House of Commons Hansard Debates for 23 Jan 1991

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(4) Where in making any determination under subsection (3) above the Secretary of State considers that any statutory duty of an authority concerned is likely to be breached by virtue of the setting of a substitute amount or precept irrespective of the operation of this Act, he shall make reference to this matter in any report laid before Parliament under subsection (2) above.'.-- [Mr. Murphy.] Brought up, and read the First time.

Mr. Paul Murphy (Torfaen) : I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker : With this it will be convenient to discuss also amendment No. 2, in clause 6, page 5, line 28, after applies', insert

subject to the making of an Order in accordance with section (Certification of Statutory Duties) above'.

Mr. Murphy : The purpose of the new clause and the amendment is to focus debate on the possible impact of the Bill on authorities that may be in danger of breaching their statutory duties. The amendments propose an order -making, certification and reporting process designed to give Parliament early warning of authorities that may be forced into a breach of their statutory duties and responsibilities. Before the Bill was applied in the first year Secretaries of State would be required under subsection (3) to certify that no authority affected would be forced to breach its statutory duties as a result of the operation of this unwelcome Bill.

The Bill essentially requires authorities to set substitute amounts in response to a formula and it prevents them from taking into account the latest view of information available to them at the time when the original amount was set. The difference likely to be made in the level of poll tax which may be set may be small but it could, in a critical case, push an authority into a choice between incurring losses and breaching the duties that this House has imposed on them. More broadly, the effect of subsections (2) and (4) together is that a report must be laid when capping orders are produced, setting out the main statutory duties of authorities and showing where breaches of such duties may occur as a result of the Act or as a result of capping generally. In other words, when the Secretary of State is made aware that a council's statutory duties and obligations cannot be carried out by an authority, he must tell Parliament. As the Secretary of State must ask Parliament's permission for a whole range of actions to do with local government finance, it would be but a small matter for him, or them--since the Secretary of State for Wales would also be involved--to lay the details before the House of Commons.

When local authorities recently took the Secretary of State for the Environment to court, the effects of poll tax capping on their statutory responsibilities and duties were not seen as clearly as they are today. There was, as my hon. Friend the Member for Normanton (Mr. O'Brien) said in Committee, some reference to education budgets, but statutory duties were seen in a very general light. Given our experience since then, we now know that sudden changes in council's budgets imposed by Government can have the most disastrous effects on the mandatory and statutory services that they must carry out. I should like to mention some of the statutory duties that the Government have imposed on local authorities by means of legislation. The Food Safety Act 1990 lays a general duty on food authorities to enforce legislation and to appoint public analysts. Last year, the Government

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sponsored and the House approved the Environmental Protection Act 1990 which imposes a host of duties and responsibilities on our councils. Local authorities become the enforcement and licensing authorities for air pollution. They have a duty to keep public registers of all pollution licences and to create arm's-length waste disposal companies under the direction of the Secretary of State. They have a duty in respect of waste regulation authorities to licence waste management premises, and so on. Local authorities have many duties to do with waste collection, litter disposal, pollution of the air and of the soil--all of them laid on them by Parliament as a direct result of the legislation.

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Last year, Parliament passed the National Health Service and Community Care Act 1990, and even though the Government have postponed financing that Act, it will eventually mean that local authorities will have various duties in respect of community care. My hon. Friend the Member for Barnsley, Central (Mr. Illsley) referred in the previous debate to the problem that his and other local authorities are having with education. Over the past few years, the Government have passed several education Acts. The curiously named Education Reform Act 1988 introduced the national curriculum and local management of schools. The Education Act 1986 had to do with special education. The Education Act 1981 concerned governing bodies, and the Education Act 1962 dealt with student awards. All these Acts, approved by Parliament, laid mandatory duties on local authorities which cost them considerable sums of money.

Most capped authorities will have made cuts in their education service at a time when the Government are implementing a variety of measures to improve, they say, standards in schools. During the legal action taken by capped authorities against the Secretary of State, various local authorities' officers served affidavits against the Secretary of State highlighting their worries about meeting their statutory duties. One officer said :

"the council, if called upon to make education cuts, would simply be unable to carry out its statutory functions with respect to education."

Only yesterday, the Prime Minister saw fit to refer to homelessness and to how he believed that it should be tackled. All of us who have been involved in local authority housing matters are aware that the plight of the homeless is receiving increasing attention from local authorities and the Government ; yet the statutory responsibilities that the Government place on local authorities can be met only if they are matched by the necessary money. Limits on expenditure caused by capping will inevitably result in fewer resources to deal with the problem. On top of capping, the Government have exacerbated the problem of homelessness by changing the subsidy arrangements for people housed in short-lease accommodation. That means that authorities must rely on expensive bed-and-breakfast accommodation. So district councils face increasing difficulty in coping with the problem of homelessness.

My hon. Friend the Member for Eccles (Miss Lestor), with her considerable experience in these matters, mentioned earlier the Children Act 1989. That Act and other social services legislation, such as the Disabled Persons (Services, Consultation and Representation) Act

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1986, mean that a reduction in social services expenditure caused by capping will affect the most vulnerable sectors of our society. Although the main provisions of the National Health Service and Community Care Act have been postponed, authorities are having to provide services for clients released from institutional care. In addition, limitations on finance make it more difficult for authorities to respond to the requirements of the Children Act. Recent media reports on child abuse have highlighted the importance of valuable resources being devoted to such services, the responsibility for which has been placed on the shoulders of local authorities by this House.

Local authorities have no choice about carrying out these functions. It has been a common complaint against all Governments, Labour or Conservative, that they under-resource our councils when they impose new duties on them. But this is worse : even when local authorities set a poll tax to cover their legal responsibilities, the scene can, because of this Bill, be changed dramatically, and they will simply run out of money or be forced to reduce vital services which are required by law.

It is crucial for Parliament to be give such a picture at the time of the setting of the poll tax so that we know that services that we have said must be carried out cannot be carried out because of a Minister's actions. The new clause and amendments would allow Parliament to debate such a critical situation. Even our consideration this evening of the possibility of such an occurrence highlights how dangerous and mischievous this seemingly technical Bill is. The Government would be well advised to accept these changes, if only as a prelude to dropping the whole Bill altogether, for its very existence makes a mockery of the Government's self-confessed claim to want local government accountability, and it certainly flies in the face of the even more ludicrous claim that the Government genuinely want to review or even abolish the poll tax.

Mr. A. J. Beith (Berwick-upon-Tweed) : The whole of the Bill makes nonsense of the Government's claim to be trying to introduce greater accountability at local level, and these amendments are brought to bear at a point where local government is being made answerable to Parliament, which is a negation of the entire concept of local government. I understand why they have been introduced in their present form : the Government are trying to widen the accountability so that it is not just a matter of the level of poll tax but also refers to the kind of services to be provided. I understand the argument that is being put.

It would, however, also be appropriate in making any such statement to refer to the extent to which the difficulties in providing services had been exacerbated by non-payment of the tax. First, it would be relevant for people to know at that point how much the authority's ability to provide services had been impaired by campaigns to persuade people not to pay the tax at all.

It is an increasing source of considerable resentment that there are still campaigns, supported in some cases by Labour Members, to encourage people who can afford to pay not to do so. It would therefore be interesting to see--although in practice one could not have this sort of detail--how much of the non-payment related to people who were liable for the full rate of tax, people who were entitled to no rebate and who might have considerably

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higher incomes, and how much of it related to that section of the population which have been forced to pay 20 per cent. of the tax even though it had very little or no income.

We are talking about two rather different categories of people : those who could pay but refuse to do so and those who are in genuine and serious difficulty. It would be appropriate for us to know, in considering whether the statutory services could be paid for, if an authority had collected much less of the tax than other authorities. The non-payment element should be considered at this point. Secondly, the tax is very difficult to collect in practice. It is particularly difficult to collect in urban areas where there is great mobility of population and from those people who just do not have the money to pay it. That is not a particular partisan observation--it was made by the Audit Commission in a recently published report on the tax. It led the commission to point to the futility of trying to collect the compulsory 20 per cent. from people who simply did not have the money to pay it.

It is an absurdity in the whole social security-benefit-taxing system that, because of the political requirement that everyone should pay a significant part of the tax, we seek to exact from people money that we know they cannot afford. We know it because we have a social security system which assesses that they cannot, yet we still insist on trying to get that 20 per cent. out of them. In some cases they will be the people who are the targets of the very statutory services threatened by the authority's inability to find enough money.

Those are two reasons why the statement should be much wider than proposed in the amendment and should refer to the non-payment element, both the deliberate and wilful element and that which arises from the absurdity of the tax. It is one of the many reasons why I believe that the tax should be scrapped and replaced by something that can reasonably be collected because it is both fair and effectively run. I refer to a local income tax.

This part of the Bill is being regarded with concern, not just by authorities which have already been capped but by those threatened with capping. Earlier today I met city councillors and officers from Newcastle upon Tyne who are watching their budget very anxiously because of the possibility of capping. The people whom I saw were from the social services committee, they were worried about providing one of the statutory services referred to in the amendment. There is a threat to the very important basic services that they provide. One, in particular, is of concern to me because it affects my constituency. The authority is having to consider closing the County hotel in Rothbury, which for a long time has provided respite care for hundreds of elderly people and their carers in Newcastle upon Tyne. In large part it is self-financing, but there is a significant element of subsidy, essential because of the character of the care provided and the low incomes of the families to whom it is provided. The accommodation service, which provides employment in my constituency, has brought into the village of Rothbury for many years elderly people from the Tyneside conurbation who clearly benefit from this break in their normal routine, and there is an even greater benefit to the carers who would normally look after them. The service is a potential victim of capping, along with other important services in the city.

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Newcastle spends more on its social services than do many other authorities, including my county of Northumberland, and questions must be asked about the costing and management of services in many of the authorities where the levels of charge are so high. It is difficult to ask those questions--and it is particularly difficult for the general public to ask them--when the system of Government grant to local authorities is as confused and confusing as it now is. It is another illustration that no one really knows who is responsible. The Government have managed to bring about a situation in which the general public are confused about whether their authority is a high spender or whether it is the Government's fault because the grant system is all wrong. On the whole, they are inclined to blame the Government, so the Government must get themselves out of the situation by carrying out the sort of fundamental reform about which the Secretary of State is beginning to talk about. I am glad to hear that he is beginning to talk about it, but it still seems a long way away and, unless he pulls a rabbit from a hat, people will carry on blaming the Government and being confused and puzzled by it all. My area, Castle Morpeth, has a poll tax which is £100 higher than that of neighbouring authorities. People ask why our authority is not going to be capped. There are two reasons. One is that the borough council spends too little to qualify for capping. The other is that 80 per cent. of the money goes to Northumberland county council. The reason for the £100 difference, however, lies deep in the interstices of the Government grant system and the safety net system. It all relates to the complicated arrangements by which the Government assessed average rateable values ; it has absolutely nothing to do with the relative spending levels of the Castle Morpeth authority compared with other authorities. Its spending levels are broadly similar to those of its neighbours.

The public, however, has no way of understanding these complexities ; they are difficult enough for professionals to make sense of, and they further show that the whole debate about capping takes place in an atmosphere and against a background where no one knows or can say with authority who is to blame--certainly no one whom the public is likely to believe. People listen to assertions and counter-assertions from those who have an axe to grind.

It is depressing that all Conservative Members seem fervently to believe that all Conservative authorities are terribly responsible and that only Labour authorities overspend. A contrary view appears to obtain on the Opposition side. The general public are not much inclined to believe that sort of thing, and it further underlines the case for fundamental reform. Even if the statement envisaged in the new clause is produced and the House had the benefit of the Government's statement along with the capping statement of how statutory services would be affected, I do not think that people would believe that either. The sooner we get rid of this nonsense the better.

6.30 pm

Mr. Key : The hon. Member for Torfaen (Mr. Murphy) spoke about the statutory duties that the House places on local authorities and listed a long catalogue of woes. Under our intended criteria, no authority would be capped if its budget were at or below its standard spending assessment. Those assessments take account of the new

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burdens and duties on authorities, and also take account of scope for greater efficiency and the amount that the country can afford. The hon. Member for Torfaen spoke about affidavits submitted by certain local authority officers. It is important to get the matter straight. In their judgment their Lordships said :

"Capping does not in any way impinge on the rights of members of the authority either as citizens or as councillors, nor does it impugn their collective conduct as either unlawful or discreditable. A difference of opinion between the Secretary of State and the designated authority as to what is the appropriate level at which their community charge and their expenditure should be set is purely a political difference."

It is important to place that on record.

The hon. Member for Berwick-upon-Tweed (Mr. Beith) is not puzzled or confused, as became clear when he came to talk to my right hon. Friend the Secretary of State, my hon. Friend the Minister for Local Government and Inner Cities and me. We were grateful to him for coming and for his constructive approach. We welcome his participation. Plainly, we must have a fundamental review of local government. Perhaps it should have been done many years ago. That is why my right hon. Friend the Secretary of State is taking these matters forward and I am glad that it is being done with the participation of the hon. Member for Berwick-upon-Tweed.

The new clause and the related amendment seek to delay the operation of the Bill's provisions for any particular year and to place a series of requirements on the Secretary of State. They say that he must make an order and before doing so he must lay a report before Parliament. Before doing that, he must make or issue a certificate in some unspecified way.

That bizarre and convoluted procedure suggested by the Opposition appears to have as its rationale--such a description is charitable to say the least --the idea that in some way the Bill affects the fulfilment by a capped authority of its statutory duties. Plainly, the Bill affects the duty of a charging authority to reset its charges after capping. That is the whole point. It is to guarantee that charge payers are not denied the full benefits of capping. The behaviour of Lambeth council this year shows that such protection is needed.

Leaving aside that self-evident point and the complete confusion over the proposed changes between precepting and charging authorities, I have to tell the House that the suggestion that the Bill otherwise affects the capped authorities' fulfilment of their statutory duties is completely unfounded and misconceived. It has no bearing on the matter. The provision of services by capped authorities is not affected by the Bill, which is about the translation of budget cuts, following capping, into commensurate reductions in charges. The Bill is not about capping in general or about the size or implications of budget cuts resulting from the capping of excessive and overblown budgets. Legislation on that is contained in part VII of the Local Government Finance Act 1988.

Mr. Murphy : Does the Minister accept that, essentially, it is the capping of a budget that is derived from the 1988 Act and that ultimately the budget is related to services? Surely if the revenue that can be raised by the community charge or poll tax is limited by an Act of Parliament, that is bound to have an effect upon the statutory duties placed on local authorities.

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Mr. Key : My argument all along and in Committee is that that is not the case. The amount of money in the collection fund is but one factor that an authority will have to consider when setting its budget for the following year. That shows one of the fundamental errors in many of the Opposition's amendments. In terms of the effect of budget reductions required by capping, any cap set would represent the Secretary of State's view of what is reasonable, achievable and appropriate in all the circumstances of each capped authority. There are procedures by which authorities can make representations about proposed caps, and they are fully taken into account by the Secretary of State when he makes his decisions about final capping levels. The first year of capping in which the proposed caps of three authorities were increased shows that those procedures are no mere charade. No authority can be free of the need for expenditure restraint and for seeking greater value for money which, as I said earlier, in the end means greater value for people. For next year we have made known for the information of authorities our firm intentions for capping criteria. At their express request we did that much earlier than in the past. I do not accept any suggestion that capping necessarily leads to disruption of essential services. There is considerable scope for authorities to look carefully at the administration and management of their services to ensure that waste is eliminated and efficiency improved. I suspect that many Opposition Members would be the first to appreciate and recognise that and that many of their authorities would try to achieve it. The new clause is not merely misconceived but completely irrelevant to the Bill's purpose. I urge the House to reject it.

Mr. Murphy : The purpose of the new clause is that it is only when a local authority's statutory duties and responsibilities are affected adversely by the operation of the Act that a report has to be made to the House. If, as the Minister suggests, the local authority is not affected by the poll tax cap, no report would be made to the House. Therefore, the Government have nothing to lose by accepting the new clause.

Question put and negatived.

Order for Third Reading read.

6.37 pm

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