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Sir Anthony Meyer : I am not sure that I agree with the hon. Gentleman. The disparity can be every bit as great in France. One travels around spanking new towns and sees slummy bidonvilles on the outskirts with exactly the same problems, which are often more widespread and acute than ours. France has no fewer than five levels of government which it seems to put up with. I am not recommending that we should.
I wonder what on earth is happening. There was a steady move towards reducing the contribution made by the Government to local government, and by 1985-86 it was some 47 per cent. That has now risen to 93 per cent. That is almost entirely the consequence of the unacceptability of the poll tax and the need to sugar the pill, but the effect on local autonomy has been catastrophic. I should like to think that that effect was completely unintended, but I must take into account the destruction of all the countervailing centres of authority. I rejoice in the diminution of the power of the trade unions to challenge elected Governments. However, I observe with less rejoicing the attempts to restrict the activities of some voluntary bodies to stop them entering upon political activity.
All that is splendid, but we are going towards a highly centralised system of government. If ever that system were to fall into the hands of a party holding extreme views, we
Column 1048would be in a terrible plight. I am not sure whether that is not the most lingering legacy of the Government led by my right hon. Friend the Member for Finchley (Mrs. Thatcher) ; a more lingering legacy even than what I currently consider to be her greatest achievement, which is the modernisation of the Labour party. There are moments when one feels that the only effective check on the powers of central government is the power of the multinationals, plus the influence and power still exerted by the EC.
Against that rather unpromising background, my right hon. Friend the Secretary of State is trying to reorganise local government. He will not make the same mistake as his predecessor, my right hon. Friend the Member for Worcester (Mr. Walker), of separating the reform of local government from the reform of local government finance. Basically, that is the mistake that Gorbachev made when he tried to carry out political reform without economic reform. That is why devolution in Wales deserved to fail last time. It was a scheme to set up an elected assembly which would have had the pleasant task of distributing money but none of the responsibility for raising it. Any viable scheme for devolution must include an assembly with revenue-raising powers. I notice that many of those who advocate devolution fall quiet when one talks about that aspect, but it should be faced. However we do it, it will be diabolically difficult to get back to genuine local autonomy.
What locally elected councillor will cheerfully vote for steeply increased locally raised taxes? I just do not know the mechanism whereby we can return to genuinely independent local authorities. If I knew the answer to that, I would be even more of a wizard than my right hon. Friend the Secretary of State. All I know is that the Opposition do not even have the courage to pose the question. Several Hon. Members rose --
Madam Deputy Speaker (Miss Betty Boothroyd) : Order. It might be helpful to inform hon. Members that, if they were to speak for less than 10 minutes each, it might be possible to call all those who wish to speak. As usual, the debate is in the hands of the House. 8.26 pm
Mr. Ted Rowlands (Merthyr Tydfil and Rhymney) : I shall try hard, Madam Deputy Speaker, to obey your plea by dealing briefly with the one bit of the settlement that I understand. One good reason for not becoming Secretary of State for Wales is that one avoids becoming embroiled in the gobbledegook of the rate support grant with its formula S N (P C), where C is the community charge for capital spending, quite apart from the total standard spending and the rest. There is a strong case for avoiding that.
But there is one part of the system that I have tried to understand and have watched closely, and that is the community charge or poll tax reduction scheme. We were told that, starting in 1991, a sum of money would be specifically directed to reducing poll tax payments in certain districts. It was not even a borough or district-wide scheme. In Merthyr Tydfil and Rhymney, it was applied at ward level. We reached the absurdity where one side of the street in one ward benefited from the scheme, while the
Column 1049other side in another ward did not. However, at least one understood it. Money was being specifically allocated to reduce the poll tax to certain householders in the community according to a variety of formulae.
But a couple of months ago in the House the Secretary of State made a statement on the revenue support grant for 1992-93. We all listened and nodded wisely. On the community charge reduction scheme, he said that he intended to make £40 million available in 1992-93. He went on to say that that would provide substantial assistance to charge payers who most needed relief, and that it was double the amount that was made available to charge payers in 1990-91. Any hon. Member listening as well as he could, given the acoustics of the House, would have thought that that was a generous settlement. He would have understood that the Secretary of State was doubling the poll tax reduction scheme from £20 million to £40 million.
I am not given to personal hyperbole, but that statement was pretty close to being dishonest. What was missing was the figure for 1991-92. Instead of saying that the figure was only being doubled from £20 million to £40 million, the Secretary of State said that in 1991-92 it would be £60 million. In fact, the right hon. Gentleman was announcing a £20 million cut in the poll tax reduction scheme. Would anyone hearing that statement in the House or reading it understand that there was to be a £20 million reduction? The Secretary of State did not have the honesty or courage to explain the impact and consequence of the settlement.
Mr. David Hunt : Perhaps I may correct the hon. Gentleman. This year, the figure is not £60 million but £62 million. That is a matter of public record. The hon. Gentleman will recall that, when I announced the community charge reduction scheme, the estimated community charge was £140 higher than it turned out to be. Also, the local authorities that originally proposed the scheme had expressed doubts because they said that the level of money going into it was producing serious anomalies. I therefore rethought the scheme, believing that the last year of the community charge would be the wrong time to make a fundamental change.
Mr. Rowlands : The Secretary of State cannot get away with that. If that is the explanation, why did not his statement include something to that effect? Why did not the right hon. Gentleman say, "As a result of discussions, I have reduced the value of the scheme from £62 million to £40 million. I have kept £22 million." Instead, the Secretary of State disingenuously told the House, "I have doubled the 1990-91 figure." That is why we do not trust much of what is said about that settlement.
The scheme was directly related to the individual poll tax payer. I can tell the right hon. Gentleman what that £22 million cut means in my constituency, ward by ward.
Mr. Rowlands : I am suitably chastened, Madam Deputy Speaker, and of course I withdraw that remark. However, I hope that I may apply the posh word "disingenuous" to the Secretary of State's statement to the House that he was doubling the amount available for poll tax reduction, when in fact he was cutting it by £22 million in respect of Welsh poll tax payers.
Mr. Barry Jones : My hon. Friend makes a devastating set of remarks about the Secretary of State's technique. I remind my hon. Friend of an exchange during Question Time, when the Secretary of State told the House that 100 per cent. of the poll tax was being collected. It took an intervention by my hon. Friend the Member for Swansea, East (Mr. Anderson) to persuade the Secretary of State to correct himself, and say that he meant that 100 per cent. of expected poll tax collection--94 per cent. of that payable--was being collected.
I will tell the Secretary of State the consequences of his £22 million cut in the poll tax reduction scheme for Welsh communities and wards such as those that I represent. In Bedlinog, the increase in the poll tax will be 40 per cent., before one additional penny is spent on extra salaries, services, or inflation ; in Dowlais, 36 per cent. ; in Merthyr Vale, 47 per cent. ; in Pant, 23 per cent. ; in Park, 22 per cent. ; in Troedyrhiw, 49 per cent.
That will be the effect on communities that are considered to be in deprived areas and deserving of extra support of the cut in the poll tax reduction scheme. Nothing in the Secretary of State's original statement or in his remarks tonight brought it home to people that that would be the true consequence of his decision.
I hope that, if nothing else, we shall be able to print at the bottom of every poll tax demand issued in those wards the fact that the extra £17 that everyone must pay is the surcharge placed by the Secretary of State on those communities.
Mr. Rowlands : But the actual amount payable will increase by 36 per cent. The Secretary of State did not make any announcement to that effect when he made his original statement or at the Dispatch Box earlier today. We should not be kidded in that way. The people of Wales and the people of my communities will not be kidded. This is a Hunt surcharge on poll tax payers in communities that, only a year or two ago, were said by the Secretary of State to be the poorest and most deprived.
It is hard for anyone to come to terms with absolute statements of the kind made by the Secretary about increases in expenditure when responsible and respected borough and district treasurers, who are not known to suffer from hallucinations, tell us that, if environmental improvements, such as in waste disposal, are to be made, if they are to take up the generous allocation for home
Column 1051improvement grants, increase staffing, pay higher loan interest charges or even pursue policies mutually agreed between the Welsh Office and the Secretary of State and Labour-controlled county and district councils, the effect will be to increase the burden of revenue expenditure and to push those authorities to the level of potential capping.
Borough treasurers write to my right hon. and hon. Friends, as they do to Conservative Members, pointing out the consequences of increased expenditure resulting from legislation passed by the House, and introduced in the pre-election run-up by a Secretary of State who seeks sometimes to humiliate local authorities into taking action under the so-called citizens charter. We are entitled to say that the responsibility should lie with those who made those decisions. When it comes to the introduction, the implementation, and, even in the poll tax's death throes, the cut in the reduction scheme, the Secretary of State is the person responsible for the burden we face. 8.37 pm
Mr. Ian Grist (Cardiff, Central) : I am sorry that the hon. Member for Alyn and Deeside (Mr. Jones) is not in his place, because I was infuriated by his claim that the poorest of his and my constituents, and those of other right hon. and hon. Members, are suffering under the community charge. The hon. Gentleman knows perfectly well that they receive income support and that the element of income support calculated for community charge is based on the average charge for England and Wales-- which is far higher than 20 per cent. of any community charge imposed in Wales.
The hon. Member for Alyn and Deeside knows also that Welsh community charges are extremely low by any standard. Even Cardiff, and South Glamorgan this year, will be making a charge of less than £3 a week per head. That is a jolly good bargain for the services that are provided locally. Some of my constituents will be charged £1.60 per week after diminution, which is remarkable value. My hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) made the point that if local authorities and local government are to mean anything, they will have to raise more money locally. I wonder how people will squeal and scream at the charges and taxes that will be levied on them. If devolution were ever to come, would we ever have an assembly funded more than 90 per cent. by the British Parliament? You can bet your bottom dollar that would not happen, because the House would have no power over such an assembly, and would not be able to control its expenditure. It would, therefore, be a minimal amount which came from this place, with the maximum being raised in Wales by a Welsh assembly. Anyone who wants a Welsh assembly had better look out for the reaction of people in Wales to such a demand when they realise what will happen.
Having served in the Welsh Office during the period of the community charge and being responsible for housing and other matters, I want to pay tribute to the local authorities in Wales and to say how fortunate we are in being a small country where Ministers can get to know the councillors in charge, the chairmen of committees, the treasurers and so on, and where we can sit round a table, know each other personally and thrash these things out.
Column 1052That is how standard spending assessments are worked out, in agreement with each other--a point somewhat overlooked after the announcement, when people strike attitudes. It is noticeable, however, that with this particular set of settlements attitudes are pretty wishy-washy. It is a very good and reasonable set of settlements. The amount that councils have been given is well ahead of inflation at a time when the economy is stuck. I should have thought that on any basis that is a very favourable settlement.
The discipline brought by the community charge, together with the threat of charge capping, which has never had to be used in Wales, has encouraged councillors to increase efficiency and make every pound pay. If the Labour party got in and were to change the system yet again, and if they were to do away with the Audit Commission, which is part of their policy, we would be off again on the giddy roundabout.
The hon. Member for Alyn and Deeside mentioned council house building in the splendid year of 1975, when the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) was going round telling councils to "spend, spend, spend". My word, they did, and 15 months later we were international paupers because we were bust. All hon. Members know just how their councils ground to a halt. A major estate in my constituency at Llanedeyrn came to a grinding halt with no shops, no facilities, nothing--houses not finished and roads uncompleted. Everything resulted from the crazy expenditure of money at that time. The hon. Member for Merthyr Tydfil and Rhymney knows that very well.
Mr. Rowlands : Perhaps the hon. Member for Cardiff, Central (Mr. Grist) remembers, as I do vividly, that what we had to do in 1974-75 was pick up half-built private housing estates that had gone bust during the last private Tory housing boom.
Mr. Grist : I remember one estate in my area which the council "municipalised". As soon as we came to power in 1979 it was the fastest place for everyone to purchase his own house. I remember a party-political film unit coming to the constituency. I was asked where it could go to see people who wanted to buy their own houses, and I directed them to that estate, Ty Cerrig. They would have bought them from the word go. The municipalisation was unnecessary. It shows the sort of Government that we had then, which got away with municipalising, nationalising and spending. That is what we would have again. We have had a plethora of promises to free local government, which means spending more and more on housing, roads, education, all things which are highly desirable and all things on which we have been spending more money steadily and carefully ; but under the promises of the Labour party we would have a burst of expenditure once again and we would be back to 1975, apparently the chosen year for the hon. Member for Alyn and Deeside to remember. I would like to mention a purely constituency matter, although it has reference to what other hon. Members have said, particularly my hon. Friend the Member for Cardiff, North (Mr. Jones), with his medicentre and the row with South Glamorgan and the hon. Member for the Vale of Glamorgan (Mr. Smith), who has unfortunately left the Chamber, and that is South Glamorgan's behaviour over Corpus Christi school in my constituency.
Column 1053I should like to thank my hon. Friend the Member for Cardiff, North for having brought this matter up several times in the past. Corpus Christi is a Roman Catholic school, the premises of which had been found to be unsafe. It is in a highly residential area and is long established. The area has been built up round the school so the roads which surround it have taken into account the layout of the school as regards traffic reactions and so forth. The authorities decided not to rebuild on site, although it is a big site and they could have done so perfectly well. They decided to move to a new green field site and sell the existing school. Because the proposal broke the local structure plan, the archdiocese and the county applied to the city council for permission to develop houses and to raise the money.
The city council refused to give them permission. The county therefore purchased the 15 per cent. owned by the archdiocese and granted itself planning permission on the site. That is an abuse of power which we considered in 1990 and put out to consultation. I believe that we are going to put out some rulings on it shortly, but, unfortunately, perhaps not in time to catch that particular abuse. The site, with more than 100 houses, will debouch on to a small set of estate roads where, I am told, the traffic will be less than from the school. I find that unbelievable. Once cars are parked down one side of these roads, two-way traffic becomes difficult because one must dodge round the vehicles, so perhaps we shall have parking restrictions and all the rest of it clamped on the estate to accommodate the extra traffic which will flow out of these 100-plus executive houses.
The school itself is planned to go out of my constituency to that of my hon. Friend the Member for Cardiff, North, on a green field site on the edge of the city to which coaches will have to take all the pupils. It is a site for which a private Catholic school applied two years ago and was turned down, but the county has purchased the land for £1 million or £2 million--I forget which--and is prepared to grant itself planning permission yet again and to get Welsh Office funding to do so unless Welsh Water puts such a charge on the site that it becomes impossible. My right hon. Friend the Secretary of State ought to think again, call in the proposal and consider the widespread unease and dismay at the activities of the county council in abusing its power. If county councils and other authorities abuse their power in this sort of way they lose a great deal of public sympathy which otherwise they thoroughly deserve.
Mr. Richard Livsey (Brecon and Radnor) : The altercation that I had with the Secretary of State about finance in Powys is causing serious concern within the county, and I hope that there will be an early opportunity for the chief executive and representatives of that council to meet the Secretary of State to discuss the matter. The standard spending assessments hardly cover inflation, especially when it comes to current teachers' salaries.
There will be further expenditure which local authorities will have to incur because of recent legislation.
Column 1054The Children Act 1989, in particular, places responsibilities on local authorities necessitating more resources. The same is true of community care and other recent legislation.
In the settlements recently announced by the Secretary of State there are winners and losers. I thank him for a good settlement in Radnorshire. Unfortunately, his Department has blotted its copy book with Radnorshire in the past couple of days, something that I shall refer to later.
The Secretary of State has been a little miserly in the settlement for Powys. Powys is setting a community charge of £100 which is spot on what the Secretary of State proposes. It has tried its best to work within his guidelines. The inevitable result, given the threat of capping, of some current settlements that authorities have achieved will be a cut in services in the coming financial year. In the districts there is a very sad story, with the failure to release funds from council house sales which has failed to fund the necessary housing to rent and will certainly fail to solve the housing crisis and resulting homelessness. As has already been mentioned, just over 70,000 people in Wales are on housing waiting lists. That is a serious and human problem, which confronts families every day. The Secretary of State has engaged in a discussion--almost a debate--with the hon. Member for Swansea, East (Mr. Anderson) about the level of community charge collection. In previous years, the collection rate in my part of the world has reached 97 per cent., which is higher than the average of around 94 per cent. to which the Secretary of State referred. Local authorities in the area have been very responsible, although, like some hon. Members, they do not agree with the principles of the community charge.
The Government's distribution of cash to local authorities is very much a lottery. As the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) pointed out, the system is complex and difficult to understand. It needs to be simplified, because the formulae involved create distortions.
As I have said, we in Powys are very dissatisfied with our standard spending assessment. In an earlier intervention, I made a slight slip. I said that the revised assessment was 6.3 per cent., against a Welsh average of 8.2 per cent.--about 2 per cent. behind. Every time the Welsh Office revised the figures over the months between December and the present time, slightly less was allowed for in Powys. I do not mean that as a deliberate slight on the Secretary of State and his staff, but the fact remains that the regression analysis used to calculate the figures appeared to give Powys a smaller reward over those months.
That needs some examination. The knock-on effect has meant a cut of £600,000 in Powys's education budget, and many schools in the local management of schools scheme are having to cut their budgets. In recent weeks, I have come across many village primary schools whose LMS budgets face cuts of between £12,000 and £20,000--and that, of course, means cuts in essential services.
It is an enormous problem and it is compounded to some extent by the teachers' pay settlement. It all depends on how the counties have made their calculations for the coming year. We in Powys welcome the 7.5 per cent. settlement : teachers deserve a good settlement. It could have been better, but at least they have reaped some reward--although I suspect that it constitutes something
Column 1055of a sweetener. We have seen the same kind of sweetener in many parts of the public sector ; we are, after all, within weeks of a general election.
Although it is welcome, that 7.5 per cent. settlement does not cover the requirements of teachers' pay throughout 1992. The local authority must find a further 2.3 per cent. from the previous year. My authority's full- year costs for 1991-92 represent an additional 1 per cent., and it faces a total 9.8 per cent. increase in teachers' salary costs. That shortfall must be met from the SSA settlement of 6.1 per cent.
We must take account of the precepts on county budgets. The Dyfed-Powys police authority, for example, has a precept of 11 per cent. in the coming financial year. That is way above the inflation level, but the county must find resources to assist the police authority. The land drainage precept has been increased by 10 per cent.--again, way above inflation. That puts the county budget in a difficult position. Then there are capital financing charges of 8.7 per cent. That must be added to the cost of extra pupil numbers in schools, and the implementation of the Children Act 1989. The additional demands on the county budget must be met ; something has to give.
The district councils are also experiencing variable results. Until the announcement by the Welsh Office on 11 February, we thought that the Radnorshire settlement announced on 20 January was fair. Somewhere along the line, however, Radnorshire lost £90,000 between the two dates. That is causing considerable problems for the Radnorshire treasurer, because many details of the budget had already been worked out. I know that the Secretary of State will be receiving representations from the district. In local authority finance terms, £90,000 may not sound much, but--as the Secretary of State well knows--Radnorshire is a relatively small authority.
Mr. David Hunt : Late last night, Mr. Jonathan Evans telephoned me to say that there was some concern in Powys. I agreed with him, as I agree with the hon. Gentleman now, and I am very willing to speak to council officers if that is required.
The recalculation of Radnorshire's SSA to take account of teachers' pay meant that, for reasons of consistency, other changes that had arisen after the original calculations had been undertaken needed to be taken into account. They included the surrender of supplementary credit approvals totalling £600,000, because of the decision not to proceed with the Llandridnod Wells leisure centre. The approvals have been recycled for use by other districts and the loan charges element of Radnorshire's SSA has been reduced as a result.
Radnorshire still has a higher percentage increase in SSA than any other district--19.1 per cent., compared with an average of 8.7 per cent. Its SSA has increased by over 43 per cent. since 1991.
Mr. Livsey : I thank the Secretary of State for going into such detail. Those developments, however, result from changes in teachers' pay-- which, after all, is a county rather than a district function. I know that there is a spin-off.
Column 1056figures into account meant that the district's figures were brought up to date. Of course, Radnorshire's figures have nothing to do with the teachers' pay calculations.
Mr. Livsey : Nonetheless, quite a stir has been created in the district, and I am sure that the right hon. Gentleman will receive representations from it, too. I hope that he will take more notice of the statements that I am making than of quotations that he appears to have received from my Conservative opponent in the constituency. He has a tendency to listen more readily to Conservative candidates throughout Wales than to Welsh Members of Parliament. That is a very unacceptable state of affairs, which has been repeated time and again.
On the other hand, I am very grateful indeed to the Secretary of State for agreeing to meet a deputation from Powys. I know that they welcome that opportunity. I hope that by thanking the Secretary of State for it I shall make it clear that I want to be even-handed. There is a very sad state of affairs in housing. The current extent of homelessness is entirely unacceptable. I spent part of last Saturday evening trying to assist a parent and four children to get a roof over their heads for the night. The family ended up in a police station looking for help. I am sure that that experience is shared by many Members of Parliament. We are having to pick up the pieces of a failed housing policy. It is immoral that people should be thrown on to the streets because affordable housing is unavailable as a result of the failure to build council houses in the last five years. The Government are refusing to release funds--the councils' own funds--for this purpose. In respect of housing, as in respect of the poll tax, the Government have failed. The poll tax is one of the worst reforms to have been introduced this century. It does not address the question of ability to pay, and we are now talking about a local government settlement that involves picking up the pieces. 9 pm
Mr. Keith Raffan (Delyn) : Before coming to my main remarks I should like to express strong support for the remarks of my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) about the Rhuddlan bypass, which is important not only to the town of Rhyl in his constituency but to the town of Prestatyn in my own. Both towns depend heavily on the tourist industry, and it is important that access to them is easy. The bypass will improve access, so it is important that work be started as soon as possible. I hope that my right hon. Friend will bear these remarks in mind. We understand from Clwyd county council that the reason for the postponement is connected with the transport supplementary grant.
I want to refer to a point made by the hon. Member for Swansea, East (Mr. Anderson). As my right hon. Friend the Secretary of State pointed out in his opening remarks, the level of central Government support for local authority revenue expenditure in 1991-92 shows an increase from 79 per cent. to nearly 93 per cent. I do not regard this as a healthy development, even though it is probably temporary. We are rapidly approaching the position taken by my right hon. Friend the Member for Blaby (Mr. Lawson) : that all local authority revenue should be raised centrally, that we should abandon any attempt whatsoever to replace the rates whether by the poll tax, or the council tax--or whatever else is proposed. I do not go along with that, although I have reservations about the council tax, to
Column 1057which I shall come in a moment. We are rapidly approaching a situation in which central Government provide nearly all the finance for local authorities. That is not healthy. I believe in strong, representative local government. If we are to have that, councils must have a right to raise revenue to a much greater extent than is the case now or is likely to be the case with the council tax. Before elaborating on those remarks I should like to comment briefly on one or two aspects of the community charge in its dying days. The average cost of collecting the minimum contribution of 20 per cent. of poll tax from those on social security benefit is £6 more per head than the amount raised. [Interruption.] The hon. Member for Cardiff, South and Penarth (Mr. Michael) is not usually like this. I am actually supporting him, but he is ignoring my support. It is important that we realise how expensive it is to collect the poll tax from people on benefit. It is absurd that the cost should be £6 more per head than the amount collected. The whole 20 per cent. is covered by the uprating of income support. In fact, people in Wales who are on benefit do well. They receive an uprating of 20 per cent. of the average community charge throughout England and Wales. Surely the sensible thing for the Government to do would have been to reduce the income support by 20 per cent. rather than waste money in attempts at collection. Surely it would be fairly easy to do this and cheaper than collection of the 20 per cent. The case for abolition of the minimum calculation is overwhelming-- [Interruption.] I want to get on. As I am agreeing with points that have been made by the Opposition, I do not understand how contention can arise. This is an unnecessary distraction for councils at a time when the transfer to the council tax is having to be made. The second point relates to the community charge reduction scheme. My right hon. Friend knows that I have always been unhappy about the fact that we have a different community charge reduction scheme in Wales from that in England. The English system is much fairer and much better targeted. It is targeted towards individuals rather than towards whole community council areas. When my right hon. Friend made his statement on 13 January, the hon. Member for Torfaen (Mr. Murphy) said that, if my right hon. Friend's predecessor had listened to local government leaders in Wales, he would not have produced such an "inane" scheme.
When I tackled my right hon. Friend the Member for Worcester (Mr. Walker) on the issue when he was Secretary of State for Wales he said that he had listened to local government leaders in Wales and that they had come out in favour of a community charge reduction scheme that was oriented towards community council areas rather than towards individuals, the argument being that that would cost a lot less to administer and therefore there would be more money to spread around. This scheme has created absurd anomalies. To illustrate my point, let me take the example of Rhyl and Prestatyn. The west end of Rhyl is a very deprived area. In 1991-92, Rhyl poll tax payers had a reduction of £48, whereas the poll tax payers of Prestatyn--many of them in similar housing, and in some cases in less good housing--had a reduction of £1. In the next financial year, 1992-93, the reduction in Rhyl will be £31 and in Prestatyn zero. The whole thing is cockeyed. It is as unfair and inequitable as the rates. It would have been much more sensible and
Column 1058much fairer for us to have adopted the English system that is oriented towards individuals rather than towards community council areas.
Mr. David Hunt : I thought very carefully about this, as my hon. Friend knows, and considered what he has just said, but I felt that in the final year of the community charge or poll tax it would have been wrong to ask everybody in Wales to complete an application form for community charge relief. I hope that my hon. Friend understands that.
Mr. Raffan : Yes, but rather than giving blanket assistance to all people in a community council area, it would have been far better in the first place to direct it towards those individuals who have suffered particularly badly.
My right hon. Friends on the Treasury Bench regard the council tax as a safe haven from the poll tax. They believe that the storms will abate and that we shall sail into smoother waters. The Opposition look smug, but how many versions of a replacement for the poll tax have they produced? Is it 63, at the latest count, or 64? Perhaps there has not been one this week. The Opposition have been very quiet this week, but no doubt there will be at least one more press conference at which they will produce one more version of their replacement for the poll tax.
The Opposition have to be fair. It is all very well for them to attack Conservative Members and Treasury Bench Ministers. I was a member of the Committee that considered the poll tax Bill and I am as guilty as anybody. I regret my support for the poll tax. If the Opposition want me to apologise, that is fine, but at the same time they must apologise for crawling to the International Monetary Fund in 1976 and for slashing public expenditure on water and sewerage infrastructure and so on when the last Labour Government were in power. If they are prepared to do that, we shall be quits. My point is that they have to come up with their final alternative and they have not yet done so. I notice that no Labour Member is rising to his feet. I certainly do not want to encourage any of them to do so. I understand that the council tax will provide about 14 per cent. of local authority revenue, on average, in the United Kingdom, but even less in Wales. The rest will be provided by central Government grant and the uniform business rate. In my view, that is far too low a percentage of local authority revenue to be raised by means of a local tax.
The council tax alone is under local authority control and must finance any additional council spending. On average, a 1 per cent. increase in spending will require at least a 7 per cent. increase in council tax bills. The gearing, therefore, is 7 : 1. It may be more than that. I was interested in what the hon. Member for Brecon and Radnor (Mr. Livsey) had to say about standard spending assessments, which he referred to as "estimates"--which is clearly what they are. They are not precisely determined and can never be so. However, the amount of gearing depends upon the accuracy of the SSAs, which are the Government's estimate of the amount that counties need to spend to provide a standard level of service. As I say, they cannot be calculated precisely and the council tax increase that will be required to cover any underestimate in the SSAs will be magnified by the gearing factor.
Column 1059Gearing was a major factor, if not the sole factor, in the downfall of the poll tax. Yet it is still a major feature of the council tax. That is what concerns me. The council tax is a better and fairer tax. I will not get too carried away because, although I will not be here in the next Parliament, my words may be thrown back at my hon. Friends. I am not particularly enamoured by the council tax. At least it got us off the hook of the poll tax. [ Hon. Members :-- "Oh."] We all know that, so why not say it. We do not want to move from one fire into another fire and, as I have said, I am concerned about gearing.
The only way around the gearing problem, to diminish it, would be for councils to control more than the current 14 per cent. of their expenditure in the United Kingdom as a whole. That could be done by reducing the number of services for which councils are responsible. I am not keen on that idea and I do not think that many hon. Members would be keen on it because most of us believe in local government and I want to see it strengthened. I would not be too unhappy about the fire service and the police being hived off, but no more than that.
Another way to diminish gearing would be to make councils responsible for raising more of their revenue. We could, for example, give them control of the business rate. I have reservations about that. At least now business and industry are able to plan ahead, knowing roughly the bills they will be facing with the uniform business rate.
I remember my first few years in the House. Just before the rates were set, industries and businesses came to see me as they were justifiably anxious about the rise in rates in Clwyd. So, if they were once again to be given control of the business rate, there would have to be certain limits so that increases would not damage industry or competitiveness. There must be other ways to diminish the gearing factor and I should like them to be examined. Councils should have the right to raise more of their revenue.
The main problem with the council tax or any major reform of local government finance--on this I agree with my hon. Friend the Member for Clwyd, North-West and, although we did not compare notes, we think similarly--is that we are dealing with local government reforms the wrong way round. We are dealing with them in reverse order. This follows what I said in the debate on the Queen's Speech. We should have started with functions and internal management, moved on to format and structure and then dealt with how to finance the new structure with its revised functions. That is what we should have done in an ideal world. However, we are in a post-poll tax world, not an ideal one. Because of the political necessity of replacing the poll tax as soon as possible we had to deal with local government finance first. If we had done it in the order that I suggested, we would have had a much better chance of getting the local government finance system right.
All local government reforms--functions, finance and format--should be conceived and considered in relation to an all-Wales tier. I said on the radio the other morning, probably before most hon. Members were up-- although I know that one person was up--that the first attempt to introduce Welsh home rule was an amendment to a Bill dealing with local government. It was moved by T. E. Ellis, the then Member for Merionethshire. That is how home
Column 1060rule was first attempted in Wales. Post second world war, it has been referred to as devolution. We must look at an all-Wales tier in a pragmatic way.
It is no use my hon. Friend the Under-Secretary talking about a Mickey Mouse Parliament. That will not convince anybody. There must be arguments from Ministers on this issue. If we move to one-tier authorities, where will the strategic planning and the transport and infrastructure planning happen, and who will carry it out? These are all-Wales issues and they need an all-Wales tier. Currently, on devolution, the Government seem to be blinded by the headlights of public opinion, stunned and unable to move other than to grope robotically for historic allusions to past referendums that have no relation to the here and now.
I welcome the Secretary of State's announcement today. That is progress--we are to have a debate on the constitutional issue and, indeed, we should do so. As I said during business questions the other week, if the Scots are to have three debates--one in Edinburgh--we should at least have one, and I am glad that it is to be in Cardiff. I hope that the Under-Secretary will respond to the point raised by the hon. Member for Swansea, East and I earlier today in the Grand Committee. I raise it again now because it received no response--we should have that debate before mid-March, preferably before the Budget so that it will happen during this Parliament. It is an election issue and must be debated before the election. A new local government tax cannot be successfully conceived and born in isolation, cut off from discussion of the functions and format for which it will pay. Indeed, it should have been considered and debated not only in those contexts but in the much wider context of how local government is to fit in with regional government because they are interlocked and fitted into the government of the nation as a whole.
Mr. Allan Rogers (Rhondda) : We shall miss the rapid-fire verbosity of the hon. Member for whatever it is in north Wales. Between his speech and the tie of the hon. Member for Tatton (Mr. Hamilton), I feel rather dizzy. I do not know whether it is the Amman Valley old boy's tie that he is wearing but at least it adds a little colour to the occasion.
Because of the strictures on time, I shall deal with only two problems, one of which I rehearsed in the Welsh Grand Committee but to which the Minister of State did not answer--the problem of the teachers' pay award. I hope that it can be dealt with during the wind-up speech. I deal with the issue as it applies to Mid-Glamorgan.
As I said in the Grand Committee, if the 7.8 per cent. overall award is granted, Mid-Glamorgan will have to find £1.7 million to pay it. The Government are going to give it additional funding of only £700,000, which means that Mid-Glamorgan will have to find £1 million--a very nice convenient figure. What can Mid-Glamorgan do about the shortfall? It could cut services, which it has already done in some areas ; the only alternative--I hope that the Under-Secretary is listening--is to put £3 on the poll tax, and Mid-Glamorgan will have to do that unless the Under-Secretary of State can say now that the Government are prepared to fund the whole of the award. We know that the award has been made at this time for electoral purposes, so why do not the Secretary of State
Column 1061and the Government have the guts to fund it? If one is going to bribe people, one should at least have the gumption to pay the whole bribe. One should not tell people to pay three quarters of the bribe themselves. That is a bit unfair--even by this Government's yardstick, it is a bit much.
The authority is already budgeting to maintain services : it is about 2.2 per cent. over its standard spending assessment, so there is no way it can fund the award without pushing up the poll tax. I know that you would pull me up for using bad parliamentary language, Madam Deputy Speaker ; I would have liked to say that the Government have a bloody cheek to act in the way they have, but I am not allowed to say that.
Another issue about which I am very concerned is that of rents of factories. I am not sure what is happening in Wales, but I have suddenly received a rush--or a rash, however one wants to describe it--of papers coming through my fax from companies in the Rhondda which are being asked for huge rent rises from the Welsh Development Agency or the local authority. Whoever owns these factories-- [Interruption.] May I ask my hon. Friends to allow me to develop my case for a moment?
The rent rises, whether from the local authority or the WDA, are instigated by the district valuer. He is obliged to advise local authorities on economic rents when the revision takes place--it is like chasing one's tail. The district valuer says to the council, "That is what I consider an economic rent," and the councillors have to implement that rent. If they ignore it, they will be surcharged and called before the district auditor.
The situation is ridiculous. The Rhondda valley has high unemployment, and by any socio-economic indicator it is one of the most deprived areas of the United Kingdom. New factories are being built there, and the Government are saying how wonderful they are to help. I applaud the development, because we need the factories, but now the factories are being shut down because nobody can afford to pay the rents. The daft thing about it all is that 30 per cent. of the factories are empty anyway.
Local authorities have to charge the rents charged by the district valuers, or risk being surcharged. That means that firms are getting thrown out of factories or having to leave them, and people are being thrown out of work. Buildings are being vandalised because there is no one there. That all results in an even greater charge on the community.
I have raised two practical points, and I hope that they can be resolved. The first is the fact that the county council will have to add at least £3 per head to the poll tax in order to fund the electoral bribe for teachers. The second is the issue of rent increases for factories run by the Welsh Development Agency or by local authorities. I should appreciate it if the Minister would deal with those two matters.
Mr. Gwilym Jones (Cardiff, North) : I congratulate the hon. Member for Rhondda (Mr. Rogers) on achieving the brevity that you, Madam Deputy Speaker, have sought from us all the evening. I shall try to emulate him.
I do not understand why the hon. Member for Brecon and Radnor (Mr. Livsey) brought up the hoary old chestnut of unspent council receipts. I invite the hon. Gentleman to identify one bank account in Wales in which
Column 1062a local council has on deposit council house receipts that it cannot spend. Such a bank account does not exist anywhere in Wales. Will the hon. Gentleman find me one?
The moneys are used to repay debts already accumulated by councils--and rightly so. If they were not, local community charge payers would have to pay twice.
Mr. Huw Edwards (Monmouth) rose --