Local Authorities (Finance)

– in the House of Commons am 12:00 am ar 24 Ionawr 1973.

Danfonwch hysbysiad imi am ddadleuon fel hyn

10.14 p.m.

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

Order. Will right hon. and hon. Members withdraw as quietly as possible? Time is being taken from the Adjournment debate of the hon. Member for Manchester, Gorton (Mr. Marks).

Photo of Mr Kenneth Marks Mr Kenneth Marks , Manchester, Gorton

On 20th December last this House debated the Rate Support Grant Orders. Speaking in that debate I acknowledge that there had been a considerable increase in Government grants in general to local authorities but I pointed out that the figures were based on averages and that hidden in those averages there were acute financial problems, especially for the large cities. The Under-Secretary of State for the Environment described my speech as "thoughtful" and said that I had spoken with moderation and good sense. But the hon. Gentleman said nothing which would be of help to the large cities. He promised to look the next day at some of the detailed points that I had made on both education and the problems of the large cities. This afternoon, five weeks later, I received his comments after I had telephoned his Department.

I was sad to read the last sentence in the letter which I received today: My view remains that we have done everything we can to ease the burden on ratepayers this year. I hope that the Government as a whole do not mean that.

On 22nd December the treasurers and finance committee chairmen of five cities—Birmingham, Leeds, Liverpool, Manchester and Sheffield—met. They were faced with the alternatives of a very considerable increase in rates, in the neighbourhood of 20 per cent., or a drastic cutting of expenditure which would have meant reduced services and redundancies for their employees. They wrote to the Prime Minister asking him to meet them as soon as possible so that they could have the benefit of a full discussion with him on the ways and means which can be applied to keep the rate increase next year down to the level the Government hopes to achieve. Why do they want to see the Prime Minister? Why not the Secretary of State, the Minister of State, or the Under-Secretary of State? The answer is that this problem in the big cities is one which impinges seriously on national policies. It is the Prime Minister who has been announcing the policies which affect that problem. It is the Prime Minister who has been telling local authorities that they must not use the revaluation of rateable values as an excuse for raising rates.

The Prime Minister and the Chancellor of the Exchequer are deeply involved, as are the Secretary of State for Education and Science, because education accounts for more than half the local budgets, the Home Secretary and the Secretary of State for Social Services. But in his first reply, the Prime Minister referred the authorities to the Department of the Environment, and his letter suggested that he had not understood the size or nature of the problem. I was glad when he said this afternoon that he had now agreed to meet their representatives.

Photo of Mr Kenneth Marks Mr Kenneth Marks , Manchester, Gorton

The matter is urgent. Rating days for these cities, as for other authorities, is only a few weeks away. A great deal of work needs to be done.

What are the special problems of the cities? In a brief debate of this kind I can only summarise them, and then only for one city. Obviously I do so for the city of Manchester, part of which I represent.

For Manchester the revaluation of rateable values presents one facet of the problem. It is not the major one for the city as a whole, but certainly it is one for many of the domestic ratepayers. The gap between the rise in industrial rateable values and that in domestic rateable values is greater in Manchester than in other parts of the country, and greater than the national average. Domestic ratepayers there will pay a bigger proportion of the total rate than the national average for which the Government have allowed. The national average for the revaluation of domestic properties is about 2·5 times. For Manchester it is 2·62 times. But even that is an average. Many semi-detached houses will have an increase in rateable value of three times, and some as high as 3·1 times, especially in the constituencies of the hon. Member for Manchester, Moss Side (Mr. Frank Taylor) and the hon. Member for Manchester, Withington (Sir R. Cary).

But this is only one part of a problem which faces the city at all times. This year the acute social problems—problems of the social services and the schools, and problems of squalor and poverty—have combined with inflation, with the anomalies of the rate support grant system and the need to provide regional facilities, and have all made things more difficult than usual.

Rate support grant is largely based on population, but Manchester's population has fallen from 654,000 eight years ago to 542,000 in 1971, so it gets a proportionately smaller Government grant. Over the country as a whole, the Government grant about 60 per cent. of local government expenditure. Manchester gets only 46 per cent. and the ratepayers find the rest. If Manchester got 60 per cent. there would be no need for a rate increase this year.

This year the city has the highest rate in England and Wales—£1·32 in the pound. This could be due partly to the high standard of services. The city is rightly proud of its record in such matters as education, social services and housing. But they need to be much better. Are the Secretaries of State for those services going to suggest that they should be made worse?

Major liabilities arise from the need for urban renewal. The dereliction and social deprivation which are a legacy of 19th century industrialism have needed to be tackled, and they have been tackled. Since the war 45,000 houses have been cleared, and 20,000 are now in the process of being cleared. Another 3,000 houses are earmarked. Over 200,000 people have been displaced, and that has meant a tremendous upheaval. Its cost cannot be measured in terms of housing subsidies or grants based on population figures—the counting of heads. The pressure on the social services, the social aspects of education, on the police and fire services, on the roads and transport services, has increased and not decreased as a result of the move. The tendency has been for the highest level of salary and wage earners to move outside the city, leaving the poorer and larger families to face the burden, and because they are less affluent the social problems increase. The demands for services increase and the burden on the rates increases.

If I may take an example from education—though the population as a whole has fallen by 100,000 in eight years—17 per cent.—the school population has fallen by only 9,000–8 per cent. Of the 69 per cent. of children who stay at school for dinner, 25 per cent. get free dinners. Only one other place in the country has a higher rate of free meals, and that is Newcastle-upon-Tyne, with 28 per cent. Here is a measure of low pay, unemployment and single parent families. The rate support grant formula excludes these. The city's welfare services cannot ignore them.

They are problems about people and they need not only cash but trained people to help with these problems. It will be a tragedy if the development of these welfare services and the employment of social workers should be held up at a time such as this.

I refer briefly to some other factors. There is a much higher incidence of crime than the national average. That is not because the citizens are necessarily more criminal but because the city centres are an attraction to the criminal, because the upheaval of urban renewal—clearance areas, derelict buildings, the movement and parking of thousands upon thousands of vehicles—creates conditions for crime, violence and vandalism. Will the Home Secretary suggest a cut in the police service?

Even the sewers are part of the story. Mains built in the last century need more replacement, renewal and repair than in other areas. There are more buildings in the highest category of fire risk, so more appliances, and more expensive appliances, are needed. Shall the city not buy them?

The cost of road maintenance is higher because much of the work has to be done at weekends and at night. The heavy traffic flows, including heavy commercial traffic, and the movement of all those who now live outside the city but come into it to work, mean that this kind of work cannot take place during the week.

I could continue but time does not permit.

The problems of the big cities do not apply only to the north of England; they are common to most of the big cities of industrialised nations. If life in our cities is not to deteriorate as it has done in cities in other parts of the world, money must be spent. The cities need help, and more help from the nation as a whole. Manchester is one example. It is no mean city. It has a fine record in helping those in need. Its provisions for helping the sick and disabled are outstanding. Their needs, like many other problems, force themselves to the city's attention.

It is no coincidence that my hon. Friend the Member for Manchester, Wythenshawe (Mr. Alfred Morris), who sponsored the Chronically Sick and Disabled Act, represents a Manchester constituency. The city, like others, now faces a grim prospect. In its rate demand for 1973–74 it must find the money for the overspending caused by the tremendous inflation of this year 1972–73. It has to meet the increased costs arising from that inflation next year even if it ignores the possibility of more inflation next year. It needs to maintain its services. It ought to improve them.

Birmingham, Leeds, Liverpool, Manchester and Sheffield want to talk to the Government leaders on this urgent problem. They do not need Clause 13 of the Counter-Inflation Bill to enable them to have the information. They want to talk now. I am glad to say that they are going to talk to the Prime Minister.

Photo of Sir Robert Cary Sir Robert Cary , Manchester, Withington

Is the hon. Gentleman in possession of the factual memorandum which has been prepared by the five city treasurers for the big cities? It seems to be an absolutely vital document, which should be in the possession of the House.

Photo of Mr Kenneth Marks Mr Kenneth Marks , Manchester, Gorton

I regard it as no part of my job to present the detailed case which the five cities will present to the Prime Minister. That memorandum will be presented by their officers, and I am very glad of this.

These cities need help. If this cannot be obtained under the rate support grant, other ways must be found, in the Budget or elsewhere, of assisting them with specific grants from the Government. I urge the Government to listen hard to what they have to say.

10.28 p.m.

Photo of Mr John Tilney Mr John Tilney , Liverpool Wavertree

In about one sentence I wish to support what the hon. Member for Manchester, Gorton (Mr. Marks) has said. The problems that he has enumerated on behalf of Manchester are just the same for the City of Liverpool. We are faced with an enormous rate increase even to stand still. The cost of inflation to the city of Liverpool is £7 million, and the many millions above that are to carry out the job that the central Government have put on the local authorities.

10.29 p.m.

Photo of Mr Charles Morris Mr Charles Morris , Manchester Openshaw

I welcome the courage of the hon. Member for Liverpool, Waver-tree (Mr. Tilney) in endorsing the lucid exposition of my hon. Friend the Member for Manchester, Gorton (Mr. Marks) about the crippling financial burden which is now being carried by the ratepayers of the major provincial cities. It is a burden which, if we are to accept the memorandum referred to by the hon. Member for Manchester, Withington (Sir R. Cary), is likely to increase. It is a burden that will fall on the owner-occupier, who is already burdened with high mortgage interest repayment rates. It will fall equally on the council house tenant.

One reads in the Government's White Paper on their anti-inflation policy that all the Government are prepared to do is to monitor rate increases. They ought to be putting policies to the House and to the nation for helping the major provincial authorities in view of the crippling burden of rates which now faces the ratepayers of these cities. Time is running out. It is a burden which cannot be carried by ordinary families—the ratepayers of these major provincial centres—much longer.

10.30 p.m.

Photo of Mr Robert Brown Mr Robert Brown , Newcastle upon Tyne West

I endorse all that my hon. Friend the Member for Manchester, Gorton (Mr. Marks) has said. My constituency faces a 20 per cent. increase this coming year. No doubt the greater part of that increase will be the price of last year's inflation.

Unlike some other authorities, the city does not have the benefit of help from the rate resources grant. This is a point which I hope the Under-Secretary of State will bear in mind, if not in his reply tonight then later in his Department.

We have ever-increasing demands from precepting authorities, and the city council has no control over that. After the Tyne has been an open sewer for so many years, I do not complain that the sewerage board, for example, is now getting down to the job of cleaning it, and will spend vast sums, approaching £40 million, before the scheme is finished.

Like other major cities, Newcastle has suffered from having to house its central area population in overspill areas, in our case in the county of Northumberland, with a consequent effect upon the rate resources grant.

Undoubtedly, we have reached crisis point in the big provincial cities, and it is high time that the Government got to grips with this extremely serious problem.

10.31 p.m.

Photo of Mr Frank Taylor Mr Frank Taylor , Manchester Moss Side

Everyone appreciates that the cost of running a corporation must increase with inflation, just as the cost of everything else rises, and in Manchester, with a reducing population, the point is emphasised. But I suggest that if Manchester's present authority had not stopped tenants buying their own houses there would have been a substantial saving in rates by that means alone.

Photo of Mr Julius Silverman Mr Julius Silverman , Birmingham Aston

I do not think that the sale of council houses, whatever other evil social effects it has, would have anything but the most negligible effect on the rates generally—certainly not with the new system. It has nothing to do with the rates under the new system.

Birmingham has the same problem as is suffered by the other four cities which have been mentioned. Birmingham is expecting a rate increase of 26·1p, which is the equivalent of a 27·6 per cent. increase—that is, an increase of more than a quarter for the average ratepayer. The person who has to buy his house at an inflated cost now finds that in consequence of that very inflation he must pay more rates as well.

The housing director of Birmingham has already said that it is expected that there will be a substantial increase in the rates for council tenants, the vast majority of whom are already paying an increase of 45p. Thus, on top of that increase, which applies to the great majority of tenants, there will be a substantial rise in rates. This makes nonsense of the Government's prices and incomes policy White Paper which we debated today.

Even at this last moment the Government should either reconsider the whole rating system or at least take urgent measures to alleviate this catastrophe which is affecting the ratepayers of our great cities.

10.34 p.m.

Photo of Mr Donald Kaberry Mr Donald Kaberry , Leeds North West

I represent a part of the city of Leeds, and I happen also to be a ratepayer in that city. Naturally, I should support any movement in favour of reducing the rate poundage imposed upon us by the Leeds City Council. To that extent I associate myself with all the remarks which have been made calling for a reduction in the rate demand. I received a letter from the leader of my local city council, which is to disappear within the next 12 months, urging that I support representations to the Prime Minister, which I have done and to which he gladly and quickly responded.

I hope that something can be done. But the argument put forward is that most of the increases are consequent upon the policies being pursued by the Government. [HON. MEMBERS: "Hear, hear."] There is the raising of the school leaving age which I can see receives the wholehearted support of the Opposition. When they were in office they dropped the idea, but now we are carrying it out. Perhaps some of the burdens could be carried by central Government and not by local ratepayers like ourselves.

I know that time runs short. Many other points are affected by Government policy and the Government should seek to bear their share of the increases which are put upon us. On the other hand, I do not want them to subscribe to the bad administration of Socialist local authorities.

10.37 p.m.

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

The House will appreciate that in the very short time that is left to the debate it is not possible for me to deal in detail with the many points cogently put forward by hon. Members in support of their local authorities. I hope they will acquit me of any discourtesy, for I must, in the 8½ minutes remaining, deal with this matter somewhat discursively. Essentially two issues are raised. First, there is the question whether our cities are getting a fair share of the rate support grant. Secondly, running through the debate there has been an underlying theme of the impact of revaluation. The special problems of the cities, particularly the older parts of our cities, are not a sudden and new manifestation. On the contrary, they have been a recurring topic of discussion between successive Governments and successive administrations of all parties in those cities from time to time. The present formula on which the rate support grant of those cities is based was and is agreed by the local authority associations themselves. It was introduced in 1966 by the previous Government and it sets out to try to recognise the varying needs of the different types of authorities. The formula on which the rate support grant is based allows for a decline in population and for factors of high density, and it takes into account the higher proportion, in some areas, of very large families—

Photo of Mr Charles Morris Mr Charles Morris , Manchester Openshaw

It does not take account of inflation.

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

—and of the numbers of children at varying stages of education. I do not claim that the formula is perfect. No formula ever is. But in the context of local government reorganisation we shall be reviewing it to ensure that the distribution of grant matches more effectively the needs of local authorities.

I believe that this review, which may well be discussed by the five authorities and by others, should they meet the Prime Minister, will move in the future to be of particular relevance to the problems of the conurbations. I hope that the House will forgive me if I say no more on that point this evening. It is very difficult when reviewing formulae to make changes which would allow city treasurers to refix their sums for this year, but I shall come to that point later.

The House is, however, primarily concerned with the levels of rates. Some areas may have a high rate poundage, but the burden on the ratepayers may not be so high on that account. In 1972, Sheffield, for example, had a high rate poundage, but the average rates paid on domestic households were lower than the average for all county boroughs. The rate poundage in Leeds was about average for the country, but the average payment on domestic houses in Leeds was well below the national average. On this reckoning Birmingham comes out above the national average, but that may not be too unreasonable for one of the most prosperous areas in the country.

Liverpool and Manchester undoubtedly stand out as having average domestic rate payments substantially above the national average, and it is worth examining in detail the reasons why this should be so. One factor may be the decline of population. There are many other considerations. When we examine this question of declining population it is bound to be by no means the whole story and the evidence is not conclusive. For example, Liverpool will be receiving this year, in the 1973–74 grants, a £3 million needs and allowances grant in respect of its declining population. There will he a measure of compensation.

In Manchester the recognition of declining population is a payment of £2,500,000. Manchester will receive £11–3 million as the educational supplementary grant and Liverpool will receive £12·1 million. The rates reflect the expenditure pattern of local authorities. In his interjection the hon. Member for Manchester, Openshaw (Mr. Charles R. Morris) rightly said that the formula does not build in a factor for inflation.

In the negotiations that went on between my Department and the local authorities the higher costs were taken into account and were agreed on between the Department and the associations. The inflation costing was nut into the grant.

Photo of Mr Charles Morris Mr Charles Morris , Manchester Openshaw

Is the hon. Gentleman aware that the Association of Municipal Corporations has calculated that up to November 1972 the cost of inflation to local ratepayers was £410 million?

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

The hon. Gentleman may say that, but I am telling him that there was a discussion over a long period in which the associations agreed to the inflation factor within the package. What the Government have been able to do is to increase the rate support grant to local authorities by an unprecedented amount and to take account of inflation at the same time. We increased the grant for 1972–73 by more than £400 million. We have increased the grants by the equivalent of £8 or more per head of population to all local authorities. Nothing like it has been done before. The domestic element—that is, the direct subsidy to the domestic ratepayer—is increased from 10½p in the pound to the equivalent of 15½p in the pound. Once again, this is an unprecedented increase—of 50 per cent.

I ought to add that the total grant allows a 10 per cent. increase over and above the inflation element for growth and personal social services and an increase of 50 per cent. over two years for the handicapped. As a Government we expect local authorities to assist in the general policy of containing inflation. We are entitled to ask that. All the local authority associations, to their credit, have agreed to counsel their members to assist us. I can say that in the White Paper dealing with the second stage of controlling inflation we propose to take steps actively to discourage excessive expenditure. For this purpose a circular is being prepared——

Photo of Mr Alf Morris Mr Alf Morris , Manchester Wythenshawe

Mr. Alfred Morris (Manchester, Wythenshawe) rose——

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

I hope the hon. Gentleman wants to hear what I have to say. He may not like it, but I hope he will listen. It might be news to him. A circular is now being prepared. I hope that it will be issued in a few days. It will provide for the authorities, before they take their final decisions on rates, to indicate to the Secretary of State the rate they intend to levy. They will provide him with the information on which they base their decision. If the increase appears excessive to the Secretary of State he will make his opinion known to the authority concerned, which will be asked to re-consider it—to do its sums again. The ultimate decision will be for the local authority—

The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at sixteen minutes to Eleven o'clock.