Mr. Speaker

Before we start this important debate, I must say again to the House that many right hon. and hon. Members have written to me, stating their wish to take part in it. Several hon. Members were unsuccessful in the debate last Tuesday, and I hope that some of them may be called to speak in this debate. I understand that it will continue until 11.30 pm, so I hope it will be possible to call rather more hon. Members than it was possible to call last week. Mr. Secretary Jenkin.

Mr. Robin Maxwell-Hyslop (Tiverton)

On a point of order, Mr. Speaker. Would you be good enough to let the House know whether you have selected the amendments in my name, bearing in mind that this is not an affirmative resolution on the statutory instrument and that you are at liberty to select the amendments if you so desire?

Mr. Speaker

I must apologise to the hon. Gentleman. I should have said that I have not selected his amendments.

3.41 pm
The Secretary of State for the Environment (Mr. Patrick Jenkin)

I beg to move, That the Rate Support Grant Report (England) 1984–85 (House of Commons Paper No. 151), which was laid before this House on 14th December, be approved. Before I deal with the rate support grant settlement, I shall make some general points. The system for settling the rate support grant attracts much criticism. It is complicated, partly because it deals with very large sums of money and many local authorities and partly because it tries to take account of the varying circumstances of individual authorities. As I said on a previous occasion, it can result in rough justice, but let us not forget what went before it. I remember — I am sure that several of my hon. Friends remember it—how, year after year, we all complained that the old system of rate support grant rewarded overspending. The more a council increased its spending, the more rate support grant it received. We now have a system where, under the block grant and taper and, more sharply, under the targets and holdback, an increasing proportion of higher spending comes from the ratepayer and a reducing proportion comes from the taxpayer. The system now rightly penalises overspending.

The local authority associations criticise the way in which targets are set, but the House should know that their officers are under formal instructions not to take part in consultations leading to the setting of those targets. Privately, local authority leaders welcome targets because they provide an excellent discipline which councils can enforce upon their officers. Is it too much to ask that the associations should drop their boycott and consult us at an early stage on the target formula?

I am well aware of the continuing sense of unfairness felt by those councils which have made great efforts to make savings and cut staff costs but which still face demanding targets. Our central problem is that between 1978–79 and 1983–84 current expenditure by local councils in England increased from £11 billion to about £20.5 billion. Allowing for inflation. that is an increase in cost terms over that period of 9 per cent.

Dr. John Cunningham (Copeland)

What about central Government expenditure?

Mr. Jenkin

Central Government have had to cope with a 4 per cent. increase in the number of pensioners and with, as the Opposition never tire of reminding us, a doubling of unemployment. During that period, local government has experienced a reduction of about 750,000 in the number of children in schools.

Dr. Oonagh McDonald (Thurrock)

rose—

Mr. Jenkin

I shall not give way.

I pay a very warm tribute to those councils — they include most Conservative-controlled councils — that have done their best to make savings, cut costs and live within their targets. I understand the very real difficulties with which they have been faced. They know that keeping public spending down is central to the economic policy approved by the electorate and endorsed by Parliament.

However, I cannot say the same for those councils— the worst offenders are all Labour-controlled—that have substantially increased their spending. They are the rogue elephants in the system and have made life extremely difficult for the rest.

Mr. Allan Roberts (Bootle)

rose—

Mr. Jenkin

Governments must be concerned with the totality of local government spending. If some authorities insist on overspending, the targets of the responsible majority must be correspondingly tougher. That has driven us to propose more direct action to curb the highest spenders. Last week, the House passed by a majority that I now understand was 101 the Second Reading of the Rates Bill, which, if the House so wills, will give us power to deal with the feckless few.

Dr. Cunningham

I am grateful to the right hon. Gentleman for giving way. As well as implying that pensioners and children do not live in council areas—an odd assertion—he seemed to suggest that pensioners and children were apparently reflected in central Government expenditure but not in local government expenditure. He now says that targets are necessary, and on 14 December he said that they were "tough for everyone". Does he now think that the targets which he is asking local authorities to accept are attainable? Will he be clear and unequivocal in his answer?

Mr. Jenkin

The hon. Gentleman will no doubt make his own speech. Very high-spending authorities — the hon. Gentleman knows them — which complain about their targets are complaining about a burden that they have imposed on themselves year after year. Their spending has gone through the roof, they have got themselves into this situation, and it is for them to decide how to get out of it.

Mr. Allan Roberts

rose—

Mr. Jenkin

I shall not give way, because I want to get on.

As evidence of the responsibility of the majority of authorities, let me cite the outcome of last year's rate support grant settlement. When my right hon. Friend the Member for Henley (Mr. Heseltine), now Secretary of State for Defence, announced his proposals for the 1983–84 settlement, he cut the percentage of spending met by grant from 56 per cent. to 53 per cent., and many targets were again set well below grant-related expenditure. As one well remembers, he was met by the barrage of protest. Foremost among the protestors was that prophet of doom, the right hon. Member for Manchester, Gorton (Mr. Kaufman), to whom I have given notice that I would quote him. He said: will it not continue to mean, record high rates, worse services and over 100,000 job losses to add to the present total of 3¼ million?"—[Official Report, 27 July 1982; Vol. 28, c. 924.] What happened? Four out of five authorities, which I have described as the responsible majority, budgeted to spend at or within 2 per cent. above their targets. In other words, the great majority of local authorities buckled to and did their best.

We have heard the usual scare stories about services, but I have seen no hard evidence that they are unacceptably low. The right hon. Gentleman claimed that there would be 100,000 redundancies. I must report to the House that during the year the latest local authority manpower figures show no reduction at all. As for so-called record rates, the general rate increase last year was 6.5 per cent., the lowest for five years.

Of course, I concede that if all the councils had behaved like the Socialist republics so admired by the Labour party, no doubt there would have been record rate increases. Last year, rates in Islington rose by 60 per cent., and in Lambeth by 55 per cent. However, the great majority of councils did their best. Indeed, some were able to cut their rates.

Mr. Allan Roberts

rose—

Mr. Jenkin

I shall give way when I have finished my sentence.

Birmingham, whose inner city problems are no less serious than those of Islington and Lambeth, cut its rate by 15p last year and has just announced another 5p cut this year. That shows what a sensible, vigorous Tory city council can do if it sets its mind to it.

Mr. John Powley (Norwich, South)

Does not my right hon. Friend agree that some local authorities, particularly Labour-controlled authorities, overspend largely because they spend their ratepayers' money on quite unnecessary goods, services and local authority employees? In contrast, Norfolk county council has to spend its money on essential items such as education and the social services. Nevertheless, it is being penalised because of the profligacy—

Mr. Speaker

Order. That is a very long intervention.

Mr. Jenkin

My hon. Friend is absolutely right. I hope that there may be some words of comfort in my speech for an authority such as Norfolk.

I come to the settlement for 1984–85. Faced with a budgeted overspend in the current year of £0.75 billion —three quarters of that overspend comes from no more than just 16 Labour-controlled authorities — I have had to increase the White Paper provision — [Interruption.] Penalties are nothing to do with this issue. I am talking about spending and there is no question of any penalties affecting the amount that they decide to spend.

Mr. Mark Hughes (City of Durham)

rose—

Mr. Jenkin

I have had to increase the provision for next year by £540 million, to £20.4 billion. That is the figure for local authority current spending. Of course, that increase has put pressure on others of the Chancellor of the Exchequer's programmes. The targets that I have set are consistent with that figure of £20.4 billion.

In setting targets, I have tried to take account of the representations made to me by local authorities. The big change this year is that I have made a larger distinction than ever before between the majority of authorities which have tried to find savings and the high-spending minority which have not. But I do not question for one moment that the targets imply real economies across the board even for responsible low-spending councils.

The target for most low-spending authorities — there are 233 in that category — is a cash increase of 3 per cent. over the adjusted budget for this year. By contrast, most high-spending authorities have targets representing cash cuts of up to 6 per cent. What those targets will buy will depend crucially on the rate of increase in local government costs, and two thirds of those costs are wages. A clear message of this settlement is that restraint in manpower costs is needed more than ever this year. If the local government employers concede high pay settlements this year, of course even the maximum 3 per cent. increase from budgets will mean even greater cuts elsewhere. The downward trend of manpower numbers must be resumed. Councils simply cannot expect to keep their spending below target if they allow their manpower numbers to rise.

Mr. Allan Roberts

rose—

Mr. Geoffrey Rippon (Hexham)

As my right hon. Friend cannot have known that you, Mr. Speaker, would not accept the amendments in the name of my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop), he must have prepared a reply to it. As that amendment raises the only point at issue, will my right hon. Friend reply to it?

Mr. Jenkin

With great respect, it might be wiser for my hon. Friend the Under-Secretary to deal with that after my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) has caught Mr. Speaker's eye and made his point at greater length.

Mr. Allan Roberts

rose—

Mr. Jenkin

I have already given way to several Opposition Members.

Aggregate Exchequer grant for next year will be £11.9 billion — £90 million more than this year's settlement and £370 million more than is being paid this year when one takes account of holdback. The £11.9 billion is 51.9 per cent. of relevant expenditure, only marginally less than the 52.8 per cent. in this year's settlement.

Many councils feared a much larger reduction. In the event, the reduction in the percentage of grant is much smaller than it has been in recent years. I remind the Opposition that not only this Government reduced grant percentage. Our predecessors thought it right to reduce the grant percentage from 66 per cent. to 61 per cent. We have simply continued that trend.

I come now to holdback. As I discussed with local government in October, I am proposing a more severe scheme of grant holdback for authorities which exceed their targets next year. The arrangements are set out in paragraphs 28 to 32 of the report. To summarise, at ratepayer level holdback will be at the rate of 2p in poundage terms for the first percentage point of overspend, 4p for the second. 8p for the third and 9p for each percentage point above that.

Mr. D. N. Campbell-Savours (Workington)

rose—

Mr. Jenkin

I must get on, because many right hon. and hon. Members wish to speak.

Understandably, this scheme has aroused much concern even among responsible authorities and I should like to explain why we have had to do this.

The purpose of holdback is to deter overspending by increasing the cost to ratepayers of spending above target. Because authorities exceeding their targets this year will have already rated up for that excess, we must steepen the holdback tariff if deterrence is to work next year. Many councils asked for a gentler lead-in so that the penalty for those which try but narrowly fail to hit their targets is less severe than it is higher up the scale. I understand that argument, and the penalties for the first two percentage points of overspend are therefore much lower than for the higher levels. But if the first step were even smaller, I doubt whether it would have much impact on spending decisions.

Mr. Peter Hordern (Horsham)

So far, my right hon. Friend has dealt with the high-spending local authorities. Will he find a place in his speech to deal with low-spending authorities such as West Sussex, which has to meet nationally negotiated wage settlements of 5 per cent. for teachers and 7.5 per cent. for the police with but a 2 per cent. cash increase? It is the lowest precepted authority in the country and if it spends up to its GRE it will lose the whole of its rate support grant.

Mr. Jenkin

My hon. Friend anticipates my next argument. I have been asked by many why there cannot be an exemption for spending above the target but below GRE. I am aware that some of the fiercest criticisms of the RSG settlement come from authorities whose targets are set below GRE and which can therefore come into penalty while still not spending up to their GRE level.

Several Hon. Members

rose—

Mr. Jenkin

I should like to develop my argument.

The main reason why there cannot be such an exemption is that a GRE exemption for next year would provide councils collectively with headroom for additional spending without penalty which could amount to about £500 million. When there was a GRE exemption in 1982–83, two thirds of that headroom was used by the authorities concerned. I am sure that the House understands why it would not be responsible to contemplate allowing extra expenditure — it could be £330 million—of that magnitude this time.

Some expenditure is disregarded for the purposes of holdback. We have added one third to the two existing disregards—increased urban programme expenditure by partnership and programme authorities and increased expenditure on civil defence. I propose to disregard increased spending on those community care schemes which are financed jointly with health authorities. The amount earmarked by the DHSS for joint funding has trebled since 1978–79. The new disregard is therefore an important change for social service authorities such as county councils and has been widely welcomed by them.

Mr. Mark Hughes

I wish to deal with a narrow and technical agricultural and rating matter. The present outbreak of sheep scab in the north of England is costing Cumbria county council £11,500. Under these proposals, it will be penalised by an additional £23,000. Can that type of disregard be included?

Mr. Jenkin

It is my duty under the statute to consider requests for disregard until the time of the final rate support grant report relating to any year. I have taken note of what the hon. Gentleman has said, but that must be without commitment.

Mr. Allan Roberts

If the main thrust of the Minister's rate support grant settlement and rate capping Bill is to penalise overspenders, why has Sefton metropolitan district council, which is one of the lowest-rated metropolitan districts in the country, Conservative-controlled, and high on the list as a paragon of underspending virtue, lost £2 million in real terms in rate support grant in this settlement? If it increases its expenditure by 4.5 per cent. just to cover inflation. it will lose another £4 million on clawback. What must the Conservative authorities do to please the Minister?

Mr. Jenkin

I do not accept the hon. Gentleman's figure of 4.5 per cent. By far the biggest influence on that figure will be the pay settlement which is being negotiated. I have made no secret of the fact that I recognise that the targets that we have set and the holdback regime that I have described are tough on everyone. If authorities budget to spend within the targets set, the average rate increase should be quite low.

I am well aware of the anxieties of the low-spending authorities. Many authorities, while criticising this settlement, have expressed to me their very grave anxieties not so much about 1984–85 but about what they fear for the following year, 1985–86. I should like to give this assurance to the House.

I have been made very well aware that a number of low-spending authorities regard the targests that have been set for 1984–85 as an unfair use of a system which should in their eyes be intended to bring pressure primarily on those spending well above GRE. I have already said that, in the absence of any effective way of curbing the extravagance of the high spenders, the Government have been forced to seek savings from everyone—high and low spenders— in order to meet the Chancellor's spending guidelines. The Rates Bill is now before the House. One of its primary purposes is to help restrain the total of local authority expenditure. After enactment — that is a matter for Parliament—we shall, for the first time, have power to restrain the worst excesses of the highest spenders. This power will not change the picture overnight, but as it begins to take effect I would expect in 1985–86 and thereafter to be able to set targests which take greater account of GREs and thus recognise the efforts which low-spending authorities have made.

Sir Humphrey Atkins (Spelthorne)

My right hon. Friend has made an important statement which we shall wish to study carefully. He said that he recognises the problem of the low-spending authorities, such as Surrey, of which I represent a part. Can he assure me that his words mean that next year he will seek to deal with the difficulties which he knows that Surrey and other authorities are experiencing?

Mr. Jenkin

I am grateful to my right hon. Friend. Surrey is budgeting to spend just below its GRE for this year. It was well below GRE in 1982–83. Its target for next year is £8 million below its GRE. Obviously, I shall want to examine its budget for next year. On the evidence so far, Surrey is precisely the type of authority that I have in mind —an authority which has budgeted carefully and kept its expenditure below GRE and which now finds that a target which is significantly below GRE presents real problems.

Sir John Biggs-Davison (Epping Forest)

Bearing in mind the fact that my right hon. Friend is an Essex ratepayer, will he be more precise about what he is saying to Essex? He said that he has an expectation that something might be possible. Is that enough for Essex hon. Members who are wondering how they should vote tonight?

Mr. Jenkin

My hon. Friend understands the difficulty that I face. I am seeking to offer some reassurance for the year which begins in April 1985. My hon. Friend knows that the Cabinet's consideration of the totality of public spending and the entire first round has yet to begin. I understand all too clearly the position from the representations made vigorously by hon. Members representing Essex. When the authorities find themselves this year with a target that is 2.1 per cent. below the GRE, they think that it is unfair that Essex should have to suffer penalties in these circumstances. When I draw up the targets next year I shall take greater account of those authorities which have budgeted carefully and which could not, by any stretch of the imagination, be called high spenders.

My hon. Friend will recognise that there is no way at this time of the year of trying to put figures on next year's targets. It would be quite unreasonable to do so. I hope that I have described my intentions in approaching the setting of the rate support grant settlement next time round.

Mr. Jack Straw (Blackburn)

As we are talking about 1985–86, if and when the Rates Bill becomes law does the Secretary of State also accept the view of the chairman of the Surrey county council, published in last Friday's Financial Times, that, if rate capping works, more rate support grant will go to the capped authorities, less to the uncapped authorities, including Surrey and Essex, and therefore, in his words, other prudent authorities, will have to foot the bill"? Was the chairman of Surrey county council right or wrong when he used those words?

Mr. Jenkin

The chairman of Surrey county council made many assumptions in that letter which I do not accept for one moment. Much will depend on how the rate support grant settlement is drawn up in the light of the knowledge that some authorities will be spending less in 1985–86 than they are spending now. The chairman of Surrey county council made unwarranted assumptions.

Before I sit down, I want to say something about a new factor in the equation — the Audit Commission. Set up under the 1982 Local Government Finance Act, the commission was given a specific remit to look at value for money in local authority spending. The commission really got under way in April of last year, and it has already produced an impressive handbook entitled, "Economy, Efficiency, and Effectiveness" explaining how it proposes to tackle this aspect of its work. Copies are in the Library of the House, and I am sure that the commission will be happy to provide a copy to any hon. Member who wishes to have one. Copies have been sent to every local authority, and each local authority has been given an individual profile of its own spending, costs, and other data — including demographic data — together with comparisons with the figures of other comparable authorities of the same class.

These profiles and the other material in the handbook are intended to help individual authorities and their auditors to identify the areas where they should concentrate their efforts in looking for better value for money and for savings through greater economy and efficiency. They provide the necessary information to enable auditors and councillors to ask the really searching questions that are needed.

The handbook's introduction states: Is the Council getting what it is paying for? Does the Council need to provide all its present services, some of which may well be geared to the needs of an earlier era? Should resources be redeployed to meet new needs and demands? Are there lower cost ways of delivering the same benefits? Is the Council being managed well? These are questions …to which, often there are no ready answers". The handbook deals generally with the arrangements that councils should have in place to ensure economy, efficiency and effectiveness in their use of resources. It should become compulsory reading, not only for chief officers but for the chairmen of policy and resources committees and of finance committees. There may be councils that cannot improve their systems, but I doubt whether there are many of them.

The first edition of the handbook contains sections on further education, police, refuse collection and purchasing. Further sections will be added progressively to cover other services as the commission's special studies of specific areas produce results and findings for general application.

I shall give the House some examples of how the handbook can be used. Let us take the mundane subject of refuse collection. The handbook records how one council cut its refuse collection costs by 30 per cent. using the ROSS computer programme devised by LAMSAC. Others have saved 15 per cent. or more. Why is it that only one refuse collection authority in eight actually uses that computer system?

On police services, the commission outlines the range of opportunities for savings that exist, including, for instance, the use of civilians. Using 1 per cent. more civilians instead of uniformed officers for administrative police work could save a typical county police force £100,000 a year. There is not a scintilla of evidence to suggest that civilianisation reduces the efficiency or effectiveness of any force. Why does the ratio of civilians to police officers in different forces range from as low as 22 per 100 officers to 59? Yet 1 per cent. saves £110,000 a year in a typical county force.

On further education, the handbook spells out the significant opportunities for increasing student numbers and reducing costs without adverse effects on the quality of education. In 1981, one polytechnic alone — the details are in the book — wasted £100,000, of which £20,000 went on rates on buildings it did not need or had already sold or which had even been pulled down. Is every education authority quite satisfied that nothing like that is happening in its area?

I consider the Audit Commission handbook one of the most powerful tools for efficiency ever put into the hands of local councillors. Time and time again, officers tell the councillors, and councillors tell the public—and, I dare say, Members of Parliament — that further economies can mean only savage cuts in services, but who in this House could put his hand on his heart and say that his council is so efficient that any further economies must mean cuts in services?

Why is it that similar authorities can produce such totally different figures for expenditure per head? According to CIPFA figures for 1982–83, Tory Wandsworth spent £246 per head on all its services; Labour Camden spent £528 — more than double Wandsworth's figure—and Tory Dudley spent £290 per head compared with Labour Newcastle's £478 and Labour Manchester's £548. Spending per head is, I agree, a rough and ready comparison, but are we not bound to ask how such disparities can be justified? Are Wandsworth's ratepayers really getting half the services received by Camden's ratepayers? Are Manchester's ratepayers getting nearly twice as much as Dudley's? I do not believe it for one minute.

The hon. Member for Holborn and St. Pancras (Mr. Dobson) made an impassioned speech last Tuesday about the Inner London Education Authority. What the hon. Gentleman did not ask — and I doubt whether he ever thought of asking — is why the administrative clerical costs per pupil in the Inner London Education Authority are 80 per cent. more than the average costs in the outer London boroughs. Why are the support staff costs per pupil 86 per cent. more? Why do staff looking after school premises cost 90 per cent. more? Those are not the classroom or teaching costs; they are the administrative tail on a scale that has made the Inner London Education Authority a byword for feckless extravagance.

Mr. Frank Dobson (Holborn and St. Pancras)

rose—

Mr. Jenkin

I shall give way to the hon. Gentleman later, as I mentioned him.

If we compare ILEA with some of the other hard-pressed inner city areas in the provinces—

Several Hon. Members

rose—

Mr. Speaker

Order. The Secretary of State is not giving way. When hon. Members intervene, that takes time out of the debate.

Mr. Jenkin

I shall finish my sentence and then give way to the hon. Member for Holborn and St. Pancras.

Many of the provincial cities have large ethnic minorities. They must cope with the same problems as inner London. Yet the expenditure per pupil in ILEA is half as much again as in Coventry, Bradford, Birmingham and Wolverhampton. It is twice as much per head as in the metropolitan district of Kirklees. There is absolutely no justification for that. Savings can be made.

Mr. Dobson

The Secretary of State obviously did not listen to my quarter of an hour speech on the Rates Bill, or he would have understood the multiplicity of problems that affect ILEA that affect no other authority. Can he tell the House of any other education authority that has 50.000 children—one in six—who speak a language other than English at home?

Can the right hon. Gentleman confirm that Her Majesty's inspectorate of schools has fully endorsed the ILEA administrative back-up expenditure and attacked the failure to provide back-up in such councils as Dudley? Can he also confirm that the Metropolitan Police, for which the Home Secretary is responsible, costs 40 per cent. more than any other police force in Britain?

Mr. Jenkin

The hon. Gentleman has abused his opportunity to intervene. I quoted four or five authorities with severe inner city problems, large ethnic minorities and large numbers of children for whom English is not the mother tongue. ILEA is spending half as much again as the highest spender in those authorities. It is impossible to believe that that can be justified. It is an example of the sort of comparison, broken down by function and service, that should enable councillors who genuinely want to cut out waste without damaging services to see the way to do so.

There is a another way. Millions of pounds can be saved by putting services out to competitive contract. That has been shown conclusively by those councils which have done it. Refuse collection, street cleaning, park maintenance, school cleaning and no doubt many other services can show substantial cost reductions through competitive tendering. When the savings are now proven, why do so few councils go down that road? Is it fear of the unions? Many councils have shown that it is perfectly possible to negotiate satisfactory deals with their unions and to secure real benefits for their ratepayers. What is at the moment a pioneering trickle must become a great cost-saving flood. The opportunities are there; all that is needed is the courage and the will to grasp them.

That is the way to make sure that this settlement, tough as it undoubtedly is, brings benefit to ratepayers, and I ask right hon. and hon. Members to give it their approval.

4.20 pm
Dr. John Cunningham (Copeland)

Last week the Secretary of State introduced his Bill to control local democracy, and now he is springing his trap to ensnare local councils by creating conditions that will justify, in his terms, his action to take over responsibility for local budgets, rates and services. As the intervention of my hon. Friend the Member for Blackburn (Mr. Straw) so clearly demonstrated in respect of Surrey, the authorities that will be caught in the trap will not be restricted to the right hon. Gentleman's favourite hit list. The mess of local government finance that has been created by this Administration is now so unravellable that the trap will catch authorities indiscriminately, as I have no doubt many Conservative Members are dying to tell the right hon. Gentleman. I am sure that they will be armed with examples to support their argument. Surely no one in the House can mistake the Government's strategy. It was clear when the right hon. Gentleman made his announcement to the House on 14 December 1983 that most ratepayers would face steep rates increases in the spring as a direct result of the Government's policy.

The rate support grant that we are asked to approve involves further massive cuts in the cash that the Government are willing to give councils to support the services on which their communities depend. The report marks a further shift of the burden of taxation away from direct taxation, for example, to every rates bill in the country. It is further confirmation, if more were needed, of the Government's intention to sustain a disgraceful assault on local government and local democracy. The cash cut of £100 million in block grant is, after allowing for inflation, a cut in real terms of well over £600 million. That is equivalent to a rates increase of at least 8p in the pound.

The Association of Metropolitan Authorities has estimated that on average the Government's proposals will cost householders another £21 per year at least. It estimates that the cost will be more where councils are penalised by the Government. Council tenants will be worse off because of Government-enforced rent increases. The Government's proposals do not even keep pace with inflation, and they have been condemned as unrealistic, arbitrary and a deception of the public by the Conservative-controlled Association of County Councils. Its anger is understandable and must be as well known to Conservative Members as it is to us. I assure the House that it is well known to us. It has been demonstrated by the volume and strength of the representations that have been made to us by Conservative councils and the Conservative leaders of the councils. Ministers and Government supporters cannot be in any doubt about the intensity of the feelings of their Conservative colleagues in local government.

The Association of County Councils has stated that local councils face an intolerable choice. Rates increases will be far in excess of inflation or major cut-backs in essential services will take place. That is a quotation from the evidence that was submitted by the association to the right hon. Gentleman when its representatives went to see him.

The Government's grant penalty system will penalise harshly and unfairly all those authorities which, over the years, have done their best to meet the Government's requests. The targets allow only a 3 per cent. cash increase compared with the Treasury's estimate of 5 per cent. inflation, which is probably an underestimate. I noted the Secretary of State's refusal to say whether he believed that the targets that he is setting were attainable.

Similarly, the Conservative-controlled Association of District Councils has stated that the Government's policies are likely to produce a wide range of rates increases across the country. Even if there is spending on the lines that the Government request, the association estimates that more than 180 district councils will have rates rises of 5 per cent.— that is 63 per cent. of all districts — while dozens will have increases of over 10 per cent. It estimates that some councils will have rates increases of 20 per cent. I remind the House, ratepayers and all local electors that in 1979, when we had a Labour Government, local councils received 61 per cent. of all the expenditure that was necessary to provide local services. The Secretary of State rather disingenuously referred to that as being a reduction. He was right, but it was a reduction in a growing total. He is reducing a declining amount, and that is the major difference between the policies being followed by this Administration and those that were followed by the previous Labour Government. It is proposed to reduce the sum yet again to 51.9 per cent.

A massive reduction of rate support grant has taken place under the Governments of the Prime Minster. Penalties in the form of fines on councils which try to maintain services—their only crime is to want to protect the elderly, families with young children and the sick and disabled while keeping down transport costs and fares and keeping people in jobs—will reduce the actual level of support to below 50 per cent., which is what they did in 1983–84. The level of support will be reduced perhaps to as little as 48 per cent. of the total. Councils which refuse or fail to comply with these arbitrary and nonsensical ceilings will face the most vicious penalties on record. They will amount to fines on councils of up to £6 for every £1 that is spent without the right hon. Gentleman's approval.

In other words, local ratepayers are facing a double betrayal by the Government. First, the overall amount of grant has been slashed. That means that every council, including those that are spending within their ceilings, will receive less cash for community services. They will be forced to cut those services or to increase their rates, or both.

Secondly, the Government's fines will take money away from ratepayers when their inadequate and unrealistic ceilings are not met. The choice facing local councillors of all political parties is horrendous. In real terms, the Government's policies could mean 12,000 fewer teachers, 11,600 fewer social services residential places, 8,300 fewer day care places, 46,200 fewer homes attended by home helps, over 58,000 fewer meals on wheels per week, 2,400 fewer children boarded out, 7,100 fewer policemen, 7,150 fewer support staff for them, over 3,300 fewer firemen and 2,700 fewer jobs in road maintenance. There could be increased fares, reduced bus and train services and reductions in concessionary fare schemes. Those are the estimates of the Association of Metropolitan Authorities, and they have not been challenged, let alone refuted, by the Minister.

When will more Conservative Members face the reality of the direction in which the Government's policies are leading us? If a recovery is under way, as is claimed, why are all these measures necessary? Why are those who live in Tory-controlled counties and towns being punished, in many instances after decades of unbroken Tory domination of councils? The truth is that the policies have nothing to do with a few high-spending Labour authorities. That is a deception that has been practised by Ministers. The Government's policies are undermining council services throughout the country regardless of which political party is in control in the shire halls and the town halls.

In the documents leaked in December, the Secretary of State himself advised his colleagues that real terms reductions are required from all authorities, including those which have tried to meet targets in the past. The Secretary of State wanted to establish his own campaign unit to cloak the harsh reality in some kind of Government propaganda, but the Prime Minister clearly did not trust him or the Department to do the job properly, as she disapproved of the plan and we now learn that it is in the hands of her own press officer.

As my hon. Friend the Member for Workington (Mr. Campbell-Savours) pointed out, The Guardian last Friday revealed the contents of yet another leaked document. I have always supported the case for a freedom of information Act, but I begin to wonder whether it is really necessary. We learn from that document that in addition to central control of local councils Mr. Bernard Ingham is now calling for—note the language—"neutralisation" of "dissident elements" among the Government's own supporters to prevent the Government's attacks on local councils being frustrated.

Other proposals include remedial action with troublesome journals". What can it all mean? Will it mean fewer gongs, no more knighthoods and a more vigorous reselection process for Conservative Members? Is there to be a Finchley gulag? The mind boggles. Perhaps the right hon. Member for Cambridgeshire South-East (Mr. Pym) will be sent to a correction seminar with Professor Walters or Professor Friedman. In any event, more and more people believe that the journals and newspapers in need of remedial treatment are those that support the Government's policies, not those that oppose them.

The Government cannot disguise the fact that in the coming year grants to local councils will be at least £2,800 million less than in 1979 although there was then far less unemployment, deprivation and hardship than there is now. Yet again, we are being asked to approve the redistribution of resources in favour of the better-off and away from the people most in need. As the latest edition of the Government's own publication, "Social Trends," makes clear, the position of people in need of community support and services is deteriorating. The Financial Times analysed that document and concluded: The gap widens between the 'haves' and 'have-nots'. It is to the shame of the Government in general and the Secretary of State in particular that the House is now being asked to support more of the same policies.

That charge is borne out by the fact that even the neediest communities — the so-called partnership and programme authorities — which the Government recognise as having desperate problems, have lost £231 million in holdback alone since 1981–82. Even if those authorities were able or willing to decimate their services in the 1984–85 financial year and even if they met the Government's imposed ceiling, they would lose a further £40 million in block grant—more than a quarter of the total urban programme specific grant. That is just one aspect of the policy that the Secretary of State asks the House to approve today. Is that what he and the Government regard as fair and equitable in the prevailing climate?

In London, the total grant entitlement is cut by about £100 million in real terms. Although the GLC entitlement is to be increased by £24 million, in practice that authority and ILEA, about which the Secretary of State had much to say, will receive no block grant at all. There will be no block grant support for Londoners living in the GLC area and no block grant support for the children, teachers and other staff at schools in the ILEA area. That is disgraceful.

In the inner London boroughs, entitlement is cut by £44 million in real terms. For outer London boroughs the entitlement is reduced by £65 million in real terms. This represents a real onslaught on London by the Government. Those figures are based on the Government's unrealistic targets and show how shabbily the whole of London, both inner and outer, is being treated.

The penalty system is likely to make the situation even worse unless savage cuts in services are implemented. Preliminary estimates by London boroughs suggest that the cash loss could be up to £150 million, which represents a 37 per cent. reduction on the current financial year.

The Secretary of State has made much of the Audit Commission report, but does he really believe that this is the most efficient way to redistribute resources or reorganise finances?

Mr. Nicholas Baker (Dorset, North)

The hon. Gentleman spoke at length about fair redistribution of resources. Does he accept that under Governments of both parties there has been, and still is, unfairness in the way in which resources are distributed as between the high-spending authorities and the lowest-spending authorities? Would it not be progress if the lowest spenders were protected from percentage increases under this rate support grant adjustment so that they receive a fair allocation of resources in the future?

Dr. Cunningham

I agree that there is unfairness, but I do not assume that because an authority is a high spender it is by definition profligate or careless. The high spending often reflects the needs of the community that the authority seeks to serve. We cannot accept the simplistic view that high spending is by definition wrong and low spending by definition right and efficient.

The penalty system imposed by the Government will make things much worse for all authorities. If there is a reduction of 37 per cent. compared with the current financial year for the London boroughs, the loss of support for the people of London will be more than £300 per household since the Government came to office. The absurdity of the system is best illustrated by the fact that, using GRE as a yardstick, as the Government now intend, the City of London is defined as a huge overspender, spending 3.3 times the amount that the Government say that it should spend.

Many authorities which do not provide the services on which it is based now receive GRE on equal terms with authorities which do. For example, Gloucestershire receives support for nursery schools although it has no nursery schools. There are countless examples to illustrate the absurdity of the Government's system. The unique achievement of their system of local government finance is that it supports councils which do not provide services and penalises those which do. Is that the way to encourage local accountability?

When the Secretary of State circulated documents to his Cabinet colleagues in December, he said: It is the time of year for scare-stories on rate increases, even from Conservative authorities. The system has produced massive reductions in grant to Tory-controlled shires. Surrey lost £11 million in this financial year, and it will lose another £9 million in 1984–85. Hampshire will lose at least £4 million in the coming financial year 1984–85.

Hertfordshire, another Tory-controlled authority, has lost £9 million in the current year for spending at the level that the Government requested and will lose a further £900,000 in holdback. Hertfordshire will lose at least £8 million in the coming financial year, even if it accepts the Government's ceiling. The present situation in Hertfordshire is so bad that some schools depend more on covenants from parents and private fund-raising efforts than on support from Government grants. Indeed, at a recent lobby of Conservative Members representing Hertfordshire those facts were drawn to their attention. Those hon. Members expressed genuine surprise and concern about the effect of the cuts, which they attributed, in part, to the harshness of Government policies, but they refused to oppose them. That is not the way to represent the people of Hertfordshire.

In Tory Essex, too, it has been made clear that rates will need to increase by 7p in the pound in the coming year to maintain services, the alternative being serious reductions in those services. Indeed, the list is endless, and every member of the Association of County Councils will be clobbered by penalties.

Something more akin to panic seems to have gripped Tory-controlled Kent county council. Kent is in danger of being in the highest penalty list, in spite of its years of cutbacks. According to one of its chief officers, the county council has stopped requisitioning equipment, restricted the use of supply teachers, placed an embargo on the use of telephones in schools, and the painting and decorating of schools has been postponed. So the list goes on. It is all set out in a letter from one of the chief officers of the county council. It is not a figment of our imagination. Does the Secretary of State regard it as a scare story, or does he accept that it is the reality of life in the counties under this Administration?

In view of the examples that I have given, examples from districts, boroughs and shires, both Tory and Labour-controlled, and in view of the fact that every local authority association has condemned the report and the controls and penalties that prop it up, is it not an utter deception, a complete untruth, for the Secretary of State to claim, as he does in paragraph 7 on page 4 of the report, that This should enable the Government's policies for individual services to be broadly maintained"? How can services be broadly maintained when we know what is happening, and when we know that there is more to come? Nothing could be further from reality; nothing could he further from the truth. With his now somewhat infamous computer, the Secretary of State epitomises the man who has come to know the price of everything and the value of nothing.

There was a revolt last week against the Prime Minister's attempt to devalue people's votes. How much longer will Conservative Members, who apparently feel that they have nothing to fear from their electors, go on saying to the communities that they represent, "Yes, we intend to go on voting for cuts in all your services; yes, we will vote for reductions in Government support for those who need it most; yes, we have swallowed hook, line and sinker the fact that all this is the result of a handful of Labour councils; yes, we will treat with contempt the representations made to us by our Conservative colleagues in local government; and yes, we will support a Bill to usurp democratic elections that would prevent the worst excesses of this"? With that Bill and this report, councils, communities and those who serve them are caught in a vice. The trap in this report will hasten a local government financial crisis in 1984–85. It will bring it on—perhaps engineer it quite deliberately, so as to justify the Bill.

The Opposition will work to defend all those who are threatened by the Government's policy. In doing so, we hope to leave the country in no doubt that the solutions to the problems can begin only by the rejection of the authors of the Bill and the report—this Government. I hope that the House will reject the report.

May I press the Secretary of State on a matter that I have raised before? Why has he still not introduced a second supplementary report for 1982–83? I asked him about that in December, and it is now long overdue. Does he not realise that the first such report was debated a year ago? Why is he delaying and withholding information from the House and the councils concerned? Is it because it is a somewhat serious embarrassment for him to acknowledge that this Government owe the GLC money? They owe the GLC £100 million in grant that has been wrongfully withheld. How many other authorities are waiting for grants that the Government have delayed in paying? Why cannot we have that report?

For rate support grant, the Secretary of State's ceilings represent the test that he imposes, while in his Rates Bill grant-related expenditure is used to undermine councils' budgets. If, in 1984–85, county councils, excluding the metropolitan counties, spend only to their GRE targets, they will lose £761 million in grant. Is that realistic? Is that what the Government expect from the shire counties? As the Association of County Councils says, The operation of targets has robbed G.R.E.s of their last vestige of credibility. Very few Shire authorities will be in a position to pay attention to their G.R.E.s in fixing their budgets. For example, West Sussex would lose all its block grant if it spent at GRE level. Berkshire would lose 60 per cent. of its grant, and Kent would lose 42 per cent. of its grant. That shows how preposterous the proposal is.

The total grant lost nationally for spending at GRE level would be £1,100 million—one eighth of the entire grant available to all local authorities. It is no wonder that in an unprecedented decision the ACC says that unless these deficiencies are remedied, the Association of County Councils would prefer to see this report rejected by the House. It has never said anything like that before. The report is indeed Byzantine in its complexity and obscurity.

It is now clear why the Secretary of State has set an exclusion limit in his Bill at a figure of £10 million. That is clear from the figures in the report and those associated with it. If his test of 1983–84 budget over GRE is used to construct his now infamous hit list, the authorities that he apparently hates most—Newcastle upon Tyne, Islington, Sheffield, Tyne and Wear, Manchester, West Yorkshire and others—cannot be included on the hit list because many other authorities come out of that test far worse. The Secretary of State therefore introduced his £10 million budget caveat to ensnare the councils which, for his own political purposes, he wants to ensnare.

Can public expenditure best be controlled by restricting dozens of small authorities that overspend by a few million pounds or — as the Secretary of State believes — by tackling one or two very large authorities and using them as an example? There is patently no fairness in what the Secretary of State proposes. Will he confirm that — as reported in the Financial Times today —he is now to introduce yet another spending target, not consistent with those already in existence, so that he can finally ensnare the local authorities that he wishes to ensnare? The treatment of the GLC and the metropolitan county councils in the report seems, as was said in The Times, to be contrived to bring about an easier path to their abolition. To justify them as overspenders, the Secretary of State is imposing ceilings which it will simply be impossible for them to meet without swingeing cuts and massive sackings. The distribution of transport supplementary grant was also deliberately loaded against the metropolitan councils.

Against the background of the absurdities that are now endemic in the Government's approach to council finance, how can the Secretary of State really expect this system to endure? It simply does not work. It is grotesque in its complexity. Authorities cannot plan from one year to the next with any certainty of being able to maintain their services, and all this is done in the name of efficiency.

In a recent letter to me the Prime Minister pretended that she and her Government are committed to the protection of the individual where he is being unreasonably oppressed". The Government have brought local authority finance to a totally unreasonable state. I join all the local authority associations in calling for the rejection of the report. I repeat my suggestion that the Minister should now institute urgent discussion with local authority associations on an all-party basis to find a way out of the mess that he and his right hon. Friends have created.

4.54 pm
Mr. Francis Pym (Cambridgeshire, South-East)

The hon. Member for Copeland (Dr. Cunningham) made some very good points, but I received the impression that he had forgotten too easily the state of our national finances when the Labour party left office in 1979. I must remind him that the previous Labour Government could not be described as a model of fairness in relation to local government finance. I hope that the Secretary of State will be the man to put that right.

It is with regret that I find myself in disagreement with the Government about local government. Last week I was unable to support the Rates Bill because the general powers in it go too wide and are not defined, and because it is a centralising measure. Because of those characteristics, I think that the Bill will damage the independence of local government, and all for achieving a saving that will be marginal on a national scale and, for the ratepayers affected by it, rather less than their hopes and expectations. There is a need for rate capping for those authorities which can be shown to have abused and exceeded their powers, but it must be done in accordance with criteria which are clearly laid down, and there are no such criteria in the Bill.

Today we are discussing the rate support grant report and this, too, presents genuine difficulties. The high hopes of the Government of abolishing the rates, and indeed their undertaking to do so, were abandoned before the last election. Apparently, having gone into the matter in great detail, they found that all the alternatives were worse. We are therefore continuing with the rates, which remain as unfair as they have always been. In my view, in that situation, the Government ought to have set about reforming local government in other ways and not resorted to short-term expedients such as the Rates Bill.

In the 1970 Parliament there was much talk of reform of local government finance. It did not happen then and it has not happened since, and the consequence is the present unsatisfactory arrangement of rates, rate support grant and the Rates Bill. Not many people regard that as a sound basis for local government finance. It is a botched-up method that must be straightened out. My right hon. Friend must introduce better methods in future—he has made some remarks about that—but in the meantime we can use only the existing machinery.

I fully support the Government in their efforts to contain public expenditure and wherever possible to reduce it. However, whatever method they use to achieve that must be fair as between one authority and another. Local authorities approach their responsibilities in different ways. Some regard their power to raise rates as a licence for profligacy. Others believe that their duty is to spare the ratepayer as much as possible and to be as economical as possible. The object of policy ought to be to reverse the extravagance of the former and encourage the good housekeeping of the latter. Unfortunately, that has not been done in recent years and it will not be done under this report. Indeed, the Secretary of State has ackowledged some of the shortcomings.

I speak for the low spenders. I can tell the House about the experience of Cambridgeshire. From its inception in 1974, Cambridgeshire county council has followed the policy of economising and making savings wherever possible, and raising the minimum rate necessary to finance the services that the council and the electors feel are necessary. The policy of the county council has been to spend less than GRE and not to increase its spending by more than the rate of inflation. In 1978–79 the council introduced its own cash limit system, ahead of the Government's cash limit policy.

Cambridgeshire ought to be in the Government's good books. It should be looked up to as an example. "Here is a council that is following our guidelines, as they should all do", the Government should have said. Not a bit of it. Under this report, Cambridgeshire, for providing the services that the electors believe to be essential, and doing so in the most economical way, is to be penalised. The GRE was fixed for 1984–85 at £205.5 million, an increase over this year of 6.7 per cent. Taking all the factors into account, that was what the Secretary of State judged in his GRE. However, the block grant is based not on the GRE but on the current year's budget. On that basis, Cambridgeshire is given a target of £194.5 million, which is 2 per cent. up on this year's budget. The report states that it is an increase of 3 per cent. but in reality it is 2 per cent., because the national insurance surcharge falls to 1 per cent. in April and the target has been reduced to take account of that. Either way, it is £11 million short of GRE, and on top of that there is a further reduction in grant from 39.5 per cent. to 37 per cent.

In fact, from its first budget in 1974–75 to the current year, Cambridgeshire has seen the block grant come down from 62 per cent. in 1974 to 39.5 per cent. in 1983, a loss of income equivalent to 50p of the present precept of 129p, yet that current precept, discounted for inflation, is the same in real terms as the precept for 1974–75. That massive loss of grant has been absorbed by increased efficiency and marginal cuts in services. I think that the House will agree that that is a good record, much better than average and, I think, better than that of Her Majesty's Government. The report cuts the block grant by a further 2.5 per cent. this year.

The council's estimated budget is £198.5 million, £7 million less than GRE. If that is agreed, the result will be a penalty of £4.5 million. Although the council would spend 3.5 per cent. below GRE, a fine of £4.5 million is to be imposed. That is a tax on the electors of Cambridgeshire, and it cannot be justified. If it spent the whole of the GRE. it would have a fine of £28 million, which is impossible.

The council's proposed budget includes many savings in relation to schools and highways, privatisation and increased charges — all the things that my right hon. Friend the Secretary of State mentioned in his speech. The budget has to absorb pay awards that are above the going rate. The police and fire service awards have been agreed, and they are above not only the target but the rate of inflation. Others are to come. The budget also has to absorb the cost of new legislation, which imposes additional duties on local authorities. The Education Act 1981, the Mental Health (Amendment) Act 1982, the Criminal Justice Act 1982 and others are all sensible, progressive measures, but the cost of discharging the duties under them adds to the penalty.

On top of that, there is the difficult question of bus subsidies. The Government want the National Bus Company to break even, which is a legitimate aim, but we should consider the problem that that causes to local authorities. They have not been allowed the money to increase bus subsidies. The alternative is to reduce services. In the rural areas, that gives rise to serious deprivation for a minority of citizens.

All that has to be accommodated in a budget that is permitted to be 2 per cent, more than that of the current year, compared with the Secretary of State's assessment of a 6.7 percent, increase. As things stand under the report and on the assumption of the budget that I have described, the rate increase will be 11 per cent. If it were not for the penalty and for the reduction of grant, the increase would be only 5 per cent. — in other words, in line with the current rate of inflation. To put it another way, the ratepayer will have to find 5.1p for penalty and another 1.5p for loss of grant, despite the council's maintenance of very careful economy.

Therefore, this low-spending authority, with one of the highest population growths, is being fined for its carefulness. The methodology that gives rise to that cannot be acceptable. The Secretary of State is not dealing with the overspenders, as he is trying to do, but clobbering the underspenders. What is worse, that fine is based on the rates, that unfair tax that the Government have failed to abolish. It will be raised not for the benefit of the ratepayer, the ratepayer's family or Cambridgeshire, but for the benefit of the Chancellor of the Exchequer.

In some respects, the districts are even more badly affected. The targets do not operate to equalise expenditure levels. I know that in theory they are not intended to, but they should. At the moment, they are exacerbating the differences. The lowest-spending district in Cambridgeshire is spending £23.28 per head this year and is allowed to spend 70p more in 1984–85 under the report. The highest-spending district is spending £63.52 this year and next year is allowed to spend an extra £1.55. Therefore, the highest-spending council is allowed to spend more than twice as much extra as the lowest-spending council in 1984–85. To put it another way, very low-spending councils can spend less than 70 per cent, of GRE and lose all their grant, and other councils can spend in excess of GRE and still qualify for grant. That does not make sense. I do not see how it can be justified to the people who are called upon to make that payment.

On a regional basis, there is no doubt that East Anglia gets a raw deal. Its grant aid is more than 20 per cent, below the average for England and Wales, at £55 per head. That shortfall has to be made up by the ratepayer, whose average earnings in East Anglia are well below the national average. That does not seem to be very just. East Anglia is the lowest-spending local government region, with expenditure of £107 per head. However, that achievement and the careful housekeeping it represents work against the region, because past spending is the significant factor in fixing targets, and not needs.

Nationally, the targets for local authorities in England are 3.3 per cent, over GRE. In East Anglia they are 4.6 per cent, lower than GRE. Therefore, low-spending East Anglia gets low grants. That is the criticism that I make. It is inherent in the amendment on the Order Paper in the name of my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop). That is the policy that must change. The high-spending authorities should get low grants. It is they that have scope for savings. In putting this case, I think that I am speaking for most, and perhaps all, of my hon. Friends who represent Cambridgeshire and those in many other counties.

The present system is unacceptable. I cannot support it. My present inclination is to vote against it. My constituents did not elect me to have a tax like this inflicted upon them. We must have a better method. The Secretary of State spoke about the future. I am grateful for what he said. He said that he could speak only in tentative terms. However, can he be more specific? Can we have some clearer undertakings in the winding-up speech? Is it possible to say that next year the Secretary of State will stop penalising low spenders? Can he give them some encouragement and incentive? Can he get away from the practice of basing targets on budgets, with all the unfairness that that entails? Will he be rigorous in dealing with overspenders, not just by capping—I suspect that that is the only weapon immediately available to him if the Rates Bill is passed—but in his allocation of the block grant? Those are the questions to which I should like an answer, as would several of my hon. Friends.

My right hon. Friend has time to make the changes before next year. I, and I think many of my hon. Friends, expect big changes before he comes to the House with a report for 1985–86. I urge him to use that time to devise a method that is fair and that we can all support.

5.8 pm

Dr. Oonagh McDonald (Thurrock)

I am glad to be able to take part in the debate, having tried earnestly to take part in the debate on the Rates Bill last week.

I listened carefully to the speech by the Secretary of State for the Environment. Once again he made vague promises and vague statements of intention about the future for Essex county council in 1985–86. However, we are particularly concerned about the coming financial year.

Members of Parliament representing Essex on both sides of the House have made more than one approach to the Government on behalf of Essex county council asking for the special problems of Essex to be taken into account. The Government this year have had something to say about the target for Essex county council. This follows repeated pleas made by Members of Parliament supporting that county. I can do no better than to quote from the briefing sent not even by the Labour group of county councillors on that council but on behalf of the county council, which has, of course, a majority of Tory representatives, as it has had for a long time past. The official briefing says: The rate support grant settlement for 1984/85 has set the Government's target figure for Essex at £473.5 million, i.e. a £6.5 million shortfall. That leaves Essex with the plain choice of making further cuts in its expenditure or exceeding the Government target and incurring grant penalties.

We heard so much last week about the high-spending Labour authorities. We heard even from the Tory Back Benches about the so-called rotten boroughs in which the voters had the temerity continually to vote Labour and to allow for high rates payments and high spending on the services. In the view of the Government and their supporters, the voters had the cheek to appreciate this expenditure so much that they continued to vote Labour, despite the pleas of the Government and their supporters to do otherwise. The irony of it all, as we have already heard from the right hon. Member for Cambridgeshire, South-East (Mr. Pym), and we shall no doubt hear from other Members of Parliament representing Essex, is that Essex, as a low-spending authority, is about to incur the displeasure of a Government who have already ignored the pleas for additional Government help to meet the manifold problems of Essex.

Mr. Straw

Would my hon. Friend accept the further irony and twist that some authorities picked out by the Secretary of State as profligate high spenders, including Manchester and Newcastle, have increased their spending by far less than Essex or Cambridgeshire? Manchester, for example, has increased its spending by only 66 per cent, since 1979 compared with the 86 per cent, for Cambridgeshire, and has cut its staff by five times as much as Cambridgeshire, yet it has had to suffer far higher penalties than authorities such as Cambridgeshire and Essex.

Dr. McDonald

I thank my hon. Friend for his intervention, which shows the incredible irony of the Government's approach. One can only assume that the Government's approach is so blinkered that they have had their eyes fixed on certain Labour authorities and have taken no account of the needs and aspirations of voters in one local authority after another up and down the land. The extent to which the Government have ignored their own supporters in this matter was shown last week when a former Cabinet Minister, the right hon. Member for Chelmsford (Mr. St. John-Stevas), voted against the Government and at least one other hon. Member representing Essex abstained and refused to support the Government, no doubt prepared to put his money where his mouth was in the consideration of needs. The Essex authority is not only a low spender but, in the eyes of many of the inhabitants of Essex, a notorious low spender.

Reference is made in a submission from Tory Members of Parliament representing Essex to an extensive management review by the former Secretary of State, now the Secretary of State for Defence, in which he could find no areas where significant savings could be achieved in the county council. Savings may be achieved under the Government's target figure and under their threats, but those savings are at enormous cost to the community.

The county council talks about the closure of nursery classes and schools, teacher redundancies, closing the adult education service, closing branch libraries, reducing the number of firemen and appliances, and so on. The submission from the Tory Members of Parliament representing Essex spelt that out in further detail by describing the reduction of teacher numbers beyond that achieved by falling rolls, even though the present Secretary of State for Education and Science advised the chairman of Essex education authority that he should be spending more money and not less on education in Essex, up to its grant-related expenditure.

Reference is made to a reduction in the number of police in spite of the fact that the M25 through Essex has now been opened and the A13 has now been dualled, two roads that make extraordinary demands on the police. In the first six months of last year, no fewer than 500 serious road accidents in my constituency were reported by the police, all of which took their toll upon the local accident and emergency units. Despite the demands on the police, there has been an increase of only 10 policemen for the whole of Essex, and this from a Government who have come to office on more than one occasion with a commitment to law and order as one of their major planks. Law and order cannot be achieved without proper policing or the right number of policemen on the beat, where it matters. I am frequently in touch with community groups of all kinds in my constituency. Even local wards of my Labour party — this might surprise Conservative hon. Members — which want to see community policing in the constituency find that the county council has neither the number of policemen nor the resources to make such policing available.

Even more alarming is the possibility of Essex county council reducing its fire cover, even though, to quote again from the submission of Tory Members of Parliament representing Essex, Her Majesty's Inspector again warned that Essex is already substantially below Home Office requirements". I intend to pursue this matter with the Home Office since I am not satisfied with the reply of the Home Secretary to my question today.

As the hon. Member for Castle Point (Sir B. Braine) knows, both his constituency and mine are in areas of great hazard due to the large number of chemical and oil installations, regarding which, if there were a serious fire, both he and I would be asking questions of the Home Secretary as to why adequate cover was not provided. This is nothing but alarming from the hon. Gentleman's point of view and from my point of view. I know how deeply concerned he is to protect the health and safety of his constituents.

Sir Bernard Braine (Castle Point)

The hon. Member for Thurrock (Dr. McDonald) will know that not only am I concerned, but I have made the strongest possible representations on the subject both recently and for many years. I hope