Mr Major’s Intervention during Rate Support Grant Debate – 16 January 1980

Below is the text of Mr Major’s interventions during the Rate Support Grant debate held on 16th January 1980.

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Mr. John Major (Huntingdonshire) When I came into the Chamber early this afternoon, I did not expect to speak in the debate. However, having listened to the opening remarks of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) I felt that I should like to refer to some of his observations. I shall wait for a few minutes before doing so, in the hope that he may return to the Chamber. I hope that the hon. Member for Norwood (Mr. Fraser) will also return, because he made some remarks about Lambeth on which I should like to comment.

The rate support grant settlement was awaited with considerable trepidation in the counties. It was awaited with trepidation, first, because of the effect of the rate support grant throughout the past four or five years and, secondly, because of the economic situation and the fear that there would be substantial cuts in the level of grant.

If I may speak for Cambridgeshire in particular, a county that has done badly in the past four or five years, there was an expectation this year that the 61 per cent. level of grant would be considerably reduced in the light of economic circumstances. When it was not, there was great relief that the Secretary of State had decided to maintain it at that level for the present year. Whether that can be done in future years is a matter which the course of the Government’s counter-inflationary policy may well reveal in the months to come. I hope that it will be possible in future, in the light of the general reduction in expenditure, to look for a lower percentage of grant when it can be introduced without undue hardship for rural and urban counties.

The most favourable aspect of Government policy with which the counties were especially pleased after the events of recent years was the distribution of the rate support grant. Being parochial for a moment, I must say that the own county or Cambridgeshire has lost about £20 million per year in the past four years. This year, for the first time in the last five years, Cambridgeshire has found its grant maintained at a level at which it could reasonably have expected it to be maintained. Cambridgeshire had a minor gain, but certainly there was not a continuation of the loss suffered in recent years.

I am an urban creature. I have spent most of my life in urban areas. There has been some suggestion from hon. Members who represent urban areas – I can understand it – that there is no need for the money to be returned to the counties because they do not face special problems and that the justification for any form of switch back to the counties is extremely flimsy.

I say to those who think that way – again using as an example Cambridgeshire, which is atypical to a degree but none the less symptomatic of what has happened – that in Cambridgeshire there has been the most enormous population growth over the past four or five years. Much of that population growth has come from inner city areas. For a variety of reasons, including the policies of the borough councils in city areas, people have tended to flee from the inner city areas to the rural counties of England. In my own constituency of Huntingdonshire we have large overspill estates of Londoners, at Huntingdon and St. Neots. We also have half of the Peterborough new town in the constituency.

I turn for a moment to deal with what was said by the hon. Member for Norwood. Three years ago I had the privilege of being the chairman of the housing committee in the London borough of Lambeth for a brief period. I shall give an illustration, from those days, of why it is practical justice that there should be some return of the rate support grant to the county areas.

At that time, when I was housing chairman in Lambeth, we had precisely the problems which exist today, and one of the initiatives which we were pleased to take, and which people in Cambridgeshire were happy to see adopted, was the expansion of Peterborough new town and a special linking agreement so that families and individuals could move out of Lambeth, where conditions were appalling, into Peterborough new town. There has in fact been an enormous spillage of people specifically from Lambeth into my constituency of Huntingdonshire, and especially into the northern ring of it in Peterborough.

The effect of that over the past nine or 10 years has been cumulative, but, from the standpoint of the services needed to cater for that large influx of people, the reward for Cambridge shire’s gratuitously saying “Yes, we will assist” was year by year to see a continuous reduction in the level of rate support grant.

Mr. Marks What is the rate poundage now paid in the hon. Gentleman’s constituency, compared with the 119p that the Government are giving as the standard?

Mr. Major I shall come to that, because there are other matters which need to be adjusted with that, as was pointed out a little earlier. The point that I am making now, specifically in response to the hon. Member for Norwood, is that the reward for areas beyond London for endeavouring to assist with the London problem has been a continuing diminution in the amount of funds available to them. That is grossly unfair, since so soon as one accepts a large influx of population there is of necessity a call on a considerable number of services to be moved to a far higher level of operation, and the funds have simply not been there for that purpose.

There have been other references to Lambeth, and I have already said that I am an urban creature. In fact, I spent most of my youth living in one of the less salubrious parts of Brixton, and I am well aware of the problems of inner London and of Lambeth. In my view, the hon. Member for Norwood does less than justice when he fails to recognise that many of the problems of inner London have been generated from within by some of the barren policies of total municipalisation and the successive policies of rent control which have driven out of the privately rented sector so many units of accommodation which could have helped. This has been a material factor, and, although hon. Members on the Opposition Benches choose to ignore it, it has added and is still significantly adding to the real and understandable problems being faced today in Lambeth.

Lambeth and other boroughs have added to their own problems. I shall deal specifically with Lambeth, and perhaps with Camden, if I am pressed to do so. These authorities are to a substantial extent recognised as spendthrift authorities. They have heavy social problems, they spend money on those problems, and that is understood, but beyond that they also go in for a large amount of quite gratuitous and unnecessary expenditure.

I put to the hon. Member for Norwood – he must have been most embarrassed about it – the example of the special newspaper produced by Lambeth borough council and distributed to every house in the borough asking people to join a march and demonstrate against the Government’s cuts and economic policy. I do not know how much that cost, but the amount involved might well have helped with some of Lambeth’s social problems. Moreover, as the hon. Gentleman knows, that was by no means an isolated example.

I turn now to the forthcoming demise of regression analysis. It has seemed to many of us, as I have said, that the spendthrift local authorities, like greedy crocodiles, have under this principle been fed with more and, because they were fed with more, have demanded more. That happened, as I have tried to show, at the expense of my county and other county areas, and the effects of regression analysis have seemed to us to be wholly unfair in a large variety of ways, and inflationary, too, in some respects. I suspect that, on its demise, the corpse of regression analysis will be the most popular in this or any other year.

Mr. Ronald W. Brown I recall the hon. Gentleman in his period as housing chairman in Lambeth, but I do not recall the London Boroughs Association receiving from him any demand in respect of the loss of money in the rate support grant for London.

Mr. Major The hon. Gentleman has a splendid memory, for I do not recall ever having met him at that time, although I recall that on one famous occasion a lady threw a rat at me in the mistaken belief that she was throwing it at him. I am pleased to tell the hon. Gentleman that in the event she missed. But the hon. Gentleman makes a fair point, and I have to say that in my youth I made no such representations to the LBA. Perhaps I should have done, but I certainly did not at that time.

The right hon. Member for Sparkbrook talked of the reduction of services as a result of the rate support grant settlement and of the deflation of the economy. The right hon. Gentleman has a charming style of delivery but a flawed memory. It is barefaced for him to talk about deflation in the light of the policies of the Cabinet in which he sat as such a distinguished ornament for so long, namely, as Secretary of State for Prices and Consumer Protection.

I recall that his right hon. Friend the Member for Leeds, East (Mr. Healey), the former Chancellor of the Exchequer, was a great deflater. Usually the right hon. Gentleman deflated in panic, and usually at the behest of the IMF rather than as part of a considered policy. The present restraint, difficult and painful though it may be, has a clear objective, which is the continued reduction in the level of inflation.

There has been some talk – notably by the hon. Member for Bootle (Mr. Roberts) – of the levels of inflation and other problems. The hon. Member for Liverpool, Edge Hill (Mr. Alton), in his usual fashion, blamed Conservatives and Socialists – indeed, everybody except Liberals. It seems that disaster follows whenever the Conservative Party or the Labour Party enters into a pact with the Liberal Party.

I remind those who criticise the Government for the levels of inflation, and the results of those levels, of a distinguished speech that was made by the right hon. Member for Leeds, East at the Lord Mayor’s banquet in 1976. I do not have his speech chapter and verse before me, but I recall that he touched upon the principle of the time lag between input and the out-turn of inflation. If my memory serves me correctly, in 1976 the right hon. Gentleman was talking of a time lag of 18 months. I suggest that before Labour Members blame the Government for the present level of inflation they should re-examine that speech and their own views.

I am sorry that the hon. Member for Edge Hill left the Chamber so soon after completing his speech. He talked about the reduction of services. Out came all the usual pat arguments about meals on wheels and grannies who are to be shot by wicked Tory councillors. He made precisely the mistake that I expected him to make. Every time that the hon. Gentleman and others with his views speak, they refer to the reduction of services. They never think about the reduction of staffing levels – it is always “Maintain staffing levels and get rid of the services.” Whatever we may think about the level of unemployment, that is a most barren and dangerous philosophy and not in the interests of ratepayers whom councillors are elected to serve. We have heard a great deal about local democracy and the necessity for councillors to serve their ratepayers.

There has in some respects been an aggregation of responsibilities for local authorities. My area provides an illustration of how staffing levels may be maintained, or even cut, notwithstanding a population growth of nearly 25 per cent. The staffing level of the Huntingdon district council, which includes a housing authority, has remained broadly static over the past five years. It is valid to consider those who voluntarily retire and leave local government each year. I think that the number is well in excess of 100,000. Without wholesale sackings and draconian measures, there is the possibility of staffing reductions without the desperate reductions of services that are often claimed as likely to ensue. I believe that the figures offer a practical way in which we may proceed out of our present problems.

As we proceed, it is highly desirable that, in real terms and over a period, the level of Government commitment to local authority expenditure via the rate support grant should fall. I hope that it will. I hope, too, that at some stage we are able to find a rather better system than rates to fund local government. My heart goes out to my right hon. Friend the Member for Bridgwater (Mr. King), the Minister for Local Government and Environmental Services, whenever anyone suggests that the rating system should immediately be reformed wholesale. The anomalies in the rating system are recognised. However, I hope that my right hon. Friend will take good time to consider the issue, so that when he brings forward proposals they are more likely to be right than wrong.

Some hon. Members have spoken of the wicked habit of my right hon. Friend the Secretary of State of postponing the rating revaluation. I was tempted to intervene at the time, but I was not sure of the facts. However, I am sure now. I hope that the Opposition spokesman will confirm that not one rating revaluation has been carried out by a Labour Government since the war. Whenever the issue appeared, they scrapped it. It just did not happen. Not once have they proceeded with a rating revaluation. I suggest that when they criticise us for the practical measure of removing the rating revaluation because of the rapidly impending reform of the rating system, they should have a look at their record first.

I conclude by congratulating my right hon. Friend the Secretary of State on balancing most carefully the twin needs of trying to reduce the sum total of Government expenditure, in the general interests of containing inflation, and trying to strike a balance between urban and rural areas which will bring equity and fairness to both.