Clause 1.—(CONTINUATION OF PROVISIONS RELATING TO EXCHEQUER EQUALISA TION AND TRANSITIONAL GRANTS.)

HC Deb 24 April 1963 vol 676 cc236-92

4.15 p.m.

Mr. E. G. Willis (Edinburgh, East)

I beg to move, in page 2, line 4. at the end to add: Subject to the proviso that the aggregate sum payable to Scottish local authorities by way of Exchequer Equalisation Grant shall be increased by 5 per cent. for every 1 per cent. of registered unemployed during the relevant year.

The Chairman

I think that it will be convenient to discuss, at the same time, the new Clause, "Adjustment of weighted population in respect of unemployed", in the name of the hon. Member for Kilmarnock (Mr. Ross) and other hon. Members, with an opportunity for a Division on this new Clause at a later stage if that be desired, and also the Amendment, on the Report stage, in Clause 9, page 7, line 30, at the end to insert: (5) In addition to the provisions of the foregoing subsection the weighted population of an area shall be increased by the number of unemployed persons registered there at 1st February in the immediately preceding year.

Mr. Willis

Before I proceed, Sir William, could I be clear whether it will be possible to vote on the other Amendment?

The Chairman

Specifically, on the new Clause, the answer is "Yes". I prefer not to answer the question as to the Amendment on the Report stage, because that is for the House as a whole and not for my decision in Committee.

Mr. Archie Manuel (Central Ayrshire)

On a point of order, Sir William. I hope that I have understood clearly what you have said about the Amendment in my name in Clause 9, page 7, line 30. Did you say that we could have an opportunity to vote on that as well as on the others?

The Chairman

Perhaps I did not make it clear in my previous answer. There will be an opportunity to vote on the Amendment moved by the hon. Member for Edinburgh, East (Mr. Willis). There will be an opportunity, if desired, to vote on the new Clause, "Adjustment of weighted population in respect of unemployed". Whether or not there will be an opportunity to vote on the Amendment in the name of the hon. Gentleman during the Report stage I should not like to say, because I am here now only as Chairman of the Committee.

Mr. Willis

Clause 1 of the Bill continues the provisions relating to Exchequer equalisation and transitional grants, and the Amendment which I have moved is designed to increase the amount payable by way of Exchequer equalisation grant in accordance with the percentages set out. The Amendment recognises a problem which greatly exercised the Standing Committee, namely, the high and continuing level of unemployment in Scotland. If it were accepted, it would, at present, mean, roughly, an additional £5 million to be added to the Exchequer equalisation grant for distribution among the local authorities, and this, I suggest, would help the local authorities in dealing with the problem so far as it affects them.

As I have said, everyone is aware that unemployment is a continuing problem in Scotland. It has not suddenly appeared during the winter months, owing to the bad weather. It has gone on for far too long, and, in spite of everything which the Government claim to have done, the fact remains that it is far worse in April, 1963, than it was in April, 1962. That does not indicate that any progress has been made during the past year. If we go back to the days of the Labour Government and compare the present situation with April, 1951, the increase in unemployment is even greater. That is a measure of the Government's failure to deal with this problem. It is also a measure of the needs of local authorities.

We on this side have advocated a number of measures to deal with unemployment. We feel not that there is any single remedy for this problem, but that it should be attacked on a number of fronts and that one front is the local authority front. My hon. Friend the Member for Fife, West (Mr. W. Hamilton) tried to introduce a Private Member's Bill under the Ten Minutes Rule procedure which he thought would have helped in this respect Some local authorities in Scotland have built advance factories. A number of other things have been done by local authorities in an effort to assist.

Unemployment involves local authorities in expenditure. If local authorities are anxious to deal with the problem of unemployment in their areas, they will undertake the expenditure necessary to do that. This is already being done. I have just said that some local authorities have built advance factories, for which they do not receive a grant, to try to encourage industrialists to go to their areas. Other local authorities have launched campaigns to try to attract industrialists to their areas. My hon. Friend the Member for Fife, West represents part of a county which has just launched a big campaign to attract industries to its area. A similar campaign has been launched by Midlothian.

If there were full employment in these areas, there would be no reason for these campaigns. The reason for them arises from the fact that there is heavy unemployment, and, therefore, local authorities are involved in considerable expenditure, not only in the directions which I have mentioned, but also, if they wish to deal with unemployment in their areas, by the speeding up of local government works, which is what any local authority worth its salt will do. But we have a Secretary of State who is viciously cutting down local authority programmes. When a local authority wishes to embark on a big educational programme and to build schools, the right hon. Gentleman viciously cuts it down precisely at the time when many people in Scotland are looking for work.

That is not the sort of thing that we visualise. We realise that local authorities will be involved in expenditure if they try to speed up work in their areas and to go ahead with projects to alleviate the unemployment in their areas. It is clear that if a local authority wishes to play its part in dealing with the unemployment problem in its area—and this applies to most areas in Scotland at present—it will be involved in fairly substantial expenditure.

There is the other side of the picture, namely, that heavy unemployment in a local government area probably means a loss of revenue. The likelihood is that the revenue-earning services will not earn the sum that they usually earn. Therefore, expenditure will be the smaller. They will probably lose money on their housing revenue accounts and will be unable to meet certain expenditures falling on unemployed people by the grant of a remission of rates. Some local authorities will even suffer from a loss of rents. All these things cause loss to local authorities and, therefore, less will be spent on revenue-earning projects.

We suggest that in an area like Scotland, which has had a rate of unemployment double that of the rest of Great Britain ever since the war, it is necessary to assist local authorities in meeting the expenditure which arises from this situation. We suggest that for every 1 per cent. of registered unemployed there should be a 5 per cent. increase in the Exchequer equalisation grant, which, I think, works out at about £1 million based on the present figure for every 1 per cent. of unemployment, which means an additional £5 million.

This would also create an additional £5 million in purchasing power in Scotland and I have no doubt that a considerable part of it—I do not suggest all of it—would be spent in Scotland. The exact amount would depend on the extent to which local authorities wished to spent in Scotland. Whatever policy they followed in spending this money, they would without doubt, I think, spend a considerable part of it in Scotland and, to that extent, it would help to create employment in Scotland. Therefore, I suggest that the Amendment is worthy of the Committee's serious attention.

During our Committee discussions, we tried to deal with the difficulties arising from unemployment by various means. We have some quite good debates. Hon. Members on both sides expressed concern about unemployment. I was sorry to see that some hon. Members opposite did not seem to be so concerned with the Report stage because they failed to table the Amendments which they had tabled in Committee despite the fact that the Government offered to consider them and to see what could be done about them. The Under-Secretary of State will know that his hon. Friends now sitting behind him spoke of the excellent service which their contributions and Amendments had performed. He will remember that his hon. Friends said to him that their contributions would strengthen his hand when he went to see the Treasury. I am wondering why hon. Members opposite have suddenly become so timid. This timidity is not becoming of them.

The Earl of Dalkeith (Edinburgh, North)

We have strengthened his hand. We have achieved our object.

Mr. Willis

I find it difficult to see how their object has been achieved in the Amendments put on the Notice Paper by the Secretary of State for Scotland. I see no Amendments dealing with unemployment tabled by hon. Members opposite. Admittedly, there is an Amendment dealing with a concession on rebates. While that is part of the same question, the unemployment problem is not dealt with in the way that we are trying to deal with it, namely, by recognising the problem of unemployment by granting additional moneys to local authorities to help in solving it.

Mr. James McInnes (Glasgow, Central)

Where are all the Tories?

4.30 p.m.

Mr. Willis

I do not know where all hon. Members opposite are. Obviously, they are not very interested in unemployment in Scotland. We on this side of the Committee are very interested. We think that this proposition is very useful. The proposition was not made during the Committee stage. We tended to seek to divide the equalisation grant rather differently, as the Under-Secretary knows. But this would give us a larger overall amount to divide in rather a different fashion from the method which we advocated in Committee.

I hope that the Under-Secretary has given this Amendment, which has been on the Notice Paper for some time, very close thought and consideration and that he is convinced of its worthiness and will accept it. In fact, the debate will be much shorter if he tells us that he is prepared to accept the Amendment.

Even if he has not quite made up his mind, perhaps he will listen to the arguments to be advanced, in addition to those which I have put forward, and, at the end of the day, will agree that this is a worth-while proposition, that it seeks to do what all good Scotsmen would like to do, namely, assist the unemployed in Scotland, as well as the economic situation.

Mr. Bruce Millan (Glasgow, Craig-ton)

I support the Amendment. I wish to talk particularly about the proposed new Clause, "Adjustment of weighted population in respect of unemployed", which has the same purpose as the Amendment, namely, to increase the total Exchequer equalisation grant payable to Scotland, but which proposes to do it in rather a different way from that proposed in the Amendment.

On the general argument, I do not wish to go over all the ground which has been covered so ably by my hon. Friend the Member for Edinburgh, East (Mr. Willis), but I want to reinforce the point that he made relating to large-scale unemployment in a local authority area when the local authority is involved in additional expenditure.

I would mention, in addition to the matters that have already been mentioned by my hon. Friend, the Government's recent proposal to local authorities that they should initiate schemes costing up to £15,000, both on revenue and capital expenditure, with the specific purpose of alleviating unemployment. I am sure that a number of local authorities in Scotland have carried out work under the specific request from the Government.

That work, to some extent, will be subject to Government grant, but in the case of other minor works of that nature with the specific purpose of relieving unemployment—for instance, works involving educational expenditure which is subject to the general block grant—this expenditure will have been added to the local authority expenditure burden without any compensation from the Government. Yet it is expenditure which has been incurred specifically to relieve local unemployment. That, added to the other instances mentioned by my hon. Friend, illustrates the amount of additional expenditure in which local authorities may well find themselves involved because they have higher than average unemployment figures.

There is, however, another aspect of the question. If, in a local authority area, there is high unemployment, there is a correspondingly reduced ability on the part of the ratepayers to pay the local rates, at whatever level they may be, and it seems to me that there is a case for giving additional assistance to local authorities in that position, from this point of view, almost stronger than the case for giving them additional assistance because of the additional expenditure which they may have to carry out.

These are the general arguments. I should now like to deal with the specific way in which the additional assistance should be given, and how it should be calculated. During our debates in Committee a constant theme of the Undersecretary has been that we must, whatever we do, maintain parity between Scotland, on the one hand, and England and Wales, on the other, in the calculation of total Exchequer equalisation grant, and we have had considerable arguments as to whether or not the present position maintains parity between the two countries.

I do not propose to go over all these arguments again, but I want to draw the Under-Secretary's attention to the method which is outlined in the proposed new Clause for adjusting the Exchequer equalisation grant for Scotland because of higher than average unemployment, and to point out to him that this method does maintain parity between Scotland, on the one hand, and England and Wales, on the other.

What is proposed is that the weighted population which is used in the formula for calculating the Scottish total grant should be adjusted to take account of excess unemployment in Scotland in comparison with unemployment in England and Wales. I am not proposing, and the Clause does not propose, that the total Scottish unemployment should be added to the weighted population, because one would perhaps have an inequitable position. It is simply suggested that the additional Scottish unemployment over what the figure would be if our unemployment rate were the same as the rate for England and Wales should be added to the weighted population. It seems to me that this is a perfectly equitable way of making an adjustment to the formula.

What would this new Clause cost the Government? I calculate that, on the present unemployment figures, where the Scottish percentage is 5.2 as compared with the United Kingdom percentage, excluding Northern Ireland, of 2.7, the cost to the Exchequer might be about £1 million. But the important point is this. If the Government were to reduce the unemployment in Scotland to the same figure as exists in England and Wales, this proposed new Clause would not cost the Government a penny.

The new Clause, in fact, gives a financial incentive—apart from the other incentives—to the Government to reduce the Scotish unemployment figure to the level which exists in England and Wales. If the Government succeeded in doing this, it would not cost them a penny to have this adjustment to the formula written into the legislation.

Mr. John Brewis (Galloway)

Surely it is equally true of any amount spent on alleviating local unemployment like the recent measures in the Budget.

Mr. Millan

I am not sure whether that was meant to be a helpful intervention or not. I assume that it was. In fact, the hon. Gentleman is accepting my point. If the Government's policy succeeds in reducing unemployment the Government will save money, and I should have thought that that was an admirable principle for the Government to accept.

May I remind the Under-Secretary of the analogy with Clause 3? The Government are apparently concerned about rent levels and are introducing a formula for reducing Exchequer equalisation grant to local authorities if their rent levels are, in the Government's view, too low. The Government have pointed out that this would give an incentive to local authorities to raise their rent levels, and that if they raised their rent levels they would not lose anything under Clause 3.

If we employ the same sort of principle to this proposed new Clause—the only difference being that the Government's reasoning on Clause 3 is fallacious, whereas my reasoning is not—we find that there is a similar incentive on the part of the Government to get the Scottish economy much more prosperous than it is at present, and if this were to happen the Government would not have to spend any money under the new Clause.

When this matter was discussed in Committee, the Under-Secretary of State promised to consult the local authority organisations about the new Clause. In columns 497 and 498 of the OFFICIAL REPORT of the Standing Committee, he gave the most specific assurances that he would discuss these matters with them.

Two matters are involved. One is the alteration of the formula to increase the total sum coming to Scotland and the other is the alteration to take unemployment into the formula for the distribution of the total. That is a necessary counterpart to the new Clause of which I have been speaking. I understand, however, that my hon. Friend the Member for Central Ayrshire (Mr. Manuel) is specifically concerned with that, since he has put down an Amendment for the purpose of altering the distribution formula within Scotland.

The two matters of the total grant and the distribution formula were to be discussed with the local authority associations. I shall be interested to know the outcome of the consultations. I cannot imagine that the local authorities would wish to reject the kind of new Clause of which I have been speaking, because no local authority, whatever its unemployment position, could fail to gain under the new Clause. In so far as the total which comes to Scotland is increased, every local authority would be able to gain to some extent.

I hope that the local authority associations have told the Under-Secretary that they are in favour of the new Clause and that he will now accept it. I am heartened a little by what the hon. Member for Bute and North Ayrshire (Sir F. Maclean) said about the Government having given in on this matter, although there is nothing to that effect upon the Notice Paper. I take that to mean that the Under-Secretary will simply accept our Amendments. That would be a desirable outcome to our discussions. If the hon. Gentleman were to do that, he would give another example of the Government's determination to help to solve the unemployment problem in Scotland.

Mr. Forbes Hendry (Aberdeenshire, West)

It is true that in Standing Committee I spoke with conviction in favour of the new Clause. Since then, I have given the whole question careful thought—

Mr. Manuel

The hon. Member is now backing out.

Mr. Hendry

I supported the new Clause taken in conjunction with an Amendment proposed by my hon. Friend the Member for Bute and North Ayrshire (Sir F. Maclean). In considering the matter, I feel that I was to some extent wrong in the action which I took at that time. [HON. MEMBERS: "Oh."] It is only fair to explain to hon. Members opposite exactly why I have come to that view.

If there is a high proportion of unemployment in any local employment area, and if the local authority action to provide work for those who are unemployed, I may be wrong but it seems to me that the expenditure incurred by the local authority in doing that might rank for Government grant in one of two ways. It might rank for Government grant under the Local Employment Act, which could be to the great advantage of the local authority. At the same time, the expenditure would rank directly for equalisation grant by way of expenditure and not because of some hypothetical burden which might descend upon the local authority.

In view of that, it seems to me that on the general principle the local authority would get Government grant to compensate it for the extra expenditure which it is called upon to meet.

Mr. Manuel indicated dissent.

Mr. Hendry

Possibly, the hon. Member will explain where I am wrong. On the other hand, I agree, and I always have done, that a local authority might find itself burdened in another way under Clause 3.

Mr. William Ross (Kilmarnock)

Will the hon. Member tell me under what Act of Parliament the local authority gets 100 per cent. of its local employment expenditure met by grant?

4.45 p.m.

Mr. Hendry

I never said such a thing. Possibly, the hon. Member will have something to say about that. I think, however, that I am right in saying that any expenditure so incurred by a local authority would rank for equalisation grant. As far as I can see, it would also rank, provided that the local authority was in an appropriate area, for grants under the Local Employment Act. I have investigated this matter on behalf of certain local authorities in my constituency who are eligible for such grants.

I said that a local authority might suffer, because it might not be able to get the whole of its council house rants. In that case, it would suffer under Clause 3 of the Bill. It would, no doubt, be out of order for me to go into that subject at length at this stage, but my right hon. Friend the Secretary of State has put down an Amendment to Clause 3 which is designed specifically to deal with that very point. Taking these two sets of circumstances together, I consider that the Amendments which we are discussing and the new Clause in the name of the hon. Member for Kilmarnock (Mr. Ross) are not the best way of dealing with the situation.

When this matter was dealt with earlier, we discussed all sorts of ways of dealing with the problem. There was the great difficulty that Scotland might suffer as compared with England. If the new Clause which will be proposed later by my right hon. Friend the Secretary of State is passed by the Committee, and becomes law, Scotland will not suffer as compared with England.

My other objection is that the whole matter is purely hypothetical. There is no actual hard expenditure which would rank for equalisation grant under the Amendment or the new Clause. If, however, a local authority incurs expenditure, I suggest that it would be amply compensated by Government grants under different legislation from that which we are discussing.

Mr. Manuel

No doubt, other hon. Members as well as myself are greatly surprised at the contribution to which we have just listened from the hon. Member for Aberdeenshire, West (Mr. Hendry). Obviously, the hon. Member has only scratched the surface about Government schemes financed by local authorities and about the Exchequer equalisation grant. He has had the opportunity to look at the list of local authorities which are receiving grants. Many local authorities do not receive any Exchequer equalisation grant. Any local authority which is trying to bring forward a scheme to relieve unemployment and which is not receiving Exchequer equalisation grant will not have the opportunity of getting a proportion of the global sum of equalisation grant against that relevant expenditure.

On an earlier occasion, we had from the Under-Secretary of State quite a lecture—a most helpful contribution—about how the scheme operated, but the sweeping remarks of the hon. Member for Aberdeenshire, West are quite wrong. This whole problem has been dealt with fraudulently. There was a promise from the central Government to local authorities which undertook reclamation work or the clearance of derelict areas. We had a fraudulent presentation which did not mean the impression that was conveyed in the House.

I have read in my local newspaper of the great trouble that has been taken by one local authority in dealing with the Scottish Office—I do not want to read the whole correspondence, but I have it with me—concerning the Scottish Development Department and in attempting to get schemes of reclamation of the foreshore and derelict land. Mr. G. M. Fair, an official of the Scottish Development Department, wrote at length replying to the town clerk that the scope of the circular extended both to projects which would fall to be financed by local authorities themselves and to projects which would in the normal way be eligible for grant or subsidy.

If the hon. Member for Aberdeenshire, West accepts the Scottish Office circular he must accept this remark to the local authority. It would be better if the hon. Member for Bute and North Ayrshire (Sir F. Maclean) were to name the local authority than that I should, but I have here my local newspaper, and I have taken an interest in this matter. The town clerk replied to Mr. Fair: If I understand the position correctly the circular does not, in fact, infer any promise of new or additional financial assistance to local authorities in the distressed areas, but simply the expedition of existing departmental procedures. I am afraid that this will be received with disappointment. Mr. Fair replied, as reported on 8th February this year, repeating that the basic purpose of the circular was to enable local authorities in selected areas to bring forward a number of projects which, because of earlier capital investment limitations, might have had to be deferred for some time. It did not, as had been inferred, offer any new kind of financial assistance.

Mr. Hendry

Is the hon. Member suggesting that that expenditure would not rank for the equalisation grant?

Mr. Manuel

I said that there are many local authorities—and the hon. Member is bound to know this—which do not qualify for the Exchequer equalisation grant. Many of the authorities starting schemes of this kind will not qualify. We had quite a lengthy contribution from the Under-Secretary of State about this. I want to clear this up only because of the remarks that the hon. Member for Aberdeenshire, West made. All that we have been promised in new commitments by the Treasury is merely the bringing forward of schemes which would have been adopted anyhow. That is why I say that it is rather fraudulent.

I want to support the Amendment moved so ably by my hon. Friend the Member for Edinburgh, East (Mr. Willis) in his usual fluent and invigorating style.

and also the remarks of my hon. Friend the Member for Glasgow, Craigton (Mr. Millan). I want to devote my remarks to the Amendment we are considering dealing with weighting for unemployment. I can see no reason why unemployment should not be a weighting factor as well as the number of schoolchildren under 15 or the number of miles of road, or anything else, particularly when we are suffering from the harsh injustices of heavy and persistent unemployment in many areas. The Government ought to have looked at this. There are certain areas which are much more heavily hit by unemployment than others, and to aid such areas we think that weighted population should be increased by the number of unemployed persons registered at 1st February in the year immediately preceding.

Those words sound rather familiar. We debated this at some length along with our new Clause in Standing Committee. Like my hon. Friend the Member for Edinburgh, East, I wonder why the hon. Member for Bute and North Ayrshire (Sir F. Maclean) who was so much at one with us in the Standing Committee, has not got an Amendment on the Paper. He must remember that in Standing Committee an Amendment of his was debated along with our new Clause, and we were agreed on it. I am tempted to record one or two of the things said by hon. Members opposite. I have met local organisations, along with the hon. Gentleman, and he has been deeply concerned about unemployment not only in my area but in his area where I live. The Undersecretary of State rather slipped up on a certain understanding he gave us, and I certainly expected that the hon. Member for Bute and North Ayrshire would have put down an Amendment on Report. I discussed it with one or two of my hon. Friends. We thought that possibly he was out of the country, for he travels extensively, and that was the reason, perhaps, that it slipped his memory; or perhaps he was engaged in some military explorations. However, do not let us forget that the hon. Gentleman withdrew his Amendment in Standing Committee only because of a pledge he received—as we did. Many Members on both sides of the Standing Committee supported both the hon. Gentleman's Amendment and our new Clause. The Under-Secretary of State is not going to ride off from this today. My job today is, I think, to make certain that he toes the line and answers this debate very fully, and particularly about that promise. He realised in the Standing Committee that on that occasion he was going to be defeated and that was the only reason why he suggested in his best Highland manner—[HON. MEMBERS: "Oh."]—that he would consult the local authority associations—as a get out. He did it as a get out because he knew he would be defeated. The Tory Whip had slipped him a note—

Sir Fitzroy Maclean (Bute and North Ayrshire)

Will the hon. Member just say what he means by "his best Highland manner"?

Mr. Manuel

Well, it was—

The Chairman

Order. I think the Committee will be well advised to keep closer to the Amendment.

Mr. Manuel

I was merely thinking, Sir William, of the—

Sir F. Maclean

On a point of order. If an hon. Member uses a phrase surely it is in order to ask him what he means—

Mr. Manuel

Yes.

Sir F. Maclean

—even if it is rather contentious?

The Chairman

I accept that, but it must be borne in mind that we have a good deal of business to get through.

Mr. Manuel

All I meant was this, that the Under-Secretary's constituency borders the Highlands and he was meeting those very polite people who can give one a very nice answer at all times, and that is what he did. Highlanders are very good negotiators. I think that is a tribute I should pay them.

I would say to the Under-Secretary that he might play these games too often. We ought to have known. I rather blame myself. We ought to have known the outcome of this little manoeuvre in Standing Committee. I cannot possibly imagine how the local authority representatives turned down the formula in the new Clause—

Mr. Millan

Why is my hon. Friend assuming that they turned it down?

Mr. Manuel

I am hoping that the hon. Gentleman the Under-Secretary is less dishonest than my hon. Friend thinks he is. I am assuming—I agree, only assuming—that it was turned down because the Amendments before us indicate that the case we put up has not been supported by the local authority associations.

Mr. William Baxter (West Stirlingshire)

Would it not be of benefit to the Committee if the Under-Secretary would give us some indication whether or not, after his consultations with the local authorities, they were in agreement with the principle in this Amendment or were in disagreement with that principle? I think we are entitled to know that so that we can better proceed with the debate.

5.0 p.m.

Mr. Manuel

I assure my hon. Friend the Member for Stirlingshire, West (Mr. W. Baxter) that we shall certainly not depart from this until we have had the Under-Secretary's reply.

I cannot understand that they would turn down a proposition which would give an increased global sum to Scotland by way of Exchequer equalisation grant. From the contacts that I have, I know that the Ayrshire Burghs Association, which comprises seventeen burghs, among them the large burghs of Kilmarnock and Ayr, were completely unanimous. I could quote the correspondence on this, because they wrote to me and also took it up with the Scottish Office. What reply did the Secretary of State send to them when they were asking that our proposals be adopted? That is a large body of burghs—the whole of Ayrshire completely unanimous—and I am sure that this would infiltrate a little into the constituency of the hon. Member for Galloway (Mr. Brewis) that borders Ayrshire. I am very interested in all this. I want the Under-Secretary to explain what the Amendment meant so far as apportionment was concerned once the global sum was received. Did he really explain the formula embodied in our new Clause which would have meant, if he had accepted it, a sum going to Scotland additional to the present global sum? Did he explain that fully to the Association? He agreed that the matter must go before the local authority associations.

I wish that I had the opportunity of meeting these local authority associations and putting the case to them. I cannot imagine that they would not have accepted the proposition to which we devoted so much time and so many of our speeches in Committee. I am quite sure that they would have adopted the proposals. The Under-Secretary of State may think that he has been very clever. He has not really. He has only hastened the day when possibly there will be a rather big show-down between the local authorities and the Government, if they continue long enough in office and play this sort of game.

In Committee we had quite massive support. There was not a speech which I remember against the propositions contained in the Amendment or the new Clause. There was a little doubt perhaps by the hon. Member for Galloway, but he came down in support of them; he could not go against them. I do not want to quote his speech. The hon. Member for Galloway was fully satisfied and he came down in support of them. It was the consensus of opinion that we should have a weighting of the Exchequer equalisation grant dealing with unemployment. On the Government side, we had a speech supporting them from the hon. Member for Bute and North Ayrshire and the hon. Member for Aberdeenshire, West. The latter retracted today—back pedalled—but he said in Committee, dealing with this Amendment and new Clause, that we should help these areas of high unemployment by giving them more Exchequer grants. He said: I plead with my hon. Friend to look at this matter again before Report. If he does, he will save many of his loyal supporters from a great deal of embarrassment. I do not wish to discuss the merits of the case which has been well and truly made. No wonder the hon. Member has fled from the Chamber.

Hon. Members who, like myself, spent the weekend in areas where there is high unemployment appreciate the tremendous burden in relation to it which falls upon local authorities and the people in their areas. There we have what he said, and we have heard him today. I would also add in support the name of the hon. Lady the Member for Renfrew, East (Miss Harvie Anderson), the hon. Member for Galloway and the hon. Member for Aberdeenshire, West. Of course, as my hon. Friend the Member for Edinburgh, East mentioned, we had the final contribution from the hon. Member for Bute and North Ayrshire, who was so satisfied that the Government would do something that his final conclusion was: I was very glad to hear what my hon. Friend the Under-Secretary said. It will give him an opportunity for consultation with the Treasury. I hope that the discussion this morning will have strengthened his hand. I beg to ask leave to withdraw the Amendment."—[OFFICIAL REPORT, Scottish Standing Committee, 5th March, 1963; c. 493 and 501.] That is where we finished that. The hon. Member, along with the rest of us, has been completely let down by agreeing to the Under-Secretary's suggestion that he should discuss it with the local authority associations. He will be telling us later, as the hon. Member for Aberdeenshire, West did, that the local authorities can help themselves by setting up schemes to help unemployment which may get some grants. Very often a local authority has not the financial resources.

In the newspaper report that I mentioned, the town clerk writing to the Scottish Development Department was pointing out this very thing, that in an area so much depressed by unemployment the local authorities themselves have not the financial elbow room to start big schemes which could help to relieve unemployment in their areas. I hope that the Under-Secretary will give us the details very fully of his discussions with the local authority associations and give us the reasons for not supporting especially the new Clause which would have given Scotland more money. If they knew that and deliberately turned it down they were disloyal to Scotland, and I shall take every opportunity when meeting these people, no matter what their political colour may be, of telling them so in no uncertain fashion.

The Under-Secretary of State for Scotland (Mr. Gilmour Leburn)

In view of what has been said, particularly by the hon. Member for Central Ayrshire (Mr. Manuel), it might be helpful if I now try to answer the points so far put. I thought that it would be courteous to allow the three hon. Members speaking to these two Amendments and the new Clause to put their points of view before I intervened.

The effect of these proposals would be to increase the Scottish total of the Exchequer equalisation grants. In the first place, the grants would be increased directly by 5 per cent. for every 1 per cent. of registered unemployed in the year. I shall not go into the increases which would be given under the plan suggested by the hon. Member for Glasgow, Craigton (Mr. Millan). He described it as a more equitable one, but I understand quite clearly what he meant. On the other hand, the Amendment spoken to by the hon. Member for Central Ayrshire concerns mainly distribution.

Thus, the Amendments and the new Clause would entail an increase of the Exchequer equalisation grants going to Scotland. Unemployment is a very great evil and my right hon. and hon. Friends are just as concerned about it as any other right hon. and hon. Members. Of course, the Government have done a great deal and are doing a great deal, but I do not think that it would be appropriate for us to launch today upon a general debate on unemployment in Scotland.

What we are considering here is whether it is appropriate that unemployment should be taken into account as a factor when dealing with the Exchequer equalisation grants. However great an evil unemployment is, I do not believe that it has a massive effect on local authority budgets. They are now no longer responsible for such things as public assistance and, of course, are certainly not responsible for unemployment benefit. But what may make a significant difference are capital development and council house rents.

The present arrangements for Exchequer equalisation grants ensure that the grant paid to a local authority increases proportionately with its expenditure. I want to make that clear. This means that loan charges on additional capital investment undertaken to improve basic services and provide employment attract grant at the usual rate applicable to the local authority in question. Similarly, an increase in the housing deficit due to loss of income from rent through a rebate scheme for unemployed families or others with low incomes attracts grant, except, of course, in the case of a local authority which might have a reduction made under Clause 3.

This additional grant is not at the expense of other local authorities but is a further contribution from the Exchequer, since the amount of grant payable in total is not a fixed sum but a sum which varies in proportion to relevant expenditure in each year. In other words, the Exchequer equalisation grant increases as expenditure increases.

I really think that it is difficult to say that there is a case for any further general provision in the system designed to take account of unemployment. In particular, there must be no good case for giving additional weighting to unemployment in the calculation of the aggregate of the Scottish grants, but having said that, I want to make one qualification. It is true that there may be special difficulties for authorities which suffer reductions under Clause 3 but which have to allow a large number of rebates because of unemployment. I hope, however, that we will not discuss that point at the present time.

Mr. Ross

The hon. Gentleman is the only one doing so.

Mr. Leburn

But I wanted to make this qualification.

Mr. Ross

Why?

Mr. Leburn

Because I felt that it was a factor which must be mentioned. However, I do not wish to discuss it now, for we shall do so on Clause 3.

Now I want to turn to the question of the discussions I held with the local authorities. I believe that the outcome of these discussions gives me another very good reason for suggesting that the Amendment should not be accepted. As has been said, when we were considering similar Amendments in Committee upstairs I undertook to consult the local authority associations. As the hon. Member for Central Ayrshire suggests, I did this because of representations made—I go no further than that—by my hon. Friends the Members for Bute and North Ayrshire (Sir F. Maclean), Aberdeenshire, West (Mr. Hendry), and Galloway (Mr. Brewis) and also by the hon. Members for Kilmarnock (Mr. Ross) and Central Ayrshire.

5.15 p.m.

I saw the local authority representatives on 29th March and discussed with them the question of unemployment weightings in respect of both the total and the dis- tribution of the total. I assure hon. Gentlemen that there was no question of any manœuvre. There was no question of being very clever. If I say that it might be helpful or beneficial to consult the local authority associations, surely that is not a question of manoeuvre or of being clever.

Mr. Manuel

The hon. Gentleman will remember that at first he would not give way and that he told us so. It was only later that he manœoeuvred in order not to get beaten in Committee. He could avoid defeat only by giving way and saying that he would meet the local authorities.

Mr. Leburn

I may not be good at algebraic equations, but I can see as far through a brick wall as the hon. Gentleman can. It is perfectly usual for a Minister in Committee to discuss a point at length and then perhaps change his mind. If I look up the records I am sure that we will find that on more than one occasion during the Committee stage, having listened to further arguments by hon. Gentlemen, I changed my mind.

Mr. Willis

What the hon. Gentleman exercised his mind about was not whether or no he should accept the Amendment but whether he could find a way out of the difficulty he was in. He found a way out by suggesting that he would see the local authorities, not by accepting the overwhelming majority opinion in the Committee.

Mr. Leburn

Hon. Members opposite really have the most sinister suspicions in their minds.

Mr. Willis

We know the Tories.

Mr. Leburn

The local authority associations did not favour the introduction of a weighting for unemployment either in regard to the calculation of the aggregate or in regard to distribution. They felt that new factors tended to have unpredictable effects and led to pressure for even more new factors to be introduced. They did not think that an adjustment to equalisation grants was the way to tackle unemployment. I say that quite unequivocally. They came to this conclusion without any prompting from me. There was no question of my either manoeuvring or trying to be clever. I give the Committee that absolute assurance.

Dr. J. Dickson Mabon (Greenock) rose—

Mr. Leburn

I will give way in a moment.

In saying all this I am not suggesting that the local authorities were entirely happy with the present grant arrangements as they affect unemployment relief projects. They felt that they should have direct grants to projects undertaken to relieve unemployment. They made that point to me. As a matter of fact, they asked me if I would make that point quite clear in these discussions, and I am so doing. They made it clear to me that what they wanted was direct grants, but they did not think that unemployment was an appropriate factor which ought to be taken into account in the calculation of either the aggregate or the distribution of Exchequer equalisation grant. I hope that in these circumstances and in view of what I have said—

Dr. Dickson Mabon

I am glad that the hon. Gentleman added that second bit to what he said. Are we to take it —I want the hon. Gentleman to read his words again tomorrow—that the three associations said exactly the same thing, that they said exactly what the hon. Gentleman is now reciting, because, surely, there was some difference of opinion?

Mr. Leburn

My fair understanding of the matter is that the three associations were unanimous in what I have here recited.

Mr. Willis

All this is very interesting. Of course, it arose out of the discussion on the new Clause which centres around weighting. But, of course, the hon. Gentleman will appreciate that it does not apply to the first Amendment, which I moved. Therefore, all this about local authorities really has nothing to do with the first Amendment. That being so, I should now like the hon. Gentleman to address his answer to my first Amendment.

Mr. Leburn

The point is that, of course, I could not discuss the hon. Gentleman's Amendment with the local authority associations because I am pretty certain that at that time the Amendment was not, in fact, in existence or on the Order Paper. What I discussed with the local authority asso- ciations was whether the weighting for unemployment should be taken into account in the calculation either of the aggregate of the Exchequer equalisation grant or in its distribution, and I have tried to give the Committee an accurate account of the views of the associations. I am bound to be swayed—this is bound to affect my decision in the matter—but I believe that I have given perfectly strong arguments over and above that as to why I could not accept this Amendment or the other one, when we come to it, and I hope that the Committee will not press it.

Mr. W. Baxter

I was for years a member of the County Councils Association for Scotland, and I cannot understand how the County Councils Association could have consulted its members and given the hon. Gentleman its considered opinion when this Amendment was withdrawn only on 5th March to enable the hon. Gentleman to consult the associations. My experience of that body, of which, as I have said, I was a member, is that it would be quite impossible to get its considered opinion in such a short time. It may be that the hon. Gentleman met one or two members of the County Council Association, but for the life of me I cannot understand how he could have got the county councils' considered opinion.

Mr. Leburn

I really cannot tell whether the associations consulted their members or not, but if my memory serves me right, I met at least thirty people—their number might have been just over or just under thirty—when they attended this meeting. Whether or not they consulted all their members I would not know.

Mr. Ross

I do not know how my hon. Friends feel, but I was disappointed though not surprised at the hon. Gentleman's speech. He will remember what I said after he made his submission to his hon. Friends, under pressure from us, in Committee. I will remind him of what I said on 5th March: Now he proposes to discuss it with local authority associations, but he cannot promise us anything. I will promise the Committee something: when we are told about this later, the Government will have the comfortable majority of the whole House of Commons, including English and Northern Irish hon. Members. The Under-Secretary will not be faced with a relatively hostile and determined Scottish Standing Committee."—[OFFICIAL REPORT, Scottish Standing Committee, 5th March, 1963; c. 499.] I was surprised by the speech of the hon. Member for Aberdeenshire, West (Mr. Hendry). I was surprised at his temerity in saying what he did, although I am glad that he said something about the matter rather than just walking into the Division Lobby. Time after time in his speech he declared himself absolutely convinced of the Tightness of the principle put forward. Indeed, he went further than many of his own hon. Friends. He said in Committee that the new Clause and the Amendment went together, that the new Clause would give a greater aggregate in respect of unemployment and that the Amendment would give a fairer division in relation to unemployment. He further said that the principle was unquestionable. He spoke about unemployment in Ballater.

One of the weaknesses of the present position and the weakness of the hon. Gentleman's speech is the assumption that everyone gets Exchequer equalisation grant. With the financial burden of unemployment not being met at all, it means that those with seasonal unemployment are ruled out. This was the point which the hon. Gentleman made. Let him answer that one to himself in relation to the speech which he made today. He said there was no argument at all about it.

I note that the hon. Member for Bute and North Ayrshire (Sir F. Maclean) is muttering away on the benches opposite. I do not know whether he is in a hurry to get somewhere, but I can tell him that I am not going away. He will no doubt get an opportunity to make a speech. The hon. Gentleman divided one of his speeches into two parts. The first was the fact that the effect of unemployment would be to create a burden on the local authority. Now he tries to swivel out of it. I heard the hon. Gentleman say that he is now quite satisfied because his hon. Friend is going to do something about rent rebates.

Sir F. Maclean

I did not say anything of the kind.

Mr. Ross

We shall see what kind of speech the hon. Gentleman will make.

We have given two possible causes to the Under-Secretary in relation to what, to my mind, is absolutely essential—an increase in the global figure for distribution. There is one matter, of course, which he has not answered at all. It was the point made in the Amendment moved by my hon. Friend to increase by 5 per cent. in respect of over 1 per cent. of unemployment in Scotland. The hon. Gentleman said that that would cost £5 million. Is there any local authority in Scotland or local authority association in Scotland which would refuse an increase in the global figure of Exchequer equalisation grant for Scotland? Yet we are told that the hon. Gentleman discussed it with the county council associations and that they turned it down. I wish that I had been there to hear what was said. He must have put his case to them as unconvincingly as he has put it to the Committee today.

In actual fact, of course, before the hon. Gentleman went to the Scottish local authorities on this matter he had one other journey to make. But it was a journey that he would not even promise us that he would make. He could not offer the local authorities an increased total. He knows quite well that it is the Treasury which would do that. I should like to have heard what kind of discussions went on with the Scottish local authorities. I have no doubt that discussions took place, but I know quite well that the hon. Gentleman got the decision he wanted.

The whole Scottish Standing Committee was convinced about this matter, including hon. Members opposite who are now busy either running away or thinking out speeches which will give them another line of retreat. The Under-Secretary made his gesture and promised to do something about it because he could have been defeated in Standing Committee. The whole Scottish Standing Committee was convinced, and even the hon. Lady the Member for Renfrew, East (Miss Harvie Anderson) joined in the battle.

5.30 p.m.

The weakness of the equalisation grant at present is that we try to relate the rate burden in Scotland to that in England. We have had speech after speech from the Under-Secretary to say that we are a little better off because the rate burden per head of population is about £2 10s. less than it is in England and Wales. But the rate burden per head of the population does not mean a thing. In the calculation of equalisation grant we take into account the fact that it would be unfair to consider population alone and so we have weighted population—children under 15, and miles of roads and so on. What we are saying now is that there is another factor which must be taken into account —unemployment.

For more than twenty years, certainly since the war and long before it, unemployment in Scotland has been double that in England. There was a dramatic fall in the unemployment figures in England the other week, but there was no such change in Scotland. The headlines in the Scottish Daily Mail said that the tide had turned, but the tide will come back in and the tide of unemployment in Scotland always comes in further than it did the time before and never goes quite so far out, and it still further erodes what is left of Scottish employment every time it comes in. How far did the tide go out in Glasgow? There was a reduction in unemployment of 382; in Dumbarton, a reduction of 80; in Renfrewshire—I am sorry that the former Secretary of State for Scotland, the right hon. Member for Renfrew, West (Mr. Maclay) has gone and I am sorry that the hon. Lady the Member for Renfrew, East is not here, because the reduction of unemployment in Renfrewshire when the tide turned so dramatically was 33; the reduction in Ayrshire was 545.

All those are areas where local authorities are being urged by their Government to spend money to create employment. But if they spend money and part of it is not met by grant, no matter how small a part, there is an additional rate burden and that residual part is even greater if the global sum for division among local authorities is not increased. It has got to the stage where local authorities cannot afford expenditures which they would like to afford, because they cannot raise the rates. This was accepted by the hon. Member for Bute and North Ayrshire in Standing Committee and by every other hon. Member opposite. It is still true today and nothing has happened to unemployment in Scotland in the past two or three months to rob what we then suggested of its virtue. But the Government are prepared to do nothing and hon. Members opposite have changed and are prepared to allow the Government to do nothing. We still have 114,000 unemployed and it looks as though in Scotland we will enter the summer with what we used to think was a disastrous figure for winter unemployment. Hon. Members opposite should make up their minds about whether they want action from the Government.

The Under-Secretary said that unemployment was an evil. That was a change, because in Standing Committee he said that it was a scourge. He said that the Government were doing a lot. We can now see exactly how much they are doing and how much they have been doing when unemployment is double what it was 10 or 11 years ago. They are far too easily satisfied and here is a chance for them to do something and to get something more from the Treasury to help local authorities who would spend the money on public works. Hon. Members opposite have joined with us in pressing the Government for the implementing of schemes of public works run by local authorities. What restrains local authorities is the lack of Government grant.

The Government do a little. They have asked authorities in certain areas to proceed with schemes costing £15,000 or less and which could be started in a short time and finished in six months. I presume that they are all started, but we still have the highest April figure for unemployment for twenty-three years. The Under-Secretary said that he was not satisfied that unemployment was a relevant factor. I am satisfied that it is. Unemployment has a depressive effect on the whole area. It affects commerce and business. If the rateable value of shops fails, the income to local authorities is correspondingly lower.

The hon. Gentleman said that there were only factors. He said that one was local authority housing and rents and the other was capital expenditure. We accept capital expenditure, but is he saying that all the unemployed live in corporation houses? Do they not pay rates when they are living in private houses? What we are considering are not rents but the rate burden which is the sole criterion for equalisation grant. My hon. Friend the Member for Paisley (Mr. J. Robertson) got some interesting figures yesterday about the rate burden for corporation houses. I am sorry that the right hon. Member for Orkney and Shetland (Mr. Grimond) is not here. The rate burden of corporation houses in Shetland is about 3s. 2d., but in Kilmarnock, which is to lose £12,000 a year of equalisation grant by the Bill, it is 15s. 7d. That has to be added to the rent to get the burden. Kilmarnock and every other authority troubled with unemployment has to look twice at any expenditure.

The situation can be improved only by direct grant, but when have right hon. Gentlemen opposite ever done anything about direct grants? It was right hon. Gentlemen opposite who introduced the block grant for education and certain other expenditures, and authorities have to rely on the equalisation grant for other items although many of them get nothing.

If there is anything which is relevant to local authority expenditure or to a reduction in local authority income it is unemployment. We proved our case in Standing Committee and we have proved it again today. We have given the Government two choices, the Amendment or the new Clause. We are at the stage where we are prepared to accept anything from the Government, but we are not prepared to accept nothing. I hope that my hon. Friends will continue the debate to convince the Government that we want action on unemployment to enable local authorities to do everything they can to reduce the level of unemployment and the distress it causes.

Sir F. Maclean

In Committee upstairs I spoke with approval of the new Clause standing in the name of the hon. Member for Kilmarnock (Mr. Ross). If anything could make me change my mind on such an important question of principle it would be the hon. Gentleman's approach to this whole subject today. One says that one has to be grateful for small mercies. One of the small mercies for which I am always grateful is that it never fell to my lot to sit at the feet of the hon. Gentleman in any educational establishment. I cannot think of a worse fate.

Mr. Ross

I was glad never to be a soldier under the hon. Gentleman.

Sir F. Maclean

We both had lucky escapes.

The hon. Gentleman has not, and I am sure that he is glad not to have, the Highland manner to which his hon. Friend referred, certainly not if the Highland manner consists, as is sometimes said, in the desire to please. The hon. Gentleman certainly does not have that.

In Committee upstairs I thought that the hon. Gentleman's new Clause was complementary to the Amendment that I moved. I still think that that is the case, and I therefore propose to support it in the Lobby. Like other hon. Members on this side of the Committee, I am a great believer in incentives, and, as the hon. Member for Glasgow, Craigton (Mr. Millan) said, the new Clause provides an incentive to the Government to reduce unemployment in Scotland. I personally think that by the application of various incentives we have already achieved some measure of success in this respect. For instance, by constant badgering the hon. Member for Central Ayrshire (Mr. Manuel) and I have succeeded in getting an advance factory for the Kilwinning industrial estate. I also thought that the Budget went some way to meeting Scotland's needs, and I finally think that we have achieved a partial success at any rate with my hon. Friend the Under-Secretary of State for Scotland in the shape of the Amendment standing in the name of his right hon. Friend.

Although in his speech my hon. Friend did not seem to accept the fact, the Amendment seems to recognise that an additional burden is inevitably placed on local authorities by the existence of high unemployment in their areas and I do not see how my hon. Friend can argue to the contrary. In my constituency there is no doubt that apart from the whole question of rent rebates, which we discussed in Committee upstairs and which seems to have been met by my right hon. Friend's Amendment, there are other expenses which inevitably fall on local authorities in areas where there is a high rate of unemployment. In my constituency, and in that of the hon. Member for Central Ayrshire, the local authorities have gone to great trouble and expense to try an all-out campaign to reduce unemployment and to attract new industry to the area.

I said a short time ago that as a Tory I believed in incentives. I also believe in keeping down Government expenditure, and it seems to me that with any luck this new Clause will have that effect too, in that if unemployment is really reduced —and we have been told by successive Secretaries of State for Scotland that they will not rest until unemployment is brought down to the United Kingdom rate—there will not be any additional expenditure involved and everybody will be pleased. Therefore, for these reasons, and in spite of the offensive approach of the hon. Member for Kilmarnock which I shall not call a Lowland approach, because Lowlanders are just as kindly and anxious to please as Highlanders, I propose to vote for the new Clause.

5.45 p.m.

Miss Margaret Herbison (Lanarkshire, North)

I congratulate the hon. Member for Bute and North Ayrshire (Sir F. Maclean) on his decision to support the new Clause because his decision is in line with what he said in Committee upstairs. I was not a member of that Committee but I was sufficiently interested in what was happening to read its proceedings.

I am surprised that the other critic of the Government, the hon. Member for Aberdeenshire, West (Mr. Hendry), has decided today that he cannot support the new Clause. His decision surprised me after I read what he said in Committee, but I was even more surprised after reading an article written by the hon. Member in the Inverurie and District Advertiser of 15th March, 1963. Speaking about the Bill, and about the new Clause, he said: Several other members, including that formidable fighter, Sir Fitzroy Maclean, said much the same thing, and to save himself from being defeated on a vote, Mr. Leburn had to give in. I am glad that that formidable fighter is still a fighter and willing to stick to what he believes should be done to help local authorities in areas of high unemployment. But the hon. Member for Abardeenshire, West, no doubt because he had received a number of letters from constituents, felt that he had to make a further explanation in his article, and he went on to say: A lot of burghs, such as Ballater do not get any of this money, because they have high valuations and so are not supposed to need it. Some of us, and indeed after the debate most of us, thought that the number of people unemployed, especially in the winter, should be taken into account. That would mean the Treasury finding more money and that is a thing they hate doing. I suppose the Treasury still hate doing it now, a month after this article was written, but something has made the hon. Gentleman change his mind. He went on to say, and this is printed in heavier type: It is only by putting very severe pressure on the Government that a bit more can be squeezed out of the stony-hearted keepers of the nation's purse. Where is that pressure today? What has happened to the hon. Gentleman's courage? It seems to have evaporated completely. He is willing to let the Government go ahead now, even though he said in that article that the Undersecretary of State for Scotland was afraid of being defeated and had therefore decided to reconsider the new Clause. The hon. Gentleman said in his article: We were convinced that we were demanding justice for our constituents, and that is why we used such strong measures. What has happened to that conviction? Where has it gone?

Mr. Hendry

I think the hon. Lady will agree that it would be out of order at this stage to mention my right hon. Friend's Amendment in Clause 3, which makes a great difference to the situation.

Miss Herbison

The hon. Member ought to know that the Government Amendment to Clause 3 will do little to compensate areas of high unemployment. This seems to be just a get-out or a face-saver for his having changed his mind. This mild Government Amendment helps so little that it is negligible. I hope that the hon. Member will have second thoughts about the matter before we vote upon it.

He seems to know a great deal about the present Chancellor and future Chancellors, because in this article he went on to tell us what my hon. Friend the Shadow Chancellor had been saying, and to frighten the people of his constituency by saying: Not only stocks and shares and money in the bank but homes and furniture will all have to be returned to the Socialists' inquisitors. He delves right down to the bottom of the sewer, trying to get some credit for his Government and to denigrate the Socialist Opposition. He will discover, as he discovered elsewhere, that the Scottish voters are intelligent people and that the further he delves into the sewers the less support he will get from those people. I am certain that that will be made plain to him in West Aberdeenshire in the next election.

Unemployment in Scotland is now very serious. My hon. Friend the Member for Edinburgh, East (Mr. Willis) drew a comparison between the unemployment situation in April, 1963, and April, 1951-—the last year of the Labour Government. Today in Scotland there are still 114,199 men and women unemployed. But that is not the whole picture. There are far more men unemployed than there are women—6 per cent. of the men as against 3.8 per cent. of the women. In the majority of cases the men are the people who provide the money to run the home.

There has been much talk about rent rebates. The Government Amendment to which I have referred deals only with that question. There is a very high rate of unemployment in my county of Lanark, and there are many people who receive no rent rebates but who are given rate relief. I do not know how prevalent this practice is in other areas, but it is the result of unemployment. The rent rebate Amendment that the Undersecretary will later move will not help those people at all. The situation obtaining in areas of high unemployment requires the acceptance either of the Amendment or the new Clause in the name of my hon. Friend the Member for Kilmarnock (Mr. Ross). In April, 1951, we had 54,667 people unemployed. That means that in the last year of the Labour Government we had only 47 per cent. of the number of unemployed that we have in April, 1963—after twelve years of Tory Government. I hope that the people of West Aberdeenshire will note that fact.

I want to make a last quotation from the hon. Member's article. In it he was trying to save his face. He went on to say: But the vital thing is that we should be unwavering in our loyalty to the Unionist Party, which is the only possible alternative to the horrors of Socialism. Yet in 1951 the figure of unemployed was only 47 per cent. of what it is today. If these are horrors, I know that the unemployed people in my constituency would rather be living with those horrors of 1951 than in the circumstances of 1963. The hon. Member went on to say: The only way to avoid such a disaster is to work for the return once again of the Unionist Party, which through good times and bad, has kept the country prosperous and free. Prosperous? Is Scotland prosperous today, with 114,000 of its good men and women unemployed? It is shocking for an hon. Member so to underestimate the intelligence and the sense of decency and fair play of the Scottish people that he should think that such a statement can be accepted by anyone there.

Mr. Manuel

I bet the hon. Member wishes that he had not written that article.

Miss Herbison

I ask the Undersecretary to pay no attention to any loss of support from a Member who can write such an article. I ask him to pay more attention to the hon. Member for Bute and North Ayrshire, who at least has the guts and the courage to stick to what he believes will help areas of high unemployment. I hope that the Undersecretary will accept either the Amendment or the new Clause in the name of my hon. Friend the Member for Kilmarnock. Let him not turn down both.

Mr. John Robertson (Paisley)

I agree with the Under-Secretary that none of these Amendments will provide a solution to the unemployment problem. No one on this side of the Committee has suggested that it would. I also agree that this method of increasing the amount of equalisation grant coming to Scotland is not an ideal one. But we are faced with the difficulty that this is now the only method left to us. We must try to increase the amount of money that Scotland is getting in order to make up for what she has been losing for many years.

The amount of money that has been lost to Scotland is not £5 million; it is about £30 million. That is what Scotland would have had if the principles surrounding the equalisation grant had been properly applied. I must correct my hon. Friend the Member for Kilmarnock (Mr. Ross). In 1961, the rates levied per head of population were higher in Scotland than in England—£18 1s. per head as against £17 4s. per head in England. Even then the equalisation grant paid to Scotland did not achieve its purpose.

The ability to pay rates should have an effect upon the amount of grant paid to any part of the British Isles. The existence of unemployment in any area is obviously a good reason for channelling the grant into that area. The Under-Secretary was telling us that increases in expenditure mean increases in grant. Good gracious! We cannot believe that, after reading last week how the Scottish Office slashed the school building programmes of all the education authorities. The Scottish Office effectively controls expenditure. It has always been notable that, per head of population, the expenditure of Scottish local authorities has been singularly less than that in England and Wales.

The remarkable fact is that the English counterpart of the Scottish Office is far more lenient, shall we say—more realistic, perhaps—than is the Scottish Office. It is not good enough to tell us that we get more grants if we spend more money. There is a rigid control over the money that Scottish local authorities can spend.

6.0 p.m.

I should imagine that, as my hon. Friend the Member for Kilmarnock has said, where there is a depressed area and a high figure of unemployment the resources to pay rates are much less. Do not forget that as well as the numbers of unemployed it is necessary to bear in mind that there are other people, not registered as unemployed, who work a considerable amount of short time. It is also relevant to this argument, quite apart from anything else, to remember that even people who are working receive considerably less remuneration than people working south of the Border. Obviously, therefore, where there is a high rate of unemployment and a considerable amount of short-time working the people are less able to pay high rates. But in Scotland the rates are significantly higher than in England and Wales.

Let us dwell for a moment on the question of the distribution of the equalisation grant. During the Committee stage proceedings we got some figures from the Minister about the amount of grant per head of population paid in England and Wales compared with what was paid in Scotland. This is a good way to measure the matter only if the Minister accepts the premise that Scotland has resources equal to those of England, and that is nonsense. Where does the money go when it is distributed in England? It goes to the depressed areas, to the North, to Wales and to the south-west of England. If the Minister would care to check the figures—they are available for England and Wales; they are, of course, never available for Scotland—he will find that the equalisation grant in the non-county boroughs and the counties in the north of England is equivalent to 35 per cent. of the rating values. In Scotland, the large burghs and the industrial counties receive 16 or 17 per cent.

The significant point is that Scotland, and hon. Members representing Scottish constituencies, should not come begging for this money. It is theirs by right, and by this method. I agree with the hon. Gentleman on that, so far as it goes. But I cannot think of any other way, when dealing with this Bill, of getting a little more to help the Scottish ratepayers. Local authorities cannot undertake the extra jobs that require to be done in Scotland because Scotland needs a "face lift". More money is needed to be spent by local authorities. That is self evident and does not mean arguing.

But the authorities cannot undertake this work because of the burden of the rates. That burden is far higher in Scotland than in England and already it is as high as people are prepared to accept, at least without protest. Any local authority which undertook extra work which resulted in the rates being increased would be faced with a problem at election time. After all, local authorities and councillors are no different from Members of Parliament like, let us say, the hon. Member for Aberdeenshire, West (Mr. Hendry). Obviously, the hon. Gentleman was making an electioneering point. Local councillors have to face the electors and they cannot afford to carry out work unless there is an extra Government grant forthcoming to meet the cost of it. I cannot see local authorities even considering doing work in the present circumstances.

It may well be, as the Secretary of State said recently, that the Scots will have to help themselves more and not always be running to the Government. Are we to pull ourselves up by our bootlaces? It is obvious that we must get some help. It is relevant to the distribution of Government grants, both general grant and equalisation grant, that the areas with which we are dealing should have a high unemployment figure. The hon. Gentleman did not deal with the point at all. If he was speaking theoretically of the best way to deal with the equalisation grant I might agree with him. But we have to deal with the situation as it is today and he brought forward no proposals for increasing the amount of the equalisation grant coming to Scotland, although he could easily have done so. To suggest that discussions with the associations of local authorities in Scotland had convinced him that they had agreed to consider the number of unemployed as a weighting factor in the distribution of the equalisation grant, is preposterous. His first job was to see the Treasury. But the hon. Gentleman has given no indication that he has seen the Treasury.

Hon. Members representing Scottish constituencies are often accused of being slightly nationalistic and parochial in their outlook. In relation to Exchequer grants to local authorities, I have never come across a more nationalistic and parochial outlook than that adopted by English Ministers who simply refuse to give us the money that we should have. The fact is that if there is to be any equity in the distribution of the grant at all, Great Britain must be considered as a whole.

The resources of Scottish local authorities must be compared with those of English authorities. If that were done in the way in which it should be done, the total amount paid at present in rate deficiency grants and equalisation grants would almost all—80 per cent. of it—go to Scotland. That is a measure of the state of poverty of Scottish local authorities. That, again, is the burden imposed on Scottish ratepayers.

The Under-Secretary and his right hon. Friend have made a poor job of putting across the case for Scottish local authorities. If they consider that they want more assistance to convince the Treasury that more Government grants should go to Scotland, we will see whether we can arrange something. They have not done a good job. I would not mind had they admitted defeat. But to tell this Committee that Scotland is receiving her fair share of grant is too preposterous for words. Obviously, unemployment affects the ability of Scottish local authorities to carry out their ordinary jobs. Where it is persistent, and on a high level, it should become a weighting factor in determining not only the internal distribution of grant in Scotland, but also the global sum.

We shall be dealing later with another aspect of determining what the global sum should be, but there can be no good argument against the new Clause in the name of my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) or the Amendment moved by my hon. Friend the Member for Edinburgh, East (Mr. Willis). Whatever any local authority may think about the method of distribution of the global sum—and I may be prepared to agree that some difficulty may arise there—I cannot imagine them seeing any difficulty about increasing the size of the global sum.

I suggest that the Under-Secretary should not come to the Committee and apologise time after time for his right hon. and hon. Friends of the Treasury. He should go back and fight for more instead of making excuses which are quite unacceptable.

Mr. Hendry

I am grateful to you, Sir William, for calling me again, because I think it only fair that I should be called in view of the attack which was made upon me by the hon. Member for Lanarkshire, North (Miss Herbison). It is true that I wrote an article containing the passages which she read to the Committee, but I suggest to the hon. Lady that she read them completely out of context.

Miss Herbison

No.

Mr. Hendry

I think that the hon. Lady will find that the tenor of the article was that very often pressure caused the Government to change their policy when that was a good thing to do. I then contrasted criticism of the Government on lines of that sort with the alternative, when I spoke of "horror", and pointed out that in sum total we must support our party.

Miss Herbison

That is exactly what I quoted.

Mr. Hendry

Let us see what effect the pressure brought by my hon. Friend the Member for Bute and North Ayrshire (Sir F. Maclean) and I in Committee had, The effect was that the Minister went to the local authority organisations and obtained their view and then went to the Treasury. At least, we presume that he went to the Treasury, and had a great amount of success there. Otherwise, he could not have put down the Amendment to Clause 3, which it is not in order for us to discuss at the moment, but which, I suggest, is a very great triumph for my hon. Friend.

Mr. Millan

If it is a great triumph for the hon. Member for Bute and North Ayrshire (Sir F. Maclean), is it not extraordinary that he should be supporting our Amendment?

Mr. Hendry

I am not speaking for my hon. Friend, but for myself. I think that right and proper. I expressed the opinion that it was a triumph, not for my hon. Friend the Member for Bute and North Ayrshire but for the Under-Secretary. I still think that it was a triumph for him to produce that Amendment, but it would not be in order for us to discuss it now. Therefore, I say no more about it.

Quite apart from that, my hon. Friend got the advice from the local authority organisations that they did not want unemployment raised as a weighting factor in connection with equalisation grant. Why they came to that decision I do not know, but they are responsible people. Hon. Members opposite frequently press the Under-Secretary to consult those organisations. Having consulted them, he has, very rightly, acted upon their advice.

There is only one thing which concerns me very deeply about this whole matter. It is that some local authorities do not qualify for the equalisation grant. The hon. Member for Central Ayrshire (Mr. Manuel), who, I am sorry to see, is not now present, gave a very unfortunate example. He spoke of local authorities which, I understand, do qualify for the equalisation grant. If a local authority has a high level of unemployment, and incurs substantial expenditure in trying to meet the position, the chances are that it will qualify for the equalisation grant as the law now stands.

6.15 p.m.

Mr. Harry Gourlay (Kirkcaldy Burghs)

I refer to the first speech made in this debate by the hon. Member for Aberdeenshire, West (Mr. Hendry), when he was discussing the merits of the Amendment moved by my hon. Friend the Member for Edinburgh, East (Mr. Willis) and the new Clause which is in the name of my hon. Friend the Member for Kilmarnock (Mr. Ross).

The hon. Member for Aberdeenshire, West seemed completely to miss the point, because the basis of that Amendment and the new Clause is to seek to attract more money to Scotland, whereas the points he made dealt with redistribution of the existing Exchequer equalisation grant in Scotland. While we welcome the subsequent Amendment in the name of my hon. Friend the Member for Central Ayrshire (Mr. Manuel), which will have the effect of altering the distribution, we are principally concerned at this stage with increasing the amount of money to be attracted to Scotland if the Amendment and the new Clause are accepted.

As my hon. Friend the Member for Kilmarnock (Mr. Ross) said, the speech of the Under-Secretary was not surprising, but none the less all the more disappointing. The hon. Gentleman said nothing new on this problem, which we discussed at great length in Standing Committee. He dealt very sparsely with the arguments advanced for increasing the amount of grant coming to Scotland. He paid lip service to the sad position arising from unemployment in Scotland and said that it was a great evil about which all his hon. Friends were very much concerned. He went on to say that the Government have done a great deal to alleviate the unemployment position in Scotland.

In the areas which I represent, and which have been scheduled as development districts since 7th May, 1962, not a single new job has come about. If we are to regard that as the measure of the Government's ability to help the employment position in Scotland, it is a miserable record and we have no fear of a General Election. In fact, we would welcome one next week, for then we could take control and show exactly what should be done.

The Under-Secretary went on to suggest that unemployment was not a good subject as a factor in the calculation of Exchequer grant. He referred to the fact that local authorities are no longer responsible for Public Assistance or unemployment relief, but, as my hon. Friends have indicated, the whole basis of living in such an area is altered when there is high unemployment. Shopkeepers feel the draught because of the smaller amount of spending power in the area. Those still in employment are always looking over their shoulders wondering when their turn will come to sign on at the employment exchange. The amount of spending power in the area goes down considerably, and shopkeepers have to close down their businesses.

There are very good reasons why unemployment should be regarded as a factor in the calculation and the distribution of the grant. The Under-Secretary said that he had had consultations with the local authority associations. I wonder exactly what proportion of the total number of persons present in those negotiations—he said that 30 were present—were elected representatives. I should guess that it was a very small proportion. I wonder to what extent those who were elected representatives had the opportunity of discussing their views on these two particular points.

I cannot imagine any member of my local authorities, whether on one side of the council chamber or the other, refusing to accept additional income for Scotland for redistribution. I therefore am at a great loss to understand the reasons which the elected representatives could advance to the hon. Member that our proposals were completely unacceptable. I am afraid that the local authorities' full-time officials, for some reason or another best known to themselves, have persuaded the hon. Member not to accept these proposals.

Hon. Members may wonder why I am supporting the Amendment, because at present my authority does not receive any equalisation grant. The effect of both the Amendment and the new Clause is to increase the amount of money going to Scotland, and under present circumstances this would be of no immediate benefit to my local authority. As I have pointed out on many previous occasions, this situation arises from the revaluation which took place in 1961. The Fife and Dunbarton county assessors used a basis of valuation completely different from the other Scottish assessors.

From figures circulated in the OFFICIAL REPORT yesterday by the Secretary of State for Scotland, we find that, as a result of revaluation, Kirkcaldy has the highest average rate burden per local authority house of any authority in Scotland with the exception of the City of Glasgow and the Burgh of Clydebank. The average rate burden per local authority house in Kirkcaldy is 16s. 8d. per week. In Dunfermline, it is 16s. 9d., and in Dumbarton 16s. 6d. When we compare those figures with the lowest average rate burden per local authority house in Scotland we come to Wick, with a weekly rate burden of 6s., Caithness with a weekly rate burden of 5s. 4d., and Orkney, which is down to 3s. 2d.

In the document circulated by the Secretary of State in January of this year, giving the rent levels of local authorities as at November, 1962, we find that the lowest weekly average rent of a municipal house in Scotland is in Orkney at 5s. 9d. a week. This gives a total weekly average payment for the local authority tenant in Orkney of 8s. 11d. per week. No wonder the right hon. Member for Orkney and Shetland (Mr. Grimond) does not require to attend the Committee today to defend the position under the Bill. When we compare this figure with that for Kirkcaldy, we discover that the average tenant in a municipal house in Kirkcaldy is paying 16s. 9d. in rent and 16s. 8d. in rates, a total of 33s. 5d., possibly the highest weekly average payment of tenants throughout Scotland.

We discover that in Orkney the Exchequer equalisation grant received is equivalent to 85 per cent. of the total relevant expenditure, whereas Kirkcaldy receives no Exchequer grant at all. The average gross annual value of the local authority house in Orkney is £22 as opposed to the gross annual value in Kirkcaldy of £54.

I suggest that we get the assessors in Orkney and Fife to exchange places at the next revaluation and see whether they cannot help to iron out the anomalies which have arisen from the recent revaluation. They are very pertinent to the argument before the Committee, because valuation plays a great part in the distribution of the Exchequer grant and would also play a part in the distribution of the additional money if the Amendment and the new Clause were accepted.

We must bear in mind the effect of unemployment in these areas, where the average earnings are about £8 to £10 a week. This is a very low wage. When we bear in mind the various deductions from wages we see that the take-home pay is very low, particularly in the linoleum industry, which is going through a very bad period at present. The hon. Member knows the position and he must realise that as a result of closures about 600 people may become unemployed. Kirkcaldy will have a tremendous problem of trying to attract new industries to employ the large number of people who are unemployed, but no additional money is coming to the local authority so far by way of additional grant to help it in its task of seeking new industry.

At the same time, the Minister has been persuading the various local authorities to undertake other schemes of not more than £15,000 to create employment. My authority is having to undertake schemes without any grant, and this does not give encouragement to the authority to extend this additional type of work. I suggest to the Under-Secretary of State that he should be as bold as he was on the previous discussion and again change his mind. He should speak up for Scotland and give the local authorities the additional money which they so richly deserve.

Dr. Dickson Mabon

I am delighted to intervene in the early stages of the debate, for I have no doubt that the hon. Members for Galloway (Mr. Brewis) and Renfrew, East (Miss Harvie Anderson) will want to speak. We had the four rebels on the other side in Committee. Let us be fair to them; they exacted from the Under-Secretary of State the facilities for this debate, because we should perhaps have had a vote in Committee, and perhaps the Chair would not have selected the Amendment in that event, if it had been tabled again. Perhaps that would have been an end of the matter. One of my hon. Friends suggests that we should have won the vote, and I am of the same opinion as, I think, is the Under-Secretary of State, although he denied it today and said that he wanted genuinely to consult the local authorities.

This is my first complaint: if this is consultation with the local authorities, then I shall never again listen to this argument in Committee, because I believe that we have heard a completely fraudulent position expounded. Let us look at the procedure. The Under-Secretary of State, under pressure—he admitted it himself in his second or third speech in Committee—with four declared rebels, admitted to the Committee that perhaps he might think about the matter again and that he would call together the local authority associations. That was on 5th March. By the end of March the conference had taken place, and the Government had their Amendment on the Order Paper before we rose for the Easter Recess when our debate was scheduled to take place. Another matter arose and the debate was postponed until tonight.

It therefore follows that if we had the promise of 5th March and all these things followed, it must have been very quick consultation. I know that the Corporation of Greenock was not consulted for its views in these matters. Being the second largest burgh in Scotland, and having suffered, and still suffering, from possibly the highest level of unemployment in the United Kingdom, we ought to have been consulted on a matter such as this.

My hon. Friend the Member for Glasgow, Central (Mr. McInnes) asks why we were not consulted. I do not know. This is indeed the question which I am about to put. Will the Under-Secretary of State tell us, not just for the sake of the argument on this Amendment but for the sake of any future argument on any subject which involves consultation with local authorities, exactly how this procedure operates? My feeling is that this so-called conference with local authority representatives was made up of men who were not mandated to discuss anything. In fact, I go further and say that these men did not understand what they were discussing. I therefore submit that the Under-Secretary of State either did not appreciate that fact or else he took these innocent lambs to the slaughter.

The first proposition which they were asked to discuss was that the total grant coming to Scotland should be larger because of Scottish unemployment. I still find it incredible that a group of 50 Scotsmen, of whatever political party or in whoever's pay they might be—the town councils', big business, trade unions or anything else—would say that Scotland needs no more money to relieve unemployment. That was a stupid argument for hon. Members opposite to advance.

6.30 p.m.

I ask the Under-Secretary a straight question. Did he invite the local authority associations to consider the proposition that, because of the high unemployment in the development areas of Scotland, it was reasonable that the Government should increase the total amount of Exchequer equalisation grant going to Scotland? There are two points to be discussed—the total grant and its distribution. I do not deny that the Scots are an argumentative lot. They tend to be anxious to look after their own communities. I regard this as a virtue, not a vice. I could understand the Under-Secretary saying to us, "They fought among themselves about the distribution". I concede that they could arrive at a complete deadlock over the system of distribution among themselves, but I am not prepared to accept that the representatives of the local authority associations refused an increase in the total grant.

I should like the Under-Secretary to give us the answers to these questions. What was the date of the meeting? Who were the representatives? Did they have a mandate? Did they discus this specific point? The Under-Secretary may recall that I interrupted his speech earlier in the debate and asked him if the words he was using were the exact words of unanimity that the meeting adopted. This will be an important post mortem in the history of consultation between the Government and Scottish local authorities. Few of us will rest until we get to the bottom of what happened at this meeting. Never since Sir Anthony Eden met the French Prime Minister has there been a more peculiar meeting to decide a very important matter.

The hon. Member for Aberdeenshire, West (Mr. Hendry) has twice given us an apologia as to why he has shifted his ground. Even the hon. Gentleman is wondering what happened at this meeting. In Standing Committee the hon. Gentleman said this about unemployment: Previously hon. Members opposite tried to relieve it"— that is, the problem of unemployment— by adjusting the rents of local authority houses. I was not convinced that that was the right way to proceed. I am sure that if there is a burden the burden should be relieved by a measure which will benefit the general body of ratepayers and not a selective body like housing scheme tenants."—[OFFICIAL REPORT, Scottish Standing Committee, 28th February. 1963; c. 466–7.]

This is a fundamental point. The hon. Member has shifted his ground completely, but I do not know why. I could not quite follow his argument. I could not understand why he was so persuaded. However, this was his assertion. It was an assertion in complete contradiction to that made by the Under-Secretary. This is a matter into which I went in some detail during the Recess. I went round various parts of my constituency and compared the changes in valuation and the changes in rate burden of unemployed tenants in different houses. We have quite a selection of unemployed people to choose from. The Under-Secretary's argument was, "Let us not give relief by reducing the loss of Exchequer equalisation grant because of unemployment, because unemployed live not only in council houses but in all kinds of houses". The hon. Gentleman said in Standing Committee: There are unemployed also in owner-occupied houses and in tenanted houses privately owned. This proposal does not take into account the financial circumstances of those people who are living in houses which are either owner-occupied or tenanted and privately owned."—[OFFICIAL REPORT, Scottish Standing Committee, 19th February, 1963; c. 313.]

This is a most peculiar argument. I have tried to follow it as loyally and faithfully as I can to see where its body of substance lies. I still do not appreciate it. If a local authority, because of unemployment, spends money and is compensated to some extent by various direct grants from the Board of Trade or elsewhere, no one denies that the local authority, because it has spent this money, even though it has received grants, still has a deficit on that expenditure. It still has to raise money from its ratepayers. If it has to raise money from its ratepayers, the question whether there is a deficit in the housing account of this size or that size is irrelevant. The fact is that all the ratepayers in the town have to find the extra finance.

Where I believe the Under-Secretary is confusing himself is that he is not seeing that, although the Bill is designed as a negative mechanism by which to raise rents, it also effects the—even to his mind—admirable town councils which raise rents to the level he wants. If they have unemployment and behave exactly as he wants them to behave, he still penalises them by being unable to recognise the argument about unemployment and the concession on Exchequer equalisation grant. If my town council does exactly what the Under-Secretary wants, it loses £13,000 in Exchequer equalisation grant. If we do not do what the Under-Secretary wants, we still lose £13,000 in Exchequer equalisation grant. Therefore, it does not matter. It is an internal affair for Greenock to decide about its rents, because of the way the Government have constructed the Exchequer equalisation grant.

This concession on unemployment is relevant. I do not care how small it is—we need the money, and we want the money. We think we are entitled to the money, because there are ratepayers in my town who are being asked to carry a national burden. The Under-Secretary argues that if one wants to help an unemployed man who has a high rent and who lives in a council house the best thing to do is to ask the other council house tenants to pay for it. That is the logic of the Under-Secretary's argument. He now takes it a step further and says that in a town where there is unemployment all the ratepayers must join in helping the unemployed and that Bournemouth can escape. Was not the idea of the Exchequer equalisation grant that local authorities which are well off can be balanced against local authorities which are badly off? Bournemouth was the great example which was always cited.

This is a breach of that principle. By deceiving the Committee upstairs into accepting that he was genuinely going to consult the Scottish local authorities and, through the associations, find the popular opinion among the town councils, he has done a grave disservice to his own country.

I should like the Under-Secretary to answer one last question. Did the Scottish Office, either his right hon. Friend or himself, take this matter up with the Treasury? I repeat what my hon. Friend the Member for Kilmarnock (Mr. Ross) said. Did he take this matter up with the Treasury? If he did not, how could he have discussed it with the local authority associations? If he did, will he confirm again that the local authority associations refused an increase in the total Exchequer equalisation grant to Scotland?

Mr. Leburn

I think that I clearly see the difference there is between myself and certain other Members of the Committee. There has been a great deal of discussion about unemployment in Scotland. I make no complaint about that. However, the weight of the discussion, as I see it, is that suggestions have been made that the Government are not doing sufficient to relieve unemployment for Scotland. I shall not say at this stage whether I agree with that or not. I believe that this is a matter which could more appropriately be dealt with during a debate on unemployment generally.

I want to say this, in passing. While it may be that unemployment in Scotland is double that in the rest of the United Kingdom and while it may be that a great deal must be done to alleviate the evil of unemployment, I believe that in the last few weeks and months great things have been done. I have not gat all the facts and figures before me and I shall not recite or rehearse a catalogue of what has been done. Hon. Members opposite know just as well as I do that a great many things have been done and very important announcements have been made in the last few days and weeks. I can count up in my head about £30 million additional money committed for Scotland within a comparatively short time.

It may be that extra grants, be they direct or otherwise, have to be given. My right hon. Friend the Chancellor of the Exchequer during his Budget speech made a very important announcement as to additional grants being made available for the clearance of derelict sites. This is the sort of grant. [HON. MEMBERS: "Oh."] It is absolutely true. They are going up from 50 per cent. to between 85 and 90 per cent. It is up to the local authorities to submit their schemes and I will encourage them to do that.

Miss Herbison

If the local authorities put up schemes and the Treasury decides that too much money would be used, will every local authority be told that their schemes cannot be proceeded with, just as they have been told in relation to schemes for much needed new school building?

Mr. Leburn

I have made it clear on many previous occasions that I am encouraging local authorities to put up schemes for grants in regard to this and my right hon. Friend the Secretary of State has sent out a circular inviting local authorities to put in their demands. That is not necessarily to say that absolutely every scheme will be approved. They will have to show that they are good schemes which can stand on their merits.

As I said originally—and I do not propose to go over this again—it may be that, in another debate, hon. Members can adduce a case for help being given to relieve unemployment in Scotland. All I have said is that I do not think that giving some additional amount in Exchequer equalisation grant is the appropriate way of doing it. I do not wish to pursue this matter further, because I want to deal with the questions put to me, particularly that about the meeting I had with the local authority associations.

I promised to consult the local authority associations. I consulted them on 29th March; the hon. Member for Kilmarnock (Mr. Ross) asked for the date. I do not want to deceive anyone about this. I clearly got the impression from that meeting—and if I am wrong then I am wrong—that when I put the case to the associations, the three of them, they did not wish an unemployment weighting factor to be taken into account in Exchequer equalisation grant, either in regard to the calculation of the total, or to the distribution. I cannot be more clear about it than that.

Mr. Manuel

Did the Under-Secretary explain the formula contained in our proposed new Clause? Did he give the amount by which Scotland would benefit in addition to the present global sum, as it were?

Mr. Leburn

It was the question of the principle of the weighting factor which was discussed. I could not discuss the proposal of, I think, the hon. Member for Edinburgh, East (Mr. Willis). That hon. Member said that his proposal would give another £5 million. On the other hand, hon. Members who are taking a different line might suggest that the Exchequer equalisation grant should be increased to, say, 100 per cent. for every 1 per cent., which would bring £50 million to Scotland. I discussed with them the desirability or otherwise of introducing a weighting factor into the calculation for Exchequer equalisation grant, both in regard to the calculation of the aggregate going to Scotland and to its distribution.

Mr. Millan

The Under-Secretary used the phrase "I clearly got the impression" about the local authority associations being against it. Did they not tell him if they were against it, one way or the other? Did he put to them the proposal in the proposed new Clause, which is identical to the new Clause my hon. Friends moved in Committee, to the effect that there should be an additional weighting for Scotland in relation to the unemployment rate there being in excess of the level in England and Wales?

Mr. Leburn

I am quite clear that the local authority associations understood that point. The hon. Member queries what I meant by "I clearly got the impression". I wish to be categorical about this. The members of the three local authority associations which attended the meeting told me that they did not think that a weighting factor for unemployment should be taken into account in the calculation of Exchequer equalisation grant either way—the aggregate or the distribution.

Mr. McInnes

Did the hon. Gentleman say to the local authority associations quite clearly that unemployment would be a factor in the calculation of the grant and that that would necessarily increase the global figure? Did he put it that way and, having put it that way, did they say that they did not want it?

Mr. Leburn

I am quite clear in my mind that the local authorities understood the proposition.

6.45 p.m.

Mr. McInnes

But the hon. Gentleman did not put it that way?

Mr. Leburn

I cannot remember the exact words I used. I am clear that they understood the position and that they told me that they thought it might be dangerous to bring in a weighting for unemployment because it might bring about unpredictable results for, obviously, it would have to be applied to the distribution as well as to calculating the aggregate. They thought, in any case, that if a weighting for unemployment was taken into account it might encourage, at some future date, other factors to be brought in as weighting.

Dr. Dickson Mabon

I am not saying that the Under-Secretary is entirely wrong. He may be entirely right, but am I to understand, because of the disputes or possible failure to predict how the grant would be distributed, that the three Scottish local authority associations refused an increase in the total figure—simply because they did not like the distribution?

Mr. Leburn

I am not in the least suggesting that. While on this point, I must make the position clear to the hon. Member opposite who suggested that this was a matter discussed with and by and decided by the officials of the local authorities. I think that it was the hon. Member for Kirkcaldy Burghs (Mr. Gourlay) who raised the question of officials at the meeting. There were also elected representatives there and they spoke. It is not for me to try to interpret how the local authority associations came to their decision. I admit that there were officials there, but I think that it is unfair to suggest that the decision may have been arrived at by the officials, because I want to impress on the hon. Member for Kirkcaldy Burghs that elected representatives were also there and that they spoke.

Mr. Gourlay

I asked the Under-Secretary to supply the proportion of officials and elected representatives, because that figure has a bearing on this discussion.

Mr. Leburn

I cannot, offhand, say exactly how many officials and elected representatives were there. There were a considerable number of officials there out of the total of 30 or 32 people who attended. There was a substantial number of elected representatives and a substantial number of officials.

Several Hon. Members rose—

Mr. Leburn

I cannot continually give way.

As I said earlier, it may be that a good case could be made out for giving grants to local authorities in this connection. At this meeting they specifically said that that was what they wanted; that that was the case they wanted to make to my right hon. Friend or some other Scottish Minister, and I have no doubt that they will wish to make that case. However, they said that they did not think that a weighting for unemployment would be an appropriate way to go about it. At the same time, they put in a caveat to the effect that they wanted to make representations to the Secretary of State or the Scottish Office to the effect that they thought that the way to go about it was to give bigger direct grants towards projects which might have to be undertaken to relieve unemployment.

With these remarks, and the discussion that we have had, I hope that we can now come to a decision on the matter.

Mr. Ross

We are grateful to the Under-Secretary of State. He has conducted the debates both here and upstairs with considerable courtesy, and he has gone out of his way to answer all our points. However, upstairs he was prepared to be a little more flexible, and I am convinced that his flexibility on this point, which enables us to discuss it again, was due to the fact that it was realised that the Government would be defeated. I am still convinced that what he did then was a manoeuvre to get rid of that embarrassment so that the Government could call on the impatient majority of English and Welsh Members whom I see beyond the Bar in order to deny Scotland a measure of financial justice.

The hon. Gentleman said that he would not say very much about unemployment and then started talking about it. He said that announcements had been made in the last few months. Of course they have. I think that Dr. Beeching has made some announcements, and they will affect employment in Scotland. A firm in Kirkcaldy has made some announcements involving a loss of almost half the jobs which we hope to get by the expenditure of many of these millions about which the hon. Gentleman spoke. Perhaps the hon. Gentleman has not seen the announcements made yesterday on shipbuilding. British shipbuilding work in hand is, I think, just over 1,400,000 tons compared with the figure of not so long ago, 1959, of over 5 million tons. If the hon. Gentleman looks at the figures for the Clyde he will realise how I was able to quote the figures about the tide of unemployment turning in Glasgow, with Glasgow unemployment dropping by about 300.

This matter is serious and relevant. The outstanding feature is that we have consistently had this double burden of unemployment. In trying to relieve the rate burden of local authorities, is it not relevant to take this constant detrimental factor in Scotland into account? I think that it is, and that is why we have persisted with this Amendment and why I am glad that we still have the support of the hon. Member for Bute and North Ayrshire (Sir F. Maclean). If the hon. Gentleman does not want to be misunderstood he should not make remarks such as that which he made when interrupting the speech of my hon. Friend the Member for Central Ayrshire (Mr. Manuel) and which seemed to express a view opposite to the one which he eventually expressed, although I have a feeling that my hon. Friend's speech had a little to do with the stand which the hon. Gentleman eventually took.

Sir F. Maclean

As far as I remember—and we can consult the record tomorrow—I interrupted the hon. Member for Central Ayrshire to say that we had indeed strengthened the hand of my hon. Friend the Under-Secretary of State in dealing with the Treasury, and I still consider that we have done that.

Mr. Ross

We will see the record, but I think that even that impression is quite wrong.

Is it reasonable to deal with this matter by, in one case, increasing the global sum and, in the second place, by dividing it according to unemployment in various parts of Scotland? I think that it is.

I now come to the vital meeting. I shall not quarrel with the Under-Secretary of State. All that I propose to say is that I was convinced upstairs that we would hear no more of this proposal. It does not surprise me to know that he had a meeting with the Scottish local authorities and got his way. Of course Scottish local authorities would prefer a direct grant. The fact is that they are not getting it. They would prefer it because the hon. Gentleman is dealing with certain local authorities which do not get an equalisation grant. He was dealing with local authorities which would not get an additional penny out of any extra money because their unemployment position was relatively satisfactory. But if the hon. Gentleman says that they stated that they would prefer direct grants, may I ask whether they are going to get an increased direct grant?

Mr. Leburn

It was not a question of their saying that they preferred direct grants. What I said was that they did not think it appropriate to take the factor of unemployment in as a weighting. Having said that, they put it to me that they wished greater direct grants to be given for projects to help unemployment.

Mr. Ross

That is more or less what I said.

Mr. W. Baxter

I understand that when the meeting was held between the local authority representatives and the Under-Secretary of State it was agreed that a minute of the meeting should be drawn up. Is the minute available for perusal? Is there a minute of this meeting? I should like an answer to that question.

Mr. Ross

I do not know the answer, but I can assure my hon. Friend that, if we do not get the information from the Under-Secretary of State, we will get it from the local authorities. It is very unwise for a Minister, certainly at this stage, to try to conceal the position. I do not suggest for a minute that the hon. Gentleman is doing that. All that I am saying is that I think that the hon. Gentleman is a bad advocate. His heart was not in the case that he was putting. He did not believe in it, and he told us upstairs that he did not believe in it. Only the rebels on his own side made him make this gesture.

I do not think that the Government are doing anything wonderful about derelict sites. We have 15,000 acres of derelict sites. How many acres have the Government managed to clear under the Local Employment Act?—11½. The hon. Gentleman says that the Government will be terribly generous and will give a grant of up to 85 per cent., and maybe a little more, for clearing these sites. The hon. Gentleman had better look at the Act and see the restrictive conditions attached to it. If he wants to know how the matter should have been dealt with he should appreciate that the Labour Government gave 100 per cent. grants without attaching such restrictive conditions.

We have failed to convince the Government, but I hope that we have not failed to convince hon. Members opposite on the back benches. I even hope that the hon. Member for Aberdeenshire, West (Mr. Hendry) will have once again changed his mind. This is a way by which we can help local authorities and do something about this problem. It may be a matter of only £5 million, or £1 million in the case of the second Amendment, but at least it is a token of our concern about dealing with the unemployment problem in Scotland, and I hope that my hon. Friends will join us in the Division.

Question put, That those words be there added: —

The Committee divided: Ayes 177, Noes 196.

Division No. 97.]	AYES	[6.58 p.m.
Abse, Leo	Griffiths, Rt. Hon. James (Llanelly)	Mitchison, G. R.
Ainsley, William	Griffiths, W, (Exchange)	Monslow, Walter
Albu, Austen	Hale, Leslie (Oldham, W.)	Moody, A. S.
Allaun, Frank (Salford, E.)	Hamilton, William (West Fife)	Morris, John
Bacon, Miss Alice	Hannan, William	Mulley, Frederick
Baxter, William (Stirlingshire, W.)	Harper, Joseph	Neal, Harold
Beaney, Alan	Hart, Mrs. Judith	Oliver, G. H.
Bence, Cyril	Hayman, F. H.	O'Malley, B, K.
Bennett, J. (Glasgow, Bridgeton)	Healey, Denis	Oswald, Thomas
Benson, Sir George	Henderson, Rt.Hn.Arthur(Rwly Regis)	Owen, Will
Blackburn, F.	Herbison, Miss Margaret	Padley, W. E.
Blyton, William	Hill, J. (Midlothian)	Pannell, Charles (Leeds, W.)
Boardman, H.	Hilton, A. V.	Parker, John
Bottomley, Rt. Hon. A. C.	Holman, Percy	Paton, John
Bowden, Rt. Hn. H. W. (Leics,S.W.)	Howell, Denis (Small Heath)	Pearson, Arthur (Pontypridd)
Boyden, James	Hoy, James H.	Peart, Frederick
Bray, Dr. Jeremy	Hughes, Cledwyn (Anglesey)	Pentland, Norman
Brockway, A. Fenner	Hughes, Emrys (S. Ayrshire)	Popplewell, Ernest
Brown, Rt. Hon. George (Belper)	Hughes, Hector (Aberdeen, N.)	Prentice, R, E.
Brown, Thomas (Ince)	Hunter, A. E.	Price, J. T. (Westhoughton)
Butler, Herbert (Hackney, C.)	Hynd, H. (Accrington)	Probert, Arthur
Carmichael, Neil	Hynd, John (Attercliffe)	Pursey, Cmdr. Harry
Cliffe, Michael	Janner, Sir Barnett	Randall, Harry
Collick, Percy	Jeger, George	Rankin, John
Craddock, George (Bradford, S.)	Jenkins, Roy (Stechford)	Redhead, E. C.
Cronin, John	Johnson, Carol (Lewisham, S.)	Rhodes, H.
Crossman, R. H. S.	Jones, Rt. Hn. A. Creech(Wakefield)	Roberts, Albert (Normanton)
Cullen, Mrs. Alice	Kelley, Richard	Roberts, Goronwy (Caernarvon)
Dalyell, Tam	Key, Rt. Hon. C. W.	Robertson, John (Paisley)
Darling, George	King, Dr. Horace	Rodgers, W. T. (Stockton)
Davies, C. Elfed (Rhondda, E.)	Ledger, Ron	Rogers, G. H. R. (Kensington, N.)
Davies, Harold (Leek)	Lee, Frederick (Newton)	Ross, William
Davies, S, O. (Merthyr)	Lever, L. M. (Ardwick)	Short, Edward
Deer, George	Lewis, Arthur (West Ham, N.)	Silverman, Julius (Aston)
Delargy, Hugh	Lipton, Marcus	Silverman, Sydney (Nelson)
Dempsey, James	Loughlin, Charles	Skeffington, Arthur
Dodds, Norman	Lubbock, Eric	Slater, Mrs. Harriet (Stoke, N.)
Donnelly, Desmond	Mabon, Dr. J. Dickson	Slater, Joseph (Sedgefield)
Driberg, Tom	McBride, N.	Small, William
Edelman, Maurice	McCann, John	Snow, Julian
Edwards, Rt. Hon. Ness (Caerphilly)	MacDermot, Niall	Sorensen, R. W.
Edwards, Walter (Stepney)	McInnes, James	Soskice, Rt. Hon. Sir Frank
Fernybough, E.	Mackie, John (Enfield, East)
Finch, Harold	McLeavy, Frank	Spriggs, Leslie
Fletcher, Eric	MacPherson, Malcolm (Stirling)	Steele, Thomas
Forman, J. G.	Mallalieu, E. L. (Brigg)	Stewart, Michael (Fulham)
Fraser, Thomas (Hamilton)	Mallalieu, J.P.W. (Huddersfield, E.)	Stones, William
Galpern, Sir Myer	Manuel, Archie	Stross,Dr.Barnett(Stoke-on-Trent,C.)
Gooch, E. G.	Mapp, Charles	Taverne, D.
Gordon Walker, Rt. Hon. P. C.	Marsh, Richard	Taylor, Bernard (Mansfield)
Gourlay, Harry	Mason, Roy	Thomas, George (Cardiff, W.)
Greenwood, Anthony	Mendelson, J. J.	Thomas, Iorwerth (Rhondda, W.)
Grey, Charles	Millan, Bruce	Thompson, Dr. Alan (Dunfermline)
Thornton, Ernest	Wells, William (Walsall, N.)	Winterbottom, R. E.
Tornney, Frank	Whitlock, William	Woodburn, Rt. Hon. A.
Wade, Donald	Wilkins, W. A.	Woof, Robert
Wainwright, Edwin	Willey, Frederick	Yates, Victor (Ladywood)
Warbey, William	Williams, Ll. (Abertillery)	Zilliacus, K.
Watkins, Tudor	Williams, W. R. (Openshaw)
Weltzman, David	Willis, E. G. (Edinburgh, E.)	TELLERS FOR THE AYES:
		Mr. Lawson and Mr. Ifor Davies.
NOES
Agnew, Sir Peter	Gower, Raymond	Osborne, Sir Cyril (Louth)
Allason, James	Green, Alan	Page, Graham (Crosby)
Atkins, Humphrey	Gresham-Cooke, R.	Page, John (Harrow, West)
Awdry, Daniel (Chippenham)	Grosvenor, Lt.-Col. R. G.	Pannell, Norman (Kirkdale)
Barber, Anthony	Hamilton, Michael (Wellingborough)	Partridge, E.
Barlow, Sir John	Harris, Reader (Heston)	Pearson, Frank (Clitheroe)
Barter, John	Harrison, Brian (Maidon)	Peel, John
Batsford, Brian	Harrison, Col. Sir Harwood (Eye)	Percival, Ian
Baxter, Sir Beverley (Southgate)	Harvey, Sir Arthur Vere(Macclesf'd)	Pike, Miss Mervyn
Bennett, Dr. Reginald (Gos & Fhm)	Hastings, Stephen	Prior, J. M. L.
Bevins, Rt. Hon. Reginald	Hill, Dr. Rt. Hon. Charles (Luton)	Profumo, Rt. Hon. John
Biffen, John	Hill, J. E. B. (S. Norfolk)	Proudfoot, Wilfred
Bingham, R. M.	Hocking, Philip N.	Pym, Francis
Birch, Rt. Hon. Nigel	Holland, Philip	Quennell, Miss J. M.
Bishop, F. P.	Hollingworth, John	Redmayne, Rt. Hon. Martin
Bossom, Hon. Clive	Hopkins, Alan	Rees, Hugh
Bourne-Arton, A.	Hornby, R. P.	Renton, Rt. Hon. David
Boyd-Carpenter, Rt. Hon. John	Hughes Hallett, Vice-Admiral John	Ridley, Hon. Nicholas
Braine, Bernard	Hughes-Young, Michael	Roots, William
Bromley-Davenport,Lt.-Col.SirWalter	Hurd, Sir Anthony	Ropner, Col. Sir Leonard
Brooke, Rt. Hon. Henry	Hutchison, Michael Clark	Russell, Ronald
Brooman-White, R.	Irvine, Bryant Godman (Rye)	St. Clair, M.
Brown, Alan (Tottenham)	James, David	Seymour, Leslie
Bryan, Paul	Jennings, J. C.	Shaw, M.
Bullard, Denys	Johnson, Dr. Donald (Carlisle)	Smith, Dudley (Br'ntf'd & Chiswick)
Bullus, Wing Commander Eric	Johnson, Eric (Blackley)	Smyth, Rt. Hon. Brig. Sir John
Burden, F. A.	Johnson Smith, Geoffrey	Speir, Rupert
Butcher, Sir Herbert	Jones, Arthur (Northants, S.)	Steward, Harold (Stockport, S.)
Campbell, Gordon (Moray & Nairn)	Kaberry, Sir Donald	Stodart, J. A.
Cary, Sir Robert	Kerans, Cdr. J. S.	Stoddart-Scott, Col. Sir Malcolm
Channon, H. P. Q.	Kerby, Capt. Henry	Studholme, Sir Henry
Chichester-Clark, R.	Kershaw, Anthony	Talbot, John E.
Clark, Henry (Antrim, N.)	Kitson, Timothy	Taylor, Edwin (Bolton, E.)
Cleaver, Leonard	Leather, Sir Edwin	Taylor, Frank (M'ch'st'r, Moss Side)
Cooke, Robert	Leavey, J. A.	Temple, John M.
Cordeaux, Lt.-Col. J. K.	Leburn, Gilmour	Thatcher, Mrs. Margaret
Corfield, F. V.	Legge-Bourke, Sir Harry	Thompson, Sir Kenneth (Walton)
Costain, A. P.	Lilley, F. J. P.	Thompson, Sir Richard (Croydon, S.)
Coulson, Michael	Lindsay, Sir Martin	Thornton-Kemsley, Sir Colin
Craddock, Sir Beresford (Spelthorne)	Linstead, Sir Hugh	Tiley, Arthur (Bradford, W.)
Critchley, Julian	Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield)	Tilney, John (Wavertree)
Crosthwaile-Eyre, Col. Sir Oliver	Longden, Gilbert	Touche, Rt. Hon. Sir Gordon
Crowder, F. P.	Loveys, Walter H.	Turner, Colin
Cunningham, Knox	McLaren, Martin	Turton, Rt. Hon. R. H.
Curran, Charles	McLaughlin, Mrs. Patricia
Currie, G. B. H.	Maclay, Rt. Hon. John	Tweedsmuir, Lady
Dalkeith, Earl of	Macleod, Rt. Hn. Iain (Enfield, W.)	van Straubenzee, W. R.
d'Avigdor-Goldsmid, Sir Henry	McMaster, Stanley R.	Vane, W. M. F.
Deedes, Rt. Hon. W. F.	Macmillan, Maurice (Halifax)	Wakefield, Sir Wavell
Digby, Simon Wingfield	Macpherson.Rt.Hn.Niall(Dumfries)	Walder, David
Donaldson, Cmdr. C. E. M.	Maddan, Martin	Walker, Peter
Duncan, Sir James	Maginnis, John E.	Walker-Smith, Rt. Hon. Sir Derek
Elliot, Capt. Walter (Garshalton)	Maitland, Sir John	Wall, Patrick
Elliott,R.W.(Newc'tle-upon-Tyne,N.)	Markham, Major Sir Frank	Ward, Dame Irene
Emmet, Hon. Mrs. Evelyn	Matthews, Gordon (Meriden)	Wells, John (Maidstone)
Errington, Sir Eric	Mawby, Ray	Whitelaw, William
Farey-Jones, F. W.	Maxwell-Hyslop, R. J.	Williams, Dudley (Exeter)
Farr, John	Maydon, Lt.-Cmdr. S. L. C.	Wilson, Geoffrey (Truro)
Finlay, Graeme	Mills, Stratton	Wise, A. R.
Fisher, Nigel	Miscampbell, Norman	Wolrige-Gordon, Patrick
Fletcher-Cooke, Charles	Montgomery, Fergus	Woollam, John
Gammans, Lady	Morrison, John	Worsley, Marcus
George, Sir John (Pollok)	Nabarro, Sir Gerald	Yates, William (The Wrekin)
Gibson-Watt, David	Neave, Airey
Gilmour, Sir John (East Fife)	Nicholls, Sir Harmar	TELLERS FOR THE NOES:
Glyn, Sir Richard (Dorset, N.)	Nugent, Rt. Hon. Sir Richard	Mr. Ian Fraser and Mr. MacArthur.
Goodhart, Philip	Osborn, John (Hallam)

Clause ordered to stand part of the Bill.