LOCAL GOVERNMENT (GENERAL GRANT)

HC Deb 14 December 1965 vol 722 cc1102-50

3.56 p.m.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. James MacColl)

I beg to move, That the General Grant (Increase) Order, 1965, dated 29th November, 1965, a copy of which was laid before this House on 1st December, be approved. The circumstances which led to the Order being made are outlined in the Report which accompanied it, House of Commons Paper No. 9.

General grant increase orders are not new to the House, but it may still be helpful to describe how they arise. The grants are settled by a principal Order for a period of two years on the basis of forecasts of expenditure on general grant services for the period at constant prices. It is not permissible and usually is not practicable for the main Order to allow for the possibility that the level of prices costs and remuneration may go up during the grant period. Where the level does go up and in the opinion of the the Minister the resulting extra costs are more than local authorities can be expected to bear unaided, an increase Order may be made to give them more grant. This has happened in every grant period so far.

The current grant period is the two years from 1st April, 1965, and the original grant for these two years was settled last autumn by the General Grant Order, 1964, which the House approved on 15th December, 1964. The Order was accompanied by a Report—House of Commons Paper No. 36—giving estimates of relevant expenditure of £1,246.45 million for 1965–66 and £1,338.56 million for 1966–67, on which the Order provided grants of £680 million and £731 million.

Since then the level of prices costs and remuneration affecting the general grant services has risen, the largest item of increase being the recent pay awards to teachers. These account for about two-thirds of the total increase in estimated expenditure. The main increases taken into account, which total £96.45 million in 1965–66 and £105–18 million in 1966–67, are set out in the Appendix to the Report, which also shows how these increases are shared between the various services.

In considering the increased expenditure for grant purposes, it was necessary to remember that the income of local authorities would go up as well by over £2 million a year through higher charges for welfare accommodation.

The amount of grant justified by the increased expenditure has been calculated by the method used for the main Order. This produces for the local authorities which receive general grant additional sums of £52 million in 1965–66 and £57 million in 1966–67. They are to be distributed without any changes in the pattern of distribution; the weightings for the factors in the formula have merely been scaled up so that each factor produces the same proportion of the total grant as it did before the increase.

The estimate of increased expenditure were arrived at in consultation with the Association of Municipal Corporations, the County Councils Association, the London Boroughs Committee and the Greater London Council. I am happy to be able to tell the House that the associations and the Departments concerned reached agreement for the most part. The only question on which a difference arose was the bid by the Greater London Council and the London Boroughs Committee for a special addition to Greater London's share of the increase in grant. What the claim amounted to was, in effect, a request for an additional £½ million of grant, or rather under a ¼d. rate, for the Greater London area. They claimed that this was needed to allow for higher costs peculiar to the area, in particular for the higher administrative costs attributed to the reorganisation of London government which had been underestimated in the negotiation on the main Order.

My right hon. Friend was able to meet the associations and hear the views of the London authorities about this, but he was obliged to tell them that it was not a matter which could properly be dealt with in an increase Order. An increase Order is not meant to correct underestimating in the expenditure for the main Order. Nor would it be right to consider the Metropolitan factor, or indeed any single factor in the distribution formula by itself. The formula is in the nature of a package deal affecting the interlocking interests of all local authori- ties receiving general grant and has to be looked at as a whole.

There have been many requests for changes in the formula but a general overhaul promised in 1962 was superseded by the last Administration's wider proposal to review local government finance—it was agreed last year that there should be only consequential changes in weighting—and it would be still less appropriate to try to change the formula now on an increase Order when this Government are preparing to bring forward next year proposals to reshape the grants system. Consequently, my right hon. Friend had to ask the London authorities to put up with the present grants system with all its faults a little while longer.

4.2 p.m.

Mr. Boyd-Carpenter (Kingston-upon-Thames)

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government has described with his customary fluency the rather curious machinery for the making and variation of these grants, but, perhaps understandably, he did not bring out in the course of his speech the gloomy prospect for the ratepayers which lies behind these figures.

Paragraph 4 of the Explanatory Memorandum which accompanies the Order brings out very clearly both the extent to which local authority expenditure is surging upwards and the comparatively modest contribution towards it which this Order makes. The figures are ones which concern the House, as they certainly will concern opinion outside.

Reckonable expenditure for the current year, 1965–66, was estimated a year ago at £1,246,450,000 and it is up according to the Memorandum by £96,450,000 to the formidable total of £1,342,900,000, and for 1966–67 it goes up from £1,338,560,000 by no less than £105,180.000 to a total of £1,443,740,000. This Order—and I do not think that the Parliamentary Secretary said this—by following meticulously the 55.1 per cent. formula, allowing for the adjustment to which he referred in respect of additional income for welfare homes, means a further large increase in rate-borne expenditure. It means that the ratepayers will have to find out of these increased amounts the remaining 44.9 per cent.

This Order afforded to the Government the last opportunity to do something to help the ratepayers next year, and this opportunity has pointedly not been taken. Next month the finance committees of the local authorities will begin their consideration of the rates which they will have to recommend to come into effect next April. They will have to do so against the background of an Order which, by following meticulously the 55.1 per cent. precedent, and leaving this further large expenditure to be carried by the rates, and by doing nothing progressive or constructive to deal with the emerging rate problem, will leave every one of these committees faced with gloomy decisions about the amount by which it will be necessary for them to increase their rate poundages.

The right hon. Gentleman the Minister of Housing in a note circulated in connection with the Rating Bill on 26th November forecast an increase in the rates next spring on average of 10 per cent. As usual, the right hon. Gentleman was optimistic. I will hazard a guess that, with the wage-price inflation now taking place and the high cost of what local authorities have to buy, and the continuing high rate of interest which they have to pay, the figure is more likely to be close to the 14 per cent. increase over the previous year which we met this April.

This Order does nothing whatever to tackle that situation in which, except for the 2 million ratepayers who will benefit in small measure from the Bill now before the House, the rest of ratepayers are faced with a prospect of that sort, accentuated by some of the provisions of the Rating Bill whereby they have to pay a proportion of the rates of the people who benefit from that Bill. This will be the last straw for a great may people, and all we can get from the Parliamentary Secretary is hints about some grandiose alternative for the rates when we know perfectly well from no less a person than the Prime Minister that no such alternative is in sight or has been considered.

This Order conspicuously and pointedly makes no attempt to give that early relief to ratepayers which was promised in the present Government's election manifesto. The Government make no attempt to transfer to the taxpayer a share of the burden which falls on the rates, a transfer to which hon. and right hon. Members opposite expressly pledged themselves 18 months ago. We cannot amend the Order—on this occasion the Parliamentary Secretary does not even have to shelter behind a tightly drawn Money Resolution—and to reject the Order would simply add to the rising burden on the local authorities. But at least we can make clear on the Order where the responsibility lies for the swingeing rate increases which the country faces next April. It has been suggested in the Press that hon. and right hon. Members opposite will go to the polls in March. I will give them one additional argument for doing so. They had better do so before the ratepayers discover, when the rates for next April are presented, how they have been deluded by hon. and right hon. Members opposite.

4.10 p.m.

Mr. Julian Snow (Lichfield and Tamworth)

I was fascinated by the concluding remarks of the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), because, of course, all the country knows that what we are now having to face is the direct consequence of policies pursued and action taken by his Administration. However, I rise to make a more constructive point.

My hon. Friend will recall that, some nights ago, the House accepted what I regarded as a misbegotten Order relating to the West Midlands Special Review Area, under the terms of which Staffordshire was truncated and a large slice of the county was taken away to form five new county boroughs. Consequentially, the revenue of the county of Stafford will decline subsequent to April next by about one-third, and another consequence is that, at the very minimum, there will be a rate increase in the residue of Staffordshire of about 6d. I speak of a minimum increase because, although it will, in fact, be considerably more, the five new county boroughs are being asked to shoulder any excess over 6d., a prospect which they view with less than enthusiasm.

In this Order, what weighting has been attached to this problem of Staffordshire in its truncated form, and what special provision will be made to tide it over what must be a very difficult period when overheads will not be reduced but when the consequential financial provision must be met somehow?

4.12 p.m.

Mr. James Allason (Hemel Hempstead)

The general grant is based on the proportion of, roughly, 55 per cent. of expenditure provided by the taxpayer against 45 per cent. raised by the rates. This has been the proportion for a number of years, since the principle of the general grant was introduced, but there is nothing sacrosanct about the 55 per cent. There is nothing whatever to prevent that proportion rising so that a greater proportion of expenditure is met by the taxpayer.

I made this point in a similar debate last year, on 15th December, and I asked that the general grant should be increased in order to meet the severe rise which would otherwise take place in householders' rates. The answer I then received was rather encouraging. The Minister said: … we have not excluded the possibility of a major change in the division of financial burden between central and local government before 1967–68."—[OFFICIAL REPORT, 15th December, 1954; Vol. 704, c. 225.] I hoped, therefore, that something would be done this year, and it is most disappointing to find that precisely nothing has been done in this Order. However, this was foreshadowed on 6th December when the Under-Secretary of State for Scotland explained that it would be too expensive. Giving reasons why the proportion of the general grant could not be raised, he said that it would be a terrible burden on the taxpayer. Yet this was precisely the pledge on which the party opposite was elected. The Labour Party's election manifesto told the country, We shall seek to give early relief to ratepayers by transferring a larger part of the burden of public expenditure from the local authorities to the Exchequer. Now, they say that they cannot do it because it is too expensive. The hon. Gentleman's actual words, replying to a point made by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), were: The right hon. Gentleman argued a case which I thought was quite extravagant when he said that we in the Labour Party had an opportunity to get early relief by increasing the general grant to cover the whole amount of the rates increase in any one year—in our last year, over 13 per cent. If he looks at that he will see that there are two enormous objections to doing so"—[OFFICIAL REPORT, 6th December, 1965; Vol. 722, c. 163.] I shall not weary the House by reading further, but the gist of his two objections was that it would cost the taxpayer more money. That is exactly the opposite of his party's election pledge.

The rate increase last year was very nearly 14 per cent. The Minister has already forecast that it will be 10 per cent. I am not sure whether that includes or excludes the additional 1 per cent. which is bound to arise from the operation of the Rating Bill, and, as my right hon. Friend the Member for Kingston-upon-Thames said, it may be not 10 per cent. or 11 per cent. but as much as 14 per cent. if we take into account the increases in costs which are likely to arise in the near future.

It is extremely disappointing that the Minister of Housing and Local Government is unconcerned about what is happening. In the debate on the Rating Bill, he took the line that ratepayers should expect rate increases. He said that rates would inevitably go up and it was, therefore, quite reasonable that a further burden should be borne by better-off ratepayers so that poorer ratepayers could have some relief. That was his argument to justify the way that the rate demand consequential upon the operation of the Bill would have to be borne.

If the right hon. Gentleman looks at his words again, he will find that they express a fairly light-hearted approach to the whole subject of rate increases. I agree that he said that the whole rating system should be abolished, but he did not tell us what would be put in its place. It is intolerable that the Minister should be so unconcerned about rate increases of this kind, 14 per cent. last year and, possibly, 14 per cent. in the coming year. It is a complete denial of his party's election pledges, and his reaction is to say, "Let us abolish rates". Here was the opportunity to do something to keep rates at a reasonable level. This is almost the biggest increase we have seen in the costs borne by ordinary people. I wish that it could be sent to the Prices and Incomes Board for that Board to determine whether it is fair or not.

4.18 p.m.

Mr. Oscar Murton (Poole)

The Minister ought to recognise that a greater proportion of the constantly mounting burden of local expenditure must be met by a rise in the general grant. The entirely new set of circumstances opened up by the Rating Bill add further force to the argument. Under that Bill, all ratepayers other than the 2 million who, it is estimated, will qualify for rebate, will have to find an extra £9 million a year, that is, £7 million in rebate plus £2 million in administrative costs. Through this legislation, the Government are acting quite contrary to their party's election manifesto which told the electorate that Labour would seek to give early relief to ratepayers. The question which springs to mind is, "To all ratepayers?". The answer must be, "No, just to some".

I agree that there has been and remains a cogent need to give relief to certain classes of ratepayers. But the Rating Bill does not go far enough.

I give an instance in the predicament of what might well be called a typical South Coast town. It is my own constituency of Poole. The domestic rateable value nationally forms about 48 per cent. of the total rateable value, but in my constituency it is 64 per cent. The national average of members of the population over 65—many of whom one would expect to qualify under the new legislation—is 12 per cent., but in Poole it is over 16 per cent. Poole, which is not yet a county borough, bears a disproportionate amount of Dorset County Council's precept so that 29 per cent. of the county's population pays 38 per cent. of the rates.

Mr. Speaker

Order. Is the hon. Gentleman suggesting that the problem he is putting can be solved in some way either by not accepting or by accepting the proposed increase in the general grant?

Mr. Murton

I apologise, Mr. Speaker. However, I was elaborating my argument to that point.

This situation is not unique to Poole. But it is cogent argument for increasing the General Grant Order next year. The rates this year under the Labour Government have risen 14 per cent. and, on the Minister's own admission, the burden will rise by a further 10 per cent. next year. My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), who is not in the habit of exaggerating, suggests that the rise will be at least 14 per cent. next year. With all humility, I agree.

We are assured that the Government are working actively on a new form of tax, but I was astonished when, as late as 9th November, the Prime Minister expressed the pious hope that someone would stumble some day on an alternative method of raising local revenue. I can quite understand that the word "stumble" was somewhat infelicitous, but we on this side of the House could not have found a more appropriate and descriptive phrase for all the activities of the Government. I can see no reason why the general grant could not have been increased this year in order to alleviate the problem facing ratepayers throughout the country.

4.23 p.m.

Mr. Peter Mahon (Preston, South)

Having spent a long time in local government, I still think it is prudent to say that, in the last analysis, the services that local authorities render are the acid test and not the amount of rates levied. I think that the general consensus is that rates are a positively good value. They are particularly good value where the services are good and sound and equitable from all points of view.

It would be a very ill-advised person who would say that education is not splendid value or that we are not getting good benefit from the vast amount of money being spent on it. Education on an ever-increasing scale is being given to our young people at a price of less than one large packet of cigarettes per week per person, and it is a very creditable business. In the wildest stretch of imagination one could not say that such an average cost is too much to pay for the education service.

One can go through the list of other local government services and find similar value—the health services, the social services, housing and all the multifarious other services. One could not, with the wildest stretch of imagination, say that we are being asked to pay too much for the services rendered.

However, I am pleased that there is to be some easement under the new provisions for those who are less able to pay. I agree that certain people are gaining more benefit from local government expenditure than others. People with children are getting tremendous benefit from education, and it is these who are willing to pay and do pay without disagreement. But it seems rather unfair and unjust that older people on restricted incomes, who either have had no children or whose children are now grown up and who thus receive no benefit from the education service, have to pay formidable sums in rates as their income reduces.

This is where the shoe pinches most, and it is here that the easement is to be given by the Government. That is a very good advance. We must remember that so many of our fellow human beings are deprived of the benefits of decent housing—and the greatest imposition that can be placed on any family is denial of decent living conditions. Yet many are so deprived despite the fact that they are earning good wages or equitable salaries.

Mr. Speaker

Order. The hon. Gentleman is getting a little wide of the Order.

Mr. Mahon

I bow to your Ruling and apologise, Mr. Speaker.

There are many inequities and ambiguities in the manner in which the rates are levied. That has been a bone of contention throughout the years. It is high time that these difficulties were evened out and that people recognised what they are invited to pay for. We have had the block grant, which permeated the local government system for so many years. Then there was a change to the general grant and the deficiency grant, but people, because of the intricacies of local government and the manner in which the grants are decided and levied, have not been able to understand for what and why they have been asked to pay.

It is high time that the people were in the position of being told by local government officers that they are paying for services rendered. In my experience, however, people have not known and have not understood these difficulties. Indeed, borough treasurers themselves are at a great loss to be able to explain to local government representatives the intricacies of the system. These are difficulties which must be faced by those responsible for future legislation. They must decide upon and bring in an easier and more equitable system. But it would be a tragedy if we were to say, in season and out, that the rates system is iniquitous. From many points of view, it can be considered fair and equitable. It is not an iniquitous system if the people are receiving good service in return. Many progressive authorities give such good services that their rates are good value for money.

I do not share the despair of some of the prophets of gloom who have spoken this afternoon. I do not agree that education it not good value. I take the view that there must be some improvement in this connection. Teachers and others responsible for the progress of education are worth a better deal, and I think it is generally agreed that teachers, especially younger teachers just entering the profession and taking home less than an average dock labourer's wage, should be better paid. These are the inequities in our rating system.

Mr. Speaker

I am not criticising anything the hon. Gentleman has said, but we are now discussing whether we shall increase a certain grant to local authorities, or should have increased it by more or indeed less. That is the issue which hon. Members must debate.

Mr. Mahon

I would not object to a greater addition to the general grant to make local authority services more equitable. I do not believe that people are being charged too much for local authority services. They would only have to suffer the discomfort of spending a fortnight without having their dustbins emptied to be willing to pay a private person any money to do it for them. The advantages of local government services are so tremendous that they are apt to be overlooked. If people recognised those advantages more, they would be more anxious to improve the system and to pay more to extend the wonderful services which have been provided by local authorities from time immemorial.

4.32 p.m.

Mr. A. E. Cooper (Ilford, South)

I have only two comments to make about the speech of the hon. Member for Preston, South (Mr. Peter Mahon). First, he must not run away with the idea that the Order is in any way selective, that it will help the individual ratepayer, as he seems to suppose. All that is happening is that in deciding the amount of general grant to an authority regard is to be paid to the numbers of children or the numbers of old people in the area concerned. An area with more of either, or both, will benefit to that extent, but it will still be for the local authority, as it has always been, to decide how to disperse the amount. The authority will not be able to give some benefit to Mrs. Brown, who has five children, because Parliament has passed this Order. I hope that the hon. Gentleman will disabuse his mind of that misapprehension.

Secondly, his idea that ratepayers do not know what they are paying for is fanciful in the extreme. Every local authority has laid upon it by law the obligation to print on the back of the rate demand complete details of all the services it renders together with their cost. If the hon. Gentleman has never seen his rate demand, when he gets home this evening he should take a good look at it. He should not take the view that ratepayers are not aware of what services are provided and at what cost.

Mr. James Tinn (Cleveland)

Would not the hon. Gentleman agree that the many people who are council house tenants and whose rates are deducted automatically do not receive those details?

Mr. Cooper

That is so, but the information services provided by the average authority are sufficient to deal with that, unless we want local authorities to bear the additional cost of delivering a pamphlet on rates expenditure to all council house tenants.

The Order can be regarded only as a fraud. In no way does it seek to deal with the problem of the excessive burden of rates, and it does not in any way fulfil the promise of the Labour Party at the General Election. It is the second Order of this type which the Government have introduced in 12 months. This is an example of the Labour chickens coming home to roost. This increase has been brought about by the Government's gross extravagance in the past year. The high Bank Rate of 6 or 7 per cent. has cost local authorities in this financial year and will cost in the next financial year many millions of pounds which already sorely pressed ratepayers will have to find.

The Order is not introduced to provide for any advance in social services, but simply to meet the cost of the burdens thrust upon local authorities by the impecunious and profligate Government. I suppose that the Minister will tell ratepayers, "We have come to your aid; we are introducing a Bill to provide £29 million to help ratepayers and it will benefit about 2 million ratepayers". That is true, but the 2 million who are to get some relief are not all those who need relief from the payment of rates.

For example, in my constituency there is a very large proportion of elderly people living on small business or Service pensions and owning their own homes. They are beyond the limits laid down in the Rating Bill, but they get a clout in the ear every time the rates go up and they can do nothing about it. They receive very few services from the local authorities. It is true that they have probably bad children who benefited in the past, but now these people are over 65 and have just sufficient to get by.

The Government now come along with a 14 per cent. increase in rates this year, which for these people means having to find £7 or £8 a year. That may not seem very much, but it is 140s., or roughly 3s. a week, and that on top of the decline in the value of money in the last 12 months and the higher cost of living means that these people are really feeling the pinch, and they are the people whom the Government are not helping.

That is why I say that the Order is a fraud perpetrated on the electors following wild and extravagant claims at the General Election which gulled the electors into believing that the Labour Party would do something for the ratepayers. It sounds nice for the First Secretary, or the Chancellor of the Exchequer, or the Minister of Housing and Local Government, to say, "We have increased the general grant this year by £57 million or thereabouts"—until one considers the other side of the story. It might gull a few people in Kingston-upon-Hull, North on 20th January, but it will not gull anybody after the next rate demands go in. That will be the moment of truth for the Government.

When the comparable Order was introduced about a year ago, we were highly critical of the Minister's approach to the problem of rates. His complaint then was, "I have been in office for only a few weeks and I have not had time to deal with the problems". He has now had time, and if this is the best that he can do he ought to do time.

4.40 p.m.

Mr. A. P. Costain (Folkestone and Hythe)

I realise that this debate is restricted, but I want to make one main point to the Parliamentary Secretary. If my constituents could have seen him laughing when the question of excessive rates was raised by my hon. Friend the Member for Ilford, South (Mr. Cooper), they would have been shocked. I can assure him that, in my constituency, rates for those people to whom the hon. Member for Ilford, South referred, those people just above the income group for whom the miserable Rating Bill was brought in, are the most sorely hit. I had hoped to give these people some hope when this General Grant (Increase Order) came out. I thought that even a Labour Government would try to keep promises and would make some contribution from the general grant to help these people who are getting £11, £12, £13, a week and who are not covered. It was a great disappointment when this Order came out to find that there was no attempt to make any general relief.

The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Robert Mellish)

As the hon. Gentleman is making such an attack upon the Labour Government for this increase in rates, may I ask what he said when rates rose astronomically during the last Tory Government? Did we have such sickly stuff then, or is this just humbug for the occasion?

Mr. Costain

I can assure the hon. Member that this is not humbug. If he would come to my constituency and see some of the pathetic cases, he would know it was not humbug. It is a fact. Rates did not rise to the same degree during the last Tory Administration as they have done under the present Government. The Parliamentary Secretary has made no attempt in introducing this Order to explain why he has not given more from the national Exchequer. Could he not get some from the Treasury? Hon. Gentlemen opposite have talked about the value of money. There are plenty of things in the shops which are value for money but which people just cannot afford. This is a "take it or leave it" Order and I say without any humbug that my elderly constituents cannot take such an increase. Something must be done.

4.45 p.m.

Sir Douglas Glover (Ormskirk)

If there has been any humbug spoken in this House, it has come from the party opposite, which produced an election manifesto and told the public what it was going to do for the ratepayers and then brings in this Order. I think that this is about the bitter end of Parliamentary controversy. This is an Order which is not helping the ratepayer because the ratepayer is faced with a large increase in his rates next year, contrary to all the promises made in the Labour Party's manifesto and in election addresses, about how it was going to take the burden off the rates and place it on the national Exchequer. The sum total of their promise is to bring in a fiddling little Bill, dealing with 2 million ratepayers, which puts the rates up for the other 18 million. That is a wonderful piece of progressive machinery.

Of course it helps the 2 million, but as my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) has said, the next 2 million are very nearly in the same plight and their rates are going to go up to pay for the first 2 million. So this is a well-thought-out Measure. We are not dealing with the Bill here, we are dealing with the Order, and we cannot vote against it. It is one of those things that has to be put into operation, otherwise the poor ratepayers will get no help. It is one of those things which we have to allow to go through the House, but I think that it needs to be placed on record that this Order is real humbug compared with what the Government said when they appealed to the electorate 14 months ago.

4.47 p.m.

Sir Stephen McAdden (Southend, East)

I want to add a small point in support of what has been said by many of my hon. Friends. I noticed that the Parliamentary Secretary was getting very excited and talking from a sedentary position about 13 years. Let us also remember that, 13 years of Conservative Government or not, the fact is that he and his party have been in power now for over 12 months and they have signally failed to redeem their promises made to the ratepayers. Whilst the explanation might be when they first came into office that they had been there only for a matter of weeks and that it was then impossible for them to prepare the legislation which they had in mind, may I remind the Parliamentary Secretary that while the Conservative Government were in power for 13 years the present Government were in opposition for 13 years? During the 13 years they had far more time to devote to an intimate and close study of this problem, so that when they came into power they ought to have had their plans ready, otherwise we are getting back to the position which arose in the first Socialist Government after the war when, having preached the gospel of nationalisation year in and year out, they had to admit, through the mouth of the right hon. Gentleman the Member for Easington (Mr. Shinwell), when they got into power, that they had never devoted any serious thought to the problem.

This is a two-way argument, and it is all very well to talk of 13 years of Conservative rule. There have been 13 years of Socialist opposition when they could plan for the time when they came into power. It might have been a shock, perhaps they would not have come to power if it had not been for the intervention of other factors, but they cannot dispute the fact that they had these 13 years in which to prepare their plans. It is no good coming to this House 12 months or more since they came to power and saying that they still have not arrived at a position where they can be more generous and give more openhanded help to the ratepayers, help which they so freely promised when they were in opposition and at the time of the General Election.

Among the important factors which have been brought out by my hon. Friend the Member for Ilford, South (Mr. Cooper) were that a great deal of the current burden upon local authorities is a direct result of some of the actions which have been taken by the present Government and the fact that interest rates have continued at a very high level. It is a level at which they have not been for a very long period, a longer period than ever before in our history. Surely this has placed an intolerable burden upon local authorities, about which the Chancellor and the Minister really ought to do something.

This General Grant (Increase) Order does nothing whatever to help local authorities in this matter. There may be an attempt to make some contribution to the enormous extra expenditure which has been placed upon the ratepayers' shoulders, but it is time that the Government woke up to the fact that high interest rates at present payable by local authorities stem directly from the increased Bank Rate which this country is called upon to bear and that they have a very serious responsibility in this matter, not only to the people as a whole, but particularly to the ratepayers.

It is not fair to run away from serious arguments such as were advanced by my hon. Friend the Member for Folkestone and Hythe (Mr. Costain), and my hon. Friend the Member for Ilford, South, who have pointed out that there are large sections of ratepayers, in areas of the country where there are a large number of retired and old people, who feel this continual pressure of rising rates very severely indeed. I hope that before long this Government will go further to meet the obligations into which they entered when they became a Government and redeem the promises which they made at the last General Election.

4.49 p.m.

Mr. Graham Page (Crosby)

I would call the attention of the Parliamentary Secretary to the fact that attacks on this Order have not been only from this side, and I welcome the support of the hon. Gentleman the Member for Preston, South (Mr. Peter Mahon), who has very great experience in local government service, not in Preston but in the constitutency neighbouring my own, in Bootle. We shall welcome him back there, when he loses his seat at Preston, because we have heard only today that Crosby is absorbing Bootle under the recommendations of the Boundary Commission.

Mr. Peter Mahon

Is the hon. Gentleman not sure that it is Bootle absorbing Crosby?

Mr. Page

That is why I put it round that way. He pointed out that he, at any rate, wanted to see a greater addition made to the general grant than had been made in this Order. Indeed, everyone in the House, even hon. Members opposite, would have liked to see greater relief given to the ratepayer by a greater amount of general grant in this Order.

The general grant has doubled since it was initiated seven years ago. It was £393 million then. In 1966–67 it is to be £788 million.

Mr. Mellish

Hear, hear.

Mr. Page

It has increased by a substantial amount in the last 12 months, but it is the last 12 months with which we are dealing in this Order.

The hon. Member for Lichfield and Tamworth (Mr. Snow) endeavoured to say that the Order was due to what the Government had inherited from the previous Government. But we are dealing with the last 12 months, because the previous Order was made in. December 1964 exactly 12 months ago. Section 2(4) of the Local Government Act, 1958, provides: If it appears to the Minister that during any grant period any unforeseen increase has taken place in the level of prices, costs or remuneration, and that its effect on the cost of providing the services giving rise to relevant expenditure is of such magnitude that it ought not to fall entirely on local authorities, he can bring forward an Order such as this. One assumes that the Minister, in December 1964, when the Government were complaining about what they had inherited from the previous Government, could not foresee the increases for which he is making provision in this Order. They have come about entirely in the last 12 months. The Joint Parliamentary Secretary, in introducing the Order, said that they were mainly caused by teachers' salaries. Indeed, we see that in the figures set out in the Minister's report accompanying the Order. But the increases are very substantial, and the Minister should not have brought forward an Order of this sort before making some reform in the rating system by transferring some of the burden to the taxpayer from the ratepayer.

What about teacher-training, grants to students, advanced further education, Class I and II roads, the administration of justice and civil defence? All those things, which are national and not local services, could well be passed over to the Exchequer before bringing forward an Order of this sort. It is true that this might have saved the rates only a matter of a copper in the "bob", which, although it sounds a small sum, amounts to about £100 million; and £100 million of rate burden can be a substantial amount when brought down to the individual ratepayer.

All that we have been told today is that no further relief is to be given to the ratepayer. This Asquithian Minister of Housing and Local Government says, "Wait and see. I am preparing some nice dish for the ratepayer. I have in mind next year some Bill to revise the rating system. I have not a clue what it will be. I do not know what I will put in place of rates. I am going to abolish them, and you must wait and see". He has trained his Parliamentary Secretaries to turn all Members into Bisto kids, sniffing at the tasty morsel which he will bring forward some years hence. This is not good enough. Here and now it means a further large increase in rate-borne expenditure, because the Minister has not coped with things properly in the Order. He has not attempted to present legislation to amend the rating system.

This is a complete failure to carry out election promises. Phrases used by Members opposite have been quoted today, and they cannot be denied. Even in the sober atmosphere of the Queen's Speech, let alone at the hustings, we were told that there was an intention to limit the burden of rates. This Order does not limit it. It increases the burden on the ratepayer, and, to that extent, it represents a complete failure of the Government to carry out their pledges.

4.55 p.m.

Mr. MacColl

Right hon. and hon. Members opposite have a terribly bad effect on me. Whenever I come to the House to discuss local government finance and rating, I always make a vow that I will not refer to the past 13 years. Whenever I hear them speak, they talk such nonsense that it is quite impossible to look at this matter in any kind of perspective without referring to the fact that we have inherited a structure of local government finance which is extremely rigid and which we have to try to make work.

It is said that we have done nothing to meet the problems of local government financing during the time that we have been in office. I do not want to expand on this, because I do not wish to get out of order, but, as the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) well knows, on Thursday we go into what I am sure will be a very short Committee stage to discuss the biggest undertaking ever to ease the burden of rates on the very people about whom we have had crocodile tears this afternoon. Small ratepapers will have immediate and flexible relief, not the rigid, unworkable system that was dumped on us by the last Government in their dying moments.

Sir S. McAdden

Surely the hon. Gentleman appreciates that this is not the first Socialist Government that we have had. We had one from 1945 to 1951. They had six years to find out what the unworkable local government system was like. It was no different then from what it is now.

Mr. MacColl

On the contrary, it was very different. The hon. Gentleman has forgotten that we introduced the Exchequer equalisation grant and we had a much more flexible system to keep the burden of rates off the poorer local authorities. Since then, so far from the system having become better, it has got more rigid. That is our trouble. So much for the immediate short term, dealing with relief to the poor ratepaper, not the year after next, but in the next financial year.

We are to discuss in the House tomorrow—again I must not anticipate—a Bill which will give far and away the biggest central Government help to housing ever given by any Government. That will come into operation as soon as the arrangements are made. [Interruption.] Before the hon. Member for Ilford, South (Mr. Cooper) joins his hon. Friend the Member for Ormskirk (Sir D. Glover) by leaving the Chamber when I am discussing these points, I would mention to him that that Bill deals with the very problem of interest rates to which he referred. It gives precisely what he is asking for, which is a steady rate of interest and an assurance to local authorities that, while there is a Labour Government, they can build at 4 per cent. I should have thought that that was something well worth having.

I come back to the one thing which is rigid, and that is the operation of the present general grant, which, as hon. Members opposite do not appreciate, is something we inherited under the Local Government Act. We have to bring in these Orders every two years. We have to bring in the supplementary Orders. This is not due to our profligacy. It is due to the fact that every year there has been need to supplement the general grant because of the increase in expenditure. It is not something new.

This is not basically due to increased rates of interest. Rates of interest account for about £4½ million. But three-quarters of this is in respect of teachers' salaries, grants to students and increased grants to school children. If we are to be indicted for spending money on these things, it is something for which we happily accept responsibility. That is precisely what somebody said it was not. It is a development of the social services. It is the provision of a better educational system. That is nothing of which we need be afraid.

Among the detailed points of comment which have been made, my hon. Friend the Member for Lichfield and Tamworth (Mr. Snow) asked about how the grant affected Staffordshire, which had been cut in half by the Special Review Order. That illustrates the difficulties under which we are operating, because there is no conceivable way under the Act in which we could adjust our working to help an individual authority like that. Under the general grant, we cannot help an individual local authority. There is, on the one hand, money which is added on to relevant expenditure in total and, on the other hand, money allocated in grant according to a rather complicated formula. Help in that direction, therefore, would have been quite impossible.

There are only two ways in which Staffordshire could be helped. One would be under the rate deficiency grant if it qualified and the other would be by special grants made to it by gaining authorities under the Order. That was recently done, as the House will remember, having discussed the matter at a rather late hour a few nights ago.

The hon. Member for Hemel Hempstead (Mr. Allason) suggested that my right hon. Friend the Minister was not interested in the rate burden. I have already shown conclusively that my right hon. Friend is very much concerned and anxious about it and is thinking, not into the future, but of immediately starting a process which will culminate in changing the whole position of ratepayers as regards local government expenditure. We have already produce an earnest of our good intention in this matter and there is nothing about which we need be afraid. It is not our fault that we have this 14 per cent. built-in increase in expenditure falling upon the ratepayer.

The hon. Member for Poole (Mr. Murton) raised the difficulties arising in his area because of the high proportion of domestic ratepayers and the small proportion of industrial ratepayers. That is an arguable point. The hon. Member knows as well as I do that under the Act, it is impossible to find any means of helping an authority which is suffering in that way. We cannot adjust a formula within the Act to do that. Therefore, it only illustrates the rigidity of the existing grant system and the impossibility of helping the hon. Member's local authority.

Mr. Murton

If the direct grant were to be raised, it would help those people, would it not?

Mr. MacColl

The hon. Member cannot have followed what I said earlier. When we raise the grant, we chuck an amount of money into a very large pool. Where it comes out—if I may be disrespectful and talk about such things before the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter)—it is rather like playing a one-armed bandit. One puts in one's sixpence and one never knows what will come out at the other end. There is no means of ensuring that what comes out will go to Poole or that it will get the jackpot.

Mr. Murton

In other words, it is the wrong pool.

Mr. MacColl

It was the hon. Member who made the pun. I should not have dared to make it. That is precisely the difficulty about trying to get out of this rigid system something which would be reasonably flexible.

My hon. Friend the Member for Preston, South (Mr. Peter Mahon) made a good point in saying that we need to remember that rateborne expenditure is something which will give value for money and that rateborne expenditure is something which one sees in the improvement of services, in the improvement of health and in the education of the people. I was glad that my hon. Friend pointed this out, because we get so much into the habit of talking about local government expenditure as if it were a monstrous imposition and something which somehow we must get rid of. It is a wise and fruitful investment in the welfare of the people.

It is true—my hon. Friend made the point very well—that because of the rigidity of the rating system and its unfair incidence, the advantages of local government expenditure do not come back because of the burden which they inflict on certain people. That is precisely what we will be talking about in our Rating Bill on Thursday. It is designed specifically to reduce the load falling not only upon the poorer ratepayer in absolute terms but upon the ratepayer whose resources relatively are limited.

The hon. Member for Ilford, South, who rebuked my right hon. Friend, said that this arrangement was not selective and he called the Bill a fraud. What we are discussing today is not a Bill, but an Order. If it is a fraud, the reason is that we are conscientiously carrying out the legislative system invented by the last Government and which we have to operate until we can substitute a better one for it.

Mr. Boyd-Carpenter

The hon. Gentleman keeps referring to the difficulties of the system which his Government inherited, its rigidity and so on. He was no doubt aware of that system before he came to power. Can he, therefore, explain why, being aware of this, he was not aware of the difficulties which apparently prevent him from carrying out his clear pledge to give early relief to ratepayers?

Mr. MacColl

We are giving early relief to ratepayers. The right hon. Gentleman writhes in agony at the thought that it is the poorer ratepayer who is getting help. That, apparently, is something that he finds intolerable.

Mr. Boyd-Carpenter

The hon. Gentleman is aware that the great majority of ratepayers, including some whom he would certainly regard as being of very modest means, not only get no relief but will get an additional burden from the Bill of which he is speaking. That is what makes me writhe in agony.

Mr. MacColl

Our formula is flexible and much clearer than the formula in the Measure that was passed by the right hon. Gentleman's Government, which was a fraud if ever there was one. A great deal of the burden will be shifted. There is a lot of talk about shifting the rate burden, but a lot of it will be shifted on to the commercial and the industrial ratepayer.

It is worth remembering that one of the great contributions made in the last 13 years by a previous Minister—the right hon. Member for Streatham (Mr. Sandys)—was that he derated commercial properly. He reduced the burden falling upon the commercial ratepayer and put it upon the domestic ratepayer. That is part of the problem that we are wrestling with.

Mr. Allason

The hon. Gentleman has told us that he is fulfilling his election pledge by means of the Rating Bill. Is that intended to be the fulfilment of his party's election pledges?

Mr. MacColl

I am sorry that the hon. Gentleman does not listen to my speeches with rather more care. I have already said that this is the first step in the process and I have mentioned the three measures by which we are taking positive steps to help ratepayers. First, the immediate aim is to help those with small means, and this will be done by the Bill which will come into operation in the next financial year. Secondly, there is the Housing Subsidies Bill and there is then the final comprehensive review of the whole system.

It was only when the right hon. Member for Kingston-upon-Thames ran amok in Blackpool in 1963 that we had a hasty revision of the whole grants system, which produced eventually the extraordinarily feeble mouse of the Rating (Interim Relief) Act, 1964 which his Government produced, and a good deal of discussion of the other points was deferred. We have, therefore, had to take over the review to get some sense out of it.

I have never pretended that the Order was a major step forward in the improvement of local government finances. It is not. It is an immediate step that was necessary in order to meet the very narrow field of these particular increases of expenditure, three-quarters of which are concerned with education, as I say, and I hope that the House will approve the Order.

Question put and agreed to.

Resolved, That the General Grant (Increase) Order 1965, dated 29th November 1965, a copy of which was laid before this House on 1st December, be approved.

5.10 p.m.

The Under-Secretary of State for Scotland (Dr. J. Dickson Mabon)

I beg to move, That the General Grant (increase) (Scotland) Order, 1965, dated 25th November, 1965, a copy of which was laid before this House on 1st December, be approved. The Order arises out of the Local Government and Miscellaneous Financial Provisions (Scotland) Act, 1958, which is the basis of our present local government financial structure. The Act was conceived after four years of diligent work by the party opposite, I am told, and it is within that Act that this Order comes to the surface.

It is an increase Order and only seeks to supplement the General Grant Order which we discussed in the House at this time last year and which was the result of conversations between myself, on behalf of my right hon. Friend, and the local authorities on the figures largely submitted to us by the previous Government.

It may be useful in discussion to reflect a little longer on the nature of the figures that were discussed on behalf of my right hon. Friend by myself and the local authority associations. The figures at that time totalled £80.5 million to £82 million approximately. In fact, from the debate that we had subsequent to that hon. Members will see that the Government suggested figures which were in excess of that, figures which now rise under the increase Order but which at the time we discussed it last year were £80.5 million and, for the year beginning 16th May, 1966, £84.5 million. That represents something like a £2 million increase in the second year, 1966–67, which was covered by the large General Grant Order that we discussed last year over that two-year period.

That was a first attempt by the Government to try and meet the difficulties of what has been described by my hon. Friend the Joint Parliamentary Secretary to the Ministry of Housing and Local Government as a very rigid system which was extraordinarily difficult for Ministers to operate sensibly.

It is true that under the General Grant (Increase) Order we have managed, on behalf of my right hon. Friend the Secretary of State, meeting the three associations, to have these proposals accepted without qualification. In fairness to the local authorities, I ought to say that they have done that because they know that there is more in the Government's mind than simply the present Order or the previous General Grant Order.

Various items in the Order which I shall seek to comment upon are perhaps inescapable, but it is fair to say that the local authorities have a White Paper on housing subsidies and a pledge in the Queen's Speech that we are determined to introduce a large local government Bill which will seek to take us out of the shackles of our present plight.

As for the present Order, as the House knows, the Government are obliged to stick closely to the definition in Section 2(2) of the 1958 Act, which is that we can within this Order, and only that, add unforeseen increases which have taken place in the level of prices, costs or remuneration and the effect of those on the cost of the General Grant services which has been previously agreed for the current grant period 1965–66 and 1966–67.

The local authorities submitted estimates of eligible increases of the relevant expenditure and, as I have said, the three associations accepted the proposal without qualification. In fact, although they were invited by my officials to arrange for a meeting at an elected representative level, the local authorities declined because they were quite satisfied with the grants awarded. While I regret missing an opportunity to meet distinguished local representatives and officials, I gladly pay tribute to the very fair and reasonable way in which the associations have put forward their case and come to an agreement on the increases in grant. It would be wrong of me not to say that, like good Scotsmen, they were casting their bread upon the waters, and I hope that when the tide comes in they will not be disappointed.

As will be seen from House of Commons Paper No. 10 which accompanied the Increase Order, the biggest individual increases in expenditure are in respect of the employers' share of National Insurance contributions. Other items of individual importance are interest on loans, cost of property repairs and transport. Of increases in wages and salaries, the two main items are those related to manual workers, and nurses and midwives. I am sure that in the general discharge of their duties in relation to local authority services, no one would begrudge them these essential rises in wages and salaries.

There is one item of expenditure on which no increase is shown. Those hon. Members who have witnessed the debate on the English Order might want to contrast the Scottish Order with the English one, and perhaps I ought to offer a short explanation of why there is an apparent omission in that regard in the Scottish Order.

The fact is that teachers in England and Wales have received pay increases effective from 1st April, 1965. That has involved a substantial increase in the General Grant Order which we have just discussed, as the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) has acknowledged. But the pay arrangements for teachers in Scotland, as Scottish Members may be aware, are negotiated independently and the current Scottish teachers' pay agreement covers a period of three years which does not expire until 31st March, 1966.

I regret that within the compass of the present increase Order I cannot join the debate on matters of agitation which are taking place in Scotland at the moment but which no doubt will come out in due course and be discussed later. However, I give my good wishes to any hon. Member who manages successfully to raise the issue on the Adjournment. Any salary increases which result from the present negotiations may have effect from that day onwards and will be eligible for inclusion in an increase Order next year, should such an agreement be made between the local authorities and the Government. At the moment, we do not know what amounts are involved, so nothing is included in the current order.

I hope that with those explanations, together with my preliminary remarks about how generally it must be looked at in the context of the Government's whole policy on local government finance, hon. Members will commend the Order. If they have any questions, I shall naturally try to answer them.

5.8 p.m.

Mr. Gordon Campbell (Moray and Nairn)

As the hon. Gentleman has just said, the increase Order comes forward under the 1958 Act and it is to meet unforeseen increases in prices, costs or remuneration. Presumably it is the grant periods May to May, 1965–66 and 1966–67. It must be based on estimates of increases in expenditure made, presumably, last month as the Order was laid on 25th November.

In the Secretary of State's accompanying report, to which the hon. Gentleman referred, it is made clear that there is a difference between the expenditure to be met in the present Order and the expenditure in the English Order which we have just been discussing. In the English Order there was that very large proportion which was the estimate for the increase in teachers' salaries, and the hon. Gentleman has pointed out that there is no such element in the Scottish Order. Therefore, when his hon. Friend the Joint Parliamentary Secretary to the Ministry of Housing and Local Government was excusing the increase in the English case because three-quarters of it was being spent on the excellent subject of education, that does not apply at all to the Order which we are now considering for Scotland.

When the equivalent Order was considered a year ago, the Secretary of State said: It means that during the last year of the Tory Government once again prices rose and once again salaries rose."—[OFFICIAL REPORT, 15th December, 1964; Vol. 704, c. 280.] That indeed was a hostage to fortune, and one of many which are now reappearing, for now the Government are having to propose a much larger increase in the grant to meet the increases in costs during a year of Labour Government. Most of the extra expenditure now foreseen comprises increases in costs rather than increases in salaries—in fact more than half of the increases for both years.

In the Secretary of State's accompanying Report, the headings include transport, interest on loans, vehicle duty, and postal services. These are telling reminders of Labour's first 12 months in office. Indeed, this Order reflects a rise of 4.8 per cent. in the Retail Price Index during that period, a percentage greater than any over an equivalent period during the previous nine years.

From the figures in the Report one sees that the increased costs for both years amount to about £1½ million, the rest in each case is made up by increases in salaries and wages. If one looks at the previous increase Orders for Scotland since 1958, one sees that there have been some larger ones, but almost all of the amounts in those cases were for teachers' salaries. There was one year, 1961–62, when there was a substantial increase in the rates, but that was connected with the revaluation, as the Secretary of State's Report at the time pointed out. Discounting this exceptional rate increase in 1961–62, the Order which is now before us appears to contain the largest estimate for increased costs since the General Grant was instituted in 1958.

I turn now to some of the items mentioned in the Secretary of State's Report, and to which the hon. Gentleman referred. I propose to deal first with transport. Here the effect is especially felt in Scotland. Presumably this item is composed mainly of increased fuel duty, and the effect is felt in the distances where there are in Scotland larger widespread local authorities. The figures in the Report underline the special effect in Scotland, but, as the increased vehicle duty is shown separately and not under the transport item we cannot see exactly how much transport itself adds up to.

Then there is the item, "Interest on loans". When discussing this subject last year, the 7 per cent. Bank Rate was only three weeks old. Did the Under-Secretary of State think at that time that the 7 per cent. Bank Rate was going to continue for six months, and indeed continue at a high rate after that? The figure of £410,000 for 1965–66 is a very substantial element in the estimate of increased costs which we have before us.

In that debate a year ago, almost to the day, the Under-Secretary of State tried to make some capital out of the Conservative record on the cost of living. In the previous six years the average increase had been 2½ per cent. a year. In the first year of office, a Labour Government nearly doubled that rate. In particular, the hon. Gentleman said that between 1951 and 1964 the £ had lost about one-third of its internal value. He will remember saying that. He went on to say: I cannot … pledge that the £ will remain its 20s. value as at 15th October, 1964 … I congratulate him for once on not giving a hostage to fortune on that occasion, but he then said: We will wait and see …"—[OFFICIAL REPORT, 15th December, 1964; Vol. 704, c. 320.] During the year following 15th October the internal value of the £ dropped from 20s. to less than 19s. 1d., and it can be no comfort, to the hon. Gentleman that it is now running at a rate twice that of 1951 to 1964 in reducing its internal value.

This Order is very clearly necessary. It ensures that the total burden of increased costs does not fall on the local authorities in Scotland, but part of the increase falls on them. This system was provided for in the 1958 Act, but it in no way helps the rates. The Order simply tries to catch up with the increase in the costs of local authorities. It does not alter the general position of the ratepayer. Rates continue to go up in Scotland, and the majority of ratepayers there face increased burdens. The question which we put to the hon. Gentleman is whether this increase is enough to cover costs if they continue to rise at the rate of the last few months. The Under-Secretary, if he catches the eye of the Chair, and gets permission to do so, should comment on this before we agree to approve this Order.

5.26 p.m.

Mr. Norman Buchan (Renfrew, West)

I had very little intention of taking part in this debate, but I decided to do so when I entered the Chamber about half an hour ago and witnessed the astonish- ing scene of hon. Gentlemen opposite frothing and effervescing with false indignation at the rise in general costs. When we were discussing the English Order, the view was expressed that the rise was rather regrettable because of the large amount being spent on education. Now they are complaining because the increased cost of Scottish education is not included in this Order.

I am told that this Order is for the year ending 16th May, 1966, and that the sum of £86,200,000 contains nothing in respect of the increase in teachers' salaries which will be operational by that time and for the year ending at that date. I raise this because of a curious incident which occurred this morning in terms of Scottish education, namely, the leak which appeared in the Scotsman. It seems regrettable that this leak should have occurred at the present time because, for better or for worse, the Scottish teachers had reluctantly accepted the conditions of secrecy. I hope that my right hon. Friend will investigate this leak.

We are told that this Order represents an enormous increase in the grant and that it is necessary because of Government action. The hon. Member for Moray and Nairn (Mr. G. Campbell) is correct. It is necessary because of the increase in National Insurance, in the cost of heating, rent, vehicle duty, postal charges, and so on. Of course a great deal of it is due to Government action, but we cannot allow this to be said without explaining, and if necessary underlining, the reason for this Government action.

We took over a position in which the most irresponsible financial behaviour that has ever been undertaken by any Government in this country was perpetrated throughout the first eight or nine months of 1964. It led this country to run into the red at the rate of nearly £1,000 million over the third quarter, which was the quarter which included the build-up for the General Election. That is the kind of irresponsibility which has led to this increase. In the unhappy event of the Tories having won the election we would not have seen the kind of cushioning consideration such as the Government have given being given to areas like Scotland. When the party opposite faced a similar crisis, there was no cushioning effect in Scotland. Within three months of what I might call the Lloyd syndrome of 1961 the unemployment figure increased to 136,000.

This was the position with which we were faced. We inherited it from the party opposite, and measures had to be taken to deal with it. Of course the Bank Rate went up. The increase lasted for six months, and it affected local council borrowing. Within weeks of the Tory Government leaving office we had a problem to face, as town chamberlain after town chamberlain came seeking our assistance to borrow money. This was a direct result of the financial irresponsibility of hon. Members opposite. Their English colleagues were frothing with indignation three-quarters of an hour ago. At least Scottish hon. Members opposite have sufficient control not to froth over money.

What has happened is that 12 months afterwards measures are being introduced to deal with the problem. For the first time a concept of a two-tier interest rate is being introduced. For the first time we are beginning to allocate rates in the interests of those sections which need most help. We shall operate them in local council housing, by means of loans for local councils.

We must bear these things in mind when making these minor criticisms of the increase which was caused by the emergency measures forced upon us by the financial irresponsibility of hon. Members opposite. Hon. Members opposite may laugh when I refer to the question of the rating rebate, but this was much protested at by their English colleagues, who do not like the idea of the poorer sections of the community receiving rate rebates. They ignore the fact that about three-quarers of the cost of this will come out of the Exchequer.

It has been said that the increased salaries in education are excellent. Is not the increase in respect of manual workers also excellent? Do not hon. Members opposite want manual workers to receive more when they are directly employed? Are the nurses' and midwives' increases not valuable, and for an excellent purpose? Are not the increases in respect of part-time teachers and for further education also excellent? That was not mentioned. A distinction could be made between the English and the Scottish Members on the ground of their interest in education.

I expect that when these Orders come before us again there will be a substantial increase. I hope that my hon. Friend and the Secretary of State will recognise the situation that we are facing in Scottish education at present, and that my hon. Friend will take the opportunity of pressing his right hon. Friend to publish the recommendation of the Scottish General Council as rapidly as possible. Conditions of secrecy have led to a general anxiety among those interested in Scottish education, and the kind of discussion and criticism which will arise when the figures are known is much less likely to cause difficulties than the kind of discussions which have been taking place, when nobody connected with Scottish education fully knows the position.

This unfortunate situation has been further worsened by the leak in the Scotsman, and I hope that my hon. Friend will let us have the figures, so that Scottish teachers and other interested parties can work out their policies towards them in an atmosphere of knowledge rather than suspicion.

5.33 p.m.

Mr. Hector Monro (Dumfries)

The major point made by the hon. Member for Renfrew, West (Mr. Buchan) seemed to be that hon. Members on this side of the House are not very happy about the increases in salaries of nurses, midwives, manual workers and so on. Nothing is further from the truth. We must accept them because of the incredible rise in the cost of living that has occurred due to the policies of the party opposite.

I will answer the hon. Member's other point, concerning the failures of my party when in office, later, especially in connection with the rate rebates that we have under consideration. Basically, any funds that will relieve the hard-pressed local authority treasurers are welcome and necessary. At the moment their principal worry arises from the fact that they are having to budget ahead not only for next year, but for the year after, and the year after that.

A year ago, when presenting these Orders, the Secretary of State said that he hoped that it would be the last time that he had to do this, and that "by this time next year"—by which he meant this month—he would have a new system ready. Are we any nearer a decision? Can the local authorities look forward to a change next year or the year after, or shall we go on with the same procedure indefinitely? We all know that education is the major burden of local authorities. Are we going to return to the percentage grant? Will there be any reduction in any educational service grants, or a new rate equalisation grant? All these possibilities are being bandied about, and we are extremely keen to know in some detail when these measures will be presented. Will there be continued help for remote areas and special areas which have exceptionally heavy costs?

The other point that most concerns those interested in education is the grave problem of school building in relation to the raising of the school leaving age in September, 1970. Can the Under Secretary indicate whether sufficient money will be available for building to begin in time? The increases which have been spoken about today are due to the rise in the cost of living, the increased Bank Rate, the cost of borrowing, National Insurance stamps, and road tax, but does any of the money being granted today allow for the increase in rates which is bound to come due to the new Rating Bill?

The administrative cost will fall entirely on the local authorities, and 25 per cent. of the rebate will also be paid by them. It is extremely complex, and a major headache in administration. All this money is coming out of local authority funds, and is bound to cause increased rates. The Government should have given more consideration to the views of the Association of County Councils, and a special body should be set up to deal with this matter.

Has the Under Secretary come any nearer to agreeing with my suggestion, made a year ago, that he might make the 50 per cent. discretionary allowance in respect of rates on amateur sporting clubs mandatory rather than discretionary? This is particularly important on the Borders, where many amateur clubs have to pay rates as high as £200 and £300.

Mr. Deputy Speaker (Sir Samuel Storey)

Order. The hon. Member is getting rather wide of what we are discussing.

Mr. Monro

I am sorry, Mr. Deputy Speaker, but it affects sports clubs considerably in certain areas. I hope that the Minister will give more urgent consideration to this matter than he has done so far.

5.39 p.m.

Mr. John Robertson (Paisley)

It has been quite astonishing to sit here and listen to the hon. Members opposite, speaking as representatives of the party which abolished specific grants and brought in the general grant, which was detrimental to local authority work, especially in Scotland. It has been quite astonishing to hear what they have had to say today and to see the crocodile tears they wept on behalf of Scottish ratepayers. Of course, they have not grasped the essential point about the Scottish position over General Grant Increase Orders, nor about Government grants to Scottish local authorities. They say that the Order deals with a very narrow point—with the increase of the general grant in relation to estimates of additional expenditure, which is completely in line with the Bill which the party opposite introduced.

What it does not deal with—although it is pertinent to the discussion—is the fact that the Scottish Office effectively controls the expenditure of Scottish local authorities and, consequently, controls the amount of the required increase. This is the major point. I see that the right hon. Member for Argyll (Mr. Noble) is present. During his period of office in the last Government he did nothing at all about this very important point. In a comparison of Scottish local authorities with English—we have Orders before us relating to both—the Scottish local authority comes off very badly.

One would have thought, in view of the right hon. Gentleman's enthusiasm for the Scottish ratepayer, that he would have done something, either under a General Grant Order, or a General Grant (Increase) Order, to right the balance and bring the Scottish ratepayers into line with the English. But he did nothing at all. He ignored the problem, as hon. Gentlemen opposite are doing today.

As I listened to my hon. Friend saying that it is the Government's intention to introduce Measures which will assist local authorities, I thought that mere assistance to local authorities will not be enough unless the basic anomaly of the Scottish ratepayer as compared with the English is rectified once and for all. The Goschen formula has long outlived its usefulness. It has no basis in fact today and General Grant (Increase) Orders in relation to Scotland—even this Order—are still based on the Goshen formula.

My hon. Friend said that the figures of the increase were agreed in negotiation with local authority representatives. One should like to know, which local authority representatives? Who negotiated? This is a very important point. I must tell him that many local authorities in Scotland are not aware that their representatives discussed this point, nor that any agreement was reached on the amount of the increase—[Laughter.] The right hon. Member for Argyll, need not chortle about this. They were no more aware of such discussions when he held office. This is a basic weakness of the principle.

What is meant by negotiation? Some people are called in to the Scottish Office and told that this is the situation and these folk—who in a far-out kind of way represent Scottish local authorities, although no one is quite sure of their relationship with the local authorities—are finally worn down and accept the figures of the Department. I am not blaming my hon. Friend for this situation. It has been in operation for many years and has been brought to a very fine art. It would have been remarkable if he had been able to change it during the last year. This is what happens.

I do not think that the sums referred to represent the right increase required by Scottish local authorities. We have heard many complaints about the poor English ratepayers. The Scottish ratepayer is paying much more and receiving far less for his money. That is a statement of fact which I should be out of order in expanding, but it is a fact. The reason is not that Scottish house rents are so low or Scottish local authorities are inefficient or stupid—as was suggested in an article in a well-known journal recently—but that the basis of Government grants to Scottish local authorities is unfair.

This fact has never been faced squarely: Governments have run away from it. The Goschen formula of eleven-eightieths has been applied and the needs have never been considered. It is time that Governments saw that justice was done in this matter. The Goschen formula belongs to the last century: we need another kind of formula.

Scottish Ministers in the last Government did a poor job. They were never prepared to face up to Scotland's problem. They gave plenty of lip service to it, here and elsewhere, but they did a bad job in Scotland. I hope that my hon. Friend and his right hon. Friend will face up to the problems of Scottish local authorities Neither the new Rating Bill nor any other Rating Bill or Rating Relief Bill or any other alteration in local government finance will solve the problem of Scottish local authorities unless Government grants and Government assistance to local authorities are given on need and not on the Goschen formula——

Mr. Michael Noble (Argyll)

The hon. Member has been taking the opportunity to make rather sweeping and what I think he hopes are offensive remarks about my conduct as Secretary of State. If he is thinking solely in terms of the General Grant Order, I accept what he says, that I did nothing about it. But before he speaks about the Goschen formula, and about Scotland getting nothing more than that formula, perhaps he would consider what his right hon. Friend has done in the last year—very considerably less than we did in any of the last five years.

Mr. Robertson

I do not know whether or not the right hon. Gentleman is looking for my sympathy. He had a much longer run in office than my right hon. Friend has had. I tried to guide him in Committee about how he could rectify this, but he chose to ignore my advice. Scottish Ministers were very misleading and very rude at that time about grants to Scottish local authorities. I am now giving my hon. Friend the advantage of my advice in the matter, and I hope that he acts upon it more speedily and does not reject it, as did the right hon. Gentleman. When we discussed this subject on a previous occasion, the right hon. Gentleman was not even interested. Perhaps this is why my remarks about the right hon. Gentleman —though I did not intend this—seemed to him to be offensive. I intended merely to chaff him a little, but not to be offensive.

He did nothing. Nothing which his Government did helped Scottish local authorities: he must face up to this fact. He should also face up to the fact that he did nothing about Scottish ratepayers paying far more than English ratepayers. The remedy was in his hands. All that was required was that he should stand up to his English counterpart. All that was required was a little courage.

I hope that my hon. Friend and the Secretary of State will have the courage to stand up to their English counterparts and demand that Scottish local authorities be treated on a par with those in England.

5.50 p.m.

Mr. David Steel (Roxburgh, Selkirk and Peebles)

I am becoming a little tired of the argument so often used by the Government to the effect that they are unable to do certain things because the Tories did not do them during their 13 years in office. This is a weak argument because, after all, the Tories were put out of office by people who expected some changes to be made by the new Government and who were not expecting a natural continuation of what had gone before.

Dr. Dickson Mabon

Would the hon. Gentleman not agree that, although the Conservatives were swept from office, not all their Statutes were swept from the Statute Book? Is he not aware that we were obliged to follow those Statutes unless we altered them?

Mr. Steel

I accept that, but after all that we have heard from the Government we should be given some information about the great plans which are being hatched in the minds of hon. and right hon. Gentlemen opposite. Instead, we have merely been given a melancholy picture of how they must continue what was done before.

When considering increased rates expenditure in Scotland I must raise a matter which I have raised before and which I understand it is in order to discuss today. It is the question of the increases in transport charges which are being borne by Scotland. If the Scottish Ministers had been doing their job effectively they would have made sure that when steps like this were taken—in this case the Government claim that the steps were necessary because of the economic situation—Scotland would not have had to bear the full brunt of the hardship. In other words, it should be possible to find methods to enable Scotland to have a different level of fuel tax or vehicle duty.

Mr. Noble

Would the hon. Gentleman remind the House that when I proposed an amendment to that effect the entire Front Bench opposite voted against it?

Mr. Steel

That was indeed reprehensible of them, although I believe that the Conservatives increased fuel charges twice during their period of office without presenting the sort of proposal the right hon. Gentleman put forward when he was out of office. The people of Scotland would have been more impressed had he moved that amendment when he was Secretary of State. We are now being asked to vote additional money to meet what I regard as an unfortunate rise in expenditure in Scotland some of which could have been avoided had the Scottish Ministers been doing their proper job of influencing their colleagues in the Government.

Much reference has been made to the Labour Party's election pledge that it would grant early relief to ratepayers. It was an important pledge, although I accept that in the modest proposal currently being put before the House an attempt is being made, at least in principle, to do this for one section of the ratepaying community. I am referring, of course, not simply to what the Labour Party stated prior to the election but later. In the spring of this year the Under-Secretary was going about the country saying that we could expect a rates increase of about 4 per cent. this year.

Dr. Dickson Mabon indicated dissent.

Mr. Steel

That is so. Indeed, I was so surprised that I wrote to the Secretary of State to ask if that was a correct estimate. I was told that it was. In my part of the country the increase has not been of 4 per cent. but of between 11 per cent. and 12 per cent. Rate increases of this order fall particularly heavily on the small burghs, which are finding it increasingly difficult to meet these increases. We are, therefore, entitled to ask what measures the Government are considering to alleviate the hardship, particularly for the small burghs.

Whatever the Government say about teachers' salaries in this connection, the whole question of this form of expenditure should not arise on the sort of matter we are debating today because teachers' salaries are now being determined and negotiated nationally. They no longer vary from one local authority to another and there is, therefore, no reason why this item should fall on the rating system. I would like to know whether the Government have considered this aspect as one means of switching expenditure from local authorities to the central Government, a proposal which would not involve any loss of power by the local authorities.

Some distinctions that exist between the procedure in England and Scotland puzzle me. For example, when looking around for other possible sources of revenue for Scottish local authorities, have the Government considered the anomalous position of what happens to dog licence revenue? I imagine that this is a tiny item compared——

Mr. Deputy Speaker

I do not think that that arises on this Order.

Mr. Steel

I thought that it might, Mr. Deputy Speaker, but I must accept your Ruling. I hope that the point has reached its target and that the Under-Secretary might Lind it possible to mention it when he replies.

I had hoped that the Government would indicate the possibility of more substantial proposals for alleviating the hardship on ratepayers in Scotland. The Minister of Housing and Local Government gave hon. Members to understand recently that he would welcome a complete change of the rating system, perhaps to some form of local income tax. That would indeed be a welcome change, and I hope that we will hear more about it. While such a change is a long-term prospect, I hope that the Government will, in the meantime, seriously consider methods of stopping this annual business of increased rates plus increased Votes of this sort.

5.57 p.m.

Mr. Mick Buchanan-Smith (North Angus and Mearns)

It was interesting to watch the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel), with his usual Liberal dexterity, placing his feet carefully one in each camp. At one moment he was using his stick to castigate the present Government while at the next, when the right hon. Member for Argyle intervened, he was quick to turn the stick and try to use it against the Opposition. I must compliment him on the dexterity of his approach.

If he and his Party wish to be consistent in this matter he should not criticise the present Government when they are following Tory policies, for then they are carrying out the good policies of the former Tory Government. If the hon. Gentleman really believes what he says, why does he not give less support to the Government, certainly less than the Liberal Party has been giving to them recently?

Mr. John Robertson

Surely the hon. Gentleman would not criticise the Liberal Party for supporting both the Tories and the present Government. Is he not aware of the old saying of Jim Maxton, "If You cannot ride both horses at the one time, what are you doing in this place?"

Mr. Buchanan-Smith

The trouble with that is that one can fall off mid-stream and be crushed between the two.

It is entirely wrong to suggest that my hon. Friends and I criticise these increases. There is no question of our criticising them as such because my hon. Friends, as well as others outside the House, recognise the important work which local authorities do. We appreciate, therefore, that unless they have assistance from the central Government the burden on the individual and the rates would be tremendous indeed. We appreciate that these increases are necessary. What we are questioning is not so much the fact of the increases but the reasons why they have taken place, as my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell) stated so strongly.

The hon. Member for Paisley (Mr. John Robertson) spoke of the rate burden which was placed on Scotland and said how inequitable it was compared with the burden placed within English local authorities. He skated over the question of council rents, saying that this was not a matter of great importance. He also referred to an article in a certain journal. If I am thinking of the same article, I believe that the position was put very fairly and objectively, and the hon. Gentleman should have paid more attention to the point and not skated over it. There is no question at all that in relation to the level of rates, council-house rents are most important.

The hon. Gentleman must also recognise that my right hon. Friend the Member for Argyll (Mr. Noble) when Secretary of State for Scotland, and his predecessor, tried to redress the position——

Mr. John Robertson

The hon. Member should at least listen to what I said. I mentioned that the article said that the quality of councils in Scotland was remarkably poor, and I thought that was a very scurrilous attack on many excellent people in local government. He should get down to the effects of the burden of housing on Scottish rates.

Mr. Buchanan-Smith

I refer to an article on council-house rents, which showed clearly that if these rents were more realistic in some areas, the rate burden would be much more fairly spread.

I want now to compare the increases in the two periods in question. It is interesting to note the relative increases in the different items in 1965–66 and 1966–67. Whilst the increase in wages and salaries is expected to be of the order of £275,000 the relative figure for costs is estimated to fall by £60,000. How do the Government calculate that the relative increase in costs will be reduced in the second year as compared with the increase in the first year? The present record of the Government does not give us any confidence at all that this increase in costs will not he maintained over the second year.

Another item is interest on loans. In the two years in question, the relative increase in interest on loans is expected to fall by £110,000. Does that result from the Government envisaging that there will be an easier credit position in 1966–67? With the present economic position, and the present policy of the Government, I feel that there is very little prospect of that happening in the immediate offing or even as far away as 1966–67. But perhaps this relative reduction in loan interest is expected to result from reduced capital expenditure, may be from the delays in school building which the Government have imposed. Perhaps we may be told more on that subject.

It is unfortunate that the item of heating and lighting is not differentiated in the omnibus category of costs for heating and lighting, vehicle duty, postal charges, etc. Prices in some of the nationalised fuel industries are being held at their present level as a result of Government intervention; but have the Government taken into account what will happen when the present restrictions on those industries are removed and when, as is inevitable, coal prices rise? Has that increase been taken into account in this Order? I am quite sure that once the restrictions are removed the dam will open, and costs will go up at a far higher rate proportionately than they have recently. The Under-Secretary may recognise that these costs are likely to increase, but perhaps he is being optimistic in thinking that other costs will decrease to compensate for that rise. If that is so, it is his duty to tell us what costs he hopes will fall, for fuel costs will certainly rise.

We on this side are trying to determine why these increases are taking place, and believe that the responsibility for them lies fairly and squarely on the shoulders of the Government. The National Insurance contributions, transport costs, interest rates, vehicle duty, postal charges are all items of cost which the local authorities have to bear, and over which they have very little control. They have risen in the past year as a direct result of Government action. I represent a constituency in one of the remoter areas of Scotland where transport costs are a big item of local government expenditure. In comparison with certain other areas of central Scotland, for instance, and the more populated areas in England, this item bears very heavily on such local governments.

If it is fair to say that costs in the public sector have risen as a result of Socialist Government action, it is quite right for us to reflect on the extra cost which business, industry, agriculture and individuals are having to bear in Scotland as a direct result of that action. The Under-Secretary said that he would be seeking new legislation—and I took down his words—to escape "the shackles of the present plight". We have these shackles of the present plight because we have a Government which follow a policy which raises costs. The best way of escaping from the shackles is not to seek legislation, but for the Government to quit office.

6.06 p.m.

Dr. Dickson Mabon

I must congratulate hon. Members opposite on managing to hinge so many denunciations of the Government on such a slender Order as this, but we have had previous experience of this type of thing and I do not complain of it. It may be that I am rather wasted as a Joint Under-Secretary of State; perhaps in this context I should become Chancellor of the Exchequer or, indeed, my right hon. Friend the Chief Secretary, in trying to reply to points that are primarily a matter of concern to the Treasury.

I must tell the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) that I did not go round the country, as he said, saying that the rates would rise by only 4 per cent. For once in my life, I said—and I did so on the advice of the Scottish Office in reply to a Parliamentary Question in, I believe, February last—that as far as we were able to ascertain, there would, on the basis of the then trends, be a rise of 4 per cent., given that there was a change of 2 per cent. in the basis of valuation in Scotland. I said that the rise would be 6 per cent., but with a deduction of 2 per cent. because of the change in valuation. I did not take any great consolation in those figures, but they were the best available to the Department then.

When one is asked a hypothetical question, one can either seek honestly to answer it on the basis of trends or protest that the hypothesis is unsound and should not be commented on. I have the feeling, being now chased on the matter, that I should have taken the second course, but I think that the hon. Gentleman will see the point—

Mr. David Steel

With respect, I do, but I was putting to the hon. Gentleman, not his Parliamentary answer, but a speech made by him in Scotland. If he wishes, I will send him a cutting from the newspaper.

Dr. Mabon

I shall be delighted to have it, but I have the feeling that the speech comes out of the Answer to the Question in February. I may be wrong there, but it was a hypothetical question which I genuinely answered at the time.

The figures are not 4 per cent. and 6 per cent., but 7 per cent. and 9 per cent., and I am willing to see those on the record. They compare rather favourably with that disastrous year, 1961, when the figure was 19 per cent. Had I known that hon. Members would be going over all the increase Orders we have had since 1959, I should have been delighted to supply the House with the appropriate figures—and they would be quite surprising—showing how these percentages have gone up.

I do not seek to justify the present position at all. No Minister has ever done this. No Minister has ever done this, either on the English Order this year or last year or on the Scottish Order this year or last year.

We do not like this system. There is an in-built escalator here which we are trying to remove. However, it is worthy of note that the only public declaration, so far as I can trace, of the party opposite in relation to transfer of expenditure is in relation to England. It was in the speech made by the hon. Lady the Member for Finchley (Mrs. Thatcher). She spoke on rating at the Conservative Party conference in October, 1965, referring to the transfer of £100 million from the ratepayers to the taxpayers in respect of certain limited items. That in Scottish terms means a transfer of £10 million. That is about the only indication we have had of the thinking of the party opposite.

It would be quite out of order for me to try to respond to all the no doubt pertinent questions which were asked about what form the Local Government. Bill will take. The Bill is mentioned in the Queen's Speech. I assure hon. Members that Ministers have been hard at work in constructing a Local Government Bill for both countries. No doubt this will take up the point made by my hon. Friend the Member for Paisley (Mr. John Robertson), because he will have to see both Bills together to be able to make his accounts and do his arithmetic. Perhaps he will be able to return to his argument then about the Goschen formula and about the relativity of the Scottish ratepayers' burden to the English ratepayers' burden. At present about 60 per cent. of expenditure is covered for Scotland, while it is only 55 per cent., in the context of these increase Orders, which is covered for England.

The hon. Member for Dumfries (Mr. Monro) managed to ask me a number of questions. I am sorry that he complained about the way in which I had treated him in regard to the discretionary grants for sporting clubs. I have written to him twice on this. A Statute would have to be changed to bring about the end he desires. This obviously cannot be done in an increase Order. It would have to be done, if it were done at all, in a Bill.

I am surprised that the hon. Member keeps complaining to me that somehow I should be able to induce some mandatory behaviour on the part of certain local authorities, which would resent it very much, in relation to the point he is making. Within the context of the present discretionary matter, we are doing what we can. We have drawn this to the attention of sporting clubs and local authorities in the different areas. As for the hon. Gentleman's other questions about the percentage grant, I would prefer to await the publication of the Local Government Bill.

As for the hon. Gentleman's quotation from my right hon. Friend's speech—his very admirable speech; I have to say that—[Laughter.]—because it is true—about it being the last general grant Order, my right hon. Friend may well he right. In fact it will be the last General Grant Order, because this is the General Grant (Increase) Order and it is quite conceivable, as I said in my earlier remarks, that we may have an increase Orfder next year to take account of certain other matters which may arise between the years of the Order as it is increased affecting the year 1966–67 and the beginning of the new rating year 1967–68 which we hope, with Parliamentary co-operation, we can see being affected by the new Local Government Bill. We hope that Bill will come out some time in the Spring and may get on to the Statute Book by July. Therefore, my right hon. Friend is correct in that matter.

My hon. Friend the Member for Renfrew, West (Mr. Buchan) asked me a number of questions about teachers. I dare not enter this very difficult arena at the moment. The Secretary of State's decision on wage negotiations is normally indicated by the publication of draft salary regulations. These are open to representation by interested bodies and persons for a period of 40 days. I have no doubt that the dialogue, if it could be called a dialogue—it would probably involve more than two sides to the argument—will then continue. That has been the past practice. Naturally my right hon. Friend wants to see the whole position in the light of the new situation which to some extent he has created by his well known regard for the teaching profession, of which he was himself a distinguished member.

Mr. Buchan

I thank my hon. Friend for his flattering remarks. It was in fact in relation to this morning's leak that I suggested that a new situation had arisen. I asked whether my hon. Friend could suggest anything.

Dr. Mabon

I really cannot, on the strength of this Order, without getting into trouble with the Chair, answer that point. I hope that my hon. Friend will accept the assurance I have given him about what has been past practice and how my right hon. Friend is very concerned about these developments and will naturally take action as early as he can.

My hon. Friend the Member for Paisley raised a very important question in regard to the local authority representatives. I vividly recall being catapulted into the meeting of local authorities in November of last year. I know that we are often chided by the former Under-Secretary of State for Scotland about this. I do not think that he ever went to such a meeting. Within one month of my taking office, I was obliged to attend such a meeting and to take with me virtually what were the previous Government's figures and justify them to the local authority associations. At that time the local authority associations did not know that my right hon. Friend the Secretary of State and my right hon. Friend the Minister of Housing and Local Government hoped to be able to persuade the whole Government to agree to an additional sum of money to the General Grant Order of last year. At that time, representing my right hon. Friend, I could not reveal that such discussions were going on within the Government, because we had been elected for only a few weeks.

I would not agree with my hon. Friend that Ministers, not only in this Government but in previous Governments, are able to wear local authorities down. It is a very powerful meeting. Scottish local authority associations are as energetic and resolute—rightly so—in the pursuit of Scottish matters as are Scottish Members in the House. The Association of County Councils sends its representatives. There is the Association of Counties and Cities. There is the Convention of Royal Burghs.

Mr. John Robertson

Does not my hon. Friend agree that in the final analysis the choice before the local authorities is to take it or leave it?

Dr. Mahon

I would not quite say that. In fact, if the meeting between the local authority representatives and the Minister broke up in disagreement, the local authority representatives would know where to go, namely, to their Members of Parliament, who could make a great deal of trouble in the House. It is in the interests of Ministers to try to be reasonable and to come to an accommodation and an agreement with local authorities. To that extent, the local authorities know the strength of their own representation. I do not disdain these meetings. They are very much a part of our democratic scene. It is quite right that Ministers should be willing to go and meet the local authorities when they ask for meetings. On this Order there is a statutory obligation on the Minister to do so. The Scottish local authorities did not even ask for their right under Statute, because they were satisfied that the Gov- ernment had done the best possible in this increase Order. There was no reason for them to come and meet Ministers.

There was an interjection in the speech of my hon. Friend the Member for Renfrew, West by the right hon. Member for Argyll (Mr. Noble)—I am sorry he has gone—in which the right hon. Gentleman complained bitterly that my right hon. Friend had done nothing—that was his word—to help local government in Scotland. This is an absolute caricature of the situation. As I said earlier, of the £20 million which was agreed in the main grant Order from which this Increase Order flows £1.2 million was Treasury money, in addition to the second year, which in fact covered a full local government expenditure of some £2 million. It was my right hon. Friend who had to find the money on behalf of the Government to provide the £1 million which was Scotland's share of the interim rating relief which we alluded to in the debate on the Rating Bill which we are at present considering. It was this Government that had to find that £1 million last year. It was this Government who introduced a White Paper dealing with raising housing subsidies and a Bill which will come shortly, virtually doubling the rate of subsidy for house building in Scotland. It is this Government who are introducing the Rating Bill. It is this Government who are preparing the new Local Government Bill, which we hope will satisfy hon. Members in all parts of the House that this Government are intent not only on ensuring that ratepayers get value for their money but also that the ratepayer is not unduly burdened.

Question put and agreed to.

Resolved, That the General Grant (Increase) (Scotland) Order, 1965, dated 25th November, 1965, a copy of which was laid before this House on 1st December, be approved.