SCOTLAND (RATE SUPPORT GRANT) (Hansard, 21 February 1967)

The Minister of State, Scottish Office (Dr. J. Dickson Mahon)
I beg to move, That the Rate Support Grant (Scotland) Order 1967, dated 25th January, 1967, a copy of which was laid before this House on 1st February be approved. The House is asked to give approval to the Rate Support Grant (Scotland) Order, 1967. Accompanying the Order is the Report, House of Commons Paper No. 300, explaining the considerations leading to the provisions in the Order. With the permission of the House, as this is the first Order to be made under Section 3 of the Local Government (Scotland) Act, 1966, I think it right to recall how the new grant system works, and I shall comment on the various provisions of the Order as they come up in sequence and as the explanations are given in the House of Commons Paper.
For the first time, the total amount of Exchequer assistanec towards local authority expenditure on revenue account, apart from housing subsidies, will be fixed for two years in advance and will be revised only if there are substantial unforeseen increases in the level of prices, costs or remuneration. The reason why the explanatory Paper is so much longer than that for England and Wales is that we have chosen in Scotland—that is, the Government, the local authorities and, as I understand it, the Opposition—all members of the Scottish Standing Committee have endorsed it—to accept that the main formula in the English Statute should be written into this Order and changed, if necessary, should we find that the Orders do not translate themselves into practice as is intended. This is why there is so much more explanation here.
From the aggregate amount of Exchequer assistance so fixed, grants towards specific services such as police and civil defence are deducted and the remainder is distributed through the medium of the rate support grant. The Order fixes the total rate support grants for 1967–68 and 1968–69 at £149.79 million and £159.21 million, respectively. This compares with an estimated £139.9 million for the corresponding grants in the current year. In much of my later remarks I shall talk of the three years, 1541 meaning this year as the base year and the two years covered by the Order being the two succeeding years for purposes of the three-year comparison.
The elements of the rate support grant as defined in the Act, in the Order and in the Explanatory Memorandum are the needs element, the resources element and the domestic element. The needs element is not dissimilar to the present general grant but covers a wider field of all local authority services except housing and trading services, such as public transport.
The needs element will be payable to all county and town councils. The sums involved for the next two years are £110.2 million and £115.06 million. The resources element will, like the present equalisation grant, be paid to county and town councils whose rating resources are below a certain standard. The percentage of grant to each local authority's expenditure will vary from nil to over 80 per cent., as at present. The resources elements are fixed by the Order at £36.74 million for 1967–68 and £38.35 million for 1968–69.
The third and novel element of the rate support grant is the domestic element, a new concept to implement yet further the Government's undertaking to moderate increases in householders' rates. The Order provides that rates on dwelling-houses in 1967–68 are to be 10d. in the £ lower than the rate payable by other categories of ratepayer; and that, in 1968–69, they are to be 1s. 8d. lower. The resulting loss of revenue is made good by the domestic element, fixed by the Order at £2.85 million for 1967–68 and £5.8 million for the following year.
Turning now to the process by which the total amount of Exchequer assistance is arrived at, the Act requires the Secretary of State before determining the aggregate assistance and the amount of the specific grants to consult the local authority associations which appear to him to be concerned and to take three factors into account. These are the current level of prices, costs and remuneration along with any foreseeable variation in that level and with the latest available information about the current rate of expenditure; secondly, any probably fluctuation in the demand for services so far as this is attributable to circumstances prevailing in Scotland as a whole which are not under the control of local authori- 1542 ties; and, thirdly, the need for developing those services and the extent to which it is reasonable to do so having regard to general economic conditions.
In accordance with this procedure, all counties and burghs were invited to submit figures of their actual expenditure in 1965–66 on the services giving rise to reckonable expenditure and estimates of the corresponding expenditure in 1966–67 and the two years of the grant period. These estimates were then scrutinised and discussed with representatives of the associations.
As the Report explains, the actual expenditure for 1965–66, adjusted to the same price base as the other figures, was £237 million and the estimates for 1966/ 67 and the two following years were, respectively, £258 million, £273 million and £285 million. This represents an average increase of 6½ per cent. in each year of the three-year period at virtually constant prices. The continuing rise of public expenditure on that scale would be inconsistent with the Government's present economic policy. Indeed, we have enough comments from hon. Members opposite on the current rating burdens to know that they would not have accepted higher rating burdens, despite the higher Exchequer equalisation grants in the succeeding years, and we respect that.
On detailed examination of the estimates, we found that the growth they allowed for was in some cases either greater than seemed likely in the light of past trends or greater than the probable rate of recruitment to the services concerned would allow. In others a lower rate of growth would result if nonessential capital projects were deferred. On these grounds we were able to arrive after the negotiations at figures of £264.3 million for 1967–68 and £276.2 million for 1968–69, bringing the average growth of expenditure over the three-year period down to 4½ per cent. per year.
So much for the distinction between what was estimated by the local authorities and what the Government agreed with them was practical and sensible. From my own personal experience in meeting the authorities on this matter I can say that it is not true that we simply take a straight cut of what their estimates are. That would be far too crude. What is discussed across the table, first by 1543 officials, and by elected members and officials thereafter if the matter cannot be resolved, is the pace at which certain departments of local authorities should proceed.
In responding to the debate later my right hon. Friend will, no doubt, willingly give examples in various activities where the Secretary of State wanted certain things done a little more quickly, the local authorities wanted certain other things done a little more quickly, and a compromise was arrived at in both circumstances. In other words, it is not a straight reduction throughout; it is a building up of some and a lowering of others. There are justifications for many of the attitudes taken up by the local authorities, and I will later indicate what I mean.
It can therefore be seen that we have discussed the proposals with the local authority associations quite thoroughly and reached agreement on them, although in the case of roads and the miscellaneous environmental services, they made it clear that to hold expenditure within the revised figures would be difficult for them. I am very grateful, as is my right hon. Friend, for the co-operation of local authorities in carrying out the difficult negotiations and laborious estimating exercise, and for the realism they have shown in the discussions with us.
Appendix A of the Report shows the distribution of reckonable expenditure between services which my right hon. Friend assumed in determining the aggregate amount of the rate support grants, but I must emphasise that the grant is a grant in general aid of the revenues of the authorities, and that the actual pattern of expenditure will be what they make it. The total of Exchequer assistance has been fixed at 62½ per cent. of the reckonable expenditure for 1967–68 and 63½ per cent. for 1968–69. This is an increase over the percentage under the former grant system of slightly over 1 per cent. for the first year and over 2 per cent. for the second, and accordingly, as is stated in paragraph 11 of the Report, we estimate that there is an increase of £3 million in the grants payable in respect of the first financial year of the grant period and of £7 million in respect of the second.
1544 I now turn to specific grants. The table at Appendix B shows the specific grants which are to be deducted from the aggregate of Exchequer assistance in order to arrive at the total of the rate support grants. The former specific grants for classified road maintenance and for school milk and meals do not figure in the list because those services will in future be assisted through the rate support grant. There is also an addition to the capital grants for highway improvements in respect of some work on principal roads which was formerly classed as maintenance. The list, however, includes the new grants for urban redevelopment, acquisition of public open space and derelict sites, all of which were welcomed in Committee and in the House when we discussed the Bill. The most important of these is the redevelopment grant, which extends the scope of direct assistance for comprehensive redevelopment, and the figure shown in Appendix B is about £280,000 more than the provision for the corresponding grant in this year's estimates.
Now I turn to the formula for distributing the needs element. The needs element will include a special portion for roads to support road costs in so far as they are not met by the capital grants on principal road improvement schemes. The roads portion which, in 1967–68, will be of the order of £6 million will be distributed among counties and large burghs by reference to objective factors bearing on the incidence of road expenditure—for example, road mileage, population and area—and aimed at continuing, as far as possible, the pattern of redistribution of road grants in recent years. Details of the distribution formula are given in Schedule 1 of the Order.
The balance of the needs element, amounting to some £104 million, will be distributed on similar lines to general grant, but the primary apportionment among education authorities—the counties and the cities—will be on an improved basis of weighted population which will include new weightings—for children under five, people over 65, numbers of school children and students. Schedule 2 sets out the formula in detail, as I promised would be the case during discussions on the Bill.
From Table 1 on page 6 of the Order, it will be seen that, for the first time, we 1545 recognise the extra costs of secondary and special school pupils by giving them a special weighting. The amounts of the roads portion and of the balance of the needs element apportioned to a county will be sub-divided between the county council and the town councils within the county in the same way as the county requisition—by reference to the standard penny rate product, or the actual penny rate product in the few cases where this is higher.
Now I turn to the distribution of the resources element. The resources element will, like the equalisation grant, be paid to counties and burghs whose rate resources per head of weighted population are below a certain standard—the standard penny rate product. The formula for calculating the weighted population is given in Schedule 3 of the Order and is the same as for equalisation grant.
In calculating an authority's relevant local expenditure for grant, it will be assumed that council rents are up to a certain standard at the least. This standard, or notional rent, will, like the present adjustment of equalisation grant, be a prescribed percentage of the gross annual value of council houses.
Under Schedule 4 of the Order, the percentage will be 95 per cent. for 1967–68 and 100 per cent. for 1968–69, or alternatively 100 per cent. and 105 per cent. respectively, less rent rebates awarded under a scheme approved by my right hon. Friend the Secretary of State for Scotland, which could be beneficial if rebates total more than 5 per cent. of gross annual values.
I stress this point in view of some of the doubts among local authorities discussing this matter at the present time. The alternative to column 1 of the Schedule is column 2, and the alternative prescribed there is a 5 per cent. difference. I hope that the local authorities will pay attention to that matter. My right hon. Friend the Secretary of State does not approve all rent rebate schemes—only certain ones in certain circumstances, as the hon. Member for Moray and Nairn (Mr. G. Campbell) acknowledged earlier.
This provision is no longer intended to protect the Exchequer against excessive claims for grant due to unnecessarily high housing deficits, as the aggregate amount of the resources element of rate 1546 support grant is fixed and will not be reduced.
I need not add with what relief this has been greeted by local authorities. The effect of the 1963 Act and the irritation it caused have been removed by this change in a most beneficial way in that the authorities are able to look at the situation in the knowledge that, if they so adjust, the adjustment will not be to the benefit of the Exchequer and to no-one else in Scotland. I myself am surprised by how different a climate this has created not only among Labour-controlled local authorities but also among many Progressive and Independent-controlled local authorities which have taken the same view as some Labour councils. We have made quite a significant move forward in this respect, and it is due entirely to the efforts of my right hon. Friend that we have this provision. The provision will safeguard local authorities themselves by ensuring that an undue share of the resources element is not obtained by local authorities with rents below the prescribed standards laid down.
Now I come to consultations on distribution formulae. These have been agreed with the local authority associations. It is inevitable under any grant based on a formula that some local authorities think that they have not done too well. All we can hope, being, as it were, the "honest broker" in the discussions, is that we have by this Order achieved the greatest good for the greatest number. We have done so with the active aid of the local authorities themselves, and I hope that we are a long way towards securing this goal.
I am glad that we do not have the Rate Support Grant Order inflexible in statute, but that we are able not only to consider what has been suggested tonight and to hear all the criticism, but, later—because the working parties of the local authorities will continue in session while we are in office, and until we make the next rate support grant order—to profit by experience.
Needless to say, the working formulae will be watched very carefully. If experience shows that changes are needed, there is power to make them in the next Rate Support Grant Order or, for that matter, an increase Order if one proves necessary, although it must be emphasised that an improvement in favour of one type of 1547 authority would mean a loss for others, and it is not easy to get agreement on a recasting of these formulae.
In conclusion, the financial provisions of the Local Government (Scotland) Act, 1966 and this Order make a significant improvement in the financial relationship between central and local government. This is acknowledged both by the local authorities and ourselves after our experience in discussions with them during the winter. This is so because they involve for the first time the Government looking at local government needs as a whole and because, again for the first time, there is a guarantee that the proportion of local expenditure met by ratepayers will decrease. I commend the Order to the House.

§ Mr. Gordon Campbell (Moray and Nairn)
As the hon. Gentleman said, this is the first rate support grant Order which has been submitted for Scotland. As we have recently passed the 1966 Scottish Local Government Act, the papers which are before us do not contain many surprises, because we have already considered the form of the new grant. First, it has a new name. It follows the procedures and it follows very closely the system of the former general grant. It is combined with the Exchequer equalisation grant and, as the hon. Gentleman said, it is even wider than the general grant because it takes in further subjects.
I point out, in passing, how contrary is this action to what the Labour Party said when it was in opposition. When it opposed the general grant it said it would take education, isolate it again, and make it a specific grant. The Labour Party has completely changed its tune on this, but we are getting used to that.
It has been given a new name, but the name is misleading. It is called "The Rate Support Grant," but the one thing which is clear is that what the grant will not do in 1967–68 is to give support to the rates. In Scotland they seem doomed to go up, to continue to rise by a substantial amount. I do not know whether the Secretary of State will be able to make any estimate, on either the calendar year 1967 or the grant period 1967–68, as to the probable rise in rates in Scotland. but it is pretty clear already that it will be substantial, unfortunately.
1548 The hon. Gentleman drew attention to the report of the Secretary of State which accompanies the grant Order. Again, this is similar to the general grant procedure. I draw attention to paragraph 11 of that Report in which it is estimated that £3 million more will be available to local government in Scotland under this procedure than would have been available under the previous procedure. The Minister of State mentioned that in his speech.
However, the Government have not accepted the local authorities' estimates. It is clear that the local authorities put forward estimates for ₣273 million for the period and the Government have simply catered for £264 million, so £9 million have been lopped off because, as the Memorandum says, "of current economic conditions". If 62½ per cent., which is the percentage of that £9 million, were to be covered by grant as it should be, then there would be nearly £6 million more which local authorities could have expected. Therefore, instead of getting £3 million more, as the hon. Gentleman suggested, local authorities will be getting £3 million less.

§ Dr. Dickson Mabon
Ridiculous.

§ Mr. Campbell
The hon. Gentleman says that it is ridiculous, but I will quote from the bottom of page 4 of the Memorandum which explains why the Government have lopped off this £9 million. It says: It is clear that over the two years ahead the rate of growth of the economy will fall short of that postulated in the National Plan and in this situation the growth of public expenditure must be restrained to prevent it pre-empting too large a share of the national product. Therefore, £9 million of the expenditure estimated by local authorities during this period is lopped off by the Government.

§ Dr. Mabon
This is a very important matter of procedure. There never was an occasion when, having taken the estimates county by county and burgh by burgh and adding them up and rounding them off, the estimate was not readjusted, always downwards, by the Government, because each county cannot take a Scottish view of things. By the nature of things, this is so. There has not been an occasion since 1958 when the procedure has been otherwise. The hon. 1549 Gentleman had better get used to it, because it has been going on for some time. It represents not a reduction but an adjustment by the local authority. If the hon. Gentleman wants to cite specific examples of services, I am sure that my right hon. Friend will be very willing to reply and to point out that it is not a cut in certain cases, although, of course, in some it is, although it is only marginal in those.

§ Mr. Campbell
The hon. Gentleman is doing his best to explain, but I have been looking at the statements which accompanied previous general grant orders and I have with me those for 1964 and 1962. Of course we studied those when this statement came out.
We now have the new expression, "reckonable expenditure". On previous occasions, the Government were able to agree with local authorities what the figure would be. We did not have to issue any statements saying that because of the economic situation and the growth rate not being what was postulated, we would have to make a cut of this kind. However, apparently having agreed the expenditure which the local authorities could expect, the Government have decided to cut it because of the economic crisis. That is perfectly clear, and it is quite different from the statements accompanying the 1964 and 1962 figures when the estimated expenditure was determined by both the Government and the local authorities and the figures then reached. By producing this figure of £3 million, the Government are positively misleading the House.
If a local authority finds or thinks that it must incur the full expenditure which it has estimated, it will have to obtain the extra from the ratepayers. This is why the ratepayers will find an additional burden, and the Minister of State more or less said this himself. He said that this grant was only a contribution by the Government, and he indicated that if a local authority had to spend more than was estimated the extra would not be covered by grant. That is why, although called a rate support grant, this grant, certainly in the coming year, will not give support to the rates.
This is yet another attempted swindle being perpetrated by the Government. Let us examine the reasons for this and for the economic crisis which the hon. Gentleman mentioned. The National 1550 Plan has been referred to. On 10th November last, in answer to a Question, the First Secretary of State said of the National Plan that developments had invalidated many of the assumptions and figures in the Plan. This was not altogether surprising.
What about what has been called the Scottish Plan? What about the White Paper on the Scottish Economy which came out in the January following the publication of the National Plan? We do not know whether the right hon. Gentleman still insists that the growth rate there is continuing as suggested. My own guess is that the growth rate, like that in the National Plan, has had to be abandoned for the moment.
In plain English, this means that it is the Government's mishandling of the economy which has caused this savage cut in the local authorities' expenditure and in their estimates. What has happened to the promises of early relief to rate-papers and the larger part of teachers' salaries being transferred from the rates to the Exchequer? Do these words ring in the ears of members of the Front Bench opposite? They are taken from the 1964 Labour Party election manifesto.
This Grant covers the expected remuneration of local government employees. We ask the Government: what about the pay award of 7 per cent. which many of these local government employees are awaiting? Have the estimates, even with the Government's reduction, included this award, and if so, for what period? Is it for the whole period starting in May, or for the period starting on 16th September, which would mean that the N.A.L.G.O. employees' salary award would be postponed for a further six months? On which basis have the Government worked out this grant?
If there is further postponement we have had little explanation so far of the reason, and the employees' side in the negotiations has stated that the Department for Economic Affairs indicated that it would prefer a settlement of this claim on the English pattern. That was why, it was claimed, the Scottish negotiations had to follow the English.
If this statement is correct, and we have no reason to doubt that the Department of Economic Affairs did indicate 1551 that it preferred that kind of settlement, then it was inevitable that the Scottish settlement would miss the date of 20th July. It appears that the English settlement was reached only a few days before that date and no one knew before then, when the statement was suddenly made by the Prime Minister, that this would be a watershed in pay awards.
In this and other matters the Government have completely ignored the interests of Scotland. It is not the system of government that is wrong, it is the way in which it is being operated by the present incumbents. I hope that the Minister who is to reply will tell us, first whether the Scottish award will be put into effect on 16th March as it should be, or whether it will be postponed, and secondly whether this has been included in the calculations on this Order.

§ Mr. Deputy Speaker (Sir Eric Fletcher)
The first question does not arise on the Order. The second one does.

§ Mr. Campbell
The reason I mention this is because the period covered by the Order begins in May and the dates in argument are between March and September. The question of when the award will be recognised and the extra 7 per cent. salary agreement would be covered by whether the Grant allowed for it. We want to know what is in the Government's mind about this, and we hope that in due course the Minister will be able to tell us.

§ Dr. Dickson Mabon
The hon. Gentleman knows, because he has cross-examined me many times about this, that if there are any impending awards which are not taken account of in this Order they are dealt with and taken care of, unlike the position in England, by a grant increase Order, and if such an award becomes relevant it will be dealt with in this way.
Just to get the matter clear about your Ruling, Mr. Deputy Speaker, this Order does not contain these elements of controversy. They would be contained in a grant increase Order.

§ Mr. Ian MacArthur (Perth and East Perthshire)
On a point of order.

§ Mr. Campbell
Perhaps my hon. Friend will allow me to deal with this first. This 1552 is of great interest, because when we have dealt with these general grant increase Orders, and no doubt in due course the rate support grant increase Orders which follow broadly the same principle, only unforeseeable extra expenditure is allowed. Anybody who thinks that the expenditure about which I am talking, this salary award, is something about which few people know, and is unforeseen, has not been reading the Scottish newspapers or listening to what people have been saying in Scotland.

§ Mr. Deputy Speaker
Order. I think I was being addressed on a point of order by the Minister, and I think I had better explain what is in order and what is not in this matter.
It is true that Section 2 of the Local Government (Scotland) Act requires the Secretary of State, in determining the aggregate of Exchequer grant, to take into consideration the current level of prices, costs, and remuneration. Therefore, it is in order to ask the Secretary of State the extent to which he observed this provision affecting the remuneration of teachers in making this Order, but it would not be in order in this debate to go into the question of the wage structure of local authorities, or the current grievances, if any, of the officers employed by them.

§ Mr. J. Bruce-Gardyne (South Angus)
On a point of order, Mr. Deputy Speaker. We were given a clear understanding last Thursday—and this is in the memory of a large number of hon. Members—that it would be in order to discuss all aspects of this matter during this debate tonight.

§ Mr. Deputy Speaker
On the contrary, no such assurance was given at any time.

§ Mr. Edward M. Taylor (Glasgow, Cathcart)
On a point of order, Mr. Deputy Speaker. I specifically put to the Leader of the House that it would be very unsatisfactory for us to have to dodge in and out of the rules of order to discuss this vital question. What you are saying, Mr. Deputy Speaker, and I accept it, is that we have been completely fooled. What you are saying, and again I accept it, is that we have to dodge in and out of the rules of order to discuss this matter.

§ Mr. Deputy Speaker
There is no question of dodging in and out of the rules of order. With regard to the point 1553 made by the hon. Member for South Angus (Mr. Bruce-Gardyne), I have studied the exchanges with the Leader of the House at Question Time, and apart from the fact that he does not give directions about what is in order, no such assurance as was indicated was given by the Leader of the House at any time during that exchange of views.

§ Mr. MacArthur
Further to that point of order. We on this side of the House appreciate the extraordinarily difficult position in which the Chair has been placed by the Leader of the House. Having said that, Mr. Deputy Speaker, and I am sure you appreciate that I am not trying to challenge your Ruling, may I ask by what means you can extend the customary protection which you and Mr. Speaker provide for back bench Members? As you know, last Thursday a number of my hon. Friends and I asked the Leader of the House when the Secretary of State for Scotland would make a statement to the House about the problems arising from the situation with regard to local government officers in Scotland. The Leader of the House, in many of his replies, gave us a clear indication that we could raise this matter today.

§ Mr. Deputy Speaker
I have studied this. The passage to which the hon. Member was referring occurs in c. 818. All that the Leader of the House said on that occasion—when it had been suggested by the hon. Member for South Angus that the Secretary of State for Scotland was ashamed to make a statement on this matter—was: Scottish matters are being discussed next week—I believe on Tuesday. That was quite correct. No assurance was given that this matter would be in order on any one of the various Scottish matters that arise today. It falls to the Chair to decide, on each Scottish item of business, what is in order and what is not.

§ Mr. MacArthur
With respect, Mr. Deputy Speaker, it is not only in c. 818. I agree that that is exactly as you have quoted it. But further indications were given by the Leader of the House to this effect. I asked him in c. 821 if he was aware that the Scottish business to which he referred for next Tuesday is not a suitable vehicle to discuss a matter of this kind 1554 and in reply the Leader of the House said: There is on Tuesday a whole day's business which is Scottish, and I would have thought that it was not beyond the wit of Scots to find a way of referring to this subject on one of these occasions. Earlier this evening we were debating housing, and it would have been an abuse of the House to try to raise a local government issue then. Not one of my hon. Friends made that attempt. In view of what the Leader of the House told us—and it was a clear indication of his interpretation of the situation—we are trying to raise the matter now.
I appreciate that you must be guided by the normal rules of order and not by guidance which the Leader of the House chooses to give hon. Members in an attempt to choke off criticism of the Government. But the Leader of the House did not stop there. [Interruption.] I appreciate that hon. and right hon. Members opposite do not like this. With great respect, Mr. Deputy Speaker, I am asking for hon. Members on this side of the House to be protected by you from being given misleading advice by the Leader of the House. Later on, in c. 822, my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) raised this very point, asking whether the Leader of the House was advising hon. Members on this side to dodge in and out of the rules of order in order to raise this matter. The Leader of the House replied: I said that the whole of Tuesday was to be devoted to Scottish business.… All I said was that I thought it unlikely that this question could not be raised in the course of that period."—[OFFICIAL REPORT, 16th February, 1967; Vol. 741, c. 818–22.] With the greatest respect, that wac misleading to hon. Members on this side of the House. We have deliberately behaved properly in waiting till now to raise this issue. Now you understandably rule us out of order. We have been put into an impossible position by the Leader of the House and it is only right that we should make our protests to you.

§ Mr. Deputy Speaker
Hon. Members have made their protests. I have studied the answers given by the Leader of the House. All that he did was to suggest that it migh have ben possible, on one or other items of Scottish business, to make 1555 reference to this matter. Incidental refer-has already been made to it. I have considered this matter already, as has Mr. Speaker. The rules of order are quite clear. It would be out of order in this debate to discuss in any detail the alleged grievance of local government officers in Scotland.

§ Mr. Alick Buchanan-Smith (North Angus and Mearns)
On a point of order. This is a matter which many of my constituents have represented to me most urgently. Does your Ruling mean that in what the Leader of the House said last week he was deliberately misleading hon. Members on this side of the House who seek to represent the interests of their constituents?

Mr. Deputy-Speaker
The hon. Member cannot, on a point of order, suggest that the Leader of the House has deliberately misled the House. What the Leader of the House did was to express an opinion of what might or might not be in order on some item of Scottish business. I have ruled on what is in order on this item and it is not in in order on this item to ventilate the alleged grievances of Scottish local government officers.

§ Mr. Thomas Steele (Dunbartonshire, West)
Further to that point of order. Is it not the case that the Opposition have a number of days on which they decide what should be discussed? If they are so anxious about this, why do they not use some of their time?

Mr. Deputy-Speaker
That is a matter for the Leader of the House on a business Question on any Thursday.

§ Dr. Dickson Mabon
Further to that point of order. Is it, then, quite out of order to refer to any meeting tomorrow between the Secretary of State and hon. Members opposite or any meetings on Thursday on this matter? Is that also out of order? Are we on the Government side precluded from referring to that as well?

§ Mr. Deputy Speaker
It is out of order for any hon. Member. The rules apply equally to both sides of the House.

§ Mr. Campbell
I protest at the way the Leader of the House dismissed today as simply Scottish business, as though 1556 we would be able to discuss this subject. Second, Mr. Deputy Speaker ruled that the details of the salary structure cannot be discussed but that the general questions which I put to the Secretary of State are in order. I will make it clear what questions I have put.
They related to how the estimates of remuneration in preparing this Order and the sum which it covers were reached. That, as Mr. Deputy Speaker said, is clearly in order and we look forward to hearing from the Secretary of State or the Minister of State in due course whether the element—I see the Minister of State rather happily pointing to the Secretary of State as being the Minister who will reply.
It is very much part of the rate support grant Order that that element of it which is remuneration should be explained to the House and we should know to what extent this covers increases which are expected in salaries and, therefore, whether an increase is accepted from the beginning of the period or from 16th September. I will not go further into that or the question of the salary structure or the present grievances, in accordance with the Ruling, but I have no doubt that some of my hon. Friends, if they catch your eye, Mr. Speaker, will wish to raise the points which your predecessor in the Chair said were in order on this subject.
I had just left this point and was going on to another quite different point when the hon. Gentleman raised this question. The different point was one which he mentioned at the end of his speech, on notional rent. At last we are being told how the gap in the 1966 Act is to he filled. This was a question mark while the 1966 Act was going through the House. We kept asking about the gap about notional rent—

§ Mr. Speaker
Order. I hope that the hon. Gentleman will help me. Are we taking both together? If not, the subject of notional rent arises on the second one.

§ Mr. Campbell
Yes, Mr. Speaker, but, with respect, it is in the rate support grant as well as the Exchequer equalisation grant, as the Minister of State explained. It is in Schedule 4, and, on page 2, the last paragraph is headed "Notional rent income"——

§ Mr. Speaker
Order. I am not trying to prevent the hon. Gentleman from raising a point, but notional rent comes on the second Order.

§ Mr. Campbell
It is one of the peculiarities of Scottish grants that notional rent comes up both on this grant and on the Exchequer equalisation grant——

§ Mr. Speaker
The hon. Gentleman is correct.

§ Mr. Campbell
Thank you, Mr. Speaker.
The hon. Gentleman explained what the Government were now doing in producing Schedule 4, which tells us what the notional rent will be in the light of the recently passed 1966 Act in terms of percentage of gross annual value. When we asked earlier whether or not it would be connected with the gross annual value, we got no answer. Now we have the answer. Is it a new Labour Government formula? No. It is exactly repeating the previous part of the 1963 Act. The whole of this portion of the Order is, word for word, taken from Section 3(3) of the 1963 Act, the only difference being that a new table is included.

§ Mr. Campbell
It is no good the hon. Gentleman shaking his head in dissent. I have been through these provisions carefully to make sure that I have got the position right. We also have the same option for local authorities with rent rebate schemes and, when reading his brief, the hon. Gentleman explained this and proved that it is exactly the same system.

§ Dr. Dickson Mabon
That is not so.

§ Mr. Campbell
The only difference is that under the previous system the money came from the Treasury and, if it was not granted to a local authority because its rents were too low, it remained with the Treasury and was lost to Scotland. That, I understood, was the hon. Gentleman's argument, whereas now there is a lump sum which is the resources element or equivalent to the Exchequer equalisation grant; and nothing will be lost if a local authority does not get the money. This is a complicated matter, but it works both ways. Under the previous system, if more local authorities in Scotland were 1558 eligible for the Exchequer equalisation grant, they could draw it.

§ Mr. Campbell
It is no good the hon. Gentleman disagreeing with what I am saying. The Government are saying, in bringing forward this Order, that the amount of the resources element has been calculated on what the Exchequer equalisation grant would have been if it had been carried forward into the coming year and the year after that. That is how they have arrived at the element of the Exchequer equalisation grant. This makes very little difference to the formula, and the system which the Government have adopted is, more or less complete, the same as the system as in the 1963 Act.

§ Mr. Campbell
I urge the Secretary of State to refresh his memory by reading the proceedings in Committee on what was then the 1963 Bill. He will see that, before that Measure was passed, he vigorously opposed the then Clause 3 and voted against it.

§ Mr. Speaker
Order. The spectacle of the 1963 Act being introduced in its entirety in this discussion frightens me. I trust that the hon. Member will restrict his remarks to the Order.

§ Mr. Campbell
I can sum it up by saying that the present Secretary of State opposed the words which finally appeared in the 1963 Act and which now appear in this Order. He said at that time that the provision was purely punitive.

§ Mr. Ross
If the hon. Gentleman will look a little more closely into what I said on that occasion, he will see that I stated that the money should remain in Scotland instead of going back to the Treasury. That is the big difference between what was done then and what we are doing now. In this case none of the money will go back to the Treasury.

§ Mr. Campbell
That is what the right hon. Gentleman has been saying, but does not he see that there is really very little difference between the two schemes? Because of your Ruling, Mr. Speaker, I will not pursue this matter. Certainly my hon. Friends do not object to this scheme. We understand that the notional 1559 rent should now be expressed again in terms of a percentage of the gross annual value, the system which we introduced in the 1963 Act against the vigorous criticism and opposition of hon. and right hon. Gentlemen opposite.

§ Mr. William Baxter (West Stirlingshire)
A few days ago I had the opportunity to discuss with members and officials of the Stirlingshire County Council the application of the grant to the county, and some dissatisfaction was expressed about the distribution to the county council under this new method. I would like my right hon. Friend to inform me of the proportion of grant paid, say, in 1966–67, as against that indicated for the years 1967–68 and 1968–69. These gentlemen in Stirling were expecting to ask the three Stirlingshire Members of Parliament to meet a deputation to protest against the amount of grant that was to be received under the new scheme introduced by the Government.
They are naturally very much concerned about this point, as are many of the ratepayers of Stirlingshire. The increased valuations of property that have taken place over the last 12 months or so—increases, sometimes, of as much as 150 per cent. but with a rough average for the whole county of probably between 60 per cent. and 70 per cent.—have not been reflected in any substantial reduction in the county rate, which has only been reduced from about 24s. 6d. to 22s. odd. This presupposes that the amount of money that the Stirlingshire County Council is to get under the new formula is very much less than it has ever had before. The rate reduction of about 2s. in the £ represents only about 10 per cent., while the valuations have gone up, as I say, by 60 per cent. or 70 per cent. all over.
I should like my right hon. Friend to give some clear indication of the full amount of grant that the county council received under the old scheme and what it will receive under the present set-up. There is no doubt that the proof of the pudding is in the eating, and the present indication seems to be that the grants to my county will be very much lower.
Another matter of great concern to local administrators has been to try to 1560 get rid of grant by the end of the financial year and, in particular, grant appertaining to road works. One found that a grant was made to a local authority for road improvements, but if by chance the local authority was not able to use the full amount of the grant by the end of the financial year. it was lost to the authority.
One often found in Scotland a considerable amount of wastage of money caused by councils trying to utilise their grant before the end of the financial year. One very often found men working day and night on very minor improvement schemes that were not absolutely necessary, because under the set-up then existing they were not able to carry forward much more important schemes to the following year. I would like some form of award that would enable important schemes to be carried through in full to the next financial year, without the local authority losing its grant.
It is very difficult for Members of Parliament, members of local authorities, and even officials, to follow the basis whereby the Government give grants. It is a mystery how this works out. Notwithstanding the papers which are placed before us, there is not a clear indication of how this is done percentage-wise. This is a very wrong method of continuing our work.
Under the old equalisation grant it was almost impossible to tell what grants a local authority was likely to get. It is time that we put our house in order and showed clearly to local authorities the amount of grant they can reasonably expect to get. The idea of holding something up one's sleeve to help them at the end of the year is not sound business. I should like to see a more simplified method of giving grants to local authorities.

§ Mr. Speaker
Order. We cannot change the method in this debate. That must come at another time.

§ Mr. Baxter
I appreciate that, Mr. Speaker, but I think the method laid down under the present scheme, notwithstanding the fact that it is a new method of approach called rate support grant for Scotland, is not as it should be. I counsel my right hon. Friends to look at the matter again because it is 1561 extremely important to local authorities in Scotland.
We had a Ruling from the Chair on the question of N.A.L.G.O. I accept the Ruling as proper and fair, but if perchance the Government agree to the N.A.L.G.O. award—and the Under-Secretary says that the special grant will be given to local authorities over and above the grants in this document before us—this will at least help the local authority—

§ Mr. Speaker
Order. Whether it will or not is outwith the purpose of this debate.

§ Mr. Baxter
It may be, but——

§ Mr. Speaker
Order. It is not a question that it may be; it is.

§ Mr. Baxter
Is it within the ambit of this debate to ask whether or not, if this award is paid by the local authority, it is contained in the money as stipulated under this Order? If it is contained in the money stipulated under this Order, some other method will have to be found to pay the local authority the expenditure which it will incur in paying the N.A.L.G.O. award.

§ Mr. Speaker
It is the other method which will have to be debated on some other occasion, but not this one.

§ Mr. Baxter
I accept that Ruling, but I contend that if it is included in the grants under this rate support grant and this formula, and if perchance certain awards or obligations of the local authority, be they one or another, are not included, that may put the finances of the local authority into difficulties, to say the least. I ask whether or not that particular award is included in the money stipulated in this formula which has been introduced by the Government. If it is not included in that formula, some method will have to be found to help the local authorities.

§ Mr. Speaker
Let me try to help the hon. Member. A method may have to be found, but that will have to be debated on some other occasion, not tonight.

§ Dr. Dickson Mabon
I wonder if I can help my hon. Friend. I answered this question before. He is right in suggesting that if other developments occur we 1562 shall use the grant increase mechanism. Mr. Speaker has said that this particular matter is out of order. It is perfectly right that within the terms of the Order, penny for penny we have subscribed.

§ Mr. Baxter
I appreciate the point, but it puts hon. Members into a difficulty for the simple reason that very important decisions are likely to be taken.

§ Mr. Speaker
Order. May 1 say to the hon. Member and to any other hon. Member who wishes to intervene on these lines that I appreciate the difficulty of the hon. Member and anyone who wishes to raise under this Order something which is not in order, but that is a difficulty which Parliament has had to endure for many years.

§ Mr. Baxter
Thank you, Sir. It seems that it is out of order to raise such an important matter that may put in jeopardy a local authority's finances. However, I will not pursue the matter, other than to repeat that I would like to know clearly and concisely what is the exact amount of the grant which was paid to Stirling County Council last year and how much will be paid this year.

§ Mr. W. H. K. Baker (Banff)
The two points on which I want to touch concern the resources element and the roads portion of the needs element. It is said, I think quite truly, that constant dripping wears away a stone. On the other hand, the parable of the importunate widow has some relevance to what I want to say.
The only ways of comparing the effects of the Order on local authorities are to compare it like with like—that is, with the effects of the old method of support—or with neighbouring areas which are in a similar way affected. The figures I have for my county show that under the new formula for the roads portion of the needs element the county will be in deficit on similar expenditure in 1964 by £19,500. This is a very serious reduction on what has gone before. It does not take account of any emergency work which may have to be done. This point was covered on the Report stage of the Local Government (Scotland) Bill. I had a great deal of correspondence with the Minister of State on this point. 1563 In view of this gross reduction, the effect on my county will be considerable. The resources element brings up the old question of the relationship of burghal population to that of the landward area. I make no apology for returning to this question. Of a total population for the county of Banff in 1964 of 44,500, no less than 60 per cent. was resident in burghs. Of the 11 burghs in the county, no fewer than seven have a population of less than 2,000. According to the formula, two-thirds of the two-thirds of the burghal population of the county are residents in small burghs which are truly rural areas. They vary in size from 749 to a maximum of 1,510.
In the whole county there will be an increase in grant of £36,000 under this element. I referred to a comparison with similar areas.
The two counties of Kincardine and Banff will both have a relief of about 4d. in the £ on the rates under this Order. In the past, the Secretary of State and the Minister of State have agreed with me that Banffshire has been badly off, and relatively badly off compared with other counties of Scotland. I repeat that, under the Order, Banffshire and Kincardine, which are very similar counties, will benefit to the tune of about 4d. in the £ on the rates. It is evident, therefore, that Banffshire will, relatively, be no better off than under the old system, and it is to this that I once again draw attention.
In a recent letter to me, the Minister of State was kind enough to say that he would make representations to the working party of local authorities to ask that they amend the formula to the benefit of Banffshire.

§ Mr. Speaker
Order. We cannot discuss amendment of the formula under this Order.

§ Mr. Baker
I bow to your Ruling, Mr. Speaker. The hon. Gentleman further said that, in view of my representations, he would look at the position again. Unfortunately, there is no alleviation, and, as I have pointed out, the county is relatively as badly off as before.
The needs element other than for roads is to be distributed very much on the 1564 same basis as the existing general grant—the proportion of population to mileage of road and the ratio of landward to total population of the entire area. I welcome that, in addition to the old weighting system, there are two elements now included, for children under five and under 15 and for people over 65. In my opinion, this accounts largely for the increase of £36,000 which the whole county, both landward and burghal, will receive. All it does is again to emphasise the relatively bad position in which Banffshire finds itself under this Order, as under previous arrangements. I only hope that, when we have a later Order, the Secretary of State will have been able to bring some justice into the position for Banffshire. Banffshire, of course, is not alone in this. I hope that he will, if necessary, use the powers which he possesses under the Act to correct the matter before long.

§ Mr. J. Bruce-Gardyne (South Angus)
The Order is described as a rate support grant Order. In the words of the manufacturers of lingerie, support is usually equated with uplift. There is not much unlift about this Order. I would rather call it down-pull, in view of the calculations so clearly spelt out in paragraphs 9 and 10 of the explanatory Report.
One or two of the points made in those paragraphs are significant. In the first place, we are told in paragraph 9: It is clear that over the two years ahead the rate of growth of the economy will fall short of that postulated in the National Plan". That is one of the most massive understatements we have seen in any Report from the Secretary of State.

§ Mr. Speaker
Order. Will the hon. Gentleman help me? To what part of the Order is he relating his remarks?

§ Mr. Bruce-Gardyne
I am relating my remarks, Sir, to the Report from the Secretary of State, paragraph 9, in explanation of the rate support grant.
It is interesting that this belated admission is now made. Only last weekend in Dundee, the Secretary of State announced that the Scottish Plan was to go ahead on schedule. Now we discover that that statement was sheer unadulterated rubbish and is admitted to be such by the Government themselves. The 1565 result of this, as again the Report points out, is that the growth of public expenditure must be restrained to prevent it pre-empting too large a share of the national product. I only say in passing that I hope that the Secretary of State has passed on that advice to the Chancellor of the Exchequer, because he seems to be in need of it.
We now come to the result that the estimates submitted by the local authorities, as set out in paragraph 8 of the Report, have been pared down by £9 million in the first year and by rather more than £9 million in the second year. The pared-down figure is given as the "reckonable expenditure", as if by so describing it it can somehow be assumed that one can keep it within those limits. Of course, one does nothing of the kind. By calling it reckonable, one does not reduce the spending but merely exonerates the Government from responsibility for underwriting it. This is a shabby and sordid manoeuvre. To try to say that as a result of the Order local authorities get an extra £3 million in 1967–68 and an extra £7 million in 1968–69 is to make a nonsense of the English language.
I wish also to refer to the adjustments which have been made for increases in pay and prices which have since taken effect or can be foreseen and quantified". a phrase which is used twice in the Report. The N.A.L.G.O. pay rise could have been foreseen and quantified. What is more, because there was a clear obligation on the local authorities to meet this pay rise on 16th March—

§ Mr. Speaker
Order. The hon. Member may not have been in the House when my predecessor in the Chair ruled that he cannot discuss the N.A.L.G.O. pay rise on this Order.

§ Mr. Bruce-Gardyne
Indeed, I heard Mr. Deputy Speaker's Ruling, which, of course, I accept. My point, Mr. Speaker, is that in the Report from the Secretary of State which accompanies the Order, it is twice stipulated that the Order is to cover increases in pay and prices which have since taken effect"— 1566 that is, since 30th June, 1966— or can be foreseen and quantified.

§ Mr. Speaker
Order. I heard the hon. Member when he said that the first time.

§ Mr. Bruce-Gardyne
In a case such as this, Mr. Speaker, where a wage award not only can be foreseen and quantified but is a specific obligation on the local authority as employers, surely it is brought within the compass of this statement concerning wage and price increases which can be foreseen and quantified within the purpose of the Order.

§ Mr. Speaker
Apparently it had not been foreseen and quantified in the Order. The hon. Member must talk about the Order. Mr. Bruce-Gardyne: Of course, 1 accept your Ruling, Mr. Speaker. The point which still arises and to which we need an answer is what happens in the case of local authorities such as Rothesay which have already announced that they are meeting this wage increase and therefore, presumably, in their calculations have foreseen and quantified this increase?

§ Mr. Speaker
Order. Whether or not they have foreseen or quantified the award about which the hon. Member is worried, we are discussing the amount in the Order. The hon. Member can speak for or against the amount in the Order. He cannot amend it in any way.

§ Mr. G. Campbell
Before you came, Mr. Speaker, when this point was raised by the Minister of State as I was speaking, Mr. Deputy Speaker ruled that I could ask, as I had already done, whether the amount in the period included part or all of the award.

§ Mr. Speaker
The hon. Member for South Angus (Mr. Bruce-Gardyne) may ask questions, but he was not asking a question just then.

§ Mr. Bruce-Gardyne
Then I will ask the specific question, Mr. Speaker, whether provision is made under the Order for the increase that Rothesay has undertaken to grant. We are entitled to an answer to that from the Secretary of State. If I heard the Minister of State aright when he introduced the Order, he said 1567 that one of the factors which had led the Government to scale down what they like to call the "reckonable expenditure" of local authorities from the estimates originally submitted was that the local authorities were allowing for a rate of recruitment to their services which was greater than was probable. I take it that that remark also was made against the background of the N.A.L.G.O. claim, which the Government have ordered them to reject, because clearly the rate of recruitment will be highly unsatisfactory in that situation.

§ Mr. Speaker
Order. The last thing that I would do would be to comment on any hon. Gentleman's arguments, but they must be in order. Whether the rate of recruitment is effective or not, the hon. Gentleman must come back to the Order.

§ Mr. Bruce-Gardyne
I shall not pursue that matter further. I just wanted to question whether that was what the Minister of State referred to when introducing the Order.
The main point with which we are left is that to some extent the Order is a fraud and a swindle because it does not provide an increase; the effect will be not to support the rates but to increase the burden by eliminating certain sections of expenditure which the Government choose to call "not reckonable".

§ Mr. Alick Buchanan-Smith (North Angus and Mearns)
I want to raise two short specific points about the Secretary of State's Report on the rate support grant, and the first concerns education. Paragraph 13 of the Report states: Development of the education service, including the school meals and milk services, will lead to a steady increase in expenditure. That increase is shown in Appendix A on page 10. Is the increase in the school meals and milk services related to an increase in the number of pupils attending schools, and therefore availing themselves of the service, or do the Government envisage a change in the rate of support given for those services? My question relates to the discussion which is now going on in the country on the future of those services.
My second point concerns the police, who are dealt with in paragraph 15 of 1568 the Report. Expenditure on the police is also given in Appendix A. The increased money for the police is based on an increase of recruitment and in the size of the police force in Scotland. That must be viewed against the report in Scottish newspapers last weekend that there might be a "dilution"—which I think was the term used—in qualifications of people entering the police. Perhaps the right hon. Gentleman could comment on that.

§ Mr. Speaker
I think that that would go a bit wide of the Order.

§ Mr. James Davidson (Aberdeenshire, West)
In general, we in the Liberal Party welcome the Order and the new system of support. It will be fairer to the local authorities and give them greater responsibility. They can decide how to distribute the grant to some extent themselves and will not be tied hand and foot as to how it should be distributed.

Mr. Davidson
I think that the Minister of State will agree that this will involve local government officers in extra work and it is a pity that this should occur at a time when there has been a decision which goes against local government officers, and more particularly at a time when there is a shortage of them. In Aberdeenshire, there is a shortage of local government officers in certain categories, notably of architects, surveyors and engineers, all of whom are affected by the Order. I hope that the hon. Gentleman will bear this in mind.
The Order is a move in the right direction towards greater local control over local affairs. But I have certain reservations, particularly about distribution of the roads portion and the determination of weighted population. I have been doing some arithmetic during the debate and I see that Aberdeenshire falls under the 15 per cent. category both in Table 4 and Table 3, and I would be interested 1569 to know—although it may be unfair to ask the hon. Gentleman without notice—exactly how Aberdeenshire will come out of this. Will it be better or worse off?
As far as the roads portion of the needs element is concerned, whereas it is based on the mileage of classified roads and the population, I believe that the type of countryside is also of great importance. In Aberdeenshire, for example, there are many small farms and back roads which, unfortunately, do not get on the statutory list and therefore the county is not responsible for keeping them up. Nevertheless, they are a burden on the population and a county such as Aberdeenshire, with many small farms, will suffer in the distribution of the roads portion of the needs element. I believe that other counties are in the same position.
In the determination of weighted population, I think that the distribution of population is important. I understand that this is taken account of in Table 4. But not entirely in that the landward areas, which presumably include villages and areas of countryside with many small farms and a large population not even in villages, will be rather worse off in this respect.
We welcome this new type of grant and hope that, when the present economic situation has been resolved, as we hope that it will be, the counties will find themselves better off. Certainly I think the Order will apportion the grant more justly and fairly.

§ Mr. Edward M. Taylor (Glasgow, Cathcart)
Earlier today, I suggested that the Minister of State had been successful in creating a new form of statistics under which figures could indicate certain things in different directions. With this Order and the speech that the hon. Gentleman made in introducing it, we are creating a new language, because the whole basis of his speech was that this was a means of controlling or restraining increases in local government spending. But that is not really what is being done. Instead, we are having a slashing of Government aid, and there has been no indication as to precisely how the spending of local authorities will be reduced.
The Government are doing something similar to what people do in evening newspapers when issuing a notice to say 1570 that, from a certain date, certain people will not be responsible for the debts of others. What is indicated there is that the local authorities estimated, after their own pruning, that a certain amount would be required in 1967–68. They decided that this figure would be about £273 million. It appears that what the Government have done, as we can see in paragraph 10 of the Order, is not to say that they dispute the figure, or that this money will not be spent, but simply to say that they are not prepared to take that sum into account, and that the sum which they will consider is £264 million.
While I would certainly wholeheartedly support any meaningful attempt to reduce the level of local government spending, and thereby the burden on ratepayers, this Order is not the way to do it. All that it means is that an extra and very substantial burden will be placed on ratepayers of our cities and counties, because it is clear beyond any shadow of doubt that all the endeavours of the Secretary of State for Scotland, the Minister of State, and other Ministers for Scotland, to encourage local authorities to restrain their spending—encouragement simply by issuing circulars, making statements, or making Orders of this sort—have not been successful.
I would certainly support a meaningful and tough policy to cut local government spending, but this Order simply says only that the Government will underwrite part of the inevitable expenditure of local authorities. This is not the answer.
My first question is how much of this difference between £264 million and £273 million is attributable to increases in local government spending as a result of increases imposed by the Government through taxation or through nationalised industries. We are entitled to know just how much of this money can be saved by local authorities and how much of it is unavoidable.
The second question, which has been asked by several hon. Members, is how the formula contained in the Order will affect their own local authorities. I was concerned to hear when this matter was being discussed earlier that Glasgow might lose about £1,500,000 in equalisation grant under its new name. I know that these figures change and that no final estimate will have been reached, but I wonder whether at this stage it is 1571 possible to give even a broad indication of what difference there will be in the total grant available for Glasgow under this new system compared with what was received previously.
My third question relates to notional rents, mentioned by my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell). The Government have given an indication of what they regard as notional rent and they have shown us in the formula how they seek to apply it. I should like from the Government an indication of whether this is to be accepted as the basis for the rental policy which they are themselves pursuing through the Scottish Special Housing Association. There is considerable concern in my own constituency because, while the Government are giving a general indication that 90 per cent. of gross annual value would be acceptable as being both fair and reasonable, side by side with that there are S.S.H.A. houses, directly controlled by the Government, for which new rents are being introduced this year, a year of severe restraint, which will be equivalent to 120 per cent. of gross annual value. What is the Government's policy?
Finally, I would like an indication of the Government's policy on rates. In the Order there are several figures based on the reckonable expenditure which the Government are prepared to accept. We appreciate that the majority of this money will almost certainly be in respect of salaries, wages, and payments of that sort.
To assist us to appreciate whether this amount is adequate, we would have to know whether all the adjustments in salaries and wages paid by local authorities were accepted as reckonable expenditure. We appreciate that adjustments take place day by day and month by month and that there are local variations and national agreements, but we would like to know within this figure what is the deadline for agreement on new salaries which the Government have taken into account in deciding the reckonable expenditure of local authorities.
If we are to appreciate whether the sum is adequate, we shall want to know what is the date on which wage agreements, if applicable, will be taken into account for reckonable expenditure purposes. I am thinking in particular of 1572 an increase which was agreed on 13th September, 1966, and which could have come into effect on 16th September, but which was postponed for six months because of the Government's freeze policy. This agreement referred to local government officers. Would it be included and, if not, what date would be taken into account? Can the Government give us even a general indication of whether within the global sum wage fluctuations are taken into account, local wage fluctuations as well as national agreements?
The position is far from clear and I hope that the Secretary of State will be able to clarify it to the extent that it can be clarified. If the right hon. Gentleman feels restrained by the rules of order from dealing with these matters fully, I hope that he will seek your permission, Mr. Speaker, to take an early opportunity, perhaps tomorrow morning, to clarify matters with which he cannot deal tonight.

§ Mr. Speaker
I hope that the hon. Gentleman will not lead the Secretary of State into temptation.

§ The Secretary of State for Scotland (Mr. William Ross)
In many ways I am sorry that our hopes for the kind of debate which we could have had have been somewhat frustrated, because I am anxious to meet the wishes of the House on all matters, as you know, Mr. Speaker. [Laughter.] Hon. Members should appreciate that people make statements when they have something to say in addition to statements which they have already made.
The hon. Member for Moray and Nairn (Mr. G. Campbell) spoke of the Order in somewhat scathing tones and said that we were not doing nearly enough. This must be a rather difficult kind of debate for hon. Members opposite, because we are dealing with local expenditures and local expenditures mean rates and when rates go up, hon. Members opposite shout their heads off. Implicit in many of their arguments tonight has been the suggestion that we have not taken into account a higher expenditure than that which we accepted after discussion with the local authorities. It has been said that we should have encouraged local authorities to spend more money, £9 million more. But if local authorities spend £9 million 1573 more and if we grant 60 per cent. of that, that still leaves another £3 million to be met by Scottish ratepayers. Hon. Members opposite should make up their minds. They should have been congratulating the Government on their realism and on meeting the wishes of hon. Members opposite.
The hon. Member for Moray and Nairn, among others, implied that hitherto Governments and Government officials had always accepted whatever local authorities suggested that they would spend. The hon. Gentleman should know as well as I do what the previous Act said. We took it into account and we are doing it in this Order—what can be foreseen and agreed as a level of expansion in relation to particular circumstances. We had experience of the old Act as well as this one, and I am sure that the hon. Gentleman appreciates that while it may be that we have done it in another way, we have used exactly the same kind of procedure, of reaching a figure acceptable from the point of view of the country's economic circumstances. Never at any time has any Government accepted figures without examination and without a certain measure of haggling.
Once again we come to this misleading screen of dust thrown up by hon. Gentlemen. The hon. Gentleman also spoke, as though there was something strangely Victorian about the notional rent gap. Not only in speeches that I have made but in the speech of my hon. Friend the joint Under-Secretary the Member for Glasgow, Craigton (Mr. Milan), it was pointed out that the great weakness of what was being done was that a claw-back from Scottish local authorities in respect of what was construed as rents that were far too low went to the Treasury and was not retained within the general fund for distribution within Scotland.
This is the big difference between that and this formula. One never knows how this will work out in any year. One fixed a sum in previous years in relation to the E.E.G. and back it went to the Treasury. This time it will remain for distribution among Scottish local authorities.

§ Mr. G. Campbell
What I was pointing out was that in the previous debates the line of the right hon. Gentleman was that this was a punitive measure, punishing 1574 local authorities for not bringing their rents up to a reasonable level. That is what he was saying then. Now he is introducing this point, but it was not what he was complaining about then.

§ Mr. Ross
The hon. Gentleman has the evidence in front of him. I can tell him that that was not the reason that it was taken up on that occasion by myself or my hon. Friend. The other point was what would be the effect on particular local authorities in respect of certain funds which might turn out unexpectedly badly, and whether any change could be made. The advantage of the procedure that we have here is that there is the power to make an Order. In the previous Bill all the formulae were in the Bill, and in order to make any change, new legislation was necessary. Here we have the power to change the formulae, year by year if necessary, if they turn out unexpectedly badly for a certain authority, to the extent of being unfair.
The question of roads was raised by the right hon. Member for East Stirling-shire (Mr. Woodburn), and the hon. Members for Banff (Mr. Baker) and Aberdeen, West (Mr. James Davidson). We are adopting a different procedure here. The choice of objective factors in the formula and the relative weight given to each were aimed at continuing, as far as practicable, the pattern of distribution of grant to local highway authorities in recent years. The factors chosen for this purpose, mileage of all classified roads, including principal roads, mileage of principal roads—and I know the point in relation to principal roads, that we have properly to define which are principal roads and which are not, and we are working this out with the local authorities—population, adjusted in the ease of counties to favour low, sparse populations at the expense of large populations, and area, all bear directly or indirectly on the incidence of expenditure on roads. The Local Government Finance Working Party accepted the formula as the best that could be devised in the circumstances.
Grant distributed under the Roads formula will replace specific grants at present available for the maintenance of all classified roads and for major improvements to non-principal roads. I am sorry that I do not have the figure of what Stirling-shire got last year in the last grant period.

§ Mr. W. Baxter
Will my right hon. Friend agree to look into this question and let me have the figures because I am concerned about the position in the county?

§ Mr. Ross
I have asked for the figures, and I shall pass them on to my hon. Friend. Outstanding grants for major improvements to non-principal roads will be paid until the original commitments have been discharged. Many of the specific grants which have been promised to local authorities in respect of schemes which are not completed will continue, and thus, even though some local authorities might seem to be badly affected, it will not be disastrous at the start because it will be masked by the carry-over from the previous year.
The present distribution of maintenance grants depends on so many specialised factors that no objective formula could fail to produce appreciable swings between certain authorities, and indeed at different periods for the same authorities. In any case the effects of the formula will be modified right through by the outstanding amounts carried over.
The position will, of course, be watched, and if it proves to be totally unsatisfactory, I give the pledge that we shall take action. But we have to be careful that we do not rush into making an exception which may be perfectly justifiable on its own, with the result that we change a formula which is otherwise satisfactory.
I think that it was the hon. Member for Banff who asked what would happen if additional expenditure were incurred because of a severe frost. The Secretary of State, apart from this Order, has power to deal with that under the Development and Road Improvement Fund Act of 1909. He can provide specific grants for remedial works of this sort, but it would be impossible to make an estimate in advance of the extent to which, within this Order, over the next two years or so we were going to require this kind of money.

§ Mr. Baker
I quoted the amount of deficit which will be felt in the County of Banff, namely, £19,000 in the ensuing year. The point which I was trying to make—obviously I did not make it successfully—was that the difference 1576 arises from comparing the figures for 1964, which was a very mild year, with the figures for the normal winters which we get in that part of the world.

§ Mr. Ross
I do not know whether the hon. Gentleman was present earlier on when I was being congratulated by the hon. Member for Edinburgh, North (Earl of Dalkeith) on the mildness of the weather that I managed to produce this winter. I shall not make any definite promises because to do so would not be within the terms of this Order, but I shall do my best.

§ Mr. MacArthur
My hon. Friend has raised a most important point for some of the central Highlands constituencies. Is what the right hon. Gentleman said to be regarded as an assurance that in the event of a very harsh winter he will, under the terms of the 1909 Act, step in to help those local authorities faced with very heavy and sudden expenditure?

§ Mr. Ross
It was the 1909 Act. I am saying that to meet this the Secretary of State already has power, and he has had it since 1909. That is all that I am saying.

§ Mr. MacArthur
It is not enough.

§ Mr. Ross
I know that the hon. Member would like an awful lot more. I am glad that the hon. Member for Aberdeenshire, West welcomed the new procedures. They represent a considerable advance. The hon. Member for Glasgow. Cathcart (Mr. Edward M. Taylor), with his usual facility for dealing with figures, called this a slashing of Government aid How we can manage to increase Government aid by £10 million and have it called a slashing is something that only "Batman" from Cathcart can possibly understand. The fact that we are increasing the extent to which the Government meet the expenditure of local authorities from 61 per cent. to 63 per cent., and are carrying out the pledge that we gave in the second year of a further 1 per cent. increase, is an indication that the hon. Member has not looked objectively at the figures.

§ Mr. Edward M. Taylor
rose——

§ Mr. Ross
I am sorry. I never will be able to persuade the hon. Member that he may have got his figures wrong.
1577 I have dealt with the question of notional rents. The extent to which Glasgow is affected will depend entirely on what happens to Glasgow rents during the two-years' period for which the Order is current.
The question has also been raised of the extent to which we have taken into account certain salary increases which are now being talked about. The facts of the matter were given by my hon. Friend, but I will repeat them. Salary increases which are known both in quantity and time are met within the Order. If they are not known they obviously cannot be met. When they are known, both in relation to amount and time, they will be dealt with under another increase Order.
I was also asked about the increase in school milk figures. This relates to an estimated increase in the school population, and also to a likely increase in the uptake of school meals.
I was asked whether I could indicate what a certain authority would receive in respect of roads. I cannot, because the calculations still have to be worked out with the local authorities. Only when they have been shall we be able to see what they are. I have no reason to expect that Stirlingshire's share will be lower than it is at present.
I am sorry about the complaints of the hon. Member for Banff. He tried hard to get us to agree on special treatment for small burghs by construing 1578 them according to the rural formula. My hon. Friend put this point to the working party. The hon. Member for Banff must accept that the working party—consisting of local authorities—did not think that Banff had a very good case. We could not see our way to make this change. Rates per household in Banff compare very favourably, in term of burden, with rates all over Scotland. We cannot make a change like this for one area without making it for others, so throwing the whole thing out of gear. The one important thing about the formula is that they have been agreed by local authorities on the understanding that if there is any general unfairness we can make the change.
I believe that this system will, on the whole, work well. Considering what we have done about recoverable expenditure, I suggest that the Government are being generous indeed and are showing themselves to be appreciative of the difficulties of local authorities in a sphere in which they can never please everybody. I say that because local authorities are being pressed all the time to increase the services which they provide—but when they do that some people always complain about the increased rates which result.