HC Deb 06 March 1967 vol 742 cc984-1019

11.30 a.m.

Mr. Edward M. Taylor (Glasgow, Cathcart)

Having listened with interest to the reply of the Minister of State to the Department of Education and Science, and believing that my hon. Friends who represent Yorkshire constituencies would be brief—they are noted for their brevity and the penetrating way in which they adduce their arguments—I had assumed that the discussion on agricultural education would come to an end with time to spare. I therefore hope, Mr. Deputy Speaker, that I may be allowed now to raise the subject of the high burden of rates in Scotland.

Mr. Deputy Speaker (Sir Eric Fletcher)

Has the hon. Member given the Scottish Minister notice of his intention to raise this subject?

Mr. Taylor

Yes, Sir. I took the opportunity of passing a message to the Minister's private secretary at 9.45 a.m. stating that I hoped to raise this matter. I also took the liberty of advising Mr. Speaker that, if the opportunity arose, I would seek leave to raise the subject of the high burden of rates in Scotland.

The Minister of State, Scottish Office (Dr. J. Dickson Mabon)

I understand that my office received a message from the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) at 9.50 a.m. I received it at 10.15 a.m. and I have cancelled everything to be here.

Mr. Kenneth Lewis (Rutland and Stamford)

On a point of order. We are obviously in great difficulty as a result of morning sittings. If we must give notice of our intention to raise matters when occasions such as this arise, it is obviously difficult for us to give very long notice. This all comes about because the business of the Government appearing on the Notice Paper has fallen to the ground and because they are unable to get their supporters here in the mornings to speak on these topics.

If I sensed your question to my right hon. Friend aright, Mr. Deputy-Speaker, it would seem that if one is unable to give notice in advance to the Minister one might be unable to raise a second Adjournment debate. It would, therefore, be helpful if you would clarify the position because although it happens this morning that my hon. Friend was able to give notice to the Minister, on another occasion I or one of my hon. Friends might wish to raise a subject but would not be able to give notice to the relevant Minister. In those circumstances we would be making speeches but might not receive a reply from the Government. That, however, should not prevent hon. Members from having the right to discuss whichever subjects they might care to raise. Since this is a matter of importance to hon. Members on both sides of the House, I would be grateful if you would clarify the position, Mr. Deputy Speaker.

Mr. Deputy-Speaker

I am happy to do that for the guidance of the House. It is perfectly competent, and within the rules of order, for an hon. Member to raise on the Motion for the Adjournment any subject that is in order on the Adjournment. There is a convention, that if an hon. Member wishes to take advantage of an opportunity such as that which has arisen this morning, he should give notice to the Minister concerned of the subject which he intends to raise. That is desirable, otherwise it means that an hon. Member may discuss something without receiving a Ministerial reply, something which my predecessors in the Chair have on more than one occasion deprecated.

Mr. Lewis

Further to my point of order. I appreciate that it is customary for hon. Members to give notice to the Ministers concerned, and I am sure that whenever that is possible it will be done. However, I asked you to clarify the position, Mr. Deputy Speaker, since I might wish to raise the matter of dogs and might want the Prime Minister to reply, although I appreciate the difficulty in which he finds himself. Since my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) has announced his intention of raising an important Scottish subject, I will not attempt to express my concern about the question of restraining the activities of dogs. However, if I had had the opportunity which my hon. Friend has taken, I would have asked the Prime Minister to come here and I would have asked him about his activities last weekend, when he tried to restrain back benchers from exercising their rights to vote or abstain—

Mr. Deputy-Speaker

Order. The hon. Member cannot make a speech on a point of order. Mr. Taylor.

Mr. Taylor

Having given notice to the Minister of State that I would be endeavouring to raise the important subject of the high burden of rates in Scotland, I am grateful to the hon. Gentleman for coming here at short notice, although I regret having inconvenienced him. I am also glad to see the hon. Member for Paisley (Mr. John Robertson), the hon. Member for Dundee, West (Mr. Doig) and my hon. Friend the Member for Dumfries (Mr. Monro) in their places, because I know how extremely interested they are in Scottish rating. As we would expect of the two hon. Gentlemen opposite, they are here this Monday morning to take part in our debates.

I can, perhaps, raise this matter on a Monday morning with a clear conscience, being one of the few hon. Members on this side of the House who voted in favour of morning sittings. I still believe them to be valuable because they provide us with a unique opportunity of raising matters like this, an opportunity which we would not otherwise have. I have on several occasions endeavoured to raise the question of the rating burden in Scotland. On only one recent occasion was I indirectly successful, in that I was able to refer to the subject briefly in the debate on the high cost of living in Scotland. On that occasion the Minister of State was in his place to reply, and I am sure that today he is glad of this opportunity to reply even more fully to the specific question of Scottish rating.

While I am glad of this opportunity to raise this subject, certain Scottish hon. Members might be reluctant to speak on it because in the past week or so there has been a reluctance on their part to speak on any Scottish matters at all. This is because the Government have taken the view, particularly in view of what was said in reply to Thursday's Scottish debate, that we should more or less close down and not do any business because of the prospect of a by-election in Scotland. This has been a totally unreasonable attitude on their part. As the Minister of State is aware, I have been raising the question of the high burden of rates in Scotland in every suitable occasion. When the matter was raised last Thursday the Secretary of State was in his place and, in the interim, he has spent the whole of the week-end trying to persuade a reluctant population that he is not an office boy merely transmitting messages to the North from the Chancellor of the Exchequer. Rates are indeed a serious problem in Scotland. They have traditionally been a problem. Paragraph 215 of the Allen Report stated: The average rate payment in Scotland is greater than in England and Wales as a whole for all income groups, and very considerably so. It is only in the top income groups of the South, the region with the highest rates, that the level of rates is higher on average than in Scotland but even then rates as a proportion of household income are still not higher than in Scotland. It should be stressed that the Scottish rate burden is higher than any other area for all income groups, with the one exception of the high income groups of the south of England—and even then the rates as a proporition of household income are still not higher than they are in Scotland.

Mr. Peter Doig (Dundee, West)

When was that Report published?

Mr. Taylor

In February, 1965, and the hon. Gentleman will be aware that the rates in Scotland have increased substantially since then. They have gone up by 16 per cent. this year and I understand that they went up by 9 per cent. last year. This is surprising because Scottish property is no better than property elsewhere. Indeed, one might expect the rates to be less. Certainly incomes in Scotland tend to be considerably lower than those in the rest of the country.

On the basis of figures provided by the Allen Committee, an average household income in the London area was £1,146 a year; in the South, £1,288 a year; in the Midlands, £1,143 a year; in the North £1,055 a year; in Wales, £1,059 a year. All of these are household incomes above £1,050 a year. What was the figure in Scotland? £980. Here we have a situation where the household income in Scotland was considerably lower than in the rest of the country. Despite this, the rate burden was considerably higher. In Scotland, rates went up to just over 4 per cent. of disposable income, while in England and Wales they amounted to only 2.9 per cent. of diposable income.

The domestic property situation in Scotland is more serious than in the rest of the country. If we did not know this before, we have seen the Government's housing plan, which puts the position quite clearly. We have had the Culling-worth Report, published recently, which showed that many people in Scotland are living in appalling, unbelievable housing conditions. As far as I can estimate, as opposed to official estimates, rates in Scotland are at least 70 per cent. higher than for the same house in England and Wales.

Mr. Doig

Would the hon. Gentleman agree, having been a member of a local authority, that rates have nothing to do with the state of the property but are for services provided? Would he agree that if they are 70 per cent. higher in Scotland, then Scotland must be providing better services than other places?

Mr. Taylor

If this was the case, there would be no problem. But I would suggest that we have had no information that the services provided in Scotland are 70 per cent., 50 per cent. or even 10 per cent. better than those in England and Wales. It may be that Dundee is particularly fortunate, because I know that the hon. Gentleman was a member of the town council there. No doubt he was attending to the problems of the ratepayers there with the same assiduity as he attends to their problems in the House.

Accepting, on the basis of the Allen Committee's Report, and the other information that we have, that rates are more in Scotland than in England and Wales, we have to ask why is this differential so substantial? One reason advanced by the Allen Committee dealt with municipal rents: There is no question that part of the differential is because of municipal rents. Even if we assume that this is a substantial amount, and that municipal rents in Scotland should have been reviewed a long time ago, and in many cases should have been increased, with adequate safeguards for those who could not afford to pay, the fact is that the housing subsidy comes to only one-twelfth, on average, of total rateable expenditure. Housing and rents must be dealt with but even if they are, and rents are brought to an economic level, we would still have a substantial differential compared to England and Wales.

Dr. Mabon

The hon. Gentleman has mentioned the figure of one-twelfth. I do not disagree with what he has said, but if municipal rents were reviewed in the way that he has suggested and given all the safeguards that he proposes, what fraction is he thinking of, if not one-twelfth?

Mr. Taylor

I have made my views on municipal rents quite clear, and I might be called to order if I want into this in any great detail. I have given my views in the debate on housing conditions and have gone into the matter very seriously. In the case of some Scottish local authorities, the need to review rents is an urgent one, because it amounts to a substantial proportion of rating costs.

On the other hand, we have to recognise that in some local authorities, in some municipal schemes, the general standard of communal facilities available are so inadequate that some provision will have to be made for these in fixing the municipal rents. I hope that the Minister will not think that I am dodging this question. I would be glad to take up this issue if I were in a position to do something about it. At present we are in opposition, but my party has made its views quite clear and I have endeavoured to do so when I have been serving on housing committees.

Dr. Mabon

The hon. Gentleman has not been quite frank about this. This is strictly in order, Mr. Deputy Speaker, as the hon. Gentleman raised this question in his speech. If he reads again the passage of his speech he will see that he referred to a case where some municipal rents might be raised subject to certain safeguards, so that this fraction of one-twelfth, which he was implicitly criticising—and I am not disagreeing with him, it is entirely a matter for him to defend—could be changed. All I want to know is, when he uses the phrase "an economic rent", does he mean that the fraction should rise to the English fraction, that is, with local sources buttressing the housing account, or should it rise to a fraction above one-twelfth? If so, may I ask what is the fraction?

Mr. Taylor

I can give an example from Glasgow where we have a housing deficit, I believe, of £6 million for the current year. If one looks at the figure for rents, it will be seen that they brought in a total of £6.3 million. In these circumstances, and I would have liked to have gone into these figures in more detail before giving an answer, it would appear that the rents are providing about the same as the deficit. In this case there is room for some adjustment.

On the other hand, I would not like to say that we should try to put the faults of history right in one fell swoop. This could bring hardship, but in this case I would say that there is a need for adjustment. If the Minister would like to go into this in more detail, and I am very grateful to him for showing his interest, I would be only too glad to have a meeting with him very soon and to put my view to him. I hope that it was not the Minister's intention to deflect me from the point that I am making—that even if we had rents increased very substantially tomorrow, and brought up to an economic level, with no deficit in housing accounts, rates would still be substantial in Scotland and greater than in other parts of the country.

All the figures that I have given have been in respect of 1953–64–1963–64, which I understand were the figures upon which the Allen Committee based its Report. Since then, there has been a substantial increase in rates, and it would appear that the Government, unfortunately, have not been able to make proper estimates, or to maintain proper control over local authority expenditure, which has increased. I well remember that shortly after the Minister was put in charge of local authorities in Scotland he suggested that rates in the first year would rise by 4 per cent. I suggested that the figure might be nearer 8 per cent. In the event we were both wrong and the rise was proved to he 9 per cent.

In 1966–67 the Government made it clear that local authority spending was getting out of control and something had to be done. They issued urgent directives about the need for restraint by Scottish local authorities. The net result is that the amount collected in rates increased by 16 per cent. The position is infinitely worse now than it was at the time of the Allen Committee's Report, and we have had additions to costs such as the petrol tax, vehicle licences, and the high cost of interests on loans. All of these will undoubtedly make the situation serious this year.

There has been a revaluation in Scotland this year, which did not take place in England and Wales. In revaluation years it has been the case that some local authorities indulge in a spending spree. In some cases this has happened in Scotland.

The Government have a very heavy responsibility indeed. They know that they owe their existence to Scotland. Were it not for the substantial swing in opinion in Scotland since 1964 their very shaky and miserable existence on the basis of a tiny majority could not be possible. The plain fact is that many people in Scotland voted for the Labour Party specifically because of its promises on rates.

What specific promises did the Labour Party make? There was one promise which was made quite clear and which was referred to by a substantial number of hon. Members opposite when we were in power. I wish to quote from "The New Britain", which was the Labour Party's manifesto for the 1964 General Election. In a reference to rates, it says: … Labour will restore the percentage grant and transfer the larger part of the cost of teachers' salaries from the rates to the Exchequer. This was a wonderful promise which, if implemented, would make an enormous impact on the high cost of rates. As far as I can make out, in Glasgow the net cost of education this year will be about £27 million and teachers' salaries £13.3 million. Therefore, if the Government were to keep their pledge to transfer the cost of teachers' salaries to the Exchequer, I calculate that in Glasgow rates could be reduced by 8s. in the £.

But suppose that the Government wished to say, "Watch the small print. We did not say 'all'. We just said 'the larger part'", and suppose that by "the larger part" they meant only half. If we were to transfer half the cost of £13.3 million for teachers' salaries in Glasgow to the Exchequer, we could cut our rates by 4s. This is a very substantial sum. I know for a fact that there are some people in my constituency—and I am sure that there are people in many other Scottish constituencies—who voted for the Labour Party because of this specific pledge which would have such a dramatic effect on the rates if it were put into operation.

The first question which the Minister of State must answer—and I appeal to him to ignore all the other questions, if necessary, but to answer this one—is: do the Government still hold to their pledge to restore the percentage grant and to transfer the larger part of the cost of teachers' salaries from the rates to the Exchequer?

Dr. Mabon

Before this newspaper headline goes further, would the hon. Gentleman recalculate what he has said? Is he aware that the Government give grants on education budgets? Is he aware that we cannot just make a straight calculation on teachers' salaries and to deduct it in this way to give 8s.? Would he think again and give us another figure?

Mr. Taylor

I have here all the details of the specific grants given by the Government. They do cover not teachers' salaries but things like the supply of milk. If the Minister is now saying that an adjustment would have to be made in the general grant if teachers' salaries were transferred to the Exchequer, the Government should have made that clear when they published this brash and cheap document. They should have said, "We will transfer the cost of teachers' salaries, but we shall have to make an adjustment in the general grant to cover other services".

Is the Minister of State saying, as has happened with many other promises, "We mean this but we shall have to cut something else"? Are the Government saying that this pledge should be clarified by saying that adjustment will have to be made in the general grant? If the hon. Gentleman is simply saying that this pledge means that instead of having a general grant covering all subjects, including education, the Government will take, perhaps, £100 million off the general grant and give it towards the cost of transferring teachers' salaries to the Exchequer, then the Government have mislead not only the people of Scotland but the people of Britain as a whole.

What was said in the manifesto must have meant something, and I should like the Minister of State to say precisely what it meant. Do the Government still hold to this pledge? When will it be brought into effect, and what effect would it have on rates? I assume that when the Government said that they would transfer the cost of teachers' salaries there would be the minimum adjustment to the general grant.

The second promise made which the Minister may also wish to comment on was that more Government help would be given to local authorities. Unfortunately, we saw from the Rate Support Grant Order which was discussed a few days ago that this is not happening. Local authorities in Scotland estimate their future spending at £273 million. But the Government have done something rather like what is done by people who put advertisements in the newspaper saying that Mr. Bloggs will no longer be responsible for the debts incurred by anyone else except Mr. Bloggs. They have simply said to local authorities in the Order that they are prepared to underwrite expenditure of only £264 million. They do not say that this money will not be spent. I believe that they know that it will be spent. But there is a difference of £9 million between the amount on which the Government are prepared to base their grants and the amount which local authorities calculate will be spent. Does the Minister think that this £9 million will be spent? If it is spent, who will pay for the difference?

The third promise was to bring early relief to ratepayers. There was, unfortunately, no indication that the relief would be limited to a very small sector of the electorate and that other ratepayers would have to bear part of the cost. My constituents have been faced with a substantial increase in rates. Local authority rates production in Scotland this year has increased by over 16 per cent. People are still waiting for this relief.

This is a problem which affects domestic ratepayers, but it is also a substantial problem for industry and commerce. There was complaint in the Press not long ago by the steel industry that local rates were such a burden for it that it had to allow as much as 12s. 6d. per ton for their cost. I do not say that this is something to worry about unduly, because two years ago Colvilles estimated that it had to allow 26s. 9d. per ton for the cost of rates. The situation may vary from industry to industry, but this is the one example I have. Even two years ago the cost per ton which the steel companies had to allow for rates alone was more than double in Scotland.

Bearing in mind the enormous contribution which the steel works make to Scottish local authorities, perhaps the Minister of State could answer a question which is worrying Scottish local authorities: what will be the arrangements for paying rates when steel is nationalised? If, like the other nationalised industries, the steel industry has to make a contribution in lieu of paying rates on their property, this could have an enormous impact, because the nationalised industries pay considerably less than they would have to pay if they paid rates normally simply because of the arrangement for making a payment in lieu. When we appreciate that half the rates in Motherwell—Wishaw come from the steel works, we realise what an enormous difference there would be if, on nationalisation, there were a change in the way in which the steel works paid their rates.

What about commerce? I do not know whether the Minister of State has any shares in Woolworth's, but I know that he will be very interested in the annual report which will be made to Woolworth's shareholders on Friday. At the meeting on Friday, the chairman, Mr. F.L. Chapman, will be making a statement, and at the beginning of this statement—this is not an advance copy since all shareholders get it; one of my wealthy friends is a shareholder—it states that for the first time in many years there will be a reduction in the profits of the company.

What are the reasons given for the reduction? Of course, one is the Selective Employment Tax introduced by the Government. We know about that. Another is increased National Insurance contributions, again the result of Government Policy. Another reason is the heavier charge for rates, particularly in Scotland. This is a problem which is being experienced not merely by Woolworth's, but all over the country.

I have spoken a little about Scotland, but I come now to the particular problem of Glasgow. I am afraid that many people in Glasgow are asking themselves whether they can afford to live in Glasgow any longer. Many sectors of industry and commerce are asking whether they can afford to continue in Glasgow. Scotland can certainly not survive without a healthy and prosperous Glasgow, but Glasgow's financial problems are becoming so acute that many firms in industry and commerce and many people are thinking of going, and some are even moving away.

How can we compare the Glasgow burden with that of other places? The Minister of State and I have on other occasions discussed the difficulty of making a comparison. Let us take, however, the poundage rate, which in Glasgow this year after revaluation is 24s. 6d. in the £. In Edinburgh it is 17s. 4d., Birmingham 12s. 8d., Manchester 14s. 10d., Liverpool 14s. 7d. and Leeds 12s. 6d. These are not entirely meaningful comparisons because, obviously, the values vary from one place to another.

Mr. John Robertson (Paisley)

Will the hon. Member tell us the rate burden in Newton Mearns, for example, where so many of his people reside?

Mr. Taylor

I cannot do so without notice. I could give the hon. Member the figure for 1963–64 from a document which one of my hon. Friends has with him which shows the rates for Renfrewshire generally. I cannot give the 1966–67 figure without notice, but I understand that the hon. Member will be able to get it very soon.

I was saying that that is not necessarily a meaningful comparison. One could say that Birmingham has a rate poundage of 12s. 8d. and Glasgow 24s. 6d. and that Glasgow is, therefore, paying twice as much, but that would not be a fair comparison because rateable values in different places vary. We have had revaluation in Scotland but England and Wales have not.

A fairer way of comparison would be to compare rates per head of population: in other words, what it costs to provide local government services as a whole—police, water, housing and everything else—and comparing one part of the country with another per head of population. Glasgow has a figure of £35 16s. per head of population in the year 1966–67. That is an appalling figure because it means that the average man, woman and child has to pay, directly or indirectly, £35 16s. for local rating services. They pay it either directly on their houses or indirectly through the firms for which they work or the shops in which they buy their goods. That is an enormous figure. It represents about £140 for the average family this year in Glasgow.

How does this compare with other cities? For Edinburgh we have a figure of £30 13s. 7d.; for Dundee, where the hon. Member for Dundee, West (Mr. Doig) has such an interest, £28 3s. 10d.; for Greenock, where the Minister of State is the Member of Parliament—that is probably part of the reason why it is so very low—£23 4s.; and Liverpool £24 13s. 9d. This means that for the same services Glasgow ratepayers have to pay one-sixth or 17 per cent. more than Edinburgh ratepayers, 25 per cent. more than Dundee, 50 per cent. more than Greenock and 45 per cent. more than Liverpool.

This has been a year of revaluation and some people have not noticed the dramatic jump in the cost of services per head of population in Glasgow of 24 per cent. Last year, the figure was £28 17s. 11d. This year it is £35 16s., a jump of 24 per cent., or almost one-quarter in a period of one year. The domestic ratepayers have not entirely noticed this because most of the increase has been in the valuations of commercial premises.

I would like to give the Minister a note of one or two of the commercial increases in Glasgow. I have a list of warehouses and the increases which they have suffered. If I had known that I would have the opportunity of raising this subject this morning, I would have endeavoured to get details of some of the retail premises. However, I found these particulars of warehouses in my file.

Before revaluation, the year before last, the rateable value of Arthur & Co was £20,746. The proposed new valuation is £58,080.

Mr. John Robertson

Perhaps the hon. Member can tell us the significant figure. What proportion of rates is paid by the various classes of ratepayer in Glasgow—for instance, domestic, commercial, shops and offices, industry and others? That information would be meaningful.

Mr. Taylor

Had I known at the weekend that I would be able to raise this matter, I would certainly have had the figures. All I can say is that I can get them for the hon. Member. If he is interested, I hope that on the basis of the figures which I give, he will be able to help me in this campaign which I am undertaking.

Take some of the warehouses. Arthur's valuation is up by 180 per cent. Gerber's, another big warehouse, is up from £6,000 to £17,400. an increase of—

Mr. Robertson

These figures are meaningless. They might mean one of two things. One is that in previous years these companies have been getting away with murder and not paying their adequate share of the rates. Without additional information, therefore, the figures are meaningless. My recollection is that in Glasgow industry and commerce were paying a share of the rates that was below the Scottish average. Consequently, they have been subsidised all the years by domestic ratepayers.

Mr. Taylor

I am glad that the hon. Member knows so much about the position in Glasgow. All I can tell him is that what he is saying is complete and utter nonsense.

There is no way adequately of comparing commercial and other property. The question is what percentage the various sectors bear. [Interruption.] I have given way seven times and I am holding up business. The hon. Member claims to be an expert on Glasgow. I do not claim to be an expert on Paisley, but I spent five years on the Glasgow Town Council. The hon. Member can discuss this matter with any of his colleagues from Glasgow, from whom he will get the information that commercial firms in Glasgow are facing disaster. If the hon. Member will not accept that he must ask his hon. Friends who represent the Labour Party from Glasgow. If he does not think that we have a problem and crisis in Glasgow, he should go there and try to find out something about it. If he had a warehouse like Wolfson, he would know that its rateable value has gone up from £6,400 to £19,580, an increase of 201 per cent., with only a tiny fractional reduction in the poundage rate.

I would like to know how the hon. Member would face that if he were a businessman. The only way to face it is to try to be more efficient and to put up prices. That, unfortunately, is precisely what is happening in Glasgow. Commerce is being priced out. We have seen the results of this. We have seen the Colloseum, a major store in Glasgow, having to close. Does the hon. Member think that it wants to close simply to discredit the Labour Government or the Socialist-controlled town council?

Dr. Mabon

On a point of order. May I get this clear, Mr. Deputy Speaker? The Government in Scotland have no control whatever over valuation. How can a Minister be asked to answer this debate when the matter is one for the assessors, for the valuation system and the Court of Session? I agree that in England it is a matter for the Inland Revenue, but in Scotland it is not. It is a quasi-judicial system over which Ministers do not exercise administrative control.

Mr. Taylor

Further to that point of order. I was coming directly to the question of the rate burden and I ask the indulgence of the House to continue.

Mr. Deputy Speaker

I understand that the subject which the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) is raising on the Adjournment is the alleged burden of high rates in Scotland. The scope of the debate should be confined to matters relating to that subject for which the Secretary of State for Scotland has some responsibility.

Mr. Taylor

I must apologise to the Minister if it seemed that I was going off course. As he will appreciate, his hon. Friend the Member for Paisley (Mr. John Robertson) led me astray.

I was trying to make the point, which the Minister will surely accept, that in Glasgow we have had an increase of 24 per cent. in the amount raised by rates. It has been a year of revaluation and, therefore, the increase has been largely unnoticed. The reason why it has been largely unnoticed is that most of the increase has been in respect of commercial properties. I have given the figures as evidence of how commercial properties are carrying a much larger share, and this substantial increase will be reflected in prices in Glasgow.

Rates in Scotland are extremely high, but in Glasgow we have the particular problem that for the same local authority services ratepayers pay 17 per cent. more than the ratepayers of Edinburgh, 25 per cent. more than those of Dundee and 45 per cent. more than those of Liverpool. The effect on industry can be substantial. Three years ago, I did a survey for the Clyde shipyards, comparing Glasgow with other shipbuilding towns, and I found that on average Glasgow was paying 16 per cent. more than the rest of Scotland, 35 per cent. more than Liverpool, 75 per cent. more than Birkenhead and Wallsend and 98 per cent. more than South Shields. Those are comparable shipbuilding towns and now we have a situation in which Glasgow is in danger of committing economic suicide unless something is done.

What have the Government done and what can they do? We know that the Cullingworth Report has called upon the Government to give Glasgow help to solve its unique housing problem, but we want to know what response the Government intend to make. They have introduced new formulae for the equalisation grant and the general support grant, but, unfortunately, the effect has been—using the basis of the figures provided in Facts and Figures, 1966, and the document provided by the Institute of Municipal Treasurers and Accountants, a document with which the Minister will be familiar—that Glasgow's equalisation grant has fallen from £3.5 million to £2 million. If those figures are incorrect, I hope that the Minister will take immediate steps to see that something is done about them, because these documents have always been regarded as extremely authoritative.

The Government themselves have added to costs by the imposition of the Selective Employment Tax and by increasing petrol tax and so on. They have always said that they would provide more money for housing, but the figures show that in the current year, 1966–67, Government assistance for housing, as shown by the Housing Statistics, in Glasgow has fallen to £3.2 million from £3.5 million last year, so that it is not even keeping pace with the increase in expenditure.

I call upon the Government to do several things. First, they should clearly say whether they intend to keep their promises, particularly their promise to transfer the cost of teachers' salaries to the Exchequer, a cost which for Glasgow, if there were not adjustments in the general grant, would amount to an increase in rates of 8s. in the £. Secondly, I would like to know whether their other promises about reducing rates will be kept.

Thirdly and most important, in view of the dangerous situation facing Glasgow industry, commerce and ratepayers, are the Government prepared to appoint a committee to conduct a full-scale inquiry into Glasgow local government finances? I would like such a committee to include representatives of the big industrialists, business efficiency experts and local government experts. Let them be charged with identifying the reasons for the much higher costs in Glasgow.

They might bring forward recommendations to say that a substantial amount of ratepayers' money could be paid. There may have been extravagance and waste. If so, we should know about it and something could then be done. But it may be that the problem is not the fault of Glasgow Corporation and that special help would be justified because of the special problems which Glasgow has to face.

Dr. Mabon

There is not much time left in which to reply.

Mr. Taylor

I have been constantly interrupted, but I will close as quickly as possible.

We want an outside inquiry to find out why there is this substantial differential. If the fault is the administration in Glasgow, let something be done about it. But if the fault is entirely beyond the control of Glasgow Corporation and if the differential arises because of the special problems of Glasgow, the Government should consider special help for Glasgow along the lines suggested by the Cullingworth Report for Glasgow's housing. The Minister must accept that the health of Scotland depends upon the health of Glasgow. Glasgow's financial problems are so acute that industry, commerce and the ratepayers generally look to the future with gloom and despondency. Something must be done and I hope that the Minister will tell us what he intends to do.

12.16 p.m.

Mr. Peter Doig (Dundee, West)

I listened to the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) with great interest. In view of his record, I was convinced that he would do his best to make propaganda on behalf of the Tory Party in the Pollok by-election. I did him a grave injustice, for he did nothing of the kind. What he has done has been to show that he is far more concerned about those who own shares in the steelworks, or in Woolworths, or in the shipyards, than he is about Glasgow's ratepayers.

The hon. Member asked why revaluation in Scotland had not been postponed. He must be aware that the one effect of revaluation has been to shift a proportion of the burden of rates from domestic ratepayers to business and commercial ratepayers. I want to help him and I will tell him how this comes about. Assessors are instructed to base their revaluations of domestic premises on what a house would be likely to bring in the open market, if there were no shortage and no surplus of housing, but their revaluations of commercial premises solely on what the price would be in the open market. That is why revaluation acts against the owners of business and commercial premises. If it acts against them, it must act in favour of domestic ratepayers. The one thing which would have been harmful to Scottish ratepayers would have been the postponement of revaluation in Scotland.

It is clear that the hon. Member has been arguing not on behalf of the ratepayers of Glasgow, or any other Scottish local authority, but for those who, he says, pay too large a proportion of the rates—the owners of business or commercial premises.

Mr. Edward M. Taylor

Would the hon. Gentleman say that transferring an enormous proportion of rating costs to shopkeepers helps domestic ratepayers? Surely the only effect is higher prices in the shops.

Mr. Doig

The hon. Gentleman did not mention shopkeepers. He took his examples from the steelworks, Woolworth's and the shipyards. Those who have had the largest increases in rates have not been the shopkeepers, but the big business owners. If they are now paying a bigger share, ordinary householders in Glasgow are paying a smaller share. The fault is not that of the assessors, but of previous Governments, who laid down the formulae.

Rates are paid to pay for the services which the public wants and which are provided by a local authority. As an ex-member of a local authority, the hon. Gentleman must be well aware of this. What are these based on? By far the largest item is education. I have the Glasgow figures. The figure for education in Glasgow is £24 13s. 7d. per head of the population.

The only criticism which the hon. Gentleman made was not that money was being squandered by the Glasgow Corporation, but that the cost of paying for teachers' salaries ought to be borne by the taxpayer rather than the ratepayer. That was the basis of his criticism of education expenditure.

If the Government took it all over, as they may well do before long, what would be the main effect on those people whom the hon. Gentleman appears to be concerned about, such as the steel owners, the Woolworth's shareholders, and the rest? He must know that the directors of those companies and the larger shareholders in the companies would pay a greater amount if it were taken over by Government finance than by local government finance. The hon. Gentleman is not helping these people. Goodness knows whom he is helping, because he does not seem to be helping anybody.

We come to the question of housing, about which the hon. Member had a great deal to say. I said that £24 per head was spent on education. For housing, it is only £4 18s. 3d., which is not a great deal by comparison with the total. The hon. Gentleman went on to say that if only the local authority would increase the rents it could solve this problem. I once calculated that if we doubled the rents in Dundee and put them up to even the full economic rent, it would not have helped a great deal.

The hon. Gentleman went on to talk about economic rents. Does he know what an economic rent is? Is he suggesting that the citizens of Glasgow who occupy corporation houses should pay somewhere in the region of £6 a week plus rates? That is an economic rent. Let us be clear about that. Do not let us mince words. The economic rent for the most recently built local authority houses in my constituency is over £6 a week plus rates. Is this the sort of rate that he is advocating for the people of Glasgow?

Mr. Edward M. Taylor

That would be an average for Dundee if there were economic rents. I do not say that economic rents should be brought in tomorrow. I would also accept that in Glasgow the figure is considerably less than £2 to balance our housing accounts.

Mr. Doig

The hon. Gentleman said that housing rates were coping with roughly half of the cost of housing, but, in fact, they are coping with only about a third. He also said that the local authority could save about £6,000 if it charged economic rents. I am pointing out what economic rents are. It is no good the hon. Gentleman talking about something if he does not know what it means. We want to know, and the people of Glasgow want to know, exactly what the hon. Gentleman is advocating. If he is advocating an economic rent, the economic rent for the most recently-built houses is over £6 per week plus rates.

The hon. Gentleman went on to talk about economic comparisons between a number of other local authorities, comparison between what they pay, the rateable value. I have also made some comparisons. If we take Glasgow, the rateable value per head of population is £22 5s. In Edinburgh, which the hon. Gentleman gave as an example as paying lower rates for the same services, the rateable value per head of population is £26 15s. It is true that the rate poundage is lower in Edinburgh than in Glasgow, but the rateable value on which they pay rates is higher in Edinburgh than in Glasgow, or, for that matter, anywhere else in Scotland. We have to take the two figures together before we can get a fair comparison.

The hon. Gentleman went on to compare a number of places in Scotland. It so happens that I have a brother who lives just outside London. He has a lower rate poundage. I asked his wife how much money she pays in rates per year and it was higher than we pay in Scotland. It was higher than I pay in Scotland, but it was a lower rate poundage. She has to pay more for rates than I do. This can be very misleading unless we look at the whole picture.

The Government are already giving—and we should not forget this—a very substantial amount of aid towards local rates. If we take Glasgow as an example—and the figures which I have are those before devaluation—the figure was £49 12s. 11d. per head. The Government were giving £34 9s. 8d. in Exchequer equalisation grant and another £15 18s. 6d. in general grant, making a total of £50 8s. 2d. per head. The Government were paying more than the Corporation of Glasgow towards keeping up the services for Glasgow people. So, already, there is a very considerable contribution being made from the central Government.

There may be good reasons why that should be increased. I would like to see it increased, because I believe that raising revenue through taxation is a fairer way than raising revenue through rates, but do not let us under-estimate the aid being given now by the central Government.

In all the hon. Gentleman's talk about services being provided and paid for out of rates, he did not give a single example of any waste that had taken place. He did not say that money was being wasted. He made the point that the local authority was not charging enough rent for corporation houses, but apart from this he gave no evidence of any waste. If these rates are used to pay for services which the people want, such as for providing education, houses, caring for old people, and for health services run by the corporation—and these are the sort of things it provides—does anyone begrudge these things?

Let us get down to working out how much it costs. I worked it out that for one year it cost 5d. for the use of the public parks in Dundee. I never found a single person who objected to that. If we take any one item covered by rates, we will not find one person in Glasgow or anywhere else who objects to paying for the services provided, because they get very good value.

It is quite obvious from what the hon. Gentleman said that the people he is concerned about are the shareholders and directors of the large firms. He is not concerned about the ratepayers. He had no criticism and no evidence of any taxpayers' money that was wasted by the corporation in Glasgow or anywhere else. His chief objections were directed against revaluation, which has helped ratepayers, and to the actual system, which he said was wrong. I told the hon. Gentleman where it went wrong so that he could put it right if he had enough energy to devote to it. It is a matter for the Government to put right and not a matter for anyone else. The hon. Gentleman has done a service to the whole of Glasgow by making his views quite clear for the first time for a very long time.

Dr. Mabon

rose—

Mr. Hector Monro (Dumfries)

I would be much obliged if I could intervene on a point of order. I have sat in the Chamber since ten past ten this morning, hoping to catch your eye, Mr. Deputy Speaker, on this very point about rates. We have heard from two hon. Gentlemen, one talking about Glasgow and the other talking mainly about Dundee. I think that we should have a word from those hon. Members representing rural areas in Scotland which are so important and are so heavily hit by rising rates. I feel sure that the Minister could make his apology in under half an hour.

Mr. Deputy Speaker

I do not know whether the Minister can or cannot. The hon. Gentleman the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) spoke for 45 minutes, and presumably he wants a reply from the Minister. That is why the hon. Member raised the matter on the Adjournment, and as the Minister rose it was my duty to call him to reply.

12.30 p.m.

The Minister of State, Scottish Office (Dr. J. Dickson Mabon)

I am obliged to you, Mr. Deputy Speaker. If my speech is shorter than I had intended it to be. I hope that the hon. Member will get an opportunity to take part in the debate.

It is not often that I enjoy the luxury of having enough time to reply adequately to the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor). Usually I am rushed, as I was during the Adjournment debate on 27th May last year. On that occasion I had prepared a great deal to say, and was anxious to correct a number of points which had been made, but, unfortunately, I was denied the proper opportunity of making an adequate speech because of other business, although I must add that the hon. Gentleman was able to be very expansive. I do not, of course, complain about that; I merely envy him and wish that I had the same kind of opportunity.

A number of misapprehensions about rates continue to linger in the hon. Gentleman's mind. This is rather sad, because he devotes a lot of time to the study of this subject. If he had been a back bencher during the 1959–64 Parliament he would have had a good time criticising his Government for the way in which they handled this matter, and if he had been a back bencher in the in the 1955–59 Parliament he would have been in the glorious position of being able to rebel against the Rating and Valuation Bill, which is the foundation of the rating system in Scotland. This extremely important Bill was passed by the then Government, and in the words of the then Under-Secretary of State, Lord Craigton, it was to last for 100 years.

The fact is, however, that we have had to amend it. The party opposite had to reconsider some of its thoughts on the 1956 Act and introduce fresh local government legislation. For example, in 1958 right hon. Gentlemen opposite took a long look at local government finance and decided to make a major reform in local government finance based on the valuation system. In 1963, they had to introduce another Bill to amend the original Measure, and it is all these Acts that we are talking about this morning.

The system of rating and valuation under the Valuation and Rating (Scotland) Act, 1956, is not primarily the responsibility of the Secretary of State. It is the responsibility of the valuers who are not appointed by the Secretary of State in dividuals. Nor is he responsible for their professional judgments. There is a valuation appeal system under which, if objections are raised, they are considered by the Court of Session. If objections are raised not on a matter of substance on the appeals, but on the way in which the appeals are conducted, again the Secretary of State does not come into it. The issue is considered by the Council on Tribunals in Scotland. If someone has a complaint on that score it goes to that tribunal. I therefore cannot answer for all the maters which have been raised. I want to stick as closely as I can to the local government aspect of the problem rather than to the operation of the valuation system.

It may be true that we should have had the Inland Revenue in Scotland. We then would not have had our valuations quite so much on schedule as we have, because I understand that in England valuations have had to be postponed because of the sheer volume of work falling on the Inland Revenue authorities. But it was the party opposite which insisted that valuations in Scotland should be based on assessors. It was hon. Gentlemen opposite who insisted on the quinquennial reviews in 1961 and 1966, and one can hardly blame this Government for what happened as a result of these reviews, or because we have a different system of valuation from the English one.

If hon. Gentlemen opposite say that we should have postponed revaluation, they should complain not to us but to their hon. Friends. We are being blamed for what has happened, and during the hon. Gentleman's speech this morning he seemed to imply that somehow or other the present Secretary of State for Scotland was responsible for this state of affairs, and that as I was to answer the debate clearly I had some responsibility in the matter. This is not true.

The 1958 and 1963 Local Government Acts imposed what was virtually a straitjacket on local government finance in Scotland. When the hon. Gentleman complains about Glasgow he does a lot of disservice to the city by giving the impression, as he did this morning, that it is a fantastically high-rated city and that industry and commerce would do well to keep out of it. I concede that we ought to be examining this matter, and this is exactly what we are doing. The party opposite had 13 years in which to do it, but nothing was done.

The hon. Gentleman called for a high-powered Committee. What he wants is more of a political committee than an actuarial one, one which will denounce the corporation and the Government instead of looking for a solution to the problem. If it is true that there is a difference in the rate burden in Glasgow, something which is unique in the British Isles, we must find some solution within the present system to try to adjust the situation, and this is what the working party on local government finance concerning Glasgow is doing at the moment. No other Government has done this for Glasgow.

The working party to which I have referred was established as a result of meetings which I had with Glasgow concerning housing and land use. The working party is the result of discussions about rehousing Glasgow's population. The hon. Gentleman says that people are leaving Glasgow because of the high rates. This is sheer nonsense. We are trying desperately to get as many families as we can out of Glasgow into decent houses simply because we cannot rehouse all the Glasgow people in the city. It is physically impossible to put them into decent houses in the city and, therefore, we have to rehouse a large number of them outside.

The hon. Gentleman's Government had a poor record in housing Glasgow's population. We have to improve on it, and not merely on the figures which they left as a target, namely, 3,500 families a year to be rehoused outside the city. We have to go further, and for this reason, and the various other reasons which have been given from time to time, we have begun discussions with Glasgow, and there has been a special exercise in the Rate Support Grant Order system to see whether Glasgow is harshly treated.

The hon. Gentleman gave away his case about Glasgow being treated badly when he said that a survey had been carried out three years ago. It must be remembered that that was when his party was in power, and when the system of grants being operated was that laid down by his Government. Incidentally, I would be very glad to be able to read the survey in full. If the hon. Gentleman could provide me with it all, rather than merely with extracts, I think that it would be a great help to the review being carried out by the working party.

I appreciate that this survey was commissioned by the shipbuilding interests on the Clyde. It was perfectly in order and correct for such a survey to be carried out to enable a comparison to be made with other shipbuilding centres, and I would welcome the information obtained by it. It might help us to decide whether additional steps ought to be taken to help Glasgow which has been treated unfairly, not because of bad government, but because of the rating system and because of the way in which various Acts of Parliament have worked—the Exchequer equalisation grant formula and for that matter the general grant formula.

This is the first Government to meet Glasgow on this matter. Glasgow has been saying, not for three years, not even for six years, but for many years, that because of its immense housing obligations, which were highlighted in the Cullingworth Report, which the Government commissioned, she has been unfairly treated, and has had to bear a heavy burden. The previous Government made no attempt to deal with the problem. They wound up the Committee and refused to let it meet. We restarted the Committee, and from it we have received some useful and important information.

When Glasgow was in difficulties during the decade or so when the party opposite was in power, the city received no help from the then Government. No inquiry was carried out by the Government, and no discussions were held with the local authority to see how the city could get a better deal. We are doing just this because, unlike the previous Acts, under which there was a straitjacket system such as in the general grant and the amending Act of 1963, we now have a rate support grant whose formula which, by consent of both sides, is alive, the Rate Support Grant Order. It can be varied in accordance with whatever agreements local authorities can come to with the Secretary of State.

We have a completely open system, as I mentioned in the debate on the Rate Support Grant Order last month, when we were discussing the first and second years. I gave due notice to the local authority associations that, while we stood by the distribution formula for the first year, we might have to import into our discussions an additional factor resulting from the discussions with the working party in Glasgow, which might alter the position in respect of the Rate Support Grant Order in the second year.

Scottish local authorities other than Glasgow are willing to co-operate in this, even though they may be placed at a slight disadvantage. The Government can help in other ways. They may take this as their option rather than the Rate Support Grant Order, but even if there had been good will in the minds of the Ministers of the Conservative Government, they did not have the legislative means to do this. It can, therefore, be fairly stated that, the 1963 Act having been passed by them, they did not want the means or, alternatively, did not have the will, to re-examine the Glasgow position.

We have the means. The Local Government (Scotland) Act, which received the Royal Assent on 21st December, 1966, gave us the means to make an adjustment. We have demonstrated our good will by taking part in the operation of this working party.

Mr. Edward M. Taylor

Does the Minister agree that the position has been made slightly more serious because of the reduction in the Exchequer equalisation grant, which appears to be £1½ million? Could that be restored immediately?

Dr. Mabon

Either the hon. Member does not understand the system, or he is being quite mischievous. I have been at pains to make clear, for the benefit of English Members, that the valuation system in Scotland is not the responsibility of the Inland Revenue, but depends upon a system which is quasi-judicial in character, in which Ministers do not exercise day-to-day control. The reason why Glasgow has lost this amount of Exchequer equalisation grant this year is not because of the Secretary of State, or of the Government, but because of the valuation.

The valuation judged by the city assessor was £2 million more than he allowed for in his earlier figures, which meant an adjustment under the Exchequer equalisation grant formula which the party opposite had introduced, as a modification of the formula that the Labour Party first adopted when in power. No one can claim that the existence of the formula was our fault, or that the valuation mistake—if it can be called that—was a mistake by the Government; it was a mistake by the city assessor.

That being the case, the grant could not be restored without bringing in a special Act of Parliament. That would have been in complete defiance of the rules laid down in the Valuation and Rating (Scotland) Act, 1956, and subsequent statutes passed by the party opposite. That would have been quite wrong.

We are proceeding on the correct lines, which is to have a working party examine the situation to see whether, within the present system, we can arrive at an adjustment which will place Glasgow in as fair a position as other authorities.

Mr. Tam Dalyell (West Lothian)

I apologise for not being here earlier. It is one more argument for the building of another runway at Turnhouse Airport—which has often been the cause of delay during the past month.

Is my hon. Friend basically happy about the present Exchequer equalisation grant formula? Has he said anything about it earlier? This question concerns not only Glasgow, but many other authorities which have close relations with Glasgow.

Dr. Mabon

I am sorry that my hon. Friend was delayed. If Edinburgh Corporation will look at the matter again—it has been doing so under both Governments—we might get an extra runway at Turnhouse. That is not the responsibility of the Government; it is Edinburgh's responsibility. I hope that Edinburgh will do as well in the East of Scotland as Glasgow and the Government have done in the West.

I acknowledge the force of my hon. Friend's question. The Exchequer equalisation grant formula finishes this May. This is the last of the financial years in which it will operate. The new formula relating to the resources element of the rate support grant will begin to operate in the next financial year. If my hon. Friend has any points to make to me on the matter, I hope that he will do so, and I hope, also, that his county is aware of the procedure. It can raise these matters in the discussions with the working party, which is now meeting in connection with the rate support grant in order to examine a number of the consequences of the way in which the resources element is being worked out.

We cannot make judgments about the Rate Support Grant Order until we are through the first financial year and can see what the out-turn is. Too many suppositions are being made by treasurers—in quite good faith—which may lead some hon. Members to believe this, or that, or the other will turn out to be the case. A great deal of concern has been expressed on the question of the roads element. That cannot be defined precisely until the Secretary of State collects the voices of the local authorities and studies their advice on the principal roads, because to a large extent that will determine the way in which the roads element will affect the needs part of the Rate Support Grant Order. People must have a long look at the figures before coming to conclusions as to what should be done about the formula.

If something were wrong with the existing formula it could be changed administratively. That is very useful. Local authorities have every right to make their case, and the Government have every opportunity to listen to them and to do something about the situation. Under the procedure laid down the House has the right to comment upon and reject the Order. That opportunity was denied to the House when the party opposite was in power. They wrote into their Acts rigid formulae which did not allow for changes without new legislation.

Our discussions of Glasgow difficulties with the working party amount to a real and living thing. They are something upon which definite conclusions can be based and recommendations can be made to the Government. These recommendations can be carried out without the need for a new Act of Parliament.

I have dealt at considerable length with the point made by the hon. Member for Cathcart about valuation in Glasgow. I have been in close liaison both with the city treasurer and the city chamberlain about the need for special treatment. I saw them on Friday. This matter is one of active concern on the part of the Government, and when the report is available, in June, I propose to discuss it again, at length, with the corporation when I meet it in connection with other matters.

We are continually reminded of the heavy housing burden that falls on Glasgow. One of its heavy burdens arises because of the high interest rates that it has been paying on loans made by the previous Government. The money which is being used to build many Glasgow houses was borrowed at the existing 4 per cent. rate. The Housing Subsidies Bill will receive the Royal Assent reasonably soon, and under it the Government have pledged themselves to pay Glasgow back to 25th November, 1965—which means that it will include many houses under construction—and we are paying additional subsidies on houses approved on 1st January, 1965. They are getting the benefit of the 4 per cent. interest rate.

The hon. Member for Cathcart says that interest rates are a heavy burden. That was not the view of the Under-Secretary of State on 22nd November, 1961, when a number of Glasgow Members complained of the heavy burdens that Glasgow was carrying through high interest rates, which meant that they had to borrow heavily to keep their housing programmes going. The Under-Secretary said: the high interest rate is no deterrent to continued building. It is simply tilting at windmills to suggest that the level of interest rates is a serious deterrent. … That is exactly what I am saying. Interest rates have nothing whatever to do with the biggest housing problem of all in Scotland, and the hon. Gentleman might have admitted that instead of talking of interest rates."—[OFFICIAL REPORT, 22nd November 1961; Vol. 649, c. 1465.] I am glad that the hon. Gentleman the Member for Glasgow, Hillhead (Mr. Galbraith), is not here, because he would have a row with his hon. Friend the Member for Cathcart, who is quite right in saying that interest rates are important to local authorities, and interest rates on housing, in particular, are important to Glasgow. We have very good improvement grants in Scotland and I hope that more of them can be used.

These grants come within the ambit of local government finance, and one has to approach this with caution. One does not want to spend money on the scale of Birmingham in Scotland, when Birmingham was in a much better position. I hope that the hon. Gentleman knows Birmingham well enough to real- ise that our tenemental properties in Glasgow present great problems. I believe it was his late right hon. Friend the Member for Glasgow, Kelvingrove, Mr. Walter Elliot, who called them castles of misery, magnificent sandstone tenements. They absolutely defy modern plumbing.

Simply to introduce a toilet for each home in these tenements costs a great deal of money. I hope that people will hesitate before they urge local authorities in Scotland to spend a lot of money on the improvement of these tenements.

Mr. Dalyell

My hon. Friend has said that he hoped that conditions would be created whereby more improvement grants could be used. This seems to be a very important statement. What are the difficulties in the way of improvement grants being used to their fullest extent? Are there any difficulties that we could help to remove?

Dr. Mabon

I doubt whether we could remove them, because they are difficulties in structure and in staff. One would have to turn an architect away from building new houses to redesign the old houses. This is one of the reasons put forward by many authorities for not going ahead with improvement grants. It is not finance. I have discussed this with many councils, Paisley, Barrhead, Glasgow, Johnstone. They have done very well with the present grants, and they decided not to go ahead with other schemes because it was not worth the money.

May I turn now to the promises mentioned by the hon. Gentleman. In May, we shall see introduced for the first time a domestic element in the rate support grant, which means that the domestic ratepayer in Scotland will receive an immediate reduction of 10d. in the £. No matter what the rate is fixed at, there will be this automatic reduction of 10d. in the first year and 1s. 8d. in the succeeding year. This is a novel and revolutionary step forward. It is not just a promise—it has been carried into legislative force and taken to the point of reality. I hope that the domestic ratepayers will appreciate this.

The domestic ratepayers were not so well off under the party opposite because they received very little relief, most of it preferentially or individually. In Scotland, in the financial year up to November, 120,000 ratepayers received rating relief under the Rating Act, an Act which we wanted to pass many years ago but which the party opposite refused. It brought in a Rating (Interim Relief) Act as a deathbed repentance in 1964, and we got about £1 million out of that, spread over a number of years. That was the last desperate dying effort of the party opposite to try to square itself with the ratepayers.

The Rating Act is giving relief to 120,000 ratepayers in Scotland and that is a figure worthy of note. It is not as many as we would like; we believe that there are about 160,000 to 170,000 ratepayers in Scotland who ought to be receiving rating relief under the Labour Government's Act, but how do who do not know about it or who have not come forward. I hope that every hon. Member will do his best to encourage those ratepayers with small incomes to benefit from this Measure. We have had a good response in the east of Scotland, not so good I regret to say in the City of Glasgow when I last examined the figures.

The hon. Gentleman went on to talk about the teachers' salaries and the promises in the Labour Party manifesto in 1964. He can do this if he wants, but events have moved much more rapidly. The hon. Gentleman has to recognise that we have had time to examine the rating system, and with no preparation, to take action where none was taken before. The only thing done was the setting up of the Allen Committee, from which the hon. Gentleman quoted inaccurately. We did not get the Report of the Committee until February, 1965. Therefore, we had to do something when we came into power, and the first thing that we did was to add to the existing grants the sum of £2 million. In the General Grant Order of 1964–65–66 which I had the privilege of moving in December, 1964, in this House, the English equivalent was something like £18 million to £20 million. I am speaking off the cuff now.

Our Order was to provide for £2 million more in expenditure and something like £1.2 million in direct Government loan. That was our first step. When we had the Report of the Allen Committee in 1965 we had to examine much more deeply than had been done before, using an inter-Departmental Committee, the possible alternatives to a rating system. My hon. Friend the Member for Dundee, West (Mr. Doig) is perfectly right when he says that we on these benches very much favour a closer form of direct taxation, such as local income tax. Before we can have this we will need various reforms in local government, particularly territorial reforms.

The Royal Commission may produce these in both countries in reasonably good time. The Commissions are enjoined to recognise the problem of finance even though they are not expected to provide a solution, and the Government acknowledge that once the recommendations are made, they may be in a more favourable position to tackle the whole problem of local government finance much more fundamentally. We gave an extra £1.2 million in order to increase local government expenditure up to £2 million in the second financial year. After the Allen Committee, we had to have a deep examination of local government and we introduced as a stop-gap measure, a Local Government (Scotland) Act, which modified the present rating system.

I have touched on a number of points in my reference to the domestic element, the 10d. and 8d., which domestic ratepayers will receive in May, 1967, and 1968, in the resources element grant which I have mentioned in relation to the reformation of the Exchequer equalisation grant. The party opposite witnessed successive reformations of local government finance when they were in power, which began at a relatively high figure of Government percentage as opposed to local government percentage in the makeup of local government expenditure. It was about 55 per cent., then it would fall off, and be raised again up to perhaps 57 per cent. and fall again down to 51 per cent. or 52 per cent.

I recall these figures from memory, as a result of the nature of this debate. It is enjoined in the Local Government Finance Act that the Government portion of the expenditure will rise 1 per cent. each year. This is happening. When I moved the Rate Support Grant Order I gave the figure of 62½ per cent., rising to 63½ per cent. It is the Government's intention that we should gradually take over the burden until such time as we reform the whole structure of local government finance.

The hon. Gentleman is a revolutionary. He is not at one with his party about the rating system. He does not believe in a rating system left with local authorities or in the present system which his party supports. He believes in a system which sees the scrapping of the rating system, and local governments made into regional authorities, financed entirely from the Exchequer, like regional hospital boards. I have discussed this with many local authorities and they regard it as death. They would regard this as being agents of the Minister, like regional hospital boards.

In striving to find a solution to local government finance the hon. Gentleman ought not to slit the throat of local government in the process. Local government in England and Scotland has done a great service to modem 20th century democracy, and it would be foolish for us, because of our despair over rising rates, to believe that we ought not to have any local people serving the community on local instruments of modern government. This would be a great mistake, and I urge the hon. Gentleman in studying this matter further not to kill local government because he wants to kill the rate demand notice.

The debate having been concluded, Mr. DEPUTY SPEAKER suspended the sitting till half-past Two o'clock, pursuant to Order.

Sitting resumed at 2.30 p.m.