RATE SUPPORT GRANT (SCOTLAND) (Hansard, 25 March 1968)

§ The Minister of State, Scottish Office (Dr. J. Dickson Mabon)
I beg to move, That the Rate Support Grant (Increase) (Scotland) Order 1968, dated 4th March, 1968, a copy of which was laid before this House on 7th March, be approved. This increase Order is made under Section 4 of the Local Government (Scotland) Act, 1966, and is seeks to increase the amount of rate support grant payable to local authorities in Scotland in respect of reckonable expenditure in 1967–68 and 1968–69. As is required by the 1966 Act, the Order is accompanied by an explanatory report which was laid at the same time as the Order and has been printed as House of Commons Paper No. 140. The present Order replaces one which was laid on 21st December and withdrawn at the end of last month.
There is only one difference between them, but it is an important one for local authorities in Scotland. The Order now before the House includes an additional £5.218 million of reckonable expenditure and an additional £3.32 million of rate support grant in respect of the increase in teachers' pay which was agreed to on 1st March and comes into effect on 1st April.
The fact that such an increase was impending, and that the corresponding increase in England and Wales came into effect last August, and was covered by the increase Order which the House approved on 14th December constituted the special problem which was referred to by the Prime Minister in his statement on public expenditure on 16th January. We have now dealt with it by putting Scottish local authorities in exactly the same position as those in England and Wales. All increased salary costs arising from the award are covered by the Order, except for the increases in the pay of teachers in further education. These, in England and Wales, were the subject of a separate award which the 1967 Increase Order did not take into account.
As the House will recall, the main feature of the new grant system which was introduced on the 15th May last is that, for the first time, the whole expenditure of local authorities on rating ser 1080 vices, excluding only the housing revenue account and the trading services, is taken into account in calculating how much the total of Exchequer assistance is to be. The total is determined as a percentage of the estimated reckonable expenditure, the revenue grants for specific services are deducted from it, and the balance represents the amount of the rate support grant.
Hon. Members may find it helpful, since some have now got the House of Commons Paper, if I refer briefly to what the Act says about the costing basis both for main orders and for increase orders. Section 2, under which the main Order is made, requires the Secretary of State, in consultation with the local authority associations, to take into consideration …the current level of prices, costs and remuneration, any future variation in that level which can be foreseen and the latest information available to him as to the rate of reckonable expenditure. In other words, expenditure is estimated for both years of the grant period on the basis of the prices current at the date of making the order, allowing only for future variations of which the amount and date are accurately known in advance.
Section 3, under which increase orders are made, empowers the Secretary of State to redetermine the total of Excheque assistance if it appears to him that, since the amounts in the main Order were determined, …an unforeseen increase has taken place in the level of prices, costs and remuneration and that the effect of the increase on the reckonable expenditure of local authorities…is substantial. In other words, the grant is estimated on the basis of forward projections of expenditure at constant prices and may then be adjusted retrospectively to allow for significant price changes after they have taken place and their effects can be quantified. As we all appreciate, this is quite different from the basis on which local authorities prepare their own budget estimates, since they have to fix a rate to cover their actual expenditure for the year at out-turn prices.
The Order which the House approved on 21st February last year fixed the aggregate of the rate support grants at £149,790,000 for 1967–68 and £159,210,000 1081 for 1968–69. These amounts, as the accompanying Report explained, represented 62½ per cent. of £264.3 million of reckonable expenditure for the first year and 63½ per cent. of £276.2 million for the second, less £15.4 million and £16.17 million of specific revenue grants.
The Order now before the House increases those amounts to £155,440,000 and £157,740,000, representing the same percentages of reckonable expenditure now estimated at £274.5 million and £290.75 million, less specific grants of £16.125 million and £16.89 million. I think that it is necessary to put these figures on the record, even though they are in the Report, to emphasise the parallel features of this Order and the withdrawn Order, and I hope that hon. Members can see the significant difference in the one item which has been changed. These are increases of £10.20 and £14.56 million in reckonable expenditure, £5.65 and £8.53 million in rate support grants, and £0.722 million and £0.718 million in specific grants.
The three local authority associations have expressed their agreement with the figures shown in the Report. I would like to say how much I appreciate the help that we have had from the local authority associations and the harmony of views which has, in general, prevailed.
Hon. Members will find in the Appendix to the Report accompanying the Order a list of the main factors which make up the increases.
I have no doubt that, with the generosity which the House usually affords a Minister on these occasions, if comments are made and questions asked which require an answer, I will, with permission, be allowed to reply.

§ Mr. Gordon Campbell (Moray and Nairn)
I and some of my hon. Friends will have some questions which we hope that the Minister of State will be able to answer. The Order covers increases for 1967–68 and 1968–69. In the case of Scotland, the rate support year runs, but from 15th May to 14th May. This is presumably why the Government have been able to bring it forward so late in the year, though the English Order was considered in December.
1082 Under the Act the Government can bring forward an order to make increases only in respect of extra expenditure which was unforeseeable a year ago. The main Order was approved by the House a year ago and was to run for two years. The one thing which was foreseeable a year ago was that, with the policies of this Government, there would be extra costs falling on local authorities. So this is not surprising. Indeed, it was not unforeseeable. But was it possible to quantify it accurately? Clearly it was not. The Minister of State said that only accurate increases can be brought before the House. Though in general it could be foreseen that there would be increasing costs as a result of Government policies, it evidently was not possible in particular to foresee where they would fall.
The Order was made on 4th March and, therefore, cannot have taken into account the Budget, which was announced on 19th March, and its effects, which will be considerable, upon local authorities in both of the years in question. It will have the effect, if the Finance Bill goes through with most or all of the Budget proposals, of increasing local authorities' reckonable expenditure in both years. This will mean a substantial Rate Increase Order in a year's time, particularly for transport and supplies. These are two of the headings in the accompanying statement.
Would it not be correct for this Increase Order to be withdrawn, because the additional transport costs in the coming year can be accurately calculated, because the exact extra amounts per vehicle belonging to and being used by local authorities can be calculated almost to within £100. Although extra expenditure on transport is now foreseeable and can be calculated accurately, does this have to wait until an Increase Order in a year's time, or should not this Order be withdrawn and another brought in before 15th May? I would like the Minister of State to tell the House the answer to this procedural point.
As the devaluation decision was taken by the Government on 18th November—over four months ago—to what extent have the extra costs which will arise from devaluation been reflected in the Order? For example, there must be some extra costs in the current year arising from the higher prices of imports, 1083 as these will be reflected in school-building costs.
That brings me to the question of interest rates, because one of the largest items in these increases is the additional amount in interest rates, £1.3 million this year, and nearly £1.5 million in the second year. How has this extra cost in interest rates been calculated for 1968–69, a period which we have not yet entered? How much of the higher interest rate period since devaluation on 18th November has been taken into account in putting forward these figures? These are questions which I hope the Minister will be able to answer, because two major events have taken place affecting the costs of local authorities in Scotland. The first is devaluation just over four months ago, and the second is the Budget. We must be told how the increases which are to be dealt with in this Order are related to these major events which will have such a great effect on both the years in question.
I end with the most important question of all. It is certainly the most important question to all ratepayers in Scotland. Can the Minister give us an estimate of the increase in the amount which will have to be paid by ratepayers in Scotland for 1968? I do not mind whether the Minister takes the calendar year, the financial year, or the rate support year running from May to May. The Minister has in the past—I think my hon. Friends will remember this—"had a go" at this when we have asked him for estimates.

§ Dr. Dickson Mabon
With no thanks for it at all.

§ Mr. Campbell
I thank the Minister now, because he has in the past made an estimate. Usually events have more or less doubled the estimate, or at any rate increased it substantially, but at least it will be something if, when he introduces the Order, the Minister can say what the future will have for the ratepayers, because what they really want to know is how much extra they will have to pay.
Following the Chancellor who has, with this Budget, for the first time—pressed by me and others from this side of the House—given his short-term estimates over the next year and a half, I 1084 hope that the Minister will again be able to give us some estimate of the increase which Scottish ratepayers will face in the current year. This is perhaps the most important thing which all ratepayers will want to know from this debate.

§ Mr. William Baxter (West Stirlingshire)
I cannot understand the approach of the hon. Member for Moray and Nairn (Mr. G. Campbell) to this problem. He seems to be implying that the increased costs of local authorities are not justified, or are not necessary. If he believes, as we assume he does, that it is desirable to build schools, to provide improved roads, and to increase all the social services, surely he accepts that these have to be paid for either by the ratepayers or by the central Government? As my hon. Friend rightly said, the Appendix shows how the money is being increased for various services. I think that this is ample justification for us agreeing to this Order and supporting it wholeheartedly.
As my hon. Friend said, there will be a considerable increase in grants to the local authorities during the next financial year. The hon. Gentleman says that no regard has been paid to the increase in transport costs, but he seems not to have looked at the figures. Of course the increase in transport costs and other increases must be taken into consideration when compiling these figures.

§ Mr. G. Campbell
I cannot remember whether the hon. Gentleman took part in the debate on this subject just over a year ago, but we then had the main Order, the Rate Support Grant (Scotland) Order, and what we are now considering are the extra increases in costs since then. I am merely asking the Government to explain how much has been taken into account, in deciding on the money to be paid to local authorities. We want to know how much will be covered by this Order, and how much will need to be covered by the next one in a year's time.

§ Mr. Baxter
We will deal with the next one when it comes along. Sufficient unto the day is the evil thereof. The hon. Member should devote his energies and talents to criticising the Order before us—and the only criticism he seemed to levy against it was in respect 1085 of the increased expenditure. He asked why this should be. The explanation is simple; the increase represents the increase in the social services—education, school milk, and meals for children. We have a list totalling the full amount of the extra expenditure.
The hon. Member devoted some time to the question of transport charges, and asked whether they were included in the Order. Transport charges could well be included in it. The full amount may not be, but a good proportion of it could be, because transport charges for any local authority are levied against each department. There are transport charges for the health department, and considerable transport charges for the roads department, and so on. There is no justification for the hon. Member's criticism that my right hon. and hon. Friend have not had regard to the increased transport charges.
I am concerned about the fact that we have a slight increase in respect of the support grant for civil defence costs. I cannot understand why this should be so, in view of the Chancellor's statement in his Budget speech. We may have an explanation of that.
An opportunity is being lost in presenting these support grants, to the extent that one of the great problems of local authorities is getting grants for roads, for example. It may be that at the end of a local authority's financial year the full amount of the grant for that year has not been used. Such a local authority has to bring in many contractors, who work overtime and receive excessive charges for the work they do, in order that the full amount of grant may be used up within the financial year. This is fundamentally wrong.
Once again an error of judgment has occurred in this respect. No machinery has been introduced to permit a local authority to carry over from one financial year to the next any grant money that has not been used up. A great wastage of public money is involved in local authorities trying to utilise these grants before the end of the financial year. I should have thought that my right hon. and hon. Friends could have devoted a little more ingenuity towards trying to solve this problem, which has confronted authorities for many years.
1086 I do not wish to elaborate on this point, nor do I wish to detain the Committee. I welcome the increased grants, although I believe that the time is opportune for a new look at the whole structure of local government rating. This is unfortunately continuing without any regard to a proper approach being made. It may be that after the Royal Commission has reported on the development of local government there will be a debate, and we may be able to consider the best way of raising local authority finances. That is a subject which will take much longer than the time available in this short debate. I generally welcome the increased grants to Scottish local authorities, and I know that they will greatly welcome them.

§ Mr. W. H. K. Baker (Banff)
The Minister of State for Scotland said that these increases have been welcomed by the Association of Local Authorities. He referred to the report pursuant to the issue of the original increase Order No. 140. Paragraph 4 says: Consultations have taken place with the associations of local authorities concerned… In November, I understand that Glasgow asked for further subventions, which were refused, and recommended a differential in the disbursements. Had the formula been altered, my county council would have benefited by £219 per year—not a large amount in any terms these days, but the county treasurer of Banff would have been delighted with even that. This could have been a beneficial fall-out from Glasgow.
This increase, whether for 1967–68 or for 1968–69, will be disbursed under the existing formula. I understand that the Secretary of State has invited the associations of local authorities to submit proposals for a new formula for 1969–70, which will mean another increase Order. Can we be assured—I have asked for this before—that the small, remoter areas, such as my county, will be considered sympathetically in any new formula, since very few are hit hard by the present method?
The roads portion of the needs element is fixed as bearing to the aggregate needs element the proportion which two-thirds of the expenditure on roads bears to the total expenditure less the specific 1087 grants. Such amounts are essential for general maintenance and for improvement of roads. The present disbursement, even this proportion, bears very hardly on areas like Banff, which has 11 small burghs, even smaller than the small burgh capacity: one has a population of only 700. Nevertheless, even with a small population—

§ Mr. Deputy Speaker (Sir Eric Fletcher)
I am afraid that it is out of order in discussing this Order to argue for a different formula or a different method of distributing the rate support grant.

§ Mr. Baker
I am sure that the Minister of State is well apprised of the situation, but I naturally bow to your Ruling, Mr. Deputy Speaker.
I have referred to the roads portion of the needs element and there is no provision by the Act or by this Order for frost damage to roads. In the current financial year Banff County Council have had to face expenditure estimated at £2,500. Last year it was only £50. I hope that the Minister of State will tell us that that additional expenditure will be met from other funds.
My hon. Friend the Member for Moray and Nairn (Mr. G. Campbell) referred to the extra costs likely to fall on local authorities, both in the current financial year and in the following financial year, as a result of the Transport Bill. Banff County Council have done a summation, and it reckons that the Transport Bill will lead to an increase in costs of the services of up to 10 per cent. The Minister of State shakes his head. Does he know that that figure is wrong? Perhaps he will give the House his figure. That is the summation which has been done.
The impositions of the Budget have been pointed out by my hon. Friend. I hope that the Minister will give the House categorical assurance that these extra costs imposed on local authorities by central Government will be fully met by an additional increase Order next year.

§ Mr. George Younger (Ayr)
I hope that the House will not succumb to the most attractive argument of the hon. Member for West Stirlingshire (Mr. W. Baxter), who invited us to approve the 1088 Order on the ground that all the things which would be paid for by the extra money were desirable. Of course they are desirable. I should be the last to deny that. But I ask him to reflect carefully on the full implication of what he said. If we allowed an Order to be passed through the House for everything which we considered desirable we should find ourselves rapidly in Queer Street financially. Our present problem arises from the fact that we cannot afford to go on spending more and more money on things, however desirable they may be, if we have not first earned that money.

§ Mr. W. Baxter
Is the hon. Member suggesting that we should deny the Minister the right to give extra money to Scottish local authorities? If so, will he point out the various items of the grant which he would like to cut?

§ Mr. Younger
If the hon. Member gives me a little more time I shall develop my argument. We must not approach the Order on the basis that if we think that the things being done are desirable, we should automatically grant the money. That is a fatal way of running the economy of the country. We ought to scrutinise with the greatest scepticism any request from the Government for extra money for matters which they have not foreseen.
I will back that with a further request to the Minister—and I hope that he will look particularly sympathetically at this argument. He knows only too well that all through the economy and all through private industry, every industry finds that it is made as difficult as possible for it to put up its prices when extra costs, out of its control, is imposed on it by the Government. The Minister of State, possibly rightly, was very critical of firms in the construction industry who said that they must raise their prices because of S.E.T. He was very niggardly with them and told them that they should not put up their prices. I agree with his desire. But they were doing nothing more than the Government are doing in the Order. They find that prices have rise in all departments, but all that the Government have to do is to print a piece of paper, to produce it to the House of Commons, and, if the argument of the hon. Member for West Stirling-shire were accepted, it would automatically be approved. It is a bit cool 1089 for the Government to come sliding back each year saying, "We could not foresee this difficulty. We need this extra money."

§ Mr. James Hamilton (Bothwell)
Is the hon. Gentleman saying that the Government should have foreseen the storm damage in Glasgow? If not, should not this extra money be provided?

§ Mr. Younger
Of course, and if the Minister told me that this additional money was to be spent solely for the repair of property damaged in the storm, I would troop into the Lobby with him, if necessary. But that is not the position. Many of the items to which this extra money relates could have been foreseen. That is why we must examine the matter so carefully.
In the last few years we have got used to interest rates rising higher and higher. I would have thought that this year, considering the circumstances, a ceiling would have been reached in interest charges. Does this mean that the rates charged last year are likely to be even higher next year? If so, this is serious because instead of seeking a reduction in interest rates, next year we will have an all-time record rate on top of an already all-time record one. Since Bank Rate has gone down by per cent., the interest rate should remain level, at least. For it to be going up is disturbing.
The increased costs of civil defence are equally disturbing. I urge the Minister to investigate the matter because I have the impression—although I admit that it is not backed by a detailed examination—that no effort has been made since the last reorganisation of civil defence about a year ago to cut down expenditure on this item at local authority level. Although I have not verified them, cases have been quoted to me of people spending their time with nothing to do in offices this past year and it is said that no check has been made to ensure that the economies which we were promised have occured. It seems astonishing that, despite the rundown of the last two or three years in civil defence, we should be expecting to spend more in the coming year on this item.
The question of transport costs has been raised. I cannot understand how the Government, with all the information which they must have at their disposal 1090 about the increased costs that will result from the Transport Bill—I will not now argue how great those increases may be—can introduce a Rate Support Order making provision for an increase on only £15,000 to cover all the local authorities in Scotland. Even the most mild estimate of the Government must prove that the additional cost cannot be as little as that. I urge the Minister to re-examine this matter to ensure that he has not made a gross error.

§ Mr. G. Campbell
Items like the extra costs resulting from increased licence fees and fuel duty following the Budget can be estimated almost exactly.

§ Mr. Younger
Naturally, and if the Minister says that these reasonably concrete figures cannot be produced—although the Government must have the information—he will not get a sympathetic response if next year as asks for more money on the ground that these additional sums could not be foreseen.

§ Dr. Dickson Mabon
If the Transport Bill is defeated by the Opposition and, therefore, the compensatory grants in respect of fuel duty are lost, the arithmetic is easy. But I cannot foresee that. The Bill may be passed, in which case the increase will not be so large.

§ Mr. Younger
The hon. Gentleman is going into the realms of great complication on that. If he is seriously suggesting that it is on the cards that we shall be able to defeat parts of the Transport Bill, I should regard this as great encouragement to my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell) and my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) who have been working so hard for so long to defeat the Bill, which is universally disliked throughout Scotland.
The hon. Member for West Stirlingshire referred to the extraordinary system on which we have worked for many years whereby expenditures of one sort and another have to be completed, met and finished by the end of the financial year, and if they are not, there can be no carry over. This has always seemed to me to be a built-in insurance of waste. Even the best run local authority cannot avoid incurring some waste in meeting this strange financial deadline. Has not the 1091 Minister of State observed this in connection with the extra money that he brought forward for last winter for minor road works? The work has to be finished and the money spent by 31st March. All over Scotland at the moment one can see road works being rushed through on overtime at weekends. This money is being spent at a time when we are gravely short of money, and it is being done purely to get the minor works finished by 31st March so that they may qualify for his scheme.
I am trying to be helpful in putting this forward. I believe that an astonishing sum of money is wasted each year because of this strange deadline. The Government should look into it. This may be one way in which money can be saved.

§ Mr. James Davidson (Aberdeenshire, West)
I welcome the increases in the grants. At the same time it is an indication of a growing feeling that the present rating system is becoming obsolete.
It is to meet the needs of local authorities, particularly those which have ambitious expansion programmes, that I again commend a new system based on rating on site valuation, which would be fairer and would encourage development—

§ Mr. Deputy Speaker
I am afraid that any such discussion would be outside the terms of the debate.

§ Mr. Davidson
I appreciate that, Mr. Deputy Speaker. I was just mentioning it in passing.
The burden of increased loan charges is becoming a very serious matter for local authorities. They are protected by subsidy on the capital cost of new housing, but they are not protected in other respects, particularly those already mentioned in the debate—the increased cost that may well arise from the Transport Bill, the increased fuel costs which will arise in running their vehicles and the additional vehicle Excise duties. These are among the extra costs which are not taken account of in the Order.
The pattern was set during the period of Labour Opposition of low rents. The discrepancy between English and Scottish local authority rents is very much greater 1092 than the discrepancy between average wage levels, and the way of life of those who live in local authority housing has been shaped accordingly. There is need for a gradual readjustment towards rent schemes to fulfil the fair function of increasing standard rents and extending rent rebates to ensure that there is no hardship. In spite of the difficulties which local authorities are having in financing their new council houses—

§ Mr. Deputy Speaker
Housing subsidies do not come within the terms of this Order.

§ Mr. Davidson
The financial position is becoming a little desparate and local authorities throughout Scotland may well refuse to embark on new schemes.

§ Mr. Deputy Speaker
The hon. Member must understand that housing subsidies do not arise here at all.

§ Mr. Davidson
Under the terms of this Order, the largest single matter is the pay award for teachers and, having welcomed the Order on that ground, I should like to make one point. [Interruption.] I am keeping within order. May I finish the sentence? All I want to say is that there is a feeling that the awards are unfair in the sense that honours graduates are not getting a fair slice of this cake. There will be a decrease in the differential and I should like to ask if the Government see this as a positive discouragement to honours graduates to enter the teaching profession. We all know how much they are needed in teaching today, and I wonder if it is the intention of the Government to see that these graduates are driven to other professions—perhaps into industry—or even into other countries. Having said that, I appreciate the need for this additional sum of money.

§ Mr. G. Campbell
As the hon. Member says that he welcomes the need for these figures, I would point out that this Order can be made only because of the higher level of prices, costs, and remuneration. It is only because there have been such increases that we have the need for this Order which cannot extend the services.

§ Mr. Davidson
The hon. Gentleman has made a point. I accept that remuneration to teachers can be covered by this Order.

§ Mr. Edward M. Taylor (Glasgow, Cathcart)
This Order is unfortunate in two respects. First of all, the Order and the Report increase costs, but under Socialist Governments costs do increase at a very rapid rate and, therefore, we tend to get such Orders far more frequently than would normally be the case. Secondly, I always find that they are already out of date by the time that they are discussed in this House. The one before us is out of date and it is on that basis that I would like to put some specific questions.
First, how has the Minister computed the figures for transport? We know that the Government has a Bill before the House providing for substantial increases in transport costs, and there were two items which directly affected local authorities. These were, first, the abnormal load tax and, secondly, the wear and tear provisions. Where are these taxes? Were they included in this Order? They were certainly foreseen and the Minister knew what they were going to cost because local authorities and organisations sent in a great mass of detailed figures showing what these proposals would mean in £s.d., and how they would affect the hard-pressed ratepayers of Scotland.
If they were included, and the Minister accepted his responsibilities seriously, they should have been included; but then, of course, we had the amazing turnabout. In the face of fearless and reasoned opposition from the Conservative Party, the Government decided to scrap these two impositions. What we would like to know is whether the Government have decided to make some new provision. Will there be an amended Order, say, next week? The House is entitled to have some information about when we are going to consider the new arrangements consequent upon this sudden change. Where have these savage increases been included? If they have been taken out because of the Government's decision, will the Under-Secretary tell us if the Government intend to include the increased petrol tax, oil tax, and so on?
The Government are not to go ahead with the transport taxes which would clearly have discriminated against Scotland but instead have brought in tax increases which will bring in a larger 1094 total from road users. Will this be included? Are we talking about a hypothetical Order which was already out of date when the Minister of Transport had her about turn and the Budget came forward?
If there is nothing else to be said for the Order, one splendid thing about this debate is that, for the first time for a long time, the hon. Member for West Stirlingshire (Mr. W. Baxter) is supporting the Government whole heartedly. It is a rare event.

§ Mr. W. Baxter
The hon. Member could not have been present on many occasions. On one or two occasions I have declined support for the Government, and I believe that this was the right thing to do, but on numerous occasions I have supported them.

§ Mr. Taylor
I will not go into that. The hon. Gentleman has disagreed with the Government. I wish he and his hon. Friends would do it more often.
Is this money to be distributed on the basis of the scheme drawn up after 1966? What discussions have taken place since then in relation to Glasgow? Glasgow has a special problem. It is in danger of committing economic suicide. Commercial firms are closing down. It is a desperately serious position. It was suggested that before this Order came forward and before further distributions were made we should have a measure to bring much needed relief to Glasgow. Will the Order be brought into effect on a new distribution formula, or is it being rushed through before that formula can come into effect? The Minister is under an obligation to say whether distribution will be under the old formula or the new one, which will favour Glasgow.
The items in the Order refer to unforeseen increases in prices and costs. Is the disaster which struck Glasgow and the West of Scotland included? That disaster was unforeseen. We could not anticipate it. But many of us have been concerned about the complacency shown by the Government about it. Bearing in mind that the disaster was unforeseen, the sums involved are considerable and that there is real hardship, have the Government taken the opportunity in this Order to make provision for the people of Glasgow and the West of Scotland and any other areas affected?
1095 The Government have announced a £500,000 loan and that assistance will be given for local authority spending on their own homes. On items such as the maintenance of property, supplies and equipment, dealt with on page 6, I hope that the hon. Gentleman will be able to tell us whether provision is being made for this unforeseen development in Glasgow. It is about time that we had answers to these questions.
This is an appalling situation. We are discussing an Order which appears to be out of date already. This is no way to handle the affairs of State. Let us hope that the time will come when we get back to the stable and prosperous times which we had under the Conservative Government, when there will not be need for such Orders.

§ Mr. George Lawson (Motherwell)
I am somewhat surprised that we should have this Order tonight or any other night. When the Prime Minister made his statement when the House reassembled after the Christmas Recess, it was my understanding that he made it clear that any additional expenses would have to be met by local authorities. HANSARD for 16th January shows that the expenditure of local authorities had increased by some 46 per cent. over four years, not all of them Socialist years. After discussing this expenditure, the Prime Minister went on to say: As regards 1968–69, the Government will expect local authorities to absorb any increase in costs which they cannot avoid by making savings elsewhere."—[OFFICIAL REPORT, 16th January, 1968; Vol. 756, c. 1591.] This Order surely represents an example of the pertinacity of the Secretary of State for Scotland in pressing that Scotland, in this respect, too, should be an exception. No doubt my hon. Friend the Minister of State will be able to say what was the excellent case put forward by the Secretary of State and what pressure he brought to bear in urging that these additions should be met from the central purse instead of by cutting services, the services which hon. Members opposite constantly ask to be increased.
My right hon. Friend the Chancellor of the Exchequer tonight spoke about organised humbug. It is humbuggery, if one can use that word, on the part of 1096 hon. Members opposite regularly to cry out for improved and increased services. We can all remember their persistent shout about N.A.L.G.O. in Scotland not getting its increased payment. The hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) spoke about special treatment for Glasgow, but he knows that once the total for Scotland has been decided, if Glasgow gets more, other areas get less. His hon. Friend the Member for Banff (Mr. Baker) will tell him that.

§ Mr. Baker
This amount is over the odds. I am asking for plain simple justice, not for more than our due.

§ Mr. Lawson
I accept what the hon. Gentleman says, but he should tell his hon. Friend the Member for Cathcart, who is demanding more for Glasgow. Hon. Members opposite are regularly crying out for more expenditure while ignoring the problem of who is to pay for it. For example, they call for more expenditure on the police force. It is seldom understood that the strength of the police force in Glasgow has increased by nearly 25 per cent. over ten years. I am not against having more and more police, but if we have more and more police, someone has to pay for them.

§ Sir John Gilmour (Fife, East)
Is it not cheaper to spend money on the police than on keeping criminals in prison?

§ Mr. Lawson
Certainly, but one must spend the money on the police. We are not discussing prisons tonight. If we want these services, we must be prepared to spend the money required for them. It is part of the organised activity of hon. Members opposite to say that they want more and more public services, more and more school teachers. I do, but I am prepared to say that if we want more school teachers, they must be paid for. They demand secondary schools—in every area they demand an extension of these local authority services. When it comes to the question of paying the bill they come round the other way and say that this is a Socialist Administration.

§ Mr. Ian MacArthur (Perth and East Perthshire)
All that the hon. Gentleman has said shows the need for growth in the economy, of which there is no sign at all.

§ Mr. Deputy Speaker
Order. I cannot allow this debate to expand into a general 1097 debate. We are concerned with whether these particular rate increases are desirable.

§ Mr. Lawson
I accept that, of course, although I must say that we have had the Transport Bill. What the Transport Bill has to do with this I do not know, but if it is in order then I am delighted to talk about it and how it will affect Scotland.

§ Mr. Younger
I may be able to help the hon. Gentleman. I do not think that he has quite understood that this Order refers to extra costs due to unforeseen increases which the Government have not foreseen.

§ Mr. Lawson
I started by telling hon. Gentlemen that there was nothing which compelled the central Government to meet those extra costs. I am not disputing them, but there is nothing compelling the Government to bring forward this Order. Local authorities were warned in January of this year that they would be expected to meet those extra costs themselves in some way or another. I see that there are some English Members present. One has always to discuss these things almost on tiptoe, because the tendency is to suggest that we are getting more than our due share. This is what some of my hon. Friends from English constituencies might argue, and I do not want them to start off after their respective Ministers demanding that there should be more payment in respect of English local authorities.
Today we have an example of something being done in the interests of Scotland, and yet some hon. Members opposite complain. How accurate are the words of the old wife—"Aye Girnin" ! I compliment my hon. Friend. It would be out of order to describe the apportionment of this grant. I am surprised that the hon. Member for Cathcart got away with it. We are discussing this grant and my right hon. Friend and my hon. Friend are to be complimented in that they have succeeded in wringing from the Treasury, despite all the pressures and difficulties generated over many years—pressures which have grown up under the guidance of hon. Gentlemen opposite—an excellent bargain.

§ Mr. Ian MacArthur (Perth and East Perthshire)
The touching faith of the hon. Member for Motherwell (Mr. Lawson) in the Secretary of State will have impressed us ali. He is a very loyal Member of the party opposite, but he cannot expect us to accept all this eyewash. He has touched on a very important point, and I hope that the Minister of State will reply to it. What was the significance of the Prime Minister's statement in January? What effect will this have on local government expenditure over the next year, so far as it affects the rate support grant? Do these figures for 1968–69 mean anything? Have they been published in defiance of the Prime Minister's statement, or was that just another phantom cut, to which we have become accustomed?
I fear very much that we are largely debating a fiction tonight at this late hour. I cannot see how the 1968–69 column in Appendix I, and, indeed, elsewhere in the Appendix, bears any relationship to what will happen over the next year. If I have understood the figures correctly, Appendix II shows an estimated increase in cost for 1968–69 of £15,728,000 in total. The hon. Member for West Stirlingshire (Mr. W. Baxter) welcomed this. He represented it as a cornucopia of munificence pouring out of St. Andrew's House. It is nothing of the kind.
In Appendix 1, on the opposite page, we see how that £15,728,000 is broken down. The larger part of it is for pay awards. About one-quarter—£4½ million—is represented by other increases in cost. It is about those that I would like to ask the Minister some questions.
The first item is National Insurance contributions. Here we see a very substantial increase. At this point, I would like again to pose the question asked by some of my hon. Friends: to what extent do these figures for 1968–69 take account of the Budget and of the increases which have been announced in the costs which will fall on local authorities?
The Minister, in introducing this Measure, said that these were figures of increases that were unforeseeable a year ago. when the Report by the Secretary of State was published on 7th March, 1099 however, there were unforeseeable increases ahead—those which we experienced last week in the Budget. Obviously, many of these increases in cost do not include the increases which will have to be met by the local authorities during the coming year.
In National Insurance contributions, the estimated increase has nearly doubled in the last year. Perhaps the Minister will tell us how this increase arises. Is it simply the increase in the cost of the stamp? Does it represent an increase in staff? If so, how large is the increase and what is the increased staff doing with its time? Does this make any allowance for the recent increase in the Selective Employment Tax? I presume that it does not. Since that is such a whacking increase, it must have a substantial effect on expenditure next year, but it cannot be allowed for in the figure which we are debating.
The increase in interest rates, which has already been commented on, reflects the Government's policy of high interest rates. I would like to know whether the increase for electricity includes last year's increase which came into being in defiance of the freeze in prices. Then comes the heading "Maintenance of property", in which there is also a substantial increase. Does this allow for last week's increase in the Selective Employment Tax, which bears so heavily on the construction industry, which will be responsible, in part at least, for this increase in the cost of maintaining property?
The next heading is "Fuel and heating". Does this make any allowance for the increase in gas charges which the Prices and Incomes Board forecast the day before the Budget last week? If not, why does it not make allowance for these latest increases in the price of fuel?
We next have the heading "Transport", about which my hon. Friends have asked questions. I hope that the Minister will answer them. We must know to what extent the swingeing increase in taxation on transport announced last week will affect these figures. The impact can be illustrated by the fact that it will now cost £459 to put a 10-ton lorry on the road before it is even used.
Those are some of the headings which show what an impact Government policy 1100 has on local authorities in terms of increased costs which follow from the Budget and so many other Governmental declarations. Will it not really be much wiser for the hon. Gentleman to withdraw this Order and come back with another in a week or two's time when his officials have been able to work out what the figures will be? It is a waste of their time and ours, I suggest, to spend this time debating figures which are meaningless and asking questions about figures which bear no relation at all to what the figures next year will be. It would be helpful to us all and to the local authorities if the hon. Gentleman would withdraw this Order and come back with figures which bear some relationship to what is happening.
There are two other questions I should like to ask. One relates to civil defence, which the hon. Gentleman the Member for West Stirlingshire mentioned. I see that the cost of civil defence for next year is estimated at £1 million. That I fail to understand, I am not one of those who want to see civil defence diminished. I think it has an important rôle in defending our people, and we shall be discussing that on Thursday; but will the Minister of State tell us how it is that, in view of the Government's lamentable decision to cut down the civil defence force expenditure, £1 million still appears in the figures for next year?
Then, connected with that, is the figure for the fire pay award, showing an increase of the best part of £500,000 for 1968–69. Could the hon. Gentleman tell us if that makes any allowance for the bounty paid to the Auxiliary Fire Service in Scotland? Will he tell us what that amounts to? And what the saving will be a pretty miserable one, I believe—when the Auxiliary Fire Service is extinguished as from 1st April—another blow at the security of our country.
Finally, I would turn to a point made by my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) about costs to the local authorities of the terrible hurricane last January. If no allowance is made in these figures for that extra cost, I fail to understand how that can be. This paper was published on 7th March. Exactly a month before that this House debated the hurricane damage in Scotland. I remember well the Secretary of State assuring the 1101 House of the sum of money to be made available to local authorities; it would not simply be £500,000, but additional grants which, I think he said, would run possibly to millions of pounds. That was in February. Why is there no reference to that in March? Or has the Secretary of State changed his mind? This would be an opportunity for the hon. Gentleman to make some statement about the gale damage and what the Government propose to do to help local authorities and those individuals who suffered so grievously at that time, and who are anxiously awaiting some statement from the Government, who have been silent about this for so long.
In short, I hope that I have shown that the figures are quite meaningless. I think it a waste of time for the Government to have produced them. These are guess figures. Almost every heading in the section on increased costs shows an increase now in the light of the Budget. It would be much more sensible and much more constructive if the hon. Gentleman were to scrap these miserable figures and bring us back new, revised, fresh figures next week or the week after.

§ Dr. Dickson Mabon
With the permission of the House, I would like to reply to the points which have been made.
I can think of nothing more alarming to the local authorities than that I should seek to withdraw the Order. Anybody who has ever made such an order, or been concerned with the making of an order with the local authorities or the Local Government Finance Working Party knows that to reopen the Order for discussion would take a very considerable time. It would have to be done thoroughly, and a number of the complaints made tonight, one of which we heard earlier on from the hon. Member for Banff (Mr. Baker), would have to be discussed again.
Time is getting on, and we have already had to withdraw the Order for very good reasons to which I think no one objects, namely, increases in the remuneration of teachers. If I am wrong in thinking that, I will seek to defend these increases. If it is true that no one objects to them, that is the reason for the delay. But any more delay would embarrass the local authorities, and I do 1102 not think that the hon. Member for Perth and East Perthshire (Mr. MacArthur) would really want to push me in the direction of seeking to withdraw the Order.
I join in the general idea that we have a ritual party dance about these increase orders from time to time. There has never been an occasion when either Government have failed to introduce one. The hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) regards that as a matter of discredit. Since it is a discredit to this party, I presume that it is a discredit to his own, because right hon. and hon. Gentlemen opposite had to do it consistently.
The argument has been advanced that a large part of this Order is the result of awards which could not be quantified at the time of the original main Order. We have to take into account wage awards, and we cannot always guess how large they will be. Indeed, that is not a proper way of judging finance. Not only that, but there are other unforeseen costs which do not always arise because of Government intervention. It might be a case of changes in world markets or tariffs. Anyone who knows the work of the Mallaby Committee will know that the changing processes of managerial accountancy in local authorities are helping a great deal but are costing a great deal of money. It is not always realised how well local government is moving into the computerised age in administration, and we have to give credit there. Therefore, I do not suggest that we should withdraw the Order, or seek to review it at this stage.
A number of matters mentioned in the debate are not covered in the Order. I think that my best course, in view of the large number of questions asked, is to take them seriatim and deal briefly with each one.
The hon. Member for Moray and Nairn (Mr. G. Campbell) asked me to make an assessment which would be really hazarding a guess at the amount by which rates may rise in 1968–69. It would be a tremendous guess, because local authorities do not fix their rates for another six months. Even if we knew how costs would move and when, a great deal would depend on the size of the balances with which local authorities end the current year.
1103 There is good sense in what my hon. Friend the Member for West Stirlingshire (Mr. W. Baxter) said about the psychology of the financial year. However, we did not invent it. It has been with us for a long time, and its only real opponent was Aneurin Bevan in his consistent arguments against the pastoral fiscal year, when he argued for longer periods such as quinquennia, and the rest.
It is not my position to try to defend the financial year tonight. It is the accepted practice. We could adjust the financial year to suit the English one or have the English adjust theirs to bring us more into line so that orders would be easier to compare, with negotiations carried out on a British and not a Scottish basis. But we could not give an estimate of that kind for the current year, not only because of our different financial years but because of the considerable time between now and the time when local treasurers make their assessment of their rates.
We encourage local authorities to try to ensure that they save as much as possible in a year to help them with the following year. In the case of the winter works programme, if a local authority has, in a sense, cheated by putting something into its programme which it genuinely considered that it could not do by 31st March, it is not only wasting Government money but local taxpayers' money. I would regret that. We have taken seriously each local authority's claim that it could do the work by 31st March. The winter works programme was designed to keep down unemployment, and it has been successful in its short-term objective. I thought that it would be welcomed. If any hon. Member believes that the system has been abused, I hope that he will report the matter to the Secretary of State and tell us which road is involved and which authority has been so mismanaging its affairs. I report that up to the moment we have received no complaint from Members of Parliament about any of these road works, but I am willing to examine any specific ones, including those hinted at by the hon. Member for Ayr (Mr. Younger).
I am appreciative, as I am sure Glasgow is, of the support of the hon. Mem 1104 ber for Banff for the view taken by Glasgow at the meeting we had in Glasgow when we were discussing the Order. Some cynics might say in passing that the hon. Gentleman is supporting the view taken by Glasgow because, by a side wind, one or two other authorities get an advantage. That has never crossed my mind. It is a possibility only in the minds of others, such as the hon. Member for Cathcart, who, I see, is nodding assent.
What has been agreed in the Local Government Finance Committee and what has been accepted by the Secretary of State—I am not saying that he necessarily was of the view that this was a wise decision, but he accepts it, because he genuinely consults local authorities—is that we should be prepared to leave it to the Working Party to discuss the basis of the new formula in the new Order which you, Mr. Deputy Speaker, will be allowing us to debate at a later stage.

§ Mr. Deputy Speaker
Order. I do not not think that the Minister should pursue that tonight.

§ Dr. Mabon
I have no intention of doing so, Mr. Deputy Speaker. I merely wanted to touch on it in passing, as others have.
The hon. Member for Ayr spoke about our letting prices rise through incompetence. I have said that a large part of these increased costs are accounted for by increased remuneration.
It is estimated that civil defence in 1968–69 will be cut by £0.7 million from a total budget of £1.6 million. That is a substantial cut. Whether it is good or bad it is not for me to debate at the moment. The fact is that in these estimates it is a cut. There will be an even further cut in 1969–70 which has not yet been calculated fully. As for 1967–68, the hon. Gentleman would not have expected swingeing cuts to be made until the full results of the home defence review had been worked out.

§ Mr. MacArthur
I am grateful to the Minister of State for giving this information. I think he said that the estimate for 1968–69 was £1.6 million. I ask that, because I have it here as £1.03 million. I do not want to quibble, but it is important to get the figures right.

§ Dr. Mabon
I will not go into it all just now. The hon. Gentleman can take it from me that the total budget is £1.6 million and that we are recording in 1968–69 a cut of £0.7 million. I cannot quantify the cut in the succeeding year.

§ Mr. W. Baxter
Surely that is a contradiction of the Chancellor's decision, which was agreed to on a vote a matter of two hours ago, that civil defence would be cut out entirely.

§ Dr. Mabon
We cannot just remove an item from the return as quickly as that. It is a matter of running down the system.

§ Mr. Younger
Will the hon. Gentleman give way?

§ Dr. Mabon
No; I will not give way now, because I want to finish dealing with this point. We cannot make an assessment for the position in 1969–70. My hon. Friend the Member for West Stirlingshire suggests to me that it should be nil. I cannot say that, because I do now know all the facts. In any case, I am surprised at you, Mr. Deputy Speaker, for allowing me to debate a financial year which is not within the Increase Order. I am willing to debate this when the main Order comes before the House. It may be that the desire of my hon. Friend the Member for West Stirling-shire will then be met.
The hon. Member for Ayr asked if the figure in relation to interest rates meant that interest rates would go even higher. The answer is, "No". It means that the average loan fund interest rates rose from 5.94 per cent. in 1966–67 to an estimated—I stress that—6.47 per cent. in 1967–68. That is all that is allowed for in the Order, but average rates may rise further in 1968–69 even if current rates, as we saw last week, for new borrowing go down in future, as everyone hopes they will. Many of these calculations are made in retrospect, and the consequences of past years, and these are merely the arithmetical records of what has been, rather than what is to be.
My hon. Friend the Member for West Stirlingshire asked about the carry over. I think that I have dealt with this. We encourage local authorities not to regard the financial year as sacrosanct, and one which they should finish off with a great 1106 splash, although I exempt the imposition of the winter roads programme, because the Government put a date on that and expected people to play fair by it.
I cannot talk about the matters raised by the Member for Aberdeenshire, West (Mr. James Davidson), because I do not want to get into trouble, as he did, but in relation to teachers' salaries I acknowledge that we have set up a new system by the Remuneration of Teachers (Scotland) Act, 1967. The distribution of a salaries settlement is in the hands of the Salaries Committee, and the Secretary of State is bound by any recommendation it makes. A recommendation, as we know from the legislation, can be made only if the management and teachers' sides are in agreement. I agree that under the present agreement honours graduates get the smallest increase, but this is not a point for Ministers. This was the merit of the scheme, and I thought that the Opposition, both the Conservative Opposition and the Liberal Opposition, accepted the idea of trying to have this kind of settlement outwith, although not divorced from, direct Ministerial control. That being the case, one must accept the penalty that the settlements are perhaps not all that we would like, either as individuals or as Ministers, although I reserve the Secretary of State's position on that.
I turn, now, to deal with the question of storm damage.

§ Mr. G. Campbell
I hope that in the short time available the Minister will say something about the question of transport costs, and what is entailed in this Order under that heading.

§ Dr. Mabon
The hon. Gentleman is being impatient, because I have a lot to deal with, and I think that I ought to deal with the important matters first.
With regard to storm damage, there has been a great deal of misunderstanding about this, and it seems to be persisting. The rate support grant is distributed to authorities on a weighted population basis, and it does not cover expenditure on housing revenue account. I confess that a lot of damage has been done to more than houses, but the principal sector of damage is housing, and therefore it will be revealed in the housing revenue account. We have encouraged local authorities to go ahead irrespective of the 1107 position of the housing revenue account, and we will look at it in its own time.
The damage is not distributed equally throughout Scotland. It is unevenly spread, and even among authorities in central Scotland—and they are the ones who are affected by this—there is a maldistribution, or a lack of homogeneity in the way in which the damage has struck. This is why the Secretary of State has decided, and said so in the debate some time ago, that he will deal with storm damage by means of special direct grants to those authorities concerned. If we had announced a grant on the basis of the first estimates, we would have been wrong, and we would justly have incurred a great deal of criticism. Even the estimates today are rising, and it will not be in the interests of the authorities concerned to offer them a settlement grant now. The local authorities accept this, and anyone who seeks to champion them in this House and claim that there should be a settlement now is acting against the interests of the authorities concerned. I am having a meeting in Glasgow on Friday, when we can discuss the matter further.
I reject the charge of complacency, either on the part of Ministers, or on the part of local authority officials. In fact, we not only reject it, but resent it. A great deal of hard work has been done, and remains to be done, to deal with what has been a major disaster for Scotland, and has been declared so by the Prime Minister ever since the day of the calamity. We will no doubt come to a final settlement at some future date. I am sorry that for the moment the Conservative Party has deserted the excellent position its Leader took in the debate in the House some weeks ago.

§ Mr. Hector Monro (Dumfries)
The Minister is giving the wrong impression. What the people of Scotland are concerned about is not the lack of action behind the scenes, but the fact that the Minister is not telling us openly what is happening.

§ Dr. Mabon
I have tried many times to explain exactly what is happening in this regard. Compensation to Scotland is in millions of pounds, but it would be wrong to quantify it at this stage, because we do not have a final bill. The damage earlier this month has added to the bill. 1108 This must be included in the bill and we must therefore wait until we can see what the final bill will be. We find it under different headings—agriculture, horticulture, roads, in some cases sewers, housing, schools, and hospitals. In due course we will present Parliament with a final reckoning and accounting of how much this terrible calamity has cost the nation as well as Scotland.
I turn now to the Transport Bill. Many exaggerated estimates have been made, as Ministers know from the correspondence that they have received. The only factual evidence that has been worth while has been sent to the Scottish Economic Planning Council at the request of the Transport Committee of that Council, and that obtained from questions from Ministers to organisations that we have met.
Many estimates have been made, and we have tried to explain what each one means. I have said on several occasions what the "wear and tear" tax would cost the consignor. It would be less than 1 per cent. That is not a guess: that is an assessment made by the best methods we have and the best persons we have, based on figures we have had supplied to us by the road licensing authorities and those in the business.
I do not deny the right to fight these revenue raisers; that is natural. But it is wrong to misrepresent them or to exaggerate them, although hon. Members opposite, I suppose, are entitled to do that in seeking to defeat the Bill. But the Bill brings advantages to local authorities in respect of the subsidisation of fuel costs, bus grants, and the rest. That has been completely ignored. The estimates have, however, been made by thte Local Government Working Party. When we come to the later years and the review of the year 1968–69 we shall see how matters stand.

§ Mr. Younger
The hon. Member would not wish to leave the wrong impression. I am sure that he did not mean to say that the road haulage industry had agreed that the increase in cost has been only 1 per cent. He may have used some of the industry's figures, but I am sure that he was not meaning to say that the industry agreed with his figure of 1 per cent.

§ Dr. Mabon
I know that the road haulage industry does not agree with that figure. I have never known the construction industry, or any other industry, to agree in similar circumstances. What we can agree on are the facts about the number of vehicles and the increase in revenue. Then there is the argument about projecting that as a burden on the consignors. Tonight we are speaking of consignors as local authorities. I think that, with respect, and without trying the patience of the House any more, I have answered all the points put to me.