§ 4.31 p.m.
§ The Secretary of State for Scotland (Mr. William Ross)
I beg to move,That the Rate Support Grant (Scotland) Order 1969, a copy of which was laid before this House on 6th February, be approved.House of Commons Paper No. 119 explains the considerations leading to the provisions of the Order. The Order fixes the amount of the rate support grants for the next two-year period and prescribes the formulas by which that will be distributed. To arrive at the amount of the rate support grants, an estimate has first to be made for each year of the reckonable expenditure of the local authorities for each year which can be accepted for grant: this is their total rate-borne expenditure excluding payments into the housing revenue account or any trading account.
The aggregate amount of all grants on revenue expenditure, other than housing subsidies, is then calculated as a percentage—in this period 64½ per cent. and 65½ per cent.—of the reckonable expenditure; the estimated amount of the specific grants in each year is taken off; and the balance represents the rate support grants.
These are divided into three parts—the domestic element, the needs element, and the resources element. The domestic element, payable to all rating authorities, represents the amount by which rates on dwelling houses will be reduced. It was 10d. and 1s. 8d. for the two years of the first grant period and will be 2s. 6d. and 3s. 4d. for the next period. Three-quarters of the remainder of the grant is allocated to the needs element. This is distributed on a weighted population basis to education authorities and then redistributed to their constituent rating authorities on the same basis as requisitions for whole-county services. The remaining quarter is allocated to the resources element and distributed to rating authorities in proportion to their deficiency of rating resources.
In making these estimates and determinations, the Act requires three things to be taken into consideration. The first is the current level of prices and wages, which in this case means the level at the 793 end of November, 1968, as agreed with the local authority associations.
The second is any probable fluctuation in the demand for services which affect reckonable expenditure, an obvious example of which is a variation in the numbers of the school-age population. Third is the need for developing the services and the extent to which, having regard to general economic conditions, it is reasonable to develop them. All these factors have been given their due weight in arriving at the figures embodied in the Order.
In considering expenditure proposals for the next two years the dominant factor is clearly the general economic situation of the country. I am glad to say that a full and realistic understanding of this fact has been shown by the representatives of the local authority associations throughout the lengthy discussions on the rate support grant estimates.
It is our firm intention to keep the growth of public expenditure within the limits which were announced in the White Paper of 16th January, 1968, in order that we may divert an increasing proportion of the national resources to earning an adequate surplus on our balance of payments. To achieve this result we must, with the co-operation of the authorities themselves, set firm limits to the growth of local authority expenditure over the next two years. This is a significantly large component of total public expenditure. Total local authority expenditure amounts to about one-quarter of all public expenditure. Taking revenue expenditure, it is about one-sixth of the entire public expenditure. So we are dealing with very large sums. It is also the part which has been growing fastest for a good many years now.
Nevertheless, far from local authorities having been singled out for specially heavy cuts, their expenditure is being allowed to increase in both years of the next grant period at a higher rate than public expenditure as a whole. The obligation which this places on local authorities to contain their expenditure within the limits now proposed is, I think, well understood by all those who have taken part in this year's discussions, and I intend to ensure that it is brought home to all local authorities.
794 What, then, is the basis on which we have estimated reckonable expenditure? As the House will recall, the White Paper of last January said that the Government expected local authorities as a whole, in 1969–70, to restrain the level of their expenditure so that it did not in total exceed a figure in the region of 3 per cent. in real terms above what had already been agreed for purposes of the Exchequer contribution in 1968–69; and that the Government would propose rate support grant for 1969–70 on this basis when the time came.
That time has now come. We have estimated the total of reckonable expenditure for 1969–70 at 3⅓ per cent. in real terms above the expenditure of 1968–69 as estimated for the purpose of last year's increase Order.
§ Mr. J. Bruce-Gardyne (South Angus)
The Secretary of State has referred to the increase in real terms. What is the percentage increase in money terms?
§ Mr. Ross
The figures are all in the Order. The hon. Gentleman can easily work them out. To help the hon. Gentleman out, an explanation of the Order is readily available.
The additional ⅓ per cent. which is equivalent to about £1 million, was not a concession to the generally higher level of the local authorities' estimates, but is recognition that on one rather ill-defined group of services the estimate adopted in the original Order for the first grant period was evidently too low. Between the first and second years of the grant period the increase in real terms for which the estimates allow is 5 per cent.
What is meant by the phrase "in real terms" will, I hope, be clear to hon. Members, including the hon. Member for South Angus (Mr. Bruce-Gardyne), from Appendix A to the Report on the Order. We are comparing the reckonable expenditure figures for this year, next year, and the year after on a common price basis, and saying that the difference of £10.3 million between them, and of a further £16 million for the second year, is a true measure, at current prices of the additional resources represented by the figures for the two later years.
The differences express the amount of additional resources which will be available in those two years to support the 795 increased provision of services, as a result of policy changes or changes in population structure; and to support the improvement of standards, including the cost of loan charges on the additional capital expenditure allocated to these services during the period.
Here I should remind hon. Members again of what local authorities were told in the White Paper of last January. The base for calculating growth was to be the figure of reckonable expenditure embodied in the 1968 increase Order. If, as the Government hoped, they had succeeded in absorbing part or the whole of the increase in costs due to wage and price changes, this would not have lowered the base figure. The fact that they have not succeeded in holding down expenditure this year, although I recognise that they have made an effort to do so, and that their expenditure for this year as shown by their rate support grant returns will be over the 1968 Order figure by about £5 million at November, 1968 prices, does not raise the base. What it does is to raise the rate demands.
It means that they have anticipated some of the growth allowed for next year in terms of the White Paper strategy, and that the growth in real terms for which the present estimates of reckonable expenditure allow is correspondingly less. It does not mean that the limits we are proposing on expenditure in 1969–70 are unrealistic, but it does mean that local authorities will have to exercise the utmost self-restraint in order to remain within those limits while still achieving the expansion of some services which is necessary and for which the estimates provide.
Local authorities are not, however, being asked to absorb increases in the level of prices, costs and remuneration which may occur during the grant years. Certain known increases at future dates, such as in police pay and overtime, are provided for. Otherwise, we envisage that increases of which the effect on reckonable expenditure is substantial—those are the words in the Act—will be dealt with by increase Orders made in the usual way. They can, therefore, plan on the assumption that the level of support through the rate support grants will be maintained in real terms. In Appendix B to the Report there is an indication of the likely pattern of expenditure, and in Section B of the 796 Report will be found notes on the development of the main services. In nearly all cases the estimates represent a curtailment of growth rather than a reduction in standards.
Not all services need to develop at the same rate. One which has to grow more than most is education; the increase for this service allows for a steady rise in the teaching force, which will make it possible to improve staffing standards in our schools, for the expected rise in pupil numbers, and for the continued expansion of further education. Taking the two years together, the increase is about £13.8 in reckonable expenditure on education.
The estimates of reckonable expenditure under the heading of child care also allow for the costs of implementing the Social Work (Scotland) Act, 1968 in the course of the period. As the House will know, local authorities will be setting up the new social work departments in November of this year. This will mainly involve at the start a redeployment of the authorities' existing resources to provide an integrated service. It is my intention that the system of children's panels should be introduced during 1970–71 and the estimates for that year make provision for extra expenditure for this purpose. I cannot yet give a precise date.
§ Mr. John Brewis (Galloway)
Surely, if the Social Work (Scotland) Act is to be implemented in November the local authorities must go on with obtaining premises, employing staff and so on, long before November. Is the right hon. Gentleman satisfied that he has allowed enough in the estimates?
§ Mr. Ross
We are satisfied. We discussed this fully. I do not want the authorities to engage in empire-building in respect of new offices, and so on. First, they have to get down to the integration, using their existing resources. We have mainly made provision for the appointment of the new directors of social work.
Local welfare services will form part of the integrated social work service. In the local welfare field, local authorities have in the past two years been building up quite a substantial programme of work, particularly on residential accommodation for old people, much of which will come into use during the next two years. Even 797 with the restraints on loan sanctions for new projects which had to be introduced last year and are likely to have to be continued, the work already in hand and continuing represents a substantial degree of progress; and it is in recognition of these specific commitments that the Order provides for relatively high growth rates for these services.
For police services—the largest of the specific grant services—account has been taken of the effects of the most recent police pay award, operative from 1st September, 1969, and introducing a shorter working week effective from 1st April, 1970. In the middle of last year it was regrettably necessary, in the light of recruitment trends at that time, to impose selective restrictions on police recruitment in order to hold total strength at a level consistent with the target underlying the Order for the current rate support grant period. For the next two years the present Order makes provision for recruitment of additional police officers and supporting civilian staff. A circular will shortly be issued to police authorities about the removal of the current restrictions.
One field in which the figures we have adopted imply not merely restraint on the growth of current expenditure but a fairly severe cut-back is that of highways and roads lighting. The Government decided last year, and announced in the January White Paper, that a substantial contribution to the economies required must be looked for in this field. Hon. Members will remember that we told the local authorities in Scotland, in a circular issued on 30th May, 1968, that the Scottish savings expected were £3.05 million and £3.1 million on maintenance expenditure during this year and next year, and £.75 million and £.9 million on new construction. According to the rate support grant estimates which they supplied, they have not succeeded in bringing down their expenditure in 1968–69 to the required level.
Nevertheless, their representatives recognised in the discussions that there is a much higher degree of flexibility in this area of expenditure than in most others, and that it is one in which considerable short-term economies can be made. They should be able, having had 15 months' notice of what is expected 798 of them, to bring expenditure in 1969 to well below the current year's level, and I am confident that the necessary effort will be made. We must remember that to set against the savings that I am asking and expecting them to make, the local authorities had a bonus of £4.8 million of extra work on their own roads met by 100 per cent. Government grant in the winter of 1967–68. This winter they have had a further £1.5 million—again at 100 per cent. grant. They have put these sums to good use.
The road portion of the needs element will reflect the estimate of roads expenditure which has been adopted for purposes of the Order, and this reduction will no doubt stimulate thoughts of economy on the part of highway authorities. The provision for the second year of the grant period will allow expenditure to return almost to the current year's level. The second year's figure should represent a transition stage on the way to a higher level of maintenance expenditure after 1970–71 if the state of the national economy permits.
I do not know what the hon. Member for South Angus finds amusing. This was written into the General Grants Act passed by his Government. It is still there, and always applies to this and all expenditure.
§ Mr. Bruce-Gardyne rose——
§ Mr. Ross
The hon. Gentleman will have the opportunity to make a speech. I hope that it will be a little brighter than usual.
In accordance with the Government's undertaking to bear an increasing proportion of local authority expenditure which would otherwise fall on the rates, Exchequer assistance has been stepped up to 64.5 per cent. for 1969–70 and 65.5 per cent. for 1970–71, compared with 62.5 per cent. for 1967–68 and 63.5 per cent. for 1968–69. These percentages result in the aggregates of Exchequer assistance being fixed at £200.31 million for 1969–70 and £213.85 million for 1970–71, compared with £171.56 million and £184.63 million for the two previous years under the 1968 increase Order.
From the aggregates of Exchequer assistance so arrived at there has to be deducted the total of the grants towards 799 specific services. These have been estimated at £18.086 million for 1969–70 and £19.218 million for 1970–71. The balances remaining become the rate support grants, which are accordingly fixed by the Order at £182.22 million for 1969–70 and £194.63 million for 1970–71, compared with £155.44 million and £167.74 million for 1967–68 and 1968–69 respectively.
The Order, as I said earlier, not only determines the amount of the grants but prescribes the way they are to be distributed. As hon. Members will recall, we deliberately chose to have the flexibility in these arrangements which results from their being prescribed in the Rate Support Grant Order and not the Act itself. This gives the opportunity to make desirable changes rather than waiting for a new Act.
This year some changes are proposed, which are briefly described on pages 7 and 8 of the Report.
During the summer and autumn of 1968 representatives of the local authorities, in association with officers of my Department, examined the working of the distribution formulae prescribed for the first grant period in the 1967 Order, and a number of proposals for changes by individual local authorities. The result of these discussions has been the recommendation of some important changes of principle in the system to which the Order now before the House gives effect. These changes, which were worked out with the active co-operation of local authority officials, have the almost unanimous support of the associations—Edinburgh, of course, excepted. They are aimed at closer correlation between the incidence of expenditure and the distribution of grant. The results are generally recognised as an improvement, but they are capable of further refinement, and the discussions are to be resumed.
Inevitably, changes of formula will involve shifts of grant. There will be smiles on some faces—I can see them now—and there will be frowns on others. I notice that the Edinburgh Members are not exactly smiling, and the Glasgow Members are showing a certain measure of appreciation of the good will and good sense of the Government.
The shifts of grant will be fairly marginal except in the case of a few rural 800 counties which contain a large burgh, where a rather larger loss to the counties and gain to the large burghs has to be accepted in the interest of a general improvement in the grant arrangements. By and large, the effect of the changes will be that the sparsely populated authorities will find themselves—and I want them to note this—with a lower share of the resources element but a correspondingly higher share of the needs element, while more populous authorities will in general be compensated for losses on the needs element, because of the higher sparsity weightings, by gains on the resources element. This compensation will not, however, be available to the small number of authorities which do not qualify for resources element.
The other main features of the revision will be the introduction into the needs element distribution of a weighting for population changes and an increase in the weighting value of education units which, as hon. Members will know, are based on the estimated cost of education at different stages.
The revised distribution arrangements affect only the resources element and the general portion of the needs element. The distribution of the roads portion of the needs element, which has still to be looked at, will continue in the second grant period on the same basis as in the first. For 1969–70 it will amount to £6.116 million and for 1970–71 to £6.593 million. The balance—or general portion—of the needs element, amounting to £123.684 million for 1969–70 and £130.017 million for 1970–71, will be distributed in accordance with the revised system of population weightings. To keep the maximum increase in rate poundages due to the revised distribution formulæ to not more than 1s. in the £, £113,000 of the general portion of the grant for 1969–70 will be distributed directly to the authorities named in Appendix F. This is referred to in the Order as the transitional portion.
The resources element will, as hitherto, be distributed to rating authorities whose rating resources do not come up to a certain standard—the standard 1d. rate product. The review of the distribution arrangements has resulted in the omission from the formula for determining standard 1d. rate products of all weightings except the variation weighting. This will avoid the over-compensation of a few 801 authorities for their deficiency in rating resouces which is a feature of the present system.
The financial provisions of the Order have been negotiated in an economic setting which calls for clear thinking and hard decisions about priorities on the part of local no less than central Government. It is essential that members as well as officials, joint boards as well as rating authorities, and all committees —not just the finance committees—should bend their minds to taking these decisions in the next few months. The needs of the taxpayer and the ratepayer demand that they should take seriously their responsibilities in setting out their priorities rightly and playing their part in restraining expenditures of this nature.
I commend the Order to the House.
§ 4.55 p.m.
§ Mr. Gordon Campbell (Moray and Nairn)
The Secretary of State has tried to make the best of a difficult job in presenting the Order. I will start by saying that, in the economic circumstances in which the country finds itself —the cause of which lies at the door of the Government—public expenditure has to be suddenly restricted. But the right hon. Gentleman should not try to conceal the effects of the Government's proposals in this Order. The effects will be cuts or postponements of local authority programmes or additional burdens on the rates—probably all three. Let us make no mistake about this. It will be cuts, postponements or higher rates for two main reasons.
The first, as the right hon. Gentleman himself mentioned, is that growth is limited this year to 3⅓ per cent. above the previous year's expenditure. As the Report accompanying the Order states in paragraph 9, the annual rate of growth has in recent years been 6 per cent. or more. Therefore, restricting it to 3⅓ per cent. is a drastic course.
This may be necessary in the harsh economic circumstances to which the Government have reduced the country during the last four years, but what a reflection it is upon the Government's stewardship! It must mean that the local authorities, which have been operating on the basis of an increase of about 6 per cent. a year in real terms, 802 will have to cut or postpone. Of course, that is the intention. That is what the Chancellor of the Exchequer was telling us a few minutes ago.
The second reason—and it is one upon which the right hon. Gentleman did not touch—is that this year there is to be no Increase Order for unforeseen extra expenditure which has occurred during the present year. There is nothing to offset, as is usually done every year, unforeseen increases in costs since they were considered a year ago. Usually when we have a new grant Order there is an Increase Order as well for the year which is the current year.
The Prime Minister hinted at this in his Statement a year ago, which became the text of the White Paper on Public Expenditure, Cmnd. 3515. In paragraph 51 of that White Paper, he stated:As regards 1968–69, the Government will expect local authorities to absorb any increases in cost which they cannot avoid by making savings elsewhere.If that is not a euphemism for cuts I invite the Secretary of State to think of a better one. The local authorities are expected to absorb the extra costs—and there have been some, as I shall show—without an Increase Order. They are also limited in the growth of their expenditure to almost half of what they have been used to—3⅓ per cent. as opposed to 6 per cent.
I will refer to transport in relation to costs. In our debate on 25th March, 1968, dealing with the Increase Order of last year, I pointed out to the Minister of State that the Budget which had just been introduced would increase the costs of transport because of the extra fuel duty and the increase in the vehicle licence duty. I pointed out that extra costs for local authorities operating vehicles would ensue from those increases in transport costs. I pointed out that, because the Order had been laid on 4th March and the Budget was on 19th March, these costs could not possibly have been taken into account in the Increase Order we were considering.
I also pointed out that there would need to be a substantial amount in the Increase Order coming this year to take account of these taxes. If the right hon. Gentleman is going to tell me that this is all contained in the calculations which have led to the 3⅓ per cent. increase, that 803 is what I want to know. I ask directly whether the 3⅓ per cent. increase takes into account the additional transport costs which have occurred during the current year and which could not be foreseen or taken into account at the time of the last Increase Order? Or are these costs supposed to have been balanced, as the Prime Minister suggested, by savings or cuts elsewhere?
§ Mr. Ross
I thought that I had made it perfectly clear that there is no question of euphemism. We told the local authorities last year that there would be no Increase Order this year. They knew it. The only person to whom it seems a mystery is the hon. Gentleman himself. This Order deals not with this year but with the next two years. Of course, in real terms, as I explained, it takes account of the question of costs. I also explained that unforeseeable substantial increases—due to salary increases and the rest—would be met in the usual way by Increase Orders. So the hon. Gentleman's sole point is related not to what is before the House but to what was before the House very much earlier.
§ Mr. Campbell
The right hon. Gentleman may say that now. Although it is usually the case that unforeseeable extra costs to come are dealt with in subsequent Increase Orders, the Prime Minister may again say that there will not be any Increase Order next time. This is what happened last time. The right hon. Gentleman has confirmed, as I expected he would, exactly the two points I am making. The first is that there is to be no Increase Order because the costs are supposed to be absorbed by cuts, and the second is the restriction to 3⅓ per cent.
The Secretary of State is trying to gloss over this but clearly there has been drastic action because the country is in the serious economic circumstances caused by the Government's mismanagement. I do not blame the right hon. Gentleman himself for the economic mismanagement of the country, although he is guilty of mismanagement in Scotland. Some of his colleagues dealing with economic affairs are responsible for the mess.
In these economic straits, the Government are probably right to restrict this part of public expenditure in the way 804 they suggest. It is unfortunate that this should be necessary and a bitter reflection on four years of Labour's mishandling of the country's economy. The local authorities and their ratepayers will suffer. The ratepayers will inevitably feel the impact later in the form of higher rates. And this comes from a Government who have been in office for nearly four and a half years and who told ratepayers that they would reduce the rates by taking on to the Exchequer the whole cost of teachers' salaries. The local authorities will find that the continuity of their programmes will now be upset and they will have to find ways of changing them. It must mean inefficiency when such unforeseen changes have to be made at fairly short notice.
§ Mr. Robert Maclennan (Caithness and Sutherland)
No doubt the hon. Gentleman recognises a certain inconsistency between himself and the right hon. Member for Enfield, West (Mr. Iain Macleod), who spoke earlier on the Chancellor's statement about public expenditure. The right hon. Gentleman called upon the Government to reduce below 1 per cent. per annum the increase in public expenditure, whereas the hon. Gentleman suggests that the Secretary of State for Scotland has got it just about right. Will the hon. Gentleman bring out that point more clearly?
§ Mr. Campbell
I am glad to point out that I have been saying the same as my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). I have been saying that, in the present circumstances to which the Government have brought the country, it is probably right that they should restrict this part of public expenditure in the way they have stated.
§ Mr. Campbell
I hope that the hon. Gentleman will listen. He has posed a good question and I am glad to answer it because I can explain again what I am saying. My right hon. Friend the Member for Enfield, West was dealing with the whole of public expenditure. The Secretary of State pointed out that local government expenditure is about one-quarter of the whole of public expenditure. I say that the restriction proposed is probably right in the circumstances. But I regret the circumstances because 805 it means that the continuity of local authority programmes is adversely affected. No doubt the local authorities in the hon. Gentleman's constituency, as in others, have been planning ahead and it is upsetting that this should have to happen.
I recognised that, in the economic circumstances in which the country finds itself, this has to be done, but I regret it. If we had been in office during the last four years, industry would now be booming in Scotland, no one would have heard of the Selective Employment Tax and the Argyll and Sutherland Highlanders would have a splendid future before them. [Interruption.] However, I must not be drawn by hon. Members opposite into making these comparisons because I shall get out of order. I merely wanted to remind the House of the different situation we would have had in Scotland if we had been in office.
The right hon. Gentleman mentioned the new formulæ for distribution, and I know that one or two of my hon. Friends hope to catch your eye and speak on that aspect, Mr. Speaker. I want to raise another point, that of storm damage. In our debate a year ago, the Minister of State said that he was still waiting to see what the costs would be and how the local authorities could be assisted. This was a Scottish disaster and it caused additional expense in Scotland. I hope that the hon. Gentleman will tell us how much of the extra 3⅓ per cent., if any, has been allocated in the miscellaneous part of the grant, or whether it has been dealt with by specific grants.
§ The Minister of State, Scottish Office (Dr. J. Dickson Mabon)
There is a Supplementary Estimate dealing with that. I made it clear last year that we would deal with it by specific grants to specific local authorities, so obviously it is not contained in this Order.
§ Mr. Campbell
I am glad of that. It was left very vague in the hon. Gentleman's Statement last year and I am glad that he is able to confirm it.
§ Mr. Campbell
I have a copy of HANSARD here. I will not read out the statement, but the hon. Gentleman made it clear, two months after the hurricane, 806 that it was difficult to say in what directions the expenditure would arise and that therefore this was a matter to be settled when it came up this year. He seems to have made it clear that, if there was anything more to be said, he would say it later.
I come now to the question of rents, covered in paragraph 6(a) and Schedule 4 of the Order. The Government are continuing the operation of encouraging certain local authorities gradually to raise rents to what no doubt the right hon. Gentleman considers a reasonable level by means of a formula—that of a percentage of gross annual value. This percentage rises by as much as 125 per cent. taking into account rent rebate schemes for 1970–71. But, two years ago, in furtherance of the prices and incomes policy, the right hon. Gentleman reduced the percentages by 5 per cent. to take account not only of the prices and incomes policy on rents but also of the revaluation in Scotland at the time.
The right hon. Gentleman at present appears to be trying two things at the same time. First, he is continuing to encourage the raising of rents to reasonable levels—for otherwise, under the gross annual value formula, the local authorities are liable to lose some of their grant—allowing also for rent rebate schemes. Secondly, under the prices and incomes policy, he has been dissuading local authorities from making certain increases.
Two questions arise from this. First, under the percentages and the formula presented in the Order, will any local authorities and, therefore, their ratepayers be penalised by losing grant because of a prices and incomes policy direction from the right hon. Gentleman or another Minister? Secondly, can the Secretary of State give an assurance that in the last three years no local authority in Scotland has been penalised by losing grant because it intended to increase its rents in order not to lose the grant and then, under the prices and incomes policy, it was directed not to do so?
I come to another point which arises under reckonable expenditure in Appendix B in the Report. Under "Other Services" about £13 million is allocated for each year. This is described as for housing improvements, among other things. Is it supposed to cover the special 807 expenditure likely to arise on work which may have to be done to the high multistorey flats which are having to be examined as a result of the Ronan Point disaster? It seems unlikely, because very little is known about what needs to be done and what expenditure will be incurred.
Following the Ronan Point inquiry, certain local authorities in Scotland were told by the Government to appoint consultants to consider whether the strengthening of certain high buildings was needed. No doubt this is a very necessary precaution. In reply to Written Questions from me yesterday, the Secretary of State said that nothing had been arranged about grants to meet the considerable expenditure and disturbance which could be caused but that the matter was still under discussion.
Tenants are likely to suffer inconvenience and expense when they are moved out while the work is being done. In addition, ratepayers in the areas concerned will have to meet the bill for the whole operation unless a grant is made to cover it, including the construction work. Local authorities cannot be blamed for the fact that structural alterations may have to be made or the buildings evacuated. As the buildings met all the safety standards when they were constructed, the local authorities should not be financially penalised. I hope that the Minister of State will be able to say something about this subject.
I end by making a comparison of sums in this Order with the equivalent Order for England and Wales. In the coming year, 64.5 per cent. of the reckon-able expenditure in Scotland is to be met by the Exchequer. This continues a differential which has existed for many years. The equivalent percentage for England and Wales is 56. Therefore, there is a differential of 8.5 per cent. The Exchequer covers a considerably larger proportion in Scotland than in England and Wales.
I am sorry that the hon. Lady the Member for Hamilton (Mrs. Ewing) is not present and has not been here since the beginning of this important debate. [HON. MEMBERS: "She is just coming."] Now that the hon. Lady has come in to the Chamber—and I am sure that I shall be forgiven for repetition in this case—may I again point out that one sees from 808 a comparison of the Scottish Order with the Order for England and Wales, the differential of 8.5 per cent. is being continued, and 64.5 per cent. of local authority expenditure in Scotland in the coming year is to be covered by the central Government. In the equivalent Order for England and Wales, the percentage is 56. This continues a differential which has existed for many years. That was the case under the preceding General Grant. Those who contend that Scotland is getting a raw deal financially should bear this point in mind. Virtually all local government expenditure in Scotland attracts a much higher percentage of grant from the central Government than in England. That has been so for a considerable time.
The Order ushers in an even more difficult economic period for local authorities in Scotland and their ratepayers. It is a period of stringency, and I think that the Secretary of State agrees with that. I recognise that the economic situation demands drastic containment of public expenditure, but I blame the fact that it is being imposed on local authorities with little warning upon the Government's mishandling of the economic situation. This is a sad reflection on the failure of their policies for the economy of this country.
§ The Deputy Chairman (Mr. Harry Gourlay)
In view of the time factor and the fact that a number of hon. Members wish to speak, I appeal to those who are successful in being called to keep their speeches short.
§ 5.15 p.m.
§ Mr. Richard Buchanan (Glasgow, Springburn)
The hon. Member for Moray and Nairn (Mr. Gordon Campbell) laid great stress on the Government's failure to get the economy going. He said that the people of Scotland would soon be faced with rate increases. I was in local government for a long time. For three years I was treasurer of the City of Glasgow when the Conservatives were in office, and I remember having to put up the rates every year. I seem to be the Member who is always complaining about how unfair the grants were to Glasgow.
We all agree that the balance of payments is all-important to the prosperity of this country. I remember coming to 809 the House of Commons in 1964 and being faced with the dilemma of wanting to get ahead with increasing the social services and laying the basis for a Socialist Britain but having to accept that we could not do it because we had a terrible balance of payments problem. We had an awful situation to deal with. When the Conservatives were in office a booming Britain was built on a false basis. It was built on a consumer boom, and we have never made up the deficit which was left hanging round our necks. The balance of payments was in an awful state. We were supposed to have a booming Scotland built on industries in the state left by right hon. and hon. Members opposite—mines overworked, railways run down, uneconomic pits and old, ageing factories. Is that the basis on which we are to build a booming Scotland?
Scotland has lost 100,000 jobs. Many people make great play of that fact. But no one points out that Scotland has gained 100,000 jobs in new scientific and technological industries. We have had to restructure industry, and that is to the credit of my right hon. Friend the Secretary of State and his colleagues.
Obviously, no one likes paying rates or taxes. But when I was a member of the Glasgow Corporation I remember the housing subsidy being slashed almost without warning from 42 to 18 per cent. Now, with the new rate support grant, we see from the little pamphlet issued in Glasgow every year that in 1967 and 1968 the rates were reduced by 10d. and 1s. 8d. respectively. Next year they will be reduced by 2s. 6d. When I was treasurer in Glasgow, I should have been very pleased with a rate support grant as generous as that given by my right hon. Friend which took care of 2s. 6d. worth of the domestic rate.
I made a speech on the Adjournment complaining about Glasgow's situation—the diminishing population, the density grant and metropolitan weighting for the grant. There is still no density weighting in the Scottish rate support grant, and I must confess that I am a little sorry about that. Birmingham gets £277,000, Liverpool £389,000 and the City of Westminster £192,000 under the density weighting in the English rate support grant.
810 I am delighted with the concession made by my right hon. Friend, by which Glasgow will benefit by almost £½ million. I have in the past sat opposite the right hon. Member for Argyll (Mr. Noble) and his Ministers trying to get the local authorities to appreciate the needs of Glasgow and to agree amongst themselves. I congratulate my right hon. Friend on the job he has done in getting local authorities to agree to population changes within the rate burden.
I am slightly disappointed. Glasgow, although it gets £½ million, is faced with a tremendous expenditure which this £½ million will scarcely look at. I read in the Glasgow Herald this morning that Glasgow is retracting from the project at Erskine. I appreciate the reason for it, but it is with great regret that I see this drawing back from this most imaginative Erskine project. I am worried that we may now go into a period of retrenchment and that, even though the rate support grant is fairer than hitherto, there will be a slowing up in the great comprehensive redevelopment of Glasgow. If the development programme is put back even by six months, the citizens will be deprived in that period of nearly 2,500 houses. I hope that something may, even at this late stage, be done about this.
The population of Glasgow in 1961 was 1,054,000; in 1966 it was 979,000; in 1967 it was 960,000; one might almost say it is a rapidly diminishing population. The citizens who remain cannot be expected to bear the tremendous burden imposed upon them by the most imaginative and enduring programme of development in Europe.
I ask my right hon. Friend, in considering future reorganisation of the grant, to ensure that the accumulated burdens of the past will be made lighter by an enlightened rating policy. If the Local Government Commission reports, as I hope it will, on a regional basis, I hope that my right hon. Friend will take that opportunity to ensure that the development of Glasgow will not be held up through lack of money.
§ 5.22 p.m.
§ Mr. John Brewis (Galloway)
The hon. Member for Glasgow, Springburn (Mr. Buchanan) made an interesting speech about Glasgow, but I am afraid I am unable to follow him since I do not know 811 Glasgow well enough. I do, however, share one thing in common with him, that I too was a finance convener of a county before coming to this House.
The Rate Support Grant Order covers the two years 1969–70 and 1970–71, which are the two years in which the Prime Minister in his statement last January said that we would begin to feel the impact of the reductions in the grants available to local authorities. We all deplore that this is necessary because of the economic state of the country, but we realise that certain reductions must be made.
Local authorities when forecasting estimates for 1969–70 made an estimate of £322.1 million. The Secretary of State has cut this down. I say at once that it is essential for the Secretary of State to look at the estimates in the context of what is available to Scotland, but he has cut down the estimates to £300.3 million, a very substantial reduction, almost £22 million. Only after that reduction do we get the 3¼ per cent. added on, which is the increase about which he has been speaking. This is a substantial reduction; reductions go on every year, and must affect the quality of service in Scotland.
The figures came down from £322 million to £300 million, and I understand that the loan charges were reduced by slightly less than £1 million. This represents the starts on capital projects taking place next year. The reduction in loan charges of about £1 million grossed up represents a considerable number of capital projects which have been deferred. After discussing this with the local authority association, the right hon. Gentleman put that figure up by about £450,000, in other words it was split roughly 50–50. This is an extraordinary rule of thumb way of going over the estimate. I understand that the Department queries amounts as low as £200 on local authority estimates. Perhaps we could have an explanation of how these capital cuts have been worked out.
We in this House are continually giving local authorities further duties to perform, many of which are concerned with the social services. For example, we have today in Committee passed a Clause in the Education (Scotland) Bill dealing with the child guidance service, 812 which is now to become a duty instead of being discretionary. The amount involved will not be large, but it is symptomatic of the extra duties being put upon local authorities.
The Social Work (Scotland) Act, which was supported by both sides of the House, involved a separate organisation for social work. We are to have directors of social work in future who are to be competent, well-qualified people, and they will require a salary commensurate with their abilities. There will be about 56 local authorities looking for directors of social work, who are not plentiful and whose salaries are, therefore, likely to be substantial. It was also decided that the social work system should be so laid out that people could go in through one door to consult the various services, and be passed on to the probation service, the child care service, or whatever service was appropriate. This will mean that extra money will have to be spent on premises.
Assuming that a director of social work will receive perhaps £3,000 a year, and that there will be capital expenditure on buildings, my local authority reckons that it will cost in a year between £5,000 and £8,000. But what is set aside for this service in the first year is only £155,000, and the Wigtonshire share of that is about £1,200 in the first year, compared with an expenditure between £5,000 and £8,000; so they will get nothing like 64 per cent. or 65 per cent. of the expenditure by way of grant.
Another recent Act, the Sewerage (Scotland) Act has not yet been put into operation. On the other hand, there are places which are waiting for the Act to become operative. In Kirkcudbright, for example, there is a desirable development of private house construction which is waiting for the Bill to become operative so that connections with the drains can be made. This comes under the specific grant. I notice, under the specific grant, that the amount to be spent on this service is going down from 1969–70 to 1970–71. There is a reduction in the estimated amount of expenditure, so it does not look as if the Bill will come into operation before 1971. It seems a very strange thing that the Bill should be brought in, passed through the Scottish Standing Committee and passed through this House last year, and it does not 813 appear to be likely to be brought into operation until 1971. I wonder whether the Minister of State can give me some information about it when he winds up, because, as I have said, certain housing developments are being held up by the Act not being in force.
I want to ask a question about coast protection. The expenditure on coast protection comes under the main rate support grant. It is one of the other services at the bottom of the list. I understand that the amount available is distributed among all the counties. This seems very surprising, because some counties in Scotland have no sea coast—for example, Lanarkshire—while other counties have a considerable problem with coast protection. As it is included in the figures of the rate support grant, I imagine that all counties are getting a proportion of the money set aside for coast protection, and it is not being kept just for those counties which actually use the money.
Why does not coast protection come under the specific grant? I think that a grant of about 75 per cent. can be obtained if work is being done to protect a principal road. But for any other work on coast protection which is needed there is no extra grant available. In the old days, if a county spent more than a fourpenny rate on coast protection, I believe that some help was available.
I ask this particularly, because a year or two ago, there was a storm which affected the Isle of Whithorn, and the county council had to come in and repair the harbour and sea defences. Otherwise, in time the village would have been flooded. The county council spent several thousand pounds on it, but it was unable to get any grant. I feel that coast protection is a subject which should be looked at.
The last point I wish to make concerns changes which have been made in the formula for distribution of grants. I notice that certain counties, like Inverness and Dumfries, have come out of it rather badly. Although Inverness County has come out of it badly, Inverness Burgh has done extremely well. When these counties get transitional relief, as is set out at the bottom of one of the tables— I think that Inverness County is getting nearly £100,000—at whose expense is 814 this £100,000 provided? Is it com[...] from the rest of the pool which wo[...] be available for other local authorit[...] in Scotland?
There is another aspect of the formula which I enter on with some trepidation. It always seems surprising, when one looks at the rates in counties in Scotland, that there seems to be a distinct batting order: one gets West Lothian normally about the highest rated county and Clackmannan following fairly closely. We know that counties which have Socialist administrations often spend a great deal of money. I will not go into whether it is well or badly spent. I will instance Wigtonshire and the Stewartry of Kirkcudbright. The Stewartry of Kirkcudbright is always very well administered. Its rates are very much lower than, say, West Lothian and Clackmannan, but also very much lower than Wigtonshire which follows very much the same policy and has the same area. The difference between the rates assessed is comparatively large. The last figure I have for West Lothian is about 27s. 6d. while Kirkcudbright and Moray is down to about 13s.
The formula, which has been changed, has made a certain amount of difference, but the batting order is still very much the same. Clackmannan has moved into first place and West Lothian into second. Moray, which used to be the lowest rated, is now one from the bottom while Kirkcudbright is at the bottom. It seems we are talking about needs and resources, but we should be able to get the rate poundage over Scotland very much closer to some sort of mean. I know that I am on rather slippery ground here, because the actual expenditure of counties comes into it. However, I should be interested to know whether the Minister of State thinks that the present formula will be more satisfactory than the last or whether he thinks that there should be more amendments made in future years.
§ 5.35 p.m.
§ Mr. William Hannan (Glasgow, Maryhill)
It is always a pleasure for me to follow the hon. Member for Galloway (Mr. Brewis). He appears to speak from his experience of local government. In this way he has helped to modify the rather more bitter comments which have come from the benches opposite.
815 I should like to respond to two points which the hon. Gentleman made. First, the cost of the child guidance service. The hon. Gentleman will recall that my hon. Friend the Under-Secretary, replying to that point this morning, said that in his view it would not cost local authorities more.
On the point about social work, anyone listening would think that this was going to mean great increased cost to local authorities. But I should like to put this point to the hon. Gentleman. The social consequences and the cost of vandalism and child neglect are so high today that the question really is not whether we can afford the cost of discharging this work but whether we can afford not to. Consider, for instance, the consequences and the cost involved for inmates of prisons, hospitals and deprived children. I suggest that these costs should be weighed against the prospective costs here. While there will be a temporary period in which they will be running together, we hope that ultimately the costs relating to deprived children and the consequences of bad social conditions will be omitted.
§ Mr. Brewis
I should like to say how much I agree. My point was that the necessary expenditure is not getting the correct percentage of grant.
§ Mr. Hannan
I will leave that to another time.
I will try to cut short my remarks, particularly as they follow the same line as those of my hon. Friend the Member for Glasgow, Springburn (Mr. Buchanan).
I make no apology for stressing one or two points. It may be the fault of myself, among others, that the magnitude of Glasgow's development plan, for example, in terms of clearances, overspill, the resiting of offices, factories and warehouses and problems associated therewith, have not been adequately stated often enough in this House, nor appreciated by Members on both sides. Glasgow has not got the metropolitan status of other cities in the United Kingdom. Despite adopting high densities of housing in the redevelopment schemes, an overspill of no less than 60 per cent. of the existing population must be anticipated. This means a dogmatic change. With no large areas of suitable undeveloped land left within the city, the provision beyond its boundaries of 816 accommodation for this overspill is the governing factor.
The speed at which redevelopment can be sustained is dictated mainly by the rate at which ground can be cleared and accommodation made available in the reception areas, and there are already signs that this pace is slackening. What is the position at Elderslie? As I understand it, because of the delay in coining to a decision, the programme there is six months behind schedule. This inevitably means that the comprehensive development areas within the city—and we know that ultimately there are to be 29—will take longer to complete. There will be a slowing down of the process all along the line. Already it is being said that this year Glasgow will provide 2,500 fewer houses than it has in recent years.
I wonder whether my hon. Friend has seen Press reports that the majority administration of Conservatives and Progressives in Glasgow has decided not to take part in the out-county scheme for city overspill in Erskine, Renfrewshire.
§ Mr. Deputy Speaker (Mr. Harry Gourlay)
Order. The hon. Member is getting a little wide of the Order before the House.
§ Mr. Hannan
In that event I shall shorten my remarks, but I hope that my hon. Friend can give me some information about this, because if there is a hiatus it will endanger the grant which is likely to come from this Order. These reports in the Press show how a change of administration can endanger the progressive policy of the 29 development areas. Their development will be slowed down if there are signs of retrenchment.
In view of the great changes that are taking place in schools, in houses, in libraries, in transportation, and in the building of new commercial colleges in Glasgow, changes which are being carried out with courage and imagination, I think that it is appropriate to ask what contribution the grant system makes to all this. My Parliamentary colleagues who, like myself, represent Glasgow constituencies, city councillors on both sides, and above all the ratepayers of Glasgow, have for a long time felt deeply dissatisfied with the so-called "objective factors" by which these grants are distributed—the former 817 general grant and now this the rate support grant. I congratulate my right hon. Friend on the improvement which these proposals will bring about in Glasgow, but I hope that he will not think me churlish if I say that it is only a modest improvement. The size of grant is not yet anything like commensurate with the huge sums of money involved in the changes that are taking place in Glasgow.
I am the last person to be thought of as being sympathetic to the present trend of nationalism in Scotland, but we can make comparisons only if we consider the position in cities such as Birmingham and Liverpool, and one finds that different factors are employed to assess the rate support grant in England and Wales. Having said that, it has to be conceded that my right hon. Friend must be congratulated on the concessions that he has made, which means that the proposal which has long been argued for by hon. Members on this side of the House is now to be accepted.
Appendix G of the Report shows that a population variation weighting will be used in distributing the needs element for 1969–70. On my calculation, it will be worth 72,080 units of weighted population. If my arithmetic is right, and one unit is equivalent to about £8 of grant, Glasgow will get an additional grant of £576,000. This is welcome, but it should be noted that this is not a net gain. I think that my hon. Friend will agree that about one-sixth of that is paid for by Glasgow through a reduction in the grant value of its other units, and that Glasgow has also to pay its share of the higher sparsity weightings. Nevertheless, the net gain to Glasgow is a little over £500,000, and is of appreciable assistance to the ratepayers.
I should like to express my gratitude to my hon. Friend and to the other local authorities for their consideration of the problems with which Glasgow has to wrestle. The evidence is there for any who care to see it. In Glasgow, and in fact throughout Scotland, tremendous changes are taking place. Those who are churlish about spending money ought to look at the credit side, and think of the wonderful city that Glasgow will be in the 1970s. It is to the credit of my right hon. Friend and my hon. Friend 818 that they are paying such attention to the problems of Glasgow.
Whatever our ideals about new towns, decentralisation, or the provision of modern living standards and amenities—and we all want to see progress in these matters—it is sad to see a big city losing its citizens to other areas. When this happens—and I hope that this is not lost on the Government—the city's problems, financial and otherwise, are borne by those who remain in the city. Because Glasgow is responding to the wishes and exhortations of Governments, and because, too, of the obsolete pattern of local government boundaries, it is only fair and proper, in justice and equity, that those ratepayers who stay behind should be helped by the Government to carry the accumulated burdens.
I hope that my hon. Friend will bear in mind the adjuration which was uttered earlier, that Glasgow still requires help, and that, like Oliver Twist, will no doubt come back for some more.
§ 5.48 p.m.
§ Mr. Michael Clark Hutchison (Edinburgh, South)
We are dealing with a complex subject. I do not pretend to know all the answers, but I wish to draw the Minister's attention to what is happening in Edinburgh as a result of these proposals. I assure the Minister that the position there is very serious, and that the city authorities are deeply worried.
Edinburgh receives no share of the resources element. The thing that is causing the most difficulty is education weighting. Under the general grant system, weighting was given for all schoolchildren under the age of 15. But, under the rate support grant needs element of 1967–68, weighting was restricted to those children at local authority schools. Edinburgh was hit because it had 6,880 pupils at grant-aided schools and 5,680 at independent schools, who were all excluded from the calculation. Now there is to be a further change, and because of the weighting given to education units Edinburgh will be very badly hit.
The nature of the city's difficulties will be shown by the following figures. In 1967–68 her share of the needs rate support grant was £9,497,000. As a result of these changes, it will fall by £664,000 or 7 per cent. That represents at least 9d. on the rates. Bearing in 819 mind how difficult it is to contain expenditure within certain limits, and remembering the effect of the incomes policy on ratepayers' ability to meet extra burdens, it will be seen how serious this withdrawal of money is.
Costs are rising in the city, transport costs particularly. It will be difficult for Edinburgh to maintain the continuity in some projects which have already been begun. Cuts will be necessary and other items will be postponed. The situation has been described to me by the Edinburgh authorities as "grim" and we face a rate rise of 9d.
I believe that the Government have a scheme for giving financial help to an authority which will have to raise its rates by 1s., but why only 1s.? By fixing it at 1s., it seems that the Government are expressly trying to exclude and hit Edinburgh. I do not understand why Edinburgh must face this financial burden and even less why her reasonable request for help and transitional arrangements was not granted. Surely some adjustments along these lines could be made.
I doubt whether in all Scotland's history a local authority has been so shabilly or unfairly treated by the central Government. I cannot vote against the Order, much as I would like to, because if I did it would stop financial help to other authorities, but I issue my protest on behalf of the city at the way that it has been treated. This Government are clearly hostile to Edinburgh and its people. The Secretary of State said earlier that hon. Members for Edinburgh were looking grim about these proposals. I can tell him that, after the next election, there will be seven Unionist Members for the city and that our faces will be wreathed in smiles.
§ 5.54 p.m.
§ Mr. George Willis (Edinburgh, East)
I was tempted to rise by what the hon. Member for Edinburgh, South (Mr. Clark-Hutchison) said. I also represent Edinburgh and I and my constituents will have to pay these rate increases. But we should get this matter in perspective. What the hon. Gentleman forgets is that for many years Edinburgh has enjoyed a highly privileged position in Scotland because of its number of grant-aided and independent schools and the way in which the grant was distributed. Not only is 820 Edinburgh relieved of great educational expenditure, but it also benefits because of the distribution under the formula about which the hon. Gentleman is complaining. For a long time the city has been benefiting at the expense of practically every other local authority in Scotland, which is surely grossly unfair.
I do not like my rates to rise any more than the hon. Gentleman does, but we must be fair. Although he is right to draw the Government's attention to the effect of these proposals on Edinburgh, particularly at present, we cannot quarrel with something which institutes fair play. After all, all local authorities are entitled to the fair deal which these changes will bring. Edinburgh has been privileged in many other respects in local government expenditure. Its public halls have all been built by generously-minded public citizens—Usher Hall, MacEwan Hall and the rest of them. Edinburgh spent very little on them. Most of the attractions in Edinburgh are the result of Government expenditure. King's Park and the Botanical Gardens did not cost Edinburgh a thing. Edinburgh has made an attractive city by Government expenditure and that of generous citizens. Even the Zoological Gardens were started by private people—Lord Salvesen and one or two others. Our amenities have been immensely improved, and not at the ratepayers' expense.
When contesting the municipal elections, hon. Gentlemen opposite claim these low rates of Edinburgh as the result of their great business management of the city's affairs, but that is a lot of poppycock. The low rates are due to our being subsidised by the Government and private people and having enjoyed for so many years these great educational advantages. We should recognise that, sooner or later, a day of reckoning had to come.
§ Mr. Willis
Does the hon. Gentleman want his local authority to continue to suffer because Edinburgh is enjoying a privilege?
§ Mr. Willis
Yes, it is. If this change is not made, his local authority will be worse off. Is he going to tell his constituents, "I voted that Edinburgh should 821 enjoy a privilege and I am sorry that you are worse off as a result"? That is the logic of the argument——
§ Mr. Patrick Wolrige-Gordon (Aberdeenshire, East) rose——
§ Mr. Willis
There is another one who is apparently going to tell his constituents, "You must be worse off so that Edinburgh can enjoy these privileges"——
§ Mr. Wolrige-Gordon
Has it escaped the right hon. Gentleman's attention that the local authorities will be worse off as a result of this Order.
§ Mr. Willis
That is not true, of course. His hon. Friend raised the changing of the formula and the effects on Edinburgh, and I was saying that we should get this into perspective and remember that practically every local authority has suffered because of Edinburgh's privileged position. That is why no other local authority supports Edinburgh in this or is clamouring to keep the status quo. No, it is Edinburgh alone.
By all means draw attention to the effects of this change. The Government are endeavouring to meet the difficulties that are being experienced. However, hon. Members should not run away with the idea that there is something unjust in these proposals. For the first time we are getting justice as between Edinburgh and other local authorities. For this reason I would find it difficult to oppose the Government in this matter. This seems to be a better system for proceeding between local authorities, and while I am sorry in some respects for Edinburgh, sooner or later its privileged position had to come to an end. The Government have done that, and I believe that these proposals will make for better local government.
§ 6.0 p.m.
§ Mr. W. H. K. Baker (Banff)
I trust that the right hon. Member for Edinburgh, East (Mr. Willis) will forgive me if I do not follow him along the tortuous paths of the Botanical Gardens in Edinburgh. I wish to address my remarks to the problems of my constituency, for in a debate such as this one must keep in mind only the important points.
I make no apology for returning to the problems faced by my own constituency, 822 the County of Banff. I have often raised this matter during the four-and-a-half years that I have been here. The basis of the trouble lies in the fact that although the county is mostly rural in nature, agriculture and fishing being the prominent industries, the bulk of the population lives within burghs and those burghs are extremely small.
We see on page 12, in column 12, of the Report by the Secretary of State that there is no entry against Banff. The reason for this is not hard to find. Table 3 on page 6 of the Order lays down the formula by which adding-in of weighting is given for various propositions, notably for population. Counties which have under 50 per cent. of their populations living in the landward portion of a local authority do not qualify for any weighting. Only 29 per cent. of the total population of the County of Banff, 44,500 people, live in the landward area. The rest reside in the burghs.
But—and this is a very large "but" —there are 11 of these small burghs in the county. Their populations vary from 797 to 7,644. Seven of the 11 are under 2,000 in population and many of them take pride in their long tradition as burghs. For example, the Burgh of Portsoy, with a population of 1,725, was created a Burgh of Barony as long ago as A.D. 1550. Thus, by an act of history, all the ratepayers in Banffshire are penalised under the present Order.
I was glad to hear the Secretary of State say that the Government's mind is not closed to further alterations in the formulae which lay down the distribution of this grant. It has not gone far enough for Banffshire and I hope that the right hon. Gentleman will take note of this, as I admit he has done in the past. He has acknowledged the problem, but, unfortunately, he has not gone far enough. I hope that he will continue to examine the matter until we get satisfaction.
One possible solution would be to count all the burghs—indeed, throughout Scotland this could apply because there are other areas affected in the same way—with a population of 2,000 and less as part of the landward area when it comes to the weighting question in the operation of the formula. I appreciate that this may happen after the Wheatley Report is implemented, but that may not happen 823 for three or four years. In the meantime, the ratepayers of Banffshire will continue to suffer. I urge with all the force at my command that the position should be favourably considered and remedied before the next General Grant Order is introduced.
In most respects the situation of Kincardineshire is similar to that of Banffshire, but fortunately for Kincardine, it has no problems with its small burghs, and thus Kincardine has nearly 50 per cent. of its population taken into account for the weighting factor. Banff, on the other hand, gets nil. This is unjust and is another reason why we must have some alleviation. This situation prevails notwithstanding the representations which I and the county council have made to the Scottish Development Department direct and through the Association of County Councils.
Despite these representations—and it must be agreed that Banff's problems have been admitted at all levels—the county is still marginally worse off under this Order compared with the 1967 Order. We are worse off to the tune of £1,662. In other words, the rate-borne expenditure will increase by that amount over the whole county.
The right hon. Gentleman said that there is, under the present Order, a complete revision of the needs element. Under this revision Banffshire will be better off by £45,461, but on the resources element we will be worse off by £47,249. It is not possible to do a simple subtraction and arrive at the net figure of "worse offness", taking these two factors into account, because direct and specific grants also come into the question.
The Minister of State may say in reply that rate burden per household in Banff is lower than that of any comparable area. That is true, but such a statement needs close examination. There are many elderly retired people in the county. There are other households with far less opportunity to earn overtime and with fewer youngsters bringing in money. To be fair, the Government must look at the wage and salary earnings capacity of households. In other words, they must compare like with like. It is not only a question of comparing areas such as my constituency with smaller areas such as Kincardine, but a question of looking at the 824 central belt of Scotland as well, for in that area incomes are much higher.
On page 5 of the Secretary of State's Report we read in paragraph 20:… expenditure on the maintenance of non-principal roads … must continue to be severely restricted".That is a false economy, particularly in Upper Banffshire where the roads are taking a tremendous beating from heavy traffic from the distilleries, quarries, and so on. They were not built to take such a beating. This is becoming an increasingly difficult problem. If the roads portion of the needs element is kept at its present level, in years to come we will have some extremely hard problems to solve in this connection.
I am told that to maintain roads adequately they should be resurfaced every six or seven years. The county road surveyor in my area tells me that in Banff, if the present system continues, it will be 14 to 15 years before the roads are resurfaced. In addition, the shoulders of the roads are often over precipitous slopes so that the conditions under which drivers of lorries must operate—not only in the inclement weather which we have at present, but throughout the year—represent a hazard to life.
This brings me to the question of snow clearance. This year we will be faced with a very heavy bill indeed. Last year was not so bad and the amount of money expended on snow clearance was very small. However, this expenditure will have to be wholly rate-borne unless the Government intervene under earlier Statutes because this factor of snow clearance is not covered by the Act which set up these rate support grants.
I therefore urge the Government to take a close look at this matter, and I hope that the Minister of State will assure me on the subject when he replies.
§ 6.13 p.m.
§ Mr. Robert Maclennan (Caithness and Sutherland)
I am sure that the hon. Member for Banff (Mr. W. H. K. Baker) will understand if I concentrate on the problems of the County of Sutherland, which are quite different from those facing his constituency.
I must, first, comment on the speech of the hon. Member for Moray and Nairn (Mr. Gordon Campbell). I assure him 825 that my hon. Friends will scrutinise with the greatest care any statements made by hon. Gentlemen opposite, and particularly by the Opposition Front Bench, about the need for cuts in public expenditure, particularly in view of the acceptance by the Opposition that the figure of reckonable expenditure by local authorities in Scotland should be increased by about 3⅓ per cent. in the forthcoming financial year.
I wish principally to draw attention to the anticipated effects of the proposed redistribution of the needs and resources element of the rate support grant on the rate burden of the local authority of Sutherland. I understand that the proposals stem from a review which was undertaken by a Committee into local government finance and which is continuing its deliberations. May we have an assurance that the proposed redistribution is not final and that the anomalies which seem apparent to me can be ironed out in the coming year?
I have been in continuing discussion with Lord Hughes on this subject and I need not weary the House by going into the details of the problem as it affects one local authority in Scotland. I assure the Minister, however, that the concern felt by that local authority over this matter is considerable. The main problem relates to the redistribution of the resources element which has constituted 75 per cent. of the grant in Sutherland. If I am correctly informed, this figure will be reduced to 57 per cent. and will lead to some difficult budgeting problems for the local authority in the immediate future.
This results from the changes in the population weightings used to determine the standard 1d. rate product, and in particular from the removal of the road mileage weightings. I well understand the difficulties of working out a formula acceptable to every local authority in Scotland. The hon. Member for Banff amply demonstrated the obverse side of the coin and the difficulties that we shall have so long as we retain our present local authority boundaries. This debate underlines the urgency of a review of these.
We all look forward to the Wheatley Committee's report. It is to be hoped, however, that the continuing review of the method of distribution of the needs 826 and resources element will not have to wait upon the outcome of that report. Can the right hon. Gentleman be specific about how it is intended to compensate local authorities suffering a diminution, through the alteration of the resources element by the increase in the needs element? Would he explain what this means for the County of Sutherland?
§ 6.15 p.m.
§ Mr. Hector Monro (Dumfries)
The Secretary of State came into the Chamber with an unusually bright countenance. I do not think that he will find that local authorities are smiling as happily about this Order. They have a lot of difficult decisions to make due to the mismanagement of financial affairs by the Government. They are making desperate economies in expenditure, but further economies are limited if services are to be maintained. This is most important. With costs going up local authorities will do exceptionally well to prevent rates rising steeply this year.
It is right that we should keep expenses and rates down, but it is a very difficult battle with costs rising all the time. In the last few years we have based our calculations on a rise of 6 per cent. To come down to just over 3 per cent. will be very difficult. The Government should not think that they are being very generous. It will need a really intensive rearguard action by local authorities to maintain these rising costs within bounds. A point that has not been mentioned much is the very big effect that interest rates have had over the last four years and the staggering debt that most local authorities are running up.
The Government are passing legislation each year—far too much of it—which in nearly all cases tells local authorities that they have to spend more money. In some ways it is wrong for the Government to keep doing this without taking the blame for the increasing costs incurred by local authorities in carrying out new Acts. Looking at some recent legislation, one can appreciate the cost to local authorities.
The Secretary of State mentioned the social work measure. It is one which we welcomed, but we should not dodge the issue that it will cost a great deal of money in the long run. In this coming financial year there will probably be only the salaries of a minimal number 827 of staff, but in the years to come it will be a heavy burden. More recent acts, like the Water Resources Act, which was a severe penalty on the small burghs, the Sewerage (Scotland) Act, and the rising costs of transport, as a result of the Transport Act, have added to this burden.
There is a false economy—and the Secretary of State should not glower with horror at the thought of it—over the maintenance of roads. As the hon. Member for Banff said, roads in country districts, particularly those roads which carry heavy traffic, perhaps due to timber extraction, coupled with the extra wear and tear as a result of snow clearance, incur expenditure on which it is foolish to cut back. In Scotland, we want to set an example to tourists with good roads and bring them back each year. All these new burdens that local authorities have to bear have a very unsettling effect on them. What they want to concentrate on is attracting new industry and expanding the economy of their areas. What they would also like is a period of stability, without new measures being thrown upon them.
§ Mr. Monro
It is very difficult to do anything in a local authority without the money. The Government's base expenditure for this grant is considerably less than the local authorities anticipated. The formula for the grant was previously absolutely incomprehensible, and even now it is hard to understand. It creates serious anomalies in rural areas. I hope that the Secretary of State will continue his discussions with the local authorities, the County Councils' Association and others, to try to find an acceptable formula for these rural areas, particularly with regard to the maintenance of roads, which is one of the biggest heartburns of local authorities. I am glad that the Order has been brought in, but it has not made life much easier for the local authorities.
§ 6.25 p.m.
§ Mr. George Lawson (Motherwell)
I rather regret that the hon. Member for Dumfries (Mr. Monro) returned to the theme of his hon. Friend the Member for Moray and Nairn (Mr. G. Campbell). The debate has been subdued; Members 828 have sought, quite legitimately, to put points about their constituencies. The hon. Member has come back to the party line. It is a great pity that, when we deal with local government services we talk in terms of spending money and virtually never in terms of the vital services being rendered, very cheaply. Who among us would be prepared to empty our own dustbins, to get rid of waste from our homes, or to supply ourselves with water or perform any one of the multitude of services rendered through the local authority?
It is interesting to compare this with what happens in other countries. Those of us who have read Galbraith's "Public Squalor and Private Affluence" might have some knowledge of this. Hon. Members opposite do a great disservice to the needs of the nation, irrespective of which party happens to be the Government, by deriding this, presenting it as if it were a question of spending money and not one of paying for services rendered—and paying very little in comparison with the areas covered and the nature of the services rendered.
There are almost inexorable pressures upon any Government in a civilised society. If we talk in terms of increases in the amount of rates being paid, we have to see how these increases have been moving. I did a little exercise and took the total current expenditure on rates in the United Kingdom over three separate periods of three years. The first was 1962–64, which could be said to be concerned with the party opposite. The increase in expenditure was 20 per cent. For the period 1964–66, a mixed period for administrations, the increase was 27.5 per cent. I then took the period 65–67 —I stopped at 1967 because the Blue Book I was using did not go beyond that period—and the increase there was 25 per cent.
We can see that these things are increasing. When the hon. Member for Dumfries talks about throwing duties upon local authorities, he does not disapprove of those duties. He normally supports them. He supported the social work measure, he supported more money being spent on roads. He wants more money spent on schools, especially in his area, although I grant that he probably wants it spent in other areas, too. The hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor), who is not present, 829 is regularly pressing the case of the police. My right hon. Friend can no doubt tell us how much those costs have been rising.
Hon. Gentlemen opposite are constantly pressing for increased expenditure, and equally constantly they cry out against this expenditure, posing as though they were people who would cut expenditure. There is nothing like being honest in such a matter. If we want these services, and we do, we want more of them, then we must tell the people that they have to be paid for. One great distinction between members of my party and hon. Gentlemen opposite is that we believe in extending the area of collective responsibility.
We think that so much can be done better on the basis of the acceptance of collective responsibility, whereas hon. Gentlemen opposite are constantly niggling away at this, and trying to suggest that it could be done so much better privately. When it comes to the crunch, they find that they cannot do it privately, and they are ready, like so many others, to dip their hands into the public purse.
I want to raise two constituency points. It is very strange that a town like the joint Burgh of Motherwell and Wishaw gets no resources grant. The hon. Member for Edinburgh, West (Mr. Stodart) was complaining about the harsh treatment meted out to his city. If he looks at the situation in Motherwell, then at the amount being paid to Edinburgh, and measures this against the population of Motherwell, he will find that Motherwell is getting very much harsher treatment, merely on the basis of what money is paid. Motherwell gets no resources grant at all. There is an enormous valuation placed upon the steel works there.
It is very strange that Motherwell has an industrial valuation which is about twice that of the City of Dundee. When we examine this we find that it does not always work out to the advantage of the local people. I am making a plea, maybe I will not get much change from my right hon. Friend, that he should take account of more things than mere heads in an area. This formula is still based on heads, and roads and the ages of people. It should be extended. Look at the problem in some areas. I have 830 a great deal of sympathy for those who have spoken about Glasgow.
Think of the enormous task that it is in itself to make a city like Glasgow habitable, according to the standards we want to see. Glasgow is an excellent city, but so much requires to be done and the cost is so great. Similarly, in my own area there is a town that came into existence as a steel-coal town, but is being rebuilt at enormous cost; and if I may say so, this rebuilding gets very little, proportionately, out of the central purse. I make that plea and will make a further plea.
In my own area we would very much like to help Glasgow with its overspill problem. We are very keen and ready to lend a helping hand. Proposals have been put forward to the hon. Gentleman and his right hon. Friend. We appreciate that not everything would be granted that might be asked, but there is one comparatively simple thing which might well be accepted. If Motherwell and Wishaw is to assist Glasgow, then at least Motherwell and Wishaw ought not to be expected to carry the whole burden of building the houses. This is all we ask at this stage, that there should be the assistance of the Scottish Special Housing Association in building houses in the joint Burgh of Motherwell-Wishaw. If this were done much could then be done to assist in this great development project going forward in the West of Scotland.
I hope that my hon. Friend the Minister will be able to say something on these questions and that he might be optimistic about finding an answer. In the meantime, in the economic situation that exists and of which we have heard so much, the Government are doing exceedingly well and I compliment them upon it.
§ 6.32 p.m.
§ Mr. Alick Buchanan-Smith (North Angus and Mearns)
The hon. Member for Motherwell (Mr. Lawson) rather disappointed me, because, in his first remarks, he said this had been a somewhat subdued debate and I expected him to come in and liven it up. But having tried to castigate my hon. Friend the Member for Dumfries (Mr. Monro) for dealing with matters affecting his constituency, we were then entertained by the hon. Gentleman to a general philosophy about local authority spending, and 831 he proceeded to deal in his own area with the subjects with which my hon. Friend had dealt a few moments before.
§ Mr. Lawson
I was complimenting hon. Members on the subdued and moderate nature of the debate and regretting the fire and flood that we so often get from the other side.
§ Mr. Buchanan-Smith
Both sides will welcome the opportunity such a debate offers to have a discussion such as we do on no other occasion in the year, on the matter of rates and local authority spending, something which affects our constituents so much. The other great opportunity we have in a debate like this is to raise particular matters which affect our own constituencies and our own local authorities. As ever, we were entertained by the right hon. Member for Edinburgh, East (Mr. Willis) and his description of fair shares for everybody and fair play for everybody, and his criticism of my hon. Friend the Member for Edinburgh, South (Mr. Clark-Hutchison).
In a debate like this I always feel that there is something wrong with an hon. Member if his claim for fair shares does not mean a rather bigger share for the area he represents; and I thought the hon. Gentleman's speech was slightly out of keeping with previous utterances. I only hope that the people in Edinburgh will note what he has to say.
In general, this debate falls into two main parts and it is the main part, which is the most important, with which I would like to deal—what is being spent by the Government in supporting local authority services and how it is distributed between different services; and secondly, methods of distribution and in particular the needs element and the resources element. This has been raised by many hon. Members. My hon. Friend the Member for Edinburgh, South spoke of the way it affects his constituency and his own city.
My hon. Friend the Member for Banff (Mr. W. H. K. Baker) spoke with his usual persistence. No one in the House has been more persistent in raising particular problems of distribution over many years. He not only raised the question, but he put to the Minister of State concrete suggestions. We on this side of the House will look forward to 832 hearing what the Minister has to say on that when he replies. The hon. Member for Caithness and Sutherland (Mr. Maclennan) raised similar problems affecting distribution in his particular area. I have some sympathy with the Minister of State in having to deal with questions of the distribution of the needs and resources elements, because it must require the wisdom of Solomon to try to please everybody in making a distribution.
I would like to raise a particular point in relation to the population factor which has been taken into account. In paragraph 3, the Secretary of State's report says that for the first time fluctuations in population are to be taken into account. Obviously, this is a very important factor as it will affect different authorities in different ways.
What is particularly noticeable here, comparing our Scottish Order with the English and Wales Order debated in December of last year, is that whilst the Scottish Order is based on estimates of population from the Registrar-General at the end of June last year, for the first time in an English Order, as well as considering the Registrar-General's figures, 1966 sample census figures in support of population changes have also been used. From what one has read of that debate in the House in December, these threw up quite different movements in population from those shown in the estimates from the Registrar-General and had quite a marked effect on the distribution of needs element of towns such as Birmingham, which happened to have a contracting population moving outside.
Obviously, this has an application to towns like Glasgow. We have heard about overspill. I would like to hear from the Minister why these other figures from the sample census have not been taken into account in the Scottish figures, to give a more up-to-date and realistic figure of population, so far as distribution is concerned.
As my hon. Friend the Member for Moray and Nairn (Mr. Gordon Campbell) said, we on this side accept the need to restrict Government expenditure. We have pressed for it to be restricted in view of the current economic circumstances of the country. We condemn the Government when they try to dress up 833 their grants, as I believe the Secretary of State did this afternoon, as being particularly generous when they are not. We appreciate the difficulties, but he tried to put a gloss on the position when speaking of local authorities, a gloss that does not really belong there; because we have to recognise that when the estimates of expenditure for 1969–70 were negotiated with local authorities and estimates of local authorities exceeded the eventually negotiated sum of reckonable expenditure by over £11 million for 1970–71. For 1970–71 they still exceeded by £11 million the reckonable figure eventually agreed. Therefore, whether we like it or not, the fact about the rate support grant is that the Government give less to local authorities than local authorities themselves believe they need.
We appreciate why. There is a natural tendency for local authorities to pitch their desires fairly high so as to get as much as they can. We sympathise with that. The Secretary of State is wrong to put any gloss on this by claiming that he is being generous in the Order, because he has not met the desire of the local authorities in this matter.
What we come back to every time is the fact that the debate on the need for the support grant and the restriction of it stems from the need for stringency, which arises from the Government's failure to manage the economy. The hon. Member for Glasgow, Springburn (Mr. Buchanan) tried to blame this, as is so often done by hon. Members opposite, on mismanagement of the economy before 1964, harking back to balance of payments deficits, and so on. The right hon. Member for Belper (Mr. George Brown), after the last General Election, stated that there were no alibis now. Yet we still have this balance of payments crisis argument and this mismanagement of the economy argument thrown at us, which is what underlies the failure of the Secretary of State to be able to meet the local authorities' need.
The real thing for which we on this side condemn the Government is the effect that this will have on rates. The question we must ask is: can local authority expenditure be kept to those agreed estimates? Over the last two years the actual expenditure of local authorities exceeded the reckonable expenditure, 834 even taking into account the increased Orders. In 1967–68, actual expenditure exceeded reckonable expenditure by over £3 million. In 1968–69, a year for which we can use only the close estimate, because we have not actual figures to work on—actual expenditure exceeded reckonable expenditure by over £12 million.
Where must the money come from to meet the difference between the reckonable expenditure, even taking into account the increase and the actual expenditure which local authorities must incur? The only place it can come from is out of the rates. It is true that through the domestic element there is a certain amount of relief for householders, but we must remember in these debates that for industry, trade and commerce there is no relief and their costs are rising, which increases the costs of industry and everything else in Scotland.
It is for these reasons that we condemn and criticise the Government. Despite the rate support grant and despite everything that the right hon. Gentleman said in introducing the Order, we find that the rates go remorselessly upwards; and they keep going up regardless of what he does. This puts local authorities into a very difficult position. As many of my hon. Friends have said, particularly my hon. Friends the Members for Galloway (Mr. Brewis) and Dumfries, they are faced with the dilemma of being charged by Parliament and by the Government with carrying out new social services, yet have must try to work within a very restricting budget and in the face of rising costs.
All of us sympathise with the local authorities in the difficult position into which the Government have put them. It is, therefore, no wonder that at this time the question is asked: why are our rates rising so fast, and what are the Labour Government doing about it? This question was asked in one of the Labour Party's own pamphlets— "Go Ahead Scotland"—back in 1965. Nearly four years later we in the House and the people in Scotland are still wondering when the Labour Government will find the answer.
§ 6.45 p.m.
§ The Minister of State, Scottish Office (Dr. J. Dickson Mabon)
I am obliged to the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) for that 835 winding-up speech. This is the first time that I have had a chance to welcome him to his new responsibilities. I do so with pleasure. I am sure that he will have a happy time speaking from the Opposition Front Bench and that he will be doing so for many years to come.
I shall return later to some of the points that he made, because they rehearsed some of the points made by the hon. Member for Moray and Nairn (Mr. Gordon Campbell). I have not had the opportunity of congratulating that hon. Gentleman on his elevation to new responsibilities, either; and I take sincere pleasure in doing so.
I want to take up the argument advanced by the hon. Member for North Angus and Mearns about the formula. I agree that the making of the formula is very difficult. The hon. Member for Banff (Mr. W. H. K. Baker), who has persistently argued the case of Banff and the need for a change in the formula, exemplified this difficulty. The hon. Gentleman knows how hard I tried on behalf of my right hon. Friend on last years's increase Order to persuade local authorities to change the formula in midstream. The local authorities refused. On reflection, I think that they were quite right, although at the time I was a little disappointed. The hon. Gentleman regretted the refusal of the local authorities. He calculated that the benefit to Banff would have been about £290—admittedly a paltry sum, but, nevertheless, a symbol at least of the changing formula.
This year we have made a change in the formula, albeit one which some people do not like. This is the judgment of Solomon. The hon. Member for Edinburgh, South (Mr. Clark Hutchison) told us what political mileage the Unionist Party in Edinburgh would make from this change, but he did not acknowledge that the Unionist Party elsewhere would suffer badly if it wanted a return to the previous formula, because it would hurt so many Conservative Members so much.
The hon. Member for Banff cannot do the sum now, and I do not blame him for that. However, I want him to have a look at this in preparation for the speech he will make on next year's increase Order so that he can see the outturn, at least for the present, of what 836 is likely to happen in the first year of the operation of formula.
My hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan) has, perhaps, the greatest difficulty of all. The population of his constituency is less than one person to every 100 acres. The authority already gets over 87 per cent. of its expenditure met by the taxpayer. It is, therefore, very difficult to devise any formula which will fit the peculiar circumstances of Sutherland. By any set of weightings which was chosen—and about 200 variations were worked out by our computer—there are bound to be some authorities where the grant works out to be slightly more and others where it will be slightly less, whenever a change is made. Sutherland, which has the biggest sparsity weighting, will get a little less. Although this was not the intention, it is, nevertheless, the out-turn. This is very difficult to arrange.
I acknowledge the point made by my hon. Friend the Member for Caithness and Sutherland that if Sutherland adjusts its budget methods to the figures which he quoted, that change, which I think is long overdue, will make a difference. It is not reasonable to push equalisation to such lengths that, as as present, we give to the county of Sutherland £23 more of rateable resources per head than we do to the City of Edinburgh. I accept my hon. Friend's point—it perhaps might be called the post-Wheatley argument— that counties like Sutherland would best be dealt with in a wider reform of local government which took away the basic physical disadvantage which Sutherland must inevitably face
I return now to the vigorous speech made by the hon. Member for Edinburgh, South. It was one of the shortest speeches in the debate—that is typical of the hon. Gentleman—but it got the maximum political mileage out of the situation. I am greatly indebted to my right hon. Friend the Member for Edinburgh, East (Mr. Willis) for his courageous and vigorous speech, in which he pointed out that Edinburgh had enjoyed a substantially favourable position for many years under both Labour and Conservative Governments, and only now was it being altered because of the position of other Scottish counties.
According to the figures of the Institute of Municipal Treasurers and Accountants 837 in Scotland, the rateable value per head of population in Edinburgh is just under £38, as against an average of £33 10s. for the four cities. The average rate-borne expenditure per head in Edinburgh, after deducting the needs element, is £38 14s. 6d., as against an average of £43 18s. 10d. for the four cities.
From these figures it is impossible not to conclude that the present grant distribution system is unduly favourable to Edinburgh and that the Edinburgh ratepayer has been too well treated up to now. I realise that this is an unpalatable thing to swallow, and I do not ask the hon. Gentleman or any of his Edinburgh colleagues to agree with me.
The slight changes made in the formula will by no means wipe out the disparity between Edinburgh and the rest; it will still be in a favourable position. It may well be argued by the other authorities that this disparity should not continue even with the present change. I counsel hon. Gentlemen that before they start to take Edinburgh's side on this they should consult their local authorities about the formation of the grant.
The hon. Member for Galloway (Mr. Brewis) asked whether I would confirm that we have continuing discussions about the formula. It is true that we do, but after our experience with local authorities last year I doubt whether we can change the formula, or try to do so, every year. I could not promise my hon. Friend the Member for Caithness and Sutherland that anything could be changed in a year. We should have to wait and have lengthy arguments—extending over 18 months in this case—on what the formula should be and what its out-turn would be in terms of the different counties.
I should like to make a correction of substance to the argument of the hon. Member for Galloway about the coast-protection grant. We do not give it to all authorities including those that are landlocked. It is paid at the rate of 50 per cent. to authorities which carry out approved coast protection schemes. The amount of these specific grants, which are capital grants—that is why they do not appear in Part C—is deducted from reckonable expenditure before we strike the rate support grant. We should get that right, because it would be a point of grievance, and we have enough of 838 them without misunderstandings about grievances that do not exist.
Two speeches that my right hon. Friend and I were particularly appreciative of were those of my hon. Friends the Members for Glasgow, Springburn (Mr. Buchanan) and Glasgow, Maryhill (Mr. Hannan), who explained that they could not be present at the end of the debate. Like other hon. Members from Glasgow, they argued the case for a change in grants, particularly rate support grant, along what they called the argument of the metropolitan weighting, which applies only to the Greater London area.
It might, perhaps, be argued that Glasgow is the natural parallel in Scotland, but this weighting is exclusive to one authority. We have tried in various ways to take account of what Glasgow has argued. We have concluded, and the local authorities have agreed somewhat reluctantly—in Edinburgh's case very reluctantly, that we should make this shift in the form of the grant which the hon. Member for North Angus touched on. That is the significant point of this formula. But that rate support grant alteration giving Glasgow an advantage in every year of about £500,000, whilst I appreciate that it is welcome to the city and is a sacrifice by some authorities in Scotland, cannot be the end of the story.
I say to all the Glasgow Members that it is not up to the Government to prove their case. Glasgow must prove it, not by assertions. None of us on either side of the House will be content with assertions. There must be reasonable projections of capital investment. Every one of us, whatever part of Scotland we represent—central or elsewhere—recognises that Glasgow has a peculiar difficulty in trying to re-create itself in about 35 years. There are enormous financial problems. While the Government do a great deal, I accept that there may be a case for their doing more, but Glasgow must present it to us. There are no closed doors here.
With regard to the developments going on in the city now in policy terms, I hope that the Progressive Conservative Group will change its mind about the declaration it made yesterday and which was in today's newspapers. It is making a serious error over the 2,000 families that will be prejudiced if such a decision is 839 made. I accept that the slow-down in comprehensive development areas, which has already cost us 2,500 houses during the period to 1973, is far too big a sacrifice to be added to on grounds of financial restriction. This is very serious. The citizens of Glasgow, apart from the councillors, will have to take it seriously.
I return to the points made earlier in the debate. When read with the local authorities' estimates of the expenditure for the current year, the figures in the Order mean that the increase in the aggregate grants will be larger than the increase in expenditure, so that, even allowing for some increase in non-reckonable expenditure, the total amount raised in rates next year will not have to go up if local authorities succeed in containing their expenditure within the Order figures. That relationship between grant and expenditure will hold good despite any changes over the next 12 months in the level of prices and wages, if, as the Government envisage at present, an Increase Order is made in the usual way. Inevitably, some local authorities will have to raise more money from the ratepayers, because some expansion in their services is just taking place, or because they are in the middle of some large piece of capital investment. Local authorities in general should approach next year's budget with the firm intention of stabilising or in some cases bringing down their rates.
If there is a significant rise in the rate call as a whole, it can only be because local authorities have failed to shape their spending policies in accordance with the Government's economic strategy as it applies to them. Discussions with the local authority associations have shown a great readiness on the local authority side to co-operate in this policy. We in the House have a responsibility not to exaggerate the real practical difficulties which face many of them in so doing, But they must accept that the Government are taking on a larger share of the expenditure of local authorities, as witness the fact that in the second year of the Order we shall be bearing 65.5 per cent. of the reckonable expenditure.
When the hon. Member for North Angus and Mearns speaks again on rate support grant, as no doubt he will, he will want to look back to the time, if there ever was one, when the Conservative 840 Party accepted that burden as part of the taxpayers' share of local government expenditure in Scotland. He will have to go back a very long time to get such a figure, and I doubt whether he could do so.
§ Dr. Mabon
I am giving the hon. Gentleman a chance to make a confession on the Floor of the House that there was no such year, rather than seeking to be adamant about it now.
The hon. Member for Moray and Nairn raised the central point but did himself an injustice when responding to the interruption about the comments of his right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) when he argued a case for 1 per cent. less. He canot shuffle out of this. Either he is in favour of 1 per cent. less, which means another 3.3 per cent. next year and 5 per cent. the year after, or he is in favour of 2.3 per cent. and 4 per cent. Those are figures in real terms, and they are exactly comparable to the kind of call the right hon. Member for Enfield, West made this afternoon. The hon. Gentleman cannot say that the Order is right on the one hand and agree with his right hon. Friend on the other. He is either being deliberately ambiguous or contradicting his right hon. Friend.
I hope that the hon. Member for North Angus and Mearns will take it well when I say that I hope that he will not fall into the same kind of errors as his hon. Friend has over all the years I have debated such Orders with him. He always makes the mistake of debating the next Order and not the one we are considering. Last year he argued for the inclusion of storm damage cost in the Order and was wrong. If we had put the storm damage estimates in the general Increase Order, the local authorities would have come out badly.
The hon. Member argued today that we should put the Ronan Point figures in the present Order, without knowing what the elements of that Order are. We must wait to see the out-turn of the Ronan Point position as it applies to Scotland before we can decide how help should be given. Perhaps we shall decide it in the storm damage way. He knows that that is the right course. I 841 should much prefer the hon. Gentleman to debate the Orders we have rather than the ones ahead.
I am much obliged to the House for its kindness in receiving the Order as it did.
§ Question put and agreed to.
That the Rate Support Grant (Scotland) Order, 1969, a copy of which was laid before this House on 6th February, be approved.