RATE SUPPORT GRANT (SCOTLAND)

HC Deb 27 March 1973 vol 853 cc1235-65

10.24 p.m.

The Under-Secretary of State for Development, Scottish Office (Mr. George Younger)

I beg to move, That the Rate Support Grant (Increase) (Scotland) Order 1973, a copy of which was laid before this House on 16th March, be approved.

Mr. Speaker

It may be for the convenience of the House to discuss at the same time the following motion: That the Rate Support Grant (Scotland) Order 1973, a copy of which was laid before this House on 16th March, be approved.

Mr. Younger

The Rate Support Grant (Scotland) Order, to which I will refer as the main order, is to provide a grant for local authorities during the two financial years 1973–74 and 1974–75 —that is for the fourth period of rate support grant, and for the last full period before we reorganise local government in Scotland. Although the order covers two years, it is the first of the two years, 1973–74, with which we are most concerned tonight.

The Local Government (Scotland) Bill, which we are discussing in Standing Committee, will provide, if and when it is passed, that any existing rate support grant order shall cease to have effect in respect of the year 1974–75. We shall no doubt discuss the provisions for 1974–75 on another occasion, perhaps in about a year, and, with reorganisation then close upon us, we may decide on quite different grant amounts for that year. But there will be no further opportunity to consider the grant to be provided for 1973–74 and that is therefore what should be of most interest to us tonight.

Rate support grant is the main financial prop for local authorities. It contributes much more to local government finance than do local rates and these orders are therefore very important to local government workings through the years. Before making the main order, the Secretary of State is required by the 1966 Act to consult the local authority associations on the level of costs and prices, on the need for developing services, and on the extent to which, having regard to general economic conditions, it is reasonable to allow for development. In fact, there have been very active negotiations with the associations prior to the making of this order. I think it is fair to say that the details of the price base and the provision for development in the main order, and the cost increase calculations on which the increase order is based, have both been agreed by the local authority associations.

Perhaps I should remind the House of the working of the rate support grant system. The grant is in aid of local authority revenue expenditure—that is, expenditure which would otherwise fall to be met out of rates—but excluding contributions to housing revenue accounts, and to the trading services, which are of course expected to be self-supporting. The grant conveyed by the main order is thus fixed by reference to estimates of the expenditure of all local authorities.

Once total estimates have been reached, the grant percentage is decided and is applied to the estimates in order to give the aggregate of Government assistance. From this aggregate grant the specific grants on revenue expenditure are deducted, leaving more than nine-tenths of the aggregate grant to be distributed as rate support grant. The first main determinant of the rate support grant is thus the amount of reckonable expenditure, and the second is the percentage rate which is applied to that expenditure.

There are three elements of the rate support grant—the domestic element, the needs element and the resources element, each serving different purposes and distributed to the authorities on different criteria. Domestic element gives direct rates relief to the household ratepayer. Needs element, taking up nearly three-quarters of the grant, is distributed so as to compensate for the difference in circumstances between authorities—such as population, numbers of children or old persons, density, growth or decline of population and so on.

Resources element, nearly a quarter of total grant, compensates for local deficiencies of rateable resources. In effect it equalises the rateable resources at about the level of those authorities with the highest rateable values per head. I shall be speaking again about the domestic element, but the orders now before the House make no changes of substance in the factors affecting distribution of the needs and resources elements—none has been asked for by the local authorities on this occasion—and I suggest that we need not concern ourselves with the complexities of grant distribution, so far as these two sections of the grant are concerned.

In our discussions with the local authority associations, we reached more or less complete agreement over the forecasts of expenditure for 1973–74 and 1974–75. It is, of course, only over the need and scope for developing the existing services that there is any significant room for differences of opinion. Hon. Members of all parties no doubt agree in regarding the improvement of local services as a desirable aim, but there is an overriding need, as we said in the White Paper of last December on Public Expenditure, to ensure that the total calls on our resources for publicly financed services are kept within a rate of growth which does not prejudice other objectives As it turns out, we are providing for rates of growth which are higher in real terms than those which underlay any previous rate support grant order. The forecasts are that expenditure at constant prices will increase at an average rate of over 4.6 per cent. annually from 1971–72, apart from the provision for servicing of debt. This compares with the figure of 25 per cent. annual growth for public expenditure generally which was indicated in the December White Paper. For 1973–74, the year with which we are more immediately concerned, the forecast is that local authority expenditure will amount to about £581 million.

I will not weary the House by mentioning at this stage details of every one of the service headings under which this expenditure comes, but I should mention one or two of the more important ones.

I begin with education, which accounts for more than half of the expenditure reckonable for rate support grant. The main expenditure consequences of the programme announced in the White Paper "Education in Scotland: A statement of policy", which I presented to the House in December, will not be felt until the later years of the decade, but the estimates for 1974–75 do take account of the start we are making with the expansion of nursery education.

The new structure of promoted posts for secondary teachers has provided them with greater incentive and better prospects, and allowance has been made in the expenditure forecasts for the new structure to be fully implemented. We have also assumed a continuing annual growth of 3 per cent. in non-teaching costs per pupil and per student in schools and further education colleges respectively, to allow for improved standards of accommodation and for the rising expenditure on equipment and books needed to keep pace with increasingly sophisticated teaching methods.

The social work services—another heavy commitment for the authorities— have been developing at a rapid rate and provision has been made for continuing expansion in the next two years so as to give growth of 19.2 per cent. by 1974–75 over the close estimate of expenditure for the current year, in addition to increased provision for servicing of debt. This represents an annual average growth of 9.6 per cent. in real terms and will allow for the employment of a greater number of qualified social workers and supporting staff, for extra accommodation for the elderly and other groups and for expansion of the home help service.

On highways—which is second to education in terms of the amount of expenditure—in addition to loan charges, and in addition to some revenue expenditure within the current programme of additional works to promote employment, the figures in the report provide a little over 4 per cent. annually for improvement of maintenance standards.

If further details are required, I shall be glad to give them if I have an opportunity to reply to the debate.

Hon. Members may have noticed that in quoting rates of expenditure growth, I have generally taken care to exclude the cost of loan charges borne by the authorities. I do so because this element of expenditure reflects the amount of existing debt and the expected amount of capital investment. It is not affected by changes in routine maintenance and operation of services. In the report loan charges are allocated to services. If considered in isolation, the cost of debt service is seen as a major element in local expenditure. It amounts to about one-sixth of the total reckonable expenditure and is forecast to reach about £111 million in 1974–75. This figure reflects the pace of capital investment in Scotland during recent years, including the capital expenditure in the current programme of additional works to promote employment.

Hon. Members will see that for each of the grant years there is a reduction of £1 million for efficiency and economy measures. I make no apology for this relatively small deduction from these very large estimates. Just as the forecasts for individual services are an indication of priorities and growth rates which might generally be followed, so the specific reduction for economy measures is intended to indicate the need for all authorities to eliminate unnecessary expenditure or activities, to find savings through greater efficiency. In all, the forecast for 1973–74 is a sum of £67 million greater than the estimate for the current year. We all want the continuing improvement in quality of local services which these estimates represent, but the consequent growth of local expenditure must be financed and the problems of finance have been aggravated by inflation.

This raises the question of rates. Rates are a factor affecting other costs and prices, and they are an important item in household budgets. The Government therefore intend that the average level of rate increases in 1973–74 should be kept within bounds compatible with our attack on inflation. Moderation in expenditure is plainly the first step towards stable rates, and I hope that local authorities will contain their expenditure within the guidelines indicated by the figures in the report.

We are providing in this order for an exceptional increase in the rate of grant, an increase of 1½ per cent. Previous increases have been 1 per cent. or half of 1 per cent. We are also making an addition of £1 million to the grant for 1973-74, as the report explains, to match the special temporary assistance which is being given to ratepayers in England and Wales this year, as my right hon. Friend the Chancellor of the Exchequer informed the House on 6th March. A large part of the additional rate support grant will be used to shield the household ratepayer from rates increases, and we are adding £4.7 million to the domestic element. Accordingly the order provides that domestic rate poundages must be reduced by 15p in the pound instead of the present reduction of 12p in the pound.

In all, the Exchequer contribution towards local authority spending in 1973–74 on the services reckonable for rate support grant will be the massive sum of £396 million, of which £33 million is accounted for by specific grants and the rest by the rate support grant. What this means is that for every £100 of reckonable expenditure the Exchequer will be finding slightly over £68, rates as a whole slightly less than £32, and household rates, paid by individual householders only about £13.60p. Over the past six years, since the introduction of rate support grant, the share borne by grant has increased by 5½ per cent., and consequently the share falling on rates has been reduced by about one-seventh.

Taking account of the estimates, of the higher grant rate and of the additional £1 million the order gives effect to a reasonable, indeed, a generous, settlement. It should enable local authorities to maintain and improve the quality of services without substantial increases in rate poundages. In short, it creates the conditions in which rates can be stabilised, and it is with this in mind that we have decided that during 1973 we shall monitor changes in local rates. The word "monitor" is used carefully. What we intend is not to take away from the local authorities their discretion as to the requisition they issue or the rates they levy but to inform ourselves of the assumptions on which the fixing of rates and requisitions is likely to be based.

We may wish to exchange views with individual authorities. There are bound to be disparities in local needs, but in general we should expect the levels of expenditure to conform broadly with the estimates on which this main order is based, and that as a result over the country as a whole the average level of rate increases will be moderate and tolerable.

I should briefly refer to the increase order, but I will not take up the time of the House with detail. This order follows up the main order of 1971 and the increase order of 1972. By providing additional grant to take account of the effect of changes in costs and prices it preserves the value of that 1971 settlement. Wages and salary awards are the main component in the cost increases which have affected local authority expenditure, and in 1972–73 they account for £33 million in a net increase of £48 million.

As the report explains, the estimates of cost increase are based on the systematic examination and calculation of the effects of wage awards and price changes on local government expenditure. They have been agreed with the local authority associations. The effect of the order is to authorise payment of £33 million of additional rate support grant to the authorities for the two years 1971–72 and 1972–73, which in itself should considerably ease the rating position in the coming year.

The increase order is to increase the existing grants for 1971–72 and 1972–73. The main order is to provide new grants for 1973–74 and 1974–75. I will be delighted to try to answer any questions which hon. Members may wish to raise. I commend the orders to the House.

10.39 p.m.

Mr. Robert Hughes (Aberdeen, North)

I want to make one or two comments about the increase order before moving to the main order. The order shows substantial increases to be made by the Government towards rising pay award costs and other increases. It is staggering to find that an extra £2.6 million will have to be found for supplies and services, £2.57 million for property costs, £3.02 million for payments to other bodies and persons and £3.51 million for other unspecified increases in costs.

In view of that, perhaps it is surprising that in the main order the Government say that they have made no provision for any increases in the future. This means that we are to come back at a later stage to decide what the increases will be in 1973–74.

I am not sure that this is the best way to deal with it. It might be better to try to project some of the increases and avoid having to return. We might get better budgeting at local authority level and, if rates are to be monitored, we might see a more efficient system. How- ever, the orders simply reflect the growing costs being faced by local authorities and show how much influence the Government have on local authority expenditure and rates.

Very substantial changes in costs have occurred. The Under-Secretary used the figure of 4.6 per cent. as being the real increase. The figure of 4.7 per cent. has also been quoted. I shall not quarrel about that small difference. I wonder whether we are not confusing increasing expenditure with increasing service. The two things do not necessarily go together. One can have a vast increase in expenditure which is outwith the control of the local authority and the Government can pat themselves on their backs and say that they have taken care of inflation by providing more money—but they may not have provided better services.

Regarding the main order, I am not sure whether it is the perennial refrain "It is not enough" or the Oliver Twist position which I adopt—that of saying, "Can we have more?" Unfortunately, we cannot have more. Therefore, we have to decide how far the moneys provided are sufficient to meet the needs. The Under-Secretary may care to check my calculation, which is that average rates paid in Scotland are increasing at the rate of 6 per cent. per annum, despite the increased sums made available by the Government. Despite the increased proportion of reckonable expenditure, ratepayers are having to find slightly more than 6 per cent. extra each year. Perhaps here we have a reflection of the amount of money which has to be found by the ratepayer instead of the Government.

The Under-Secretary said that in discussing with local authorities the amount of reckonable expenditure there had been agreement. He indicated that there was some agreement about the amount of money to be found from central Government. However, will he clear up the point about the reduction in differentials between Scotland and England and Wales from 8.5 per cent. to 8 per cent.? We understand that this means that ½ per cent. has been transferred to England to help with the early stage of local government reorganisation. That is what some of our local authority treasurers are saying in the Scottish Press.

The statement made to the Convention of the Royal Burghs was that there has been a transfer of money. I have been unable to find out exactly how much this has cost Scotland. Was it necessary to make this reduction in the differential? The Convention of the Royal Burghs was told that most burghs are likely to have rate rises of probably 10 per cent. to 20 per cent. If that is so, it is a very substantial increase in money from the pockets of ratepayers.

Can the Government give an accurate forecast as to how far individual authorities are likely to increase their rate demands? How much of this increased burden on ratepayers is due to the continual derating of industrial premises? We still have the derating in Scotland, whereas England and Wales do not. It can be argued that derating is necessary in order to encourage industry to come to Scotland and that this is worth while. But Scottish ratepayers are beginning to ask whether they should subsidise industry coming to Scotland in two ways—through income tax, which could be argued to be a reasonable proposition in that income tax takes account of the various family circumstances, and through rates, a direct subsidy from the ratepayer, being a very regressive form of taxation.

The local authorities are asked to have restraint in view of the coming reorganisation of local government. On page 5 of the report on the order there is a very curious phrase. It says: The Secretary of State is concerned that the new local authorities, on taking office, should not find themselves hampered by an unnecessarily high rate of current spending. I am not sure what that means. It would be disastrous if there were to be some kind of hiatus on local government expenditure in the changeover period between the Bill becoming law and the new authority taking over.

Not enough is being done in local authority work at the moment, and if there is no continuation of progress the new authorities will start off being handicapped rather than hampered. I hope we shall have some clarification of the steps the Secretary of State intends to take to curb what he considers to be excessive spending. I am not thinking specifically of house building, which is not covered in the order. But something must be done about refurbishing the older housing estates. It saddens me to go round some of them. Some were built pre-war, some immediately post-war and some not so long ago. When I see how they are deteriorating I am concerned. I am not sure whether the amount of money specified in the urban programme can be used for this purpose or whether it is intended for something else. Certainly local authorities should be encouraged to bring their older housing schemes up to a modern standard, not just inside the houses, because that can be done by improvement grant, but in the environment also.

The Secretary of State is being niggardly in deducting £1 million for savings in existing services. That cannot be regarded as an inconsequential amount when we consider how much is being provided to help domestic ratepayers according to the Government's announcement of 6th March. In his speech the Chancellor of the Exchequer said that he thought the amount would be at least £10 million. If it is more than £10 million, will there be a pro rata increase because the local authorities need as much as they can get.

I do not know whether the figure of savings is meant to be in terms of efficiency or in reduction in expenditure. Previously the figure was £500,000. What monitoring has the Secretary of State done to see whether that £500,000 was actually saved by the authorities, or was it simply a saving in money from the Exchequer? If it is a cut in actual expenditure from central Government and the local authorities have not been able to save by methods of efficiency, the amount being given with one hand to protect the ratepayer is being taken away again with the other hand. We must know whether his exhortations of 2½ years ago to save money have had any effect and whether there has been any reduction in the standards of service.

Services must be got right, because unless they are right there is no opportunity for change. Under the formula laid down by law the Government cannot change the gross amounts except by reason of changes in prices, wages or costs.

May I deal with education expenditure? The Secretary of State says that he has provided for a change in determining the entitlement to free school meals. I believe that there will be a big increase in the costs of food to the schools and I am not satisfied that the Government have paid sufficient attention to this fact. There are continuing increases in the price of food and the Government are responsible for them. Unless they have made sufficient allowance for that in their estimates the schools will be faced with one of two possibilities. Either the people concerned with providing school meals will have to make cuts of some substance in the diet provided, or there will have to be further increases in the charges to those parents whose children take school meals, and that means all the attendant increases in means-tested schemes. We have had enough trouble about those already without going further.

We cannot contemplate a cut in the substance of the meals provided. Recently, we have seen a very worrying recurrence of rickets in our younger population. Rickets is the direct result of poor nutrition. It shows that the nutrition of children in Scotland has not kept pace with what might be regarded as the general increase in the standard of living. It also shows the danger of ending free school milk. We warned the Government at the time about what might happen.

I accept that the mere restoration of free school milk would not by itself prevent rickets. But in terms of a low nutritional diet, the availability of free milk is very important, especially if children are on the threshold of malnutrition. The Government should think in terms of restoring free milk and supplying vitamin D tablets to children, because together they would undoubtedly eradicate this social disease for ever.

One point about rickets which is overlooked is that it highlights the problem that there may be lurking in our school children other diseases of nutrition deficiency. In the view of the Opposition, the Government have no right to gamble with the future health of our children.

Mr. Patrick Wolrige-Gordon (Aberdeenshire, East)

Can the hon. Gentleman give the House any idea how many cases of rickets he knows of among school children in Scotland?

Mr. Hughes

The problem is confined to Glasgow, and the cases which came to light between 1968 and 1970 numbered about 21. But our evidence is that it is deep-seated and that many rickets cases have not been properly diagnosed because of the belief among doctors that the disease has disappeared. It appears that rickets may be endemic, especially among Asian children in Glasgow.

We are dealing with people suffering social deprivation. It has been shown that a quarter of the children—white children—in Glasgow suffering from rickets live in homes with no toilets and no hot water supply and where the average number of inhabitants is seven or eight. This is a serious problem, and the Government should be keeping a close watch on it. Indeed, the time has come for action.

I welcome the provision which allows for the greater employment of social workers. I am very worried about the number of families who land up in courts throughout Scotland and who are evicted from their homes for the non-payment of rent. If we are to prevent that, we need a very strong back-up service. At the moment, many social workers are regarded as no more than rent collectors, which destroys their relationship with their clients. The large case load has to be reduced, and that means employing as many social workers as we can get.

There is a growing need among local authorities taking care of the rehabilitation of patients due to be discharged from mental hospitals. Far too many people still remain in our mental hospitals simply because they have been there so long that there is no one outside to look after them and give them some support. I pay tribute to those Scottish local authorities which provide half-way houses or residential accommodation outside in the community to which people can be discharged from mental hospitals. But a great deal more needs to be done, and I hope that we shall hear from the Minister how far he sees this being a feature of the development of the social work programme.

I turn now to the local health services. I am sorry that the Under-Secre-tary of State for Health and Education is not present. It is stated that provision has been made for continued expansion of services, particularly for the improvement of home nursing and health visiting services and the further development of the family planning service. I believe that yesterday's announcement by the Secretary of State for Social Services of the intention to change the system which is available in many local authorities for the free provision of family planning services is disastrous. If it is done, I believe that it will destroy services such as those of Aberdeen.

I put on record again how important it is to have a properly developed comprehensive domiciliary and free family planning service. Infant mortality in Aberdeen is 12.3 per thousand live births, which is the lowest rate in the United Kingdom and one of the lowest in the world, if not the lowest. The birth-rate is down from 17.2 per thousand to 14.4 per thousand population. A significant factor is the fall in the number of illegitimate births, and I believe that the number of abortions is significantly lower than it would have been had it not been for the family planning service.

This great improvement has been brought about by close liaison between the Aberdeen Council and the regional hospital board. I believe, as the convenor who piloted the scheme through the council, that it has had great effect. I believe that this courageous decision by Aberdeen has done much to convert practically the whole country to its ideas. In making provision for expansion of the family planning service, the Secretary of State will, we hope, encourage as many local authorities as possible to follow the example of Aberdeen.

It is precisely because lower-income families and people with large families have a health hazard that it is important to have the family planning service. We want a commitment by the Secretary of State that where a local authority does develop a service along the lines of that developed by Aberdeen, now almost universally desired, it will be carried on by the new area health boards in Scotland, irrespective of what is done in England and Wales. I am told that in the National Health Service (Scotland) Act 1972 there is provision for the Secretary of State to allow the boards to carry on and develop such schemes and to launch new ones, and I hope that we shall get a com- mitment from the right hon. Gentleman that he will not discourage such services in any way.

More and more we are recognising the regressive nature of rates. We welcome the increases in the domestic element and, for what it is worth, the special temporary provision of the £1 million. But even with all this and the rate rebates, there is still injustice in rates as a method of local taxation. It cannot make sense for one wage earner in a household to meet the rates. More and more services are being transferred from national to local government. Each time it exacerbates the problems of the ratepayers and the whole position to the point where elections are fought not on what kind of services are to be provided but, especially by the Conservatives, on how far they will keep down the rates. This presents a false picture of what local elections are about and leads to an unhealthy state of local democracy and local debate.

The Under-Secretary of State said that this is probably the last occasion on which we shall have a debate in this form because of the changes in local government. I hope that this is also the last occasion on which we shall discuss local rates in this context and that we shall move towards some form of local income tax.

11.0 p.m.

Mr. W. H. K. Baker (Banff)

Unlike the hon. Member for Aberdeen, North (Mr. Robert Hughes), I shall concentrate on one part of the main order, and that is Table 3 on page 7. The constituency of Banff is a predominantly rural area and cannot therefore benefit from the formula laid down. As my hon. Friend the Under-Secretary of State knows from correspondence and talks I have had with him, the present formula has worked adversely against Banff.

I do not intend to go into detail, except to say that through an accident of history the county of Banff has 11 small burghs, none of which is within the statutory meaning of "small burghs", ranging in population from 750 to 7,500, and seven of which have a population of under 1,700. Consequently, compared with other counties, Banff has done badly in the distribution of the rate support grant.

To give one brief comparison, since the last order was discussed in the House, the proportion of grant received by the county of Banff relative to local expenditure was 57½ per cent., whereas in Kincardine, which is similar to the county of Banff, the proportion of grant relative to expenditure was 73 per cent.

Under the present formula, which is continued in the order, the ratio of landward to burghal population is taken into account, and in general it may fairly be said that the greater the burghal population relative to the landward population the greater is the grant that is received. In the county of Banff, as less than 52½ per cent. of the total population—40 per cent. in fact—is resident in the landward area, no percentage is added back under Column (2) of Table 3. That works to the great disadvantage of Banff.

I ask my hon. Friend and the Government to ensure that after the passing of the current legislation whatever formula is adopted will not discriminate adversely as it does in my constituency.

11.3 p.m.

Dr. J. Dickson Mabon (Greenock)

I am not surprised that the Under-Secretary of State took so little time to develop his defence of the Rate Support Grant (Increase) (Scotland) Order 1973. It must be very embarrassing for him, particularly when we recall the speeches he made in opposition, when the Labour Government first introduced these orders, in which he went through his ritual fire dance.

We see the order as evidence of the Government's inadequate handling of the country's economic performance. If ever there were a damning document on the last year of the Government's performance it is this order. To understand why the Under-Secretary of State skipped over it so quickly one has only to look at the increases in the original estimates, not to improve services but just to keep pace with rising prices, wages and costs. The order is a damning indictment of the twist in the inflationary spiral which the Government by their indolence, and sometimes by their active intervention, have caused in the last two years— particularly last year. I will not spend as much time as hon. Gentlemen did in Opposition on the increase order. It speaks for itself. Rather I come to the defects in the substantive order as it stands.

My first comment relates to the Under-Secretary's remark, which I did not wholly comprehend, that we should pay more attention to the first year of the substantive order and not be too concerned about the second. I know that the Local Government (Scotland) Bill, if and when it passes through the House, is bound to lead to changes in the presentation of these matters. Nevertheless, I cannot understand entirely why we should disregard the second year or not pay so much attention to it and that we should concentrate on the first year. I do not comprehend these comments. Local government will still exist in its present form in the financial year 1974–75. The services must continue. Chamberlains and county treasurers must know where they stand. I do not understand why we should disregard the second year. It is a bit beyond me. I should like the hon. Gentleman to develop that point.

Mr. Younger

Perhaps I can help the hon. Gentleman. I was pointing out that the Bill, as drafted, provides that any existing rate support grant order shall cease to have effect in respect of the year 1974–75. I was merely saying that this 1974–75 part will cease to have effect. Assuming, as we hope, that the Local Government (Scotland) Bill is passed, there will have to be a new order which we can start discussing from scratch.

Dr. Mabon

We shall not start from scratch, with respect. Obviously this second year in the order is bound to be picked up substantially as it stands. I should be astonished to hear that the order that will replace the second year of this order will in any single item be revolutionary to the extent of cutting it out substantially or of increasing it— doubling it or something like that. It can be only a marginal difference unless we are to have some significant changes of policy, about which we would like to hear.

We do not want to pass the order and waste everybody's time talking about the second year if it is not relevant. I regard it as extremely relevant, so I will not take the point that the figures presented here are without significance. I think that they are significant. I should like later in my remarks to give some illustrations of my concern about some items.

Secondly, I presume that we shall be discussing the new order this time next year—I should be grateful if the Under-Secretary would confirm that—or will it be a month earlier, as this order has been somewhat delayed? It may be that with the new order next year the hon. Member for Banff (Mr. W. H. K. Baker) will at last be put out of his misery. The poor soul has been making speeches as similar to that we heard him make tonight on every rate support grant order since the new system was introduced in 1966.

I know the reply that the hon. Gentleman will get. I read it to the House on at least three occasions. I know the problem. I agree that under the present structure there is no way out of the Banff problem. But Banff still gets substantially higher grants than some counties in other parts of Scotland which are supposed to be better off—for example, the central lowland belt counties. Yet many of the social problems of Scotland are in these areas—indeed, in some of the big cities such as Aberdeen and Dundee— which get grants less pro rata than Banff. I do not seek to defend or help the Under-Secretary with his brief. I hope that we will not have the hon. Member for Banff legitimately making a similar speech next year. I hope that with the emergence of districts and the disappearance of burghs these accounting matters will not arise.

My third comment relates to the Under-Secretary's reference to increases of 1 per cent. and ½ per cent. in the major orders. He did not mention that the 1 per cent. was ours and that the ½ per cent. was his. The first substantive order that came after the election of the present Government in the spring of 1971 cut the understood increase based on the 1966 Act of 1 per cent. a year by ½ per cent. That increase—I am not sure I am being a little generous to the Government—took us back to what we lost in the early years of the present Government. We are gaining nothing. If the Government had let progress continue, as was intended, we would be standing where we are.

The cut in 1971 cut the aid to the domestic ratepayer. The increase should have been twice what it was. In the last grant, as we see from the increase order, the domestic rate for the two years has been 11p and 12p. It is to be noted that in this substantive rate support grant order the domestic rate relief is 15p for both years. That is not for one year and rising in the following year but for both years.

I cannot accept that we should disregard the second order as something fictional. It is not, unless it is the intention in the next revised order which takes up the second order to increase the domestic rate relief by at least another lp or 2p. We shall not necessarily accept 15p for both years.

We are standing absolutely pat for both years. People are looking to the year after next to see what will be the position under the new system and under the present grant. The comments of my hon. Friend the Member for Aberdeen, North (Mr. Robert Hughes) about the burden carried by Scottish domestic ratepayers vis-à-vis other ratepayers is valid. In the last Labour Government's term of office we had to consider whether it was a fair point to agree to keep industrial derating at 15 per cent. or to have an industrial re-rating.

I should like to know what would be the valuation of industry in Scotland and what would be the likely increase. What would be the rate, taking the average rate in Scotland, if we re-rated industry? How much would it mean in terms of income to the local authorities if we re-rated industry? I am not proposing that that should be done but I should like to know the result. How would the rating of Scottish industry be placed vis-à-vis the rating of English industry? I am speaking entirely off the cuff, but I think that in our time the figure was something like 12p in Scotland which after re-rating would have been 20p, as against England's 17p. I recall those figures from memory. What would our disadvantage be in Scotland if we re-rated industry?

The same applies to agricultural re-rating. I should like to know how much we are losing, taking the average poundage in Scotland, as against the estimate of the valuation of agricultural subjects— namely, agricultural land. What are we losing from 100 per cent. agricultural subjects?

These are valid points in relation to the picture presented by the rate support grant order. If local government could raise all the money it needed, it would not have to go to the State and these orders would not be required. It would be healthier if that were the case.

Paragraph 10 of the Rate Support Grant (Scotland) Order, 1973, says The aggregate amount of Exchequer grant for 1973–74 is thus £395.80 million … and for 1974–75 it is £419.61 million. My hon. Friend has rightly made the point that, judging from these figures and Appendix A, there is to be a reduction for efficiency and economy measures of £1 million, which to some extent offsets the £1 million which we are given in the second year when the efficiency reduction will carry on.

I can remember arguments about this. This is clearly a sop by the Scottish Civil Service to convince the Treasury that we are trying to be economical in local government. That is a reasonable goal, but this is a fiction, a piece of nonsense. I can almost see the greybeards of the local authority associations looking across the desk at the Minister and agreeing to this £1 million reduction, knowing that the sums involved are hundreds of millions of pounds. What does it matter? The Government should have abandoned this fiction. We have had enough experience of it.

After all, this is £1 million given by no arithmetical logic but by the sheer political expediency of the Prime Minister trying to treat Scotland the same as England, where local authorities were undergoing a considerable revaluation. We should not have had this Peter-Paul exercise of taking away £1 million in one year and giving £1 million in another respect, and in the next year taking away £1 million and not giving anything.

Why is it that, in the second year, according to Appendix B, there is no item for the additional works programme for roads? Does that presage some act of policy? Remember, we cannot restore this cut in an increase order, although we could restore it in the substantive order next year. Perhaps the Minister is thinking of that. Why is nothing provided there?

Why are rate rebates fixed at the same level for both years? Rates will rise. Will somebody suggest to me that rates will fall? The burden of rates on the domestic ratepayer, even with relief, will rise. Am I to assume that rate rebates will not rise? I do not see the logic of that. Why is the figure precisely the same in both years?

As for improvement grants for houses, do I take it that this figure of £2,500,000 in the second column represents the height of the charges of the improvement grants? In that year, in April, 1974, the improvement grant scheme will end, so I assume that the tapering-off will take place about then. Or will this figure rise still more? I should like to do some calculation of my own as to what is likely to happen in the following years and whether there is not perhaps a case for going on with the improvement grant scheme, which has been grudgingly extended in various bits and pieces, even if it has to be by legislation. Although the Minister has said that it was not wise, they have had to extend improvement grants. I should like to see them carrying on later than April 1974.

These are my criticisms, and I should be obliged if the Minister would answer them. I am most keen to know whether next year's order, in picking up all these points, will simply flow from this one, or whether the Under-Secretary is saying, "Look out—there will be substantial changes in policy. That is why an order will be needed next year, just as much as it would if we were not discussing the Local Government (Scotland) Bill."

11.20 p.m.

Mr. Patrick Wolrige-Gordon (Aberdeenshire, East)

Very united criticisms they were, Mr. Deputy Speaker. I was a little surprised at the muted tone of the speech of the hon. Member for Greenock (Dr. Dickson Mabon), until he told us how many times, when he was on the Government Front Bench, he had made the speech that my hon. Friend made tonight. I must tell the hon. Gentleman that he did not make his speech half as well as my hon. Friend did.

The hon. Member for Aberdeen, North (Mr. Robert Hughes) was undecided about what criticisms to make. He did not know whether to be Oliver Twist or Santa Clause. I feel that when the Opposition cannot make up their minds the truth is that they broadly support the Government's policy and think that they have made a fair judgment of the situation.

The hon. Gentleman covered many aspects, from mental health to rickets, and brought in family planning. Points of view vary on these topics, but when the hon. Gentleman talks about ratepayers being concerned about industrial derating and continuing to carry industry in that way, I must point out that many of them are concerned, too, about providing a free family planning service on the rates.

The main point made by my hon. Friend, and one which I should like to emphasise, is the enormous amount of the Exchequer contribution to the rate expenditure. I am sorry that the representative of the Scottish National Party has left the Chamber because I am sometimes tempted to ask from where the tremendous amount of money involved should come.

In my part of the country we are particularly concerned about the large increase in capital expenditure by local authorities as a result of boom conditions in the north-east of Scotland. It is worth driving home the fact that of the greatly increased expenditure the Exchequer produces about 68 per cent. and the householder only about 13 per cent. Nevertheless, the burden is considerable, and I hope that the Government have firmly in mind the burden of increased expenditure from this kind of activity.

I am always advised that the local authorities will reap the benefit in increased income in the years ahead, but that is not the immediate consideration which affects ratepayers who have to find their share—admittedly a small share—of the increased expenditure now, and I reinforce that point tonight.

11.23 p.m.

Mr. Frank McElhone (Glasgow, Gorbals)

I shall not endeavour to take up the points made in the speech of the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon). Unfortunately, time prevents my following up the remarks made in the forthright speeches of my hon. Friend the Member for Aberdeen, North (Mr. Robert Hughes) and my hon. Friend the Member for Greenock (Dr. Dickson Mabon), who displayed all the expertise and knowledge that one would expect from a distinguished former Minister of State. In a wide-ranging speech he managed to give us the information which the Government do not have. I say that with respect to the Under-Secretary of State, who opened the debate.

In such an important debate as this an hour and a half, allowing for Front Bench speeches, is totally inadequate to cover the whole of Scotland, especially at a time of local government reorganisation. Therefore, looking at the clock, and in order to allow some time for a reply to the comments of my hon. Friends and of myself, I shall truncate my remarks and not develop the argument in the way that I should have liked to do.

In the Glasgow Herald of 6th February the Glasgow City Treasurer, who led a deputation to the Secretary of State for Scotland, commented upon the changes in the rate support grant. Talking about differentials, she said that Scotland normally received 8. per cent. but that this had been reduced to 8 per cent. The reason for the reduction was that the other 0.5 per cent. was to go to England and Wales to pay for the reorganisation of local government.

It is a strange feature of the Scottish rate support grant that we have to have a reduction in order to pay for the reorganisation of local government in England and Wales. We should also remember that the largest authority in the whole of England—the Greater London Council—was not affected by reorganisation. But Glasgow is losing £500,000 in 1973–74. That would not be so bad, but we recall the speech made by the Secretary of State for Scotland in April 1970 at Dunblane, when he warned that this might happen, and said that we must guard against it. After his making that pious speech on local government finance we find the very same thing happening under his Government.

Scotland is losing £2.9 million in rate support grant, which is going to England and Wales. The Minister must answer this point, because it has never been answered. It was not answered when the allegations were made by the City Treasurer of Glasgow. I gather that it cannot be disputed that Glasgow, and particularly the Strathclyde region, suffered from revaluation. This fact has not been taken into account in recent rate support grant statements. Because of the increased valuations Strathclyde would lose about £4 million, and the figure for Glasgow, at the time was £1 million, in addition to the £500,000 that it is losing in 1973–74. Because of the decreased differential Glasgow does not come out too well.

One always pays regard to what the hon. Member for Banff (Mr. W. H. K. Baker) has to say. He is concerned mainly with Banff, but the Minister will recognise that the problems of Glasgow and other urban areas in Scotland are as serious, if not more serious. When one reads the order and listens to the Minister talking about the specific function in respect of social work, and expressing the hope that the House will be pleased to learn that the rate support grant has been increased by 9.6 per cent. in that respect, one realises that he has been ill-advised, or is totally unaware of the seriousness of the social problem in Scotland.

Many families are doing "moonlights", families who have been forced to do so through debts, often incurred by bad domestic management. There are about 40 cases a week in Glasgow. The Glasgow Housing Manager reports: There has been an increase of 600 of these incidents in just 12 months compared with previous years. In my maiden speech I referred to the 2,000 families in Glasgow who have absconded or been ejected for non-payment of rent. This figure has escalated as a result of the burden on the social work department. On the last occasion when I spoke in a rate support grant debate we were told that there was a 25 per cent. increase.

Mr. Ian MacArthur (Perth and East Perthshire)

I have great sympathy for people in this position. Does not the hon. Member therefore welcome the Housing Act, which will make it possible for tenants who cannot afford to pay much rent to pay much less than before, and in many cases none at all?

Mr. McElhone

I hate to see the hon. Member being continually wrong in his interventions in my speeches. He, as well as anyone—because he was with me and many others who sat through the long debates on the Housing Bill—knows that the Housing Act will be responsible for making many more families "moonlight". The Minister knows very well, and many other people in local government know, that this is why so many local authorities refused to implement the Act. The hon. Member well knows, as does the Undersecretary of State that because of the substantial rent increases arising from the Housing (Financial Provisions) Scotland Act hundreds of families each year will have to "moonlight" from their homes.

Mr. MacArthur

Nonsense.

Mr. McElhone

This is bound to cause great social problems, and arises from one of the most vicious pieces of legislation to come from any Government in postwar years.

The Minister said that there was to be an increase of 96 per cent. in the provision for home help. I have raised this matter several times over the last few years. If the Minister examines the expenditure he will see that most social work authorities are under-staffed and do not provide proper facilities. In terms of expenditure on salaries for those who come from the colleges, it must be said that not one extra home help will result from the figure of 9.6 per cent. of expenditure on the social services.

I could go on at length about the inadequacy of extra rate support grant in the way of fire services. Fire prevention is of crucial importance in Glasgow, and I should like to see Scottish local authorities encouraged to introduce computers and extremely up-to-date fire prevention methods. The situation in Glasgow is critical; indeed, the situation in the whole of Scotland is causing some concern to fire authorities.

In Appendix II there is reference to "Other services". That includes housing improvements, weights and measures, youth employment and sheltered workshops. The amount of extra grant given to these other services is shocking. The Minister must be aware of the high level of youth unemployment, particularly in Glasgow. About 32 per cent. of all unemployed school leavers are to be found in Glasgow, and yet that important area of need is lumped in with "Other services". In the last three or four years the weights and measures department has taken on an increasing work load, much of which has arisen from the operation of the description of goods legislation. The department is working at full capacity and yet there is no extra capacity for the department to protect the consumer in fully implementing the legislation.

Sheltered workshops are also lumped in with "Other services", and yet constantly on Scottish television advertisements are screened calling for disabled people to apply for jobs. It is surely hypocritical to show those advertisements to disabled people when the order provides such paltry sums to meet the provision in this respect.

I give credit to the Under-Secretary of State for Development, Scottish Office, as the Hans Christian Andersen of the Government. He can certainly spin a fairy tale. When we consider the effects of inflation and the onset of the provisions of phase 2 of the Government's prices and incomes policy, we must realise that the first year of its operation will be important. I am afraid that these orders do not augur well for the reorganisation of local government which is about to take place as a result of legislation now passing through the House. I am very depressed about the situation.

11.34 p.m.

Mr. Harry Ewing (Stirling and Falkirk Burghs)

I am grateful to take advantage of the few moments left to me at the end of this debate to make a few general points on these orders. I wish to make some constituency points, because in introducing them the Minister said that the increase takes account of changes in population shift in population. My constituency point relates to educational facilities in the county of Stirlingshire, particularly in the Falkirk-Grangemouth area, where the population —though I take no credit for it—has increased beyond all reasonable bounds.

Whereas the population in all other parts of the country is declining year after year, the population in the Falkirk-Grangemouth area is increasing. There is a corresponding effect on the educational programme, the school building programme, and the ability to attract teachers. The Minister must know that the parents in the area are seriously concerned. This is not the fault of the education authority. Almost every new school that is built rapidly becomes inadequate for its area. Although the responsible Minister is not present tonight I hope that the Under-Secretary will draw my remarks to his attention. I know that representations are being made by the Stirling County Council. My hon. Friends and I who represent the county will be assisting in these representations to see whether we can convince the Department that some extra allocation ought to be made to meet this serious problem.

I regret the application of an average growth rate figure to social work, however generous such a figure may be. If there is any area in which there ought to be rapid growth it is social work. As my hon. Friend the Member for Glasgow, Gorbals in this Parliament (Mr. McElhone)—Queen's Park in the next— pointed out, there is a growing need for the expansion of the home help service. Almost every area of social work, including the work of children's panels, needs expanding. All are suffering from a lack of finance. I recognise the problems here. Whenever anyone gets involved in social work and suggests that more money should be spent there is an immediate outcry. People call us do-gooders and say we ought to be cutting expenditure rather than raising it. That is not my view, and it is not a view taken by most people.

The Minister ought to have said more about the £1 million to be deducted for increased efficiency. It is not good enough for him to say that local authorities ought to eliminate unnecessary spending without giving examples of what he considers to be unnecessary expenditure. The Minister said that rate increases in the coming financial year would broadly conform to the Government's counter-inflation policy. Why has a limit not been applied? If the policy is related to the attack on inflation it is surely right to say that the Government have applied limits in other areas. Why, when it comes to rate increases, have they not done so?

I conclude with a reference to industrial derating, which concerns all of us. None of us is quite sure about the impact of industrial derating on the attraction on industry to Scotland. There are varying illustrations of the impact of industrial derating on local rates and the effect if industry were required to pay the full rate, or even 75 per cent. of the rate. I do not know which would be the better. But this matter requires study.

When owner-occupier rates were applied in the mid-1950s, when owner rates were abolished and the rates were applied to the occupier, the promise was given that industrial derating would stop and that, therefore, the domestic ratepayer and, to a lesser extent, the commercial ratepayer, would have a smaller burden. I am not hanging my coat on any nail, but I join my hon. Friend the Member for Greenock (Dr. Dickson Mabon) in asking the Minister to look seriously at this question. It is now giving cause for concern in Scotland.

11.41 p.m.

Mr. Younger

With the leave of the House, I shall try to answer as many as possible of the questions which have been raised. I am grateful to hon. Members of the Opposition for allowing me the time to do so. If I answer them speedily, they will understand that it is with the object of covering as many points as possible.

If Oliver Twist had looked around the House this evening he would have considered himself a backward, shy and retiring lad compared with some hon. Members of the Opposition.

Let us look briefly at the question of relativities between Scotland and England. Under the first order, made in 1967, the rate support grant system started with the Scottish ratepayer finding £37.50 towards every £100 of reckon-able expenditure. By 1973–74 the Scottish ratepayer will be finding £32 towards every £100 of reckonable expenditure. Over the years changes in the grant rate have reduced the ratepayer's contribution by £5.50—that is, by 14.7 per cent.

If hon. Members care to examine the English orders and reports they will find that over the same period the English ratepayer's share has fallen from £46 to £40 out of every £100 of reckonable expenditure; that is a fall of 13 per cent. Seen in this way, surely, it is clear not only that the Scottish ratepayer makes a smaller contribution to reckonable expenditure but that he has benefited more, not less, from the successive changes in the grant percentages.

I make the same point again in a different way. A 1 per cent. grant increase is a greater benefit to the Scottish ratepayer than to the English ratepayer. As a proportion of the reckonable expenditure falling on the rates, the 2 per cent. grant increase in Scotland for this year and next year is equal to the 2½ per cent. increase in England for the same two years.

However, I sense the concern in the House that the rate of grant should be at a level which is quite fair as between Scotland and England. Before the next rate support grant order is put before the House I shall look carefully at the differential between the two countries. That means not that it will be increased but that we shall satisfy ourselves about the relative levels of grant. In this we must take account of a number of factors, of which one is the impending reorganisation of local government. The costs of reorganisation will be taken into account in the Scottish settlement for 1974–75 in the same way as was done for England and Wales in respect of 1973–74.

The hon. Member for Aberdeen, North (Mr. Robert Hughes) mentioned a number of points, one of which was the efficiency cut. That was mentioned also by the hon. Member for Greenock (Dr Dickson Mabon). The report shows a token reduction of £1 million. The point of this is to lay before local authorities collectively a specific objective in their search for savings. We should keep this matter in perspective. A saving of £1 million is about one-sixth of 1 per cent. of the total estimate of expenditure.

I cannot possibly offer detailed suggestions as to where the savings should be found, as I was asked to do. That should be left to the authorities. In the numerous bodies represented by the expenditure of about £600 million, on which the order is based, there must surely exist a small margin of potential saving. Few local authority treasurers would categorically state that there is no scope within their organisations for marginal savings without noticeably affecting the standard of services. I cannot say categorically either that any particular rate of saving called for in past years has been achieved, or, equally, that it has not been achieved. That would require a totally disproportionate amount of monitoring to get the facts.

The hon. Member for Aberdeen, North (Mr. Robert Hughes) asked about changes in the assessment of parental income for free school meals. Provision has been made for the additional cost to authorities arising from the change in assessment of parental income for free meals purposes. We have deferred an increase in the cost of meals from 12p to 14p which was due to come into effect on 1st April as part of the counter-inflation policy.

The hon. Member also asked about the urban programme. It is provided under the Local Government Grants (Social Need) Act 1969 for the payment of grants toward local authority expenditure on projects designed to benefit areas of special social need. Its aim is to enable local authorities to take quick action by way of modest building schemes and certain projects to improve the facilities and services available in areas displaying symptoms of serious social deprivation.

The hon. Member asked about average rates increases and suggested that they might be approximating 6 per cent.

Mr. Robert Hughes

The point is that the average increase in rates over the whole of Scotland was at the rate of 6 per cent. per annum. What will happen in the different areas?

Mr. Younger

I cannot give that breakdown, but the hon. Member's figure of 6 per cent. is broadly correct, taking one year with another. As I said in a reply to a recent Question by my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor), this growth compares with the considerably greater growth in earnings over the same period.

The hon. Gentleman mentioned the distribution of the additional £1 million. It has been said that this money should have been given to ratepayers who are worst affected by the revaluation. This is not the first time that the Scottish counterpart of a sum used in England and Wales to provide transitional relief has been applied directly to the block grant. It was done in relation to general grant after the revaluation of 1963. If compensating individual ratepayers in the actual year of revaluation is a difficult administrative task for rating authorities, compensating them two years later would be almost impossible. For one thing, a great deal of property which did not exist in 1970–71 is now occupied and rates are being paid on it.

The hon. Member for Greenock (Dr. Dickson Mabon) asked me whether the 15p figure in the domestic element was for both years. I can assure him that nothing is finally decided about 1974–75. We could, however, be looking at this question in a year's time against a background of other changes in the distribution of expenditure between the ratepayer and the taxpayer. It is much wiser to leave our options open for the second of these two years, which is what I was indicating we were trying to do.

The hon. Member also asked why rate rebates in the two years should be put at the same figure. The answer is that a new basis has to be calculated for rate rebates. There is no realistic basis for estimating what rate rebate grants will have to be made under the existing scheme for 1974–75. Under the proposals in the Local Government (Scotland) Bill the new scheme will operate and the grant will no longer be deductible from the aggregate of rate support grant, which it has been in the past.

The hon. Member for Glasgow, Gorbals (Mr. McElhone), in a speech which dealt mainly with the problems of social work in which he is deeply interested, asked about rating problems for Glasgow. All is not as difficult as he feels it to be. The financial problems of Glasgow are taken into account. They have been considered on many occasions in connection with the grant distribution discussions, and the local authority associations have accepted the need for a special weighting to protect authorities in this position. In the coming year, Glasgow will receive grant of more than £3 million by virtue of the special weighting in the formula for distribution of the needs element, a weighting directly related to loss of population. Between them, the rest of the authorities will receive £3 million less than would be the case without this weighting. This is a significant contribution to Glasgow's special problem.

The hon. Gentleman also asked about home helps. Substantial additional provision for home helps has been made in the settlement, with the agreement of the local authority representatives. This is over and above the additions put forward for newly-appointed trained social work staff.

I have been asked a number of questions about social work services. I wholly share the views of those who seek adequate social work provision by local authorities. Authorities themselves are very conscious of this need. It is for this reason that the rate of growth in this service is substantially higher than that for services as a whole. In current expenditure, the growth rate between 1972–73 and 1973–74 has been forecast as 1209 per cent., and that between 1973–74 and 1974–75 as 9.34 per cent. These forecasts take into account the abolition of the minimum charge for home helps which has had the effect of increasing the reckonable expenditure on the service over the two years in question by 3.1 per cent. and 0.3 per cent. respectively. But, even after deducting these percentages, we are left with net percentage increases of 8.96 and 9.34.

I believe that these rate support grant settlements are wholly reasonable and generous for all the needs that local authorities expect to have to put in train in the next year or two. I pay tribute to the local authorities for their help in these discussions every year. As a result, we have managed to meet almost all the requests that they have made to us.

I hope very much that the House will agree to pass these orders.

Question put and agreed to.

Resolved, That the Rate Support Grant (Increase) (Scotland) Order 1973, a copy of which was laid before this House on 16th March, be approved.

Resolved, That the Rate Support Grant (Scotland) Order 1973, a copy of which was laid before this House on 16th March, be approved.—[Mr. Younger.]

ADJOURNMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jopling.]