RATE SUPPORT GRANT (SCOTLAND) (Hansard, 25 March 1974)

§ The Secretary of State for Scotland (Mr. William Ross)
I beg to move, That the Rate Support Grant (Scotland) Order 1974, a copy of which was laid before this House on 19th March, be approved.

§ Mr. Speaker
I take it that it is the wish of the House that with this order 200 we should discuss the Rate Support Grant (Increase) (Scotland) Order 1974 and the Rate Support Grant (Increase) (Scotland) (No. 2) Order 1974.

§ Mr. Ross
Thank you, Mr. Speaker. [Interruption.]

§ Mr. Speaker
Order. Will hon. Members please withdraw as quietly and as quickly as possible.

§ Mr. Ross
In moving the order—[Interruption.]

§ Mr. Speaker
Order. Will hon. Members not carry on discussions in the Chamber. I must ask hon. Members who intend to leave the Chamber to do so at once.

§ Mr. Ross
Copies of the two increase orders were also laid before the House on 19th March. The provisions of the three orders are explained in House of Commons Papers Nos. 11, 12 and 38.
We are moving from rather troubled English waters to more placid Scottish waters.

§ Mr. Hector Monro (Dumfries)
Not at all.

§ Mr. Ross
The hon. Gentleman had better face the fact that the orders are virtually those prepared by the previous administration. Little change has been made to them, and what change there is will be beneficial to some local authorities.
The Rate Support Grant (Increase) Order and the report on it—House of Commons Paper, No. 11—relate to a final increase of £4.75 million in the grant for the financial year 1972–73 which was determined early in 1971. I recall the occasion very well. I was then in opposition, and the debate started at 201 fifteen minutes past midnight. Since then, the grant has twice been increased because of cost increase, and the No. 2 order relates to an increase of £34.27 million in the grant for the current financial year 1973–74 which was originally determined a year ago.
Perhaps I should draw attention to an error that has probably not escaped the attention of mathematically minded hon. Members. Although the main order was correct, further copies that were placed in the Vote Office today contain a printer's error at the foot of the first page. The figure for the resources element of £96,600 million has been printed as £96,609 million. I offer that clarification in case anyone is confused about the addition on that order.
The Rate Support Grant Order and House of Commons Paper No. 38 relate to the determination of grant for 1974–75. This will be the last main order providing grant to the present local authorities. As it happens, it fell to me in 1967 to introduce the first rate support grant order of the whole series. That gives an indication of how time has slipped by until the presentation of these orders today. I am presenting the last in the series and look forward to signing the first order for the new authorities in about a year.
Since some hon. Members will recall that the House approved a year ago the order which determined the rate support grant for Scotland for 1974–75, I should draw attention to paragraph 1 of House of Commons Paper No. 38. The order made last year dealt with two years, as did earlier orders, but Section 120 of the Local Government (Scotland) Act 1973 changed the period for future orders to one year and provided that the existing year ceased to have effect as regards 1974–75. This means that we have been given an opportunity to redetermine reckonable expenditure for 1974–75 and in doing so to take into account some of the costs of reorganisation which fall in the year. So this is a main order plus a built-in increase order.
One unusual feature of the background to the orders is that a General Election intervened between what is normally the last stage in the negotiations and the tabling of the orders. When we took office, the details of the proposed settle- 202 ment had been announced to local authorities by the previous administration and we had passed the time when orders are normally made. Given the present economic outlook that we have inherited, we did not think it would be reasonable to attempt a full reappraisal, which would have been necessary before we could modify the reckonable expenditure forecast or the amount of the grant.
My proposals in the order are, therefore, substantially those explained to the local authority associations in January by the previous Secretary of State. But I have made one change. Because of the shortening by about two weeks of the financial year in Glasgow, Edinburgh and Aberdeen, it had been proposed to deduct £2.6 million from the forecast of reckon-able expenditure. This would have reduced the aggregate grant by about £1.8 million, giving Glasgow about £1.1 million less, Edinburgh about £500,000 less and Aberdeen about £200,000 less. I have looked at this again and concluded that these deductions should not be made. That is the one substantial change in the orders compared with what would have been introduced by the previous Secretary of State.
Details of the forecasts leading to the orders are given in House of Commons Paper No. 38, with summaries on pages 10 and 11. The forecast of total expenditure is in round terms £661 million, of which the aggregate of Exchequer grant is £449 million. Two changes affecting reckonable expenditure should be noted, because they affect the expenditure of the grant. The first is the transfer to the National Health Service of responsibility for the local authority health services and school health. That has come out of the rate support grant and has, of course, gone into other Estimates. This has reduced the reckonable expenditure by about £18 million.
Second, rate rebate grants will in future be treated separately from the rate support grant, and not as one of the specific revenue grants which are deducted from the aggregate Exchequer assistance to arrive at the total of Exchequer assistance. This last change, which is to the benefit of local authorities, is as a result of the provision by Parliament in the Local Government (Scotland) Act 1973 for a new system of rate rebates assisted by grant at the rate of 90 per cent.
203 The percentage rate of grant is 68 per cent. of reckonable expenditure. This may not seem an improvement, since it was fixed at 68 per cent. for 1973–74 as well, but the effect of the two changes to which I have referred in expenditure on health services and rate rebate grants is to make the 68 per cent. on the new arrangements the equivalent of slightly more than 69 per cent. under the old ones. It is a rather abstruse calculation, but if the £18 million is added to the reckon-able expenditure of £660 million and to the grant of £449 million, it will be found that the percentage changes and the figures I have given are correct.
Of the total grant £37 million will be paid as specific grants and £412 as rate support grants. The rate support grants will consist of a needs element of £290 million, a resources element of £97 million—in the usual proportion to needs element of 1:3—and a domestic element of £25 million.
The domestic element gives direct rate relief to householders, and the only change in the distribution arrangements which I am proposing this year is to increase that relief from 15p to 17p in the pound. This maintains the arrangement which has been adopted in recent years of giving about half of the benefit from the increased rate of grant to domestic ratepayers only, and the rest to all ratepayers generally. There is no controversy about this; it has been done before and it is accepted.
The needs element—a sum of £290 million—is the main component of the grant and is distributed, at the "education" authority level, on a formula which makes allowance for the different spending needs of each authority as measured by various indicators which have been used before. There has been no change in the distribution formula now for two years, since it would be pointless to review the working of the system as regards the present authorities when they have so little time to run. But I shall soon be asking the local authority associations to agree to meet my officials to discuss the distribution arrangements for the first year of the new authorities. This will be a considerable task and is fraught with more than usual difficulty. It may well take some time.

§ Mr. Ian MacArthur (Perth and East Perthshire)
While the right hon. Gentleman discusses the point about distribution according to need, will he look again at his proposal to freeze rents and to repeal the Housing (Financial Provisions) Scotland Act? Will he say whether any allowance is made in the order to protect ratepayers from the cost of this proposal and whether he will direct Government funds not only in that direction but to rent payers who need help the most, as was the policy pursued by the Conservative Government, and in this way help to protect the 149,000 tenants in Scotland who are already paying no rent at all?

§ Mr. Ross
Questions of rent freeze and provision in respect of rate burden that might fall upon people are not covered by rate support grant, and indeed could not be covered by it. That will have to come in legislation.

§ Mr. MacArthur
When?

§ Mr. Ross
Fairly soon, I hope. I hope that, before legislation, there will be announcements in respect of the extent of help.

§ Mr. J. Bruce-Gardyne (South Angus)
Wholly inadequate.

§ Mr. Ross
It is not inadequate. We are discussing rate support grant in Scotland, and that cannot be made a vehicle for other matters.

§ Mr. Bruce-Gardyne
We need to know what the figure is going to be.

§ Mr. Ross
Not tonight.

§ Mr. Bruce-Gardyne
Come clean.

§ Mr. Ross
It is not a case of "coming clean". The hon. Member for South Angus (Mr. Bruce-Gardyne) should get to his feet if he wants to say something.

§ Mr. Bruce-Gardyne
I shall.

§ Mr. Ross
Anything of that nature would be out of order on this order. I was responding to the hon. Member for Perth and East Perthshire (Mr. MacArthur) and seeking to give him information. There has been no change in the distribution formula now for two years, but we shall get down to discussing changes required to be made in the light of reorganisation.
205 While the needs element compensates for differences in local needs, the resources element of grant compensates for differences in local rateable values. There is a tremendous variation in rateable values—ranging from about £175 per head in Grangemouth to £9 per head in Shetland. The rates income of the poorer authorities is not capable of supporting equivalent standards of services which people rightly demand. Greater support is therefore required for these overheads. Through the resources element the Secretary of State, in effect, steps in as a local ratepayer, making the greatest proportionate contribution where rateable values are lowest.
There is one further point I should mention about the resources element. All the expenditure of the local authority is taken into account in the calculation of the element, but, in accordance with the 1966 Act, expenditure by way of contribution to housing revenue accounts is calculated on the basis that rents do not fall below a certain level, and that level is prescribed in the order as the notional rent income. That is the only part of the formula basis in respect of rent income accounts. Since we have decided to freeze rents this year, I have prescribed that the formula for calculating the notional rent income of 1974–75 is to be the same as for 1973–74.

§ Mr. MacArthur
The right hon. Gentleman has today repeated an undertaking that he gave during the election. He must say how in future local authorities and, in particular, ratepayers are to be compensated for this whim of Socialist fancy. It is wrong that the ratepayer should be made to pay a large part of the cost of the right hon. Gentleman's policy of buying thoughtless votes.

§ Mr. Ross
We are dealing with the rate support grant. It would be out of order for me to embark on a long explanation of something that is not in the rate support grant order.

§ Mr. MacArthur
You must know.

§ Mr. Bruce-Gardyne
On a point of order, Mr. Deputy Speaker. It seems that we are getting into some difficulty with the right hon. Gentleman. He has given an indication of the effect of the Government's rent freeze on the calculation of the notional rent income. He then said 206 that there could be no further discussion on the matter. That cannot be correct. If the right hon. Gentleman's original remarks were out of order it would have been for you, Mr. Deputy Speaker, to say so. It is not for the right hon. Gentleman to tell us which parts of our discussion are in order and which are not. Surely that is a matter for the Chair.

§ Mr. Deputy Speaker (Mr. George Thomas)
I am much obliged. Whoever occupies the Chair always receives plenty of advice. I have received it from the right hon. Gentleman the Secretary of State and from the hon. Member for South Angus (Mr. Bruce-Gardyne). This is a timed debate, and there may be room for a little latitude, but let us see how we get along.

§ Mr. Ross
The simple fact is that I have already said that what we are doing in respect of compensating local authorities requires legislation. Since it requires legislation it cannot possibly be in this order. Before that legislation comes along the way in which the matter will be handled will be announced to the House.
The starting point for the determination of grant is the consideration by the Secretary of State, in consultation with the local authority associations, of the current rate of reckonable expenditure—

§ Mr. MacArthur
On a point of order, Mr. Deputy Speaker. Is there any point in continuing the debate, because without the information the discussion is a waste of time?

§ Mr. Deputy Speaker
Order. That is not a point of order and the hon. Member knows it.

§ Mr. Ross
—and the current level of prices which are customarily taken into account.
I am sure that the House would wish me to express our thanks to those who have laboured to make the forecasts as fair and accurate as possible. I should like particularly to acknowledge the contribution of the local authority representatives this year, having regard to the fact that when cuts are under discussion their position is necessarily a delicate one.
After adjustment for savings proposed by the last administration, which I have 207 left unchanged, the forecast of next year's reckonable expenditure is £660 million. That implies that current expenditure of local authorities, excluding loan charges, will rise next year by no more than 1 per cent. in real terms, or about 3½ per cent. when loan charges are allowed for. These are across-the-board figures and are affected by the quite severe reduction in highways expenditure which is proposed for this year, highways being a sphere in which local authorities have more scope for varying expenditure than in most other services. It can work both ways, because they can inject as well as deduct if the situation changes.
Overall restraint does not mean that we should disregard areas of greater social need. In the estimates set out on page 10 of the report allowance is made for the improvement in standards, though at a considerably lower rate than in recent years, where that is required. In particular provision is made for the continued recruitment of teachers and other key categories of staff.
My hon. Friend the Minister of State, Scottish Office will deal in reply with points which may be raised about the provision in the order for particular services. However, I ask the House to remember that the share of the rate support grants which any local authority receives is a grant in aid of its revenues generally. How these revenues are allocated is a matter for the local authority itself.
I need not refer to the increase orders in detail. The reports relating to the orders state the considerations, and I do not think that issues of principle arise. My hon. Friend will be happy to deal with any questions that may be raised.
The orders should enable the Scottish local authorities to carry out their responsibilities during the coming financial year, and, provided they exercise restraint, to do so without imposing unreckonable burdens on the ratepayers. I commend the order to the House.

§ Mr. Teddy Taylor (Glasgow, Cathcart)
Time is short, and, while I appreciate that there was a long debate on the English order, I regret that this important order should be discussed at this time of night.
208 The Secretary of State has been a little unfair in the way he has dealt with the order. He has spoken about the negotiations having been in an advanced stage when he took office; yet, at the same time, he has claimed total credit for the concessions—to Glasgow and Edinburgh —and the 15 per cent. to 17 per cent. on domestic rating.
Had he wished to be absolutely fair the right hon. Gentleman would have pointed out that at a meeting on 18th January it was made clear by the previous Government that both these points would receive careful and sympathetic consideration. He unfortunately omitted to mention this, which shows that these points were well on the way to being agreed during earlier negotiations.
The order is important in determining the rate poundage which Scottish local authorities will announce in the autumn and many local authorities and ratepayers are more worried this year than previously about the outcome.
All the signs are that the rate rise this year could be catastrophic and alarming, and that it will affect the living standards of every Scottish family, directly through rates and indirectly through prices which will be charged in the heavily rated shops.
Why is there such great concern? The first worry, on which I hope the Secretary of State can give detailed guidance, concerns the fear expressed to the Government and, in particular, to Lord Hughes at a meeting last week, about the percentage of local government spending which the Government will underwrite.
The Secretary of State has now said that all the calculations and decisions have been made. It was a little unfair of Lord Hughes to have a meeting with the local authorities on the important point of principle. In all the years up to 1972 Scottish local authorities enjoyed a differential of 8½ per cent. over English authorities. In 1972–73 this differential was reduced to 8 per cent., with Scottish authorities getting grant for 68 per cent. of reckonable expenditure and English authorities getting 60 per cent., but the reason advanced for this was that the English authorities had special extra expenditure in coping with problems of local government reorganisation.
209 In those circumstances, Scottish authorities were understanding about a reduction in differential. However, it was anticipated that the differential would at least be restored in 1974–75 when Scotland faces the problems of its own reorganisation of local government, which will, no doubt, give rise to a heavy burden. But this year, when Scottish local authorities said that they must have the differential restored, and increased to 9 per cent., they have been presented with an order which makes clear that the differential is being reduced to 7½ per cent. Scotland is to receive 68 per cent. again this year, and the English authorities 60½ per cent. The 1½ per cent. difference comes to about £9 million.
I think that the Secretary of State is fully aware that Scottish authorities are very concerned about this further reduction in the differential between the Scottish and English authorities. He should give us a full explanation why Lord Hughes apparently turned a deaf ear to the pleas of the Scottish authorities. There may be a clear explanation, and if there is we are entitled to hear it.
The second big problem worrying Scottish ratepayers is that in paragraph 5 of the Secretary of State's report on the order it is indicated that local authorities have been asked to hold their expenditure for 1974–75 at a level which in real terms is close to that of the current year. The Secretary of State explained tonight that by "close" he was thinking in terms of 1 per cent. Bearing in mind the demand for additional services in local authorities, he has a duty to tell the ratepayers of Scotland precisely what will happen if an individual authority or several authorities cannot contain their expenditure as requested by the Government. Will it simply mean that the rates will soar? How will that help to contain inflation?
The third problem, one which the Secretary of State cannot dodge, is the one so ably raised by my hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur). In view of the order, what will be the implications for the rates of the Government's decision to put a freeze on council rents until the end of 1974? How will that affect the rates? 210 It will mean that local authorities will lose a significant income which they would otherwise have been expecting to receive in the current financial year.
At the time of the announcement of the freeze reports were published that local authorities would be compensated for that loss of income, but in a courteous letter to me of 18th March the right hon. Gentleman indicated that his aim now was to compensate them for the major part of the lost revenue, and that he hoped to give the local authorities as much notice as possible of the new arrangements so that they could prepare their estimates. When shall we have the details? If the Government will not compensate the local authorities fully, who will pay the rest? When will the Government reveal their new rents policy to local authorities?
In Glasgow the freeze is of less urgency because another rents rise was not due until 28th January next year, but other authorities had planned increases in October. But, whether it is October or January, the county and city treasurers will have to be planning very shortly what will be their rates poundage for the year 1974–75. How precisely is that to be done unless we have an indication of the Government's plans?
It seemed to me that the right hon. Gentleman was saying "I have made provision by saying that we have not the same notional rent for 1974–75 as we had for the previous year." The indication is that the major part comes to about 68½ per cent. Is that the figure? Is the right hon. Gentleman proposing that we should pay the major part, just over two-thirds, and the ratepayers pay one-third?
The detailed plans will perhaps have to await legislation, but I find it difficult to see why the matter could not have been dealt with by increasing the amount of grant. But if there has to be legislation—and the right hon. Gentleman has detailed advice on this—can he give us an indication of what percentage he has in mind? What does he mean by "the major part"—60 per cent., 70 per cent., 80 per cent., 90 per cent.? It is a crucial factor. We appreciate that the Secretary of State will want later to give the details of the legislation or of his plans, but he can surely at least give an indication of what percentage he has in mind.
211 The Secretary of State must remember that in every Scottish family someone, whether a council tenant or owner occupier, has to pay rates. Can ratepayers look forward to a massive rates rise in August instead of a rents rise at the end of the year? We are talking about big money. I understand that the loss of revenue from 28th January 1975 until the end of the financial year in Glasgow alone will amount to about £1,300,000. Other authorities which are represented here by my hon. Friends are facing an anticipated rents rise in October. This is big money. It is essential that before the local treasurers make up their budgets the Secretary of State should tell them whether he intends to make good the full amount of lost revenue and what his rents policy will be after 1974. I hope that we shall not return to the unjust system of the previous Labour Government when tenants of SSHA houses and new town development corporation houses were more directly controlled by the Secretary of State. They were subject to annual rent rises while local council rents varied enormously depending on which authority was concerned.

§ Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)
Is the hon. Gentleman aware that he, along with his right hon. and hon. Friends, was party to a Housing Finance Act that preserved a constant system whereby SSHA and new town development corporation houses always had a higher level of rents than local authority houses? Is it not hypocritical of the hon. Gentleman to express such concern for local authority and SSHA tenants when he and his hon. Friends, and particularly the hon. Member for Perth and East Perthshire (Mr. MacArthur), were responsible for bulldozing through the Housing Finance Act about which he is not complaining?

§ Mr. Taylor
The hon. Gentleman will find that he is wrong. The final result, once the Housing Finance Bill had been taken through all its stages, was not the grave variation which the hon. Gentleman is talking about. I shall be glad to go through the matter with him afterwards. He should appreciate that when we last had a Labour Government there were Questions from myself to the Sec- 212 retary of State for Scotland about the position in a strange-named place in Glasgow called Toryglen. Whether that is an appropriate name only the secrecy of the ballot box can tell. The hon. Member for Glasgow, Queen's Park (Mr. McElhone) will know Toryglen well as he has the honour of representing it. He will know that at Toryglen there were SSHA and Glasgow Corporation houses side by side. The Secretary of State for Scotland was then telling the SSHA to put up its rates, and the council rates did not go up at the same time. That was an unjust situation which I hope will not be repeated. That is why it is important that we have clarification on future policy very soon. The right hon. Gentleman must state his views on what will happen to rates in Scotland.
It is the Government's decision to abandon statutory wage control. We do not know when that will be done. I know that the hon. Member for South Ayrshire (Mr. Sillars) may have different views from some of his hon. Friends on that point. The fact is that the Secretary of State for Employment said that it was his aim that at some stage, and at an unspecified time, wage control should disappear.
If local councils decide to increase the wages of their employees outside the national wage structure negotiations, we must know whether the extra cash will come from increased orders or whether the entire burden will fall again on the ratepayers. I hope that the right hon. Gentleman can give us a clear answer to that matter. I am sure that he is fully aware that my right hon. and hon. Friends regard this order with grave suspicion. Scottish ratepayers were clobbered the last time we had a Labour Government, and the signs are that that will happen again.

§ Mr. James Sillars (South Ayrshire)
I was not sure, when the hon. Member for Glasgow, Cathcart (Mr. Taylor) came to the end of his speech, whether he was going to tell us that the Opposition were to divide the House at the end of these orders as they did at the end of the last order? Or will he just bark but never bite the Labour Party?

§ Mr. Taylor
The hon. Gentleman must be aware that we never prejudge an issue. 213 What we do in the Lobby depends entirely on whether the answers which we receive are satisfactory.

§ Mr. Sillars
Up to now it appears that the Opposition are dissatisfied with what the Labour Party has said. I have in my five minutes the opportunity to make them even more dissatisfied. Perhaps they will then divide the House. We shall then be able to explain to the people of Scotland that hon. Members representing constituencies throughout the United Kingdom stayed up late so as to take a decision relating to Scottish matters as we did on an order relating to England and Wales not so long ago.
The first point which struck me when I examined House of Commons Paper No. 38 was that this was like the Local Government (Scotland) Act, in that this was very like a Conservative measure and that the momentum had moved forward to such an extent that my right hon. Friend, even given his hostility to the Act, had found that it had gone too far to stop or for him to take the necessary Socialist corrective measures, so that he was bound to put this order forward with one or two necessary adjustments tonight.

§ Mr. John Robertson (Paisley)
My hon. Friend will notice that it is not night but morning.
Mr. Sillars: I am grateful for the correction. However, having been a railwayman I am used to the night shift and look at it in that way.
However, returning to my point about matters having gone too far for the necessary corrective measures to be taken, I have been brought up to believe that, when one has political power, provided that one has the will to make the necessary changes one can do so. I am disappointed that we are having to take most of a Conservative measure. I see the hon. Member for Cathcart nodding. He is no doubt nodding himself into a position where he will not have to divide the House in about an hour's time.
My right hon. Friend tells us in House of Commons Paper No. 38 that he consulted the local authority associations, but, as he said in introducing the order, he did not have a great deal of time in which to consult local authorities. It is also said that an increase order can be 214 introduced. I hope that my right hon. Friend will do so, for a number of reasons.
I am rather concerned with paragraph 5 on page 4 of HC No. 38, which covers briefly but succinctly the economic background against which the order was framed. It talks about local authorities marking time with some of their plans for expansion of their various activities. I fully recognise the difficulty facing the present Government. We have inherited a dreadful mess from the Conservatives. In some areas local authorities cannot afford to mark time. They must go forward at a very rapid pace of development.
I refer specifically to activities connected with housing, leaving aside the need to build more houses, which is a clamant need in Scotland at present. In the Cumnock area of my constituency we have ambitious plans for housing development. Although the last Government said that they would not stand in the way of developing housing, they stood in the way of developing the sewers and drainage systems which are essential if housing schemes are to proceed. I have been told by local councillors that the Underwood sewerage scheme was held up and that this has had a marked effect on the housing plans in the whole Cumnock area.
Can I have an assurance that any marking time by the local authorities will not simply not apply to housing but will definitely not apply to associated developments which are essential if housing is to to proceed?
The second point concerns the urban programme mentioned in paragraph 14 of HC No. 38, which states: Provision has been made for a moderate increase in current expenditure under the urban programme, although savings will be required in capital expenditure. What does this mean? If savings are required in capital expenditure, that is bound to have a great impact on the urban programme, because to a great extent it is capital expenditure that takes an urban programme forward, taking the areas earmarked from dereliction into a reasonably modern situation. I believe that the urban programme is not sufficiently imaginative.
I will not mention to too great an extent areas in other constituencies, but I 215 saw "Current Account" on BBC television in Scotland last Thursday. Part of that programme covered the situation in Ferguslie Park in Paisley and part of the city of Glasgow. That was a shattering programme for anyone to see. We have Ferguslie Park and Blackhill, and there are small housing areas in towns and villages all over Scotland which are in a shocking state because of the poor quality of housing construction. It was so poor when they were built that they were bound to degenerate into modern slums. We have flatted dwellings in which no one wants to live, and certainly no hon. Member of this House would take up an allocation to one. The urban programme should be extended to the point where we should consider, adopt and prosecute a policy of bulldozing down these poor quality buildings and rebuilding much better ones.
I come to paragraph 13 of House of Commons Paper No. 38 dealing with the Rate Support Grant Order. The view expressed there must be the Civil Service view rather than that of a Labour Secretary of State for Scotland. It tells us that the estimated growth rate of about 14 per cent. in 1973–74 is higher than expected. Surely we would not expect this to be any different, given the effects of three and a half years of Conservative rule in Scotland, especially in housing and social service—when they dumped people into the poverty trap.
What happened in three and a half years of Conservative rule was that the social condition of Scotland deteriorated to such a point that a great deal of pressure was placed on the social work departments. Before I left Ayr this morning I spoke on the telephone to the director of social work in Ayrshire, well known to my right hon. Friend as well as to me. We were discussing some of the problems arising out of the housing crisis, caused by a collapse of the house building programme under the Conservatives.
More and more of us are finding that families are desperately seeking a house, but cannot get one, either from the council or from the private sector. The director told me that in the past year we have taken more children into care than ever before, because families cannot find 216 homes. The accommodation of the social work department is bursting at the seams, while the work load of the social workers is building up.
I do not expect my right hon. Friend to build these houses in 24 hours. It will take time to repair the damage, but it seems to be extremely optimistic for the order to talk about growth in terms of 5 per cent. That underestimates the sort of welfare condition we have inherited.
The final sentence of paragraph 13 in the House of Commons Paper says: As in other services, economies in the procurement field will be necessary. Am I right in thinking that this means that economies in procurement will take place at the time of the changeover from the present system to the new system of local government when people will be building empires all over Strathclyde? It seems we are unlikely to get any economies at all. I give a qualified welcome to the Paper, and look forward to the increase order that I hope we shall get from my right hon. Friend.

§ Mr. Hector Monro (Dumfries)
I listened with interest to the Secretary of State. In a major debate on Scotland covering the whole ambit of local government services for the year it is astonishing that no member of the Scottish National Party has bothered to attend and take part.

§ Mr. Robertson
And no English Tory, either.

§ Mr. Monro
The hon. Member should remember he is not at his Ayr conference now.

§ Mr. Robertson
I was only trying to indicate that, although I have sat here all day, during the debate on the English order no English Members are willing to listen to the debate on the Scottish order.

§ Mr. Monro
That is an astonishing argument to put forward at 12.30 a.m. It is much more important for the one-and-a-half hours to be used entirely by hon. Members representing Scottish constituencies when we are discussing a subject that concerns Scotland.
According to paragraph 12 of the White Paper, the aim is to achieve improved pupil-teacher ratios in both 217 primary and secondary schools, and I welcome that. I am also glad to see that there is no intention to seek economies in teaching costs. I hope that the right hon. Gentleman will follow the December circular in which the previous Government said that there should be no cuts in school building starting this spring, which is contrary to what many Labour candidates said during the election campaign.
I should like to have some figures and assurances on teacher recruitment. There are about 3,000 students at colleges of education training to be secondary teachers. That should give a pupil-teacher ratio next session of 15.8 to one, or slightly less—a figure second only to that achieved in 1972–73.
How will the Government improve the distribution of secondary teachers, which is a major difficulty in Scotland? Will they continue the policy announced by the previous Government of voluntarily restricting recruitment in those areas that are better staffed and encouraging teachers to go to areas that are short-staffed, by which I mean the West of Scotland? Do the Government also hope to improve the pupil-teacher ratio for remedial teachers?
How does the Secretary of State hope to improve the designation scheme for commencement in August? The present scheme runs out at the end of July, and it is important to know this soon so that students in colleges of education can plan ahead which authority to apply to for jobs for next session.
Perhaps we might have a comment on primary education. Does the right hon. Gentleman see the continuing improvement in staffing which I believe is likely? In September 1973 there were 25,774 qualified primary teachers, against 20,610 in 1969. In that period there was an increase of about 25 per cent. That trend enabled the Conservative Government to recommend a class size of 30 by 1975–76. Many authorities have made substantial progress towards this objective and should reach it, bearing in mind that the primary school population has begun to fall. Are sufficient resources available to make a start in nursery education later this year, as was forecast in the White Paper of December 1972?
218 The hon. Member for South Ayrshire (Mr. Sillars) was his usual unfair self in his reference to the Conservative Party and social work. Bearing in mind that the local authorities were unable to make a major start in developing social work until 1969, over the years substantial progress has been made in view of the available resources. Many of the resources come from local authorities. It has taken a while for local authority social work committees to establish themselves as being among the most important committees within local authorities. They are receiving equal priority with education and housing, and I am glad of it. But the hon. Gentleman has been asking for too much to happen too quickly. I hope, however, as I am sure the Secretary of State does, that the local authorities will spend the maximum they can afford on social work in the coming year.
In Appendix B there is mention of approved schools. Should not these be List D schools? I would like that point clarified for future reference. I hope that the right hon. Gentleman will continue to encourage, as his predecessor did, the local authorities to be involved in the construction of List D schools, because we all accept that such school places are in short supply and are essential if the children's hearings are to carry out their work effectively.
On 18th March, the right hon. Gentleman told my hon. Friend the Member for Bute and North Ayrshire (Mr. Corrie) that he was considering urgently the future of improvement grants where there had been delay because of shortage of building materials. On 22nd March the Minister of State, Department of Industry, in an English context, told the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) that delays in construction caused by shortage of materials would not prevent the payment of grants where applications had been lodged in time. This is also an important matter to Scotland, and perhaps the Secretary of State will make an announcement as soon as possible.
What developments does the right hon. Gentleman see under Appendix B in relation to rural bus services? They have become more and more important in recent years, particularly to old folk with concessionary fares. Is there sufficient money in the order to cover the 219 developments we want to see in these services?
I shall not follow the argument of the hon. Member for South Ayrshire although I would like a reply from the Minister of State on the point we have pressed in the debate about rents and rates, because, without a satisfactory answer, it is tempting to give the Government Chief Whip heart failure and call a Division.

§ Mr. John Robertson (Paisley)
The hon. Member for Dumfries (Mr. Monro) has made a most astonishing speech. We have seen him shedding crocodile tears over a situation which he more than anyone else helped to create. During the election campaign I went out of my way to tell the people of Paisley that even if Labour was returned with a very large majority things could not be other than tough in clearing up the dreadful mess left by the Conservative Government.

§ Mr. MacArthur
Oh!

§ Mr. Robertson
That goes, too, for the hon. Member for Perth and East Perthshire (Mr. MacArthur), who has so much to say. He should feel ashamed of some of the attitudes he has taken in the past year.
Of course, restraint has to be exercised, but I do not agree that it has to be applied indiscriminately across the board. There has to be a determination of priorities, and nothing is said in the orders about priorities. However, I accept that they are Tory documents.
Nor is this just a matter of looking at the various items of expenditure only in the Scottish context. There must be a scrutiny of expenditure at a United Kingdom level. Indeed, more than scrutiny of of this order and that on which we spent the whole day is required to see the significance of what is happening in Scotland. On the face of it, it seems that intention is to maintain the status quo. I recognise that my right hon. Friends have not had much time to make their own appreciation of the situation, and, as my hon. Friend the Member for South Ayrshire (Mr. Sillars) said, no doubt we may look forward to a further order later.
However, there are two areas of public expenditure that, if possible, must be increased rather than diminished. The first is education. The situation in educa- 220 tion, as my right hon. Friend knows, has reached crisis proportions. Not only is there a shortage of school buildings, but we have part-time education, and in Paisley there are even children receiving no education at all. Of course, the former administration was responsible for that.
I know that it is asking too much to hope that all these matters will be rectified tonight, but I hope that my right hon. Friend will quickly consider what may be done to make education not only a Scottish but a United Kingdom priority. For instance, we could do without Maplin and we could have another look at the Chunnel and at Concorde in order to rescue Scottish education.
The same can be said of housing. There can be no cut-back in housing expenditure. No doubt there are items—defence and some of the grandiose schemes of the former administration in South-East England and the Midlands—that could be cut. On the basis of need, those areas have been sucking in far too much of the country's resources for far too long. If any attempt is to be made to rectify the country's imbalance overall, drastic decisions affecting the whole country, not only Scotland, will have to be made.
In Paisley, the local authority has already had officially to demolish 250 council houses, while 600 houses lie empty. But another and unknown number of houses have been partly or even totally demolished by unofficial demolishers—so badly vandalised that they, too, will have to be demolished. Replacing them will cost at least £6,000 or £7.000 per house and there is a tremendous housing waiting list in Paisley. If sufficient money is injected into the rehabilitation of Ferguslie Park, however, in the long term there will be a considerable saving of public money.
I cannot think that it is only in Scotland that these conditions exist. A special effort is needed to save public property from vandalism and complete waste. This is an instance of when being penny wise is pound foolish.
Priorities, it is said, are the language of Socialism. I believe that my right hon. Friend wants to apply Socialist priorities. We need a review of all local authority and other public expenditure and the application of Socialist priorities 221 over the whole community. Only in that way shall we get some of these problems rectified.

§ Mr. J. Bruce-Gardyne (South Angus)
I must confess that I never saw myself coming to the support of the right hon. Member the Secretary of State—least of all under your guidance, Mr. Deputy Speaker. I take this opportunity of joining in the congratulations that have been expressed to you.
Having listened to the hon. Members for South Ayrshire (Mr. Sillars) and Paisley (Mr. Robertson), it seems to me that the right hon. Gentleman is in need of friends tonight. At least on one count I am quite prepared to come to his support—namely, in terms of his reference to the need for restraint in local authority expenditure in the year ahead. I was delighted to hear that from the right hon. Gentleman. We did not hear very much about the need for restraint in local authority expenditure from the right hon. Gentleman and his hon. Friends before the election, and we are all grateful for sinners that repent, even if it be at a late hour.
I subscribe to the demand for restraint at present. I am sure that restraint in all forms of public expenditure is essential. It will be particularly essential in the year ahead, when we are facing the reorganisation of local government. I hope that the Secretary of State takes very good care to see that we do not have in Scotland a repetition of what appears to have happened in some areas in England, where the reorganisation of local government has led to a horrifying escalation of what I can only call sumptuous expenditure. This needs watching, and we shall be watching the Secretary of State to see that he watches it properly.
The Secretary of State has a bit of a brass nerve. He talks about the need for restraint. His presentation tonight slightly recalled the comment of my right hon. Friend the Member for Barnet (Mr. Maudling) on a famous occasion in 1964, when he said that the then Labour Government had inherited our problems and our solutions. That is what the right hon. Gentleman was telling the House tonight—that this, in broad essentials, was the Conservative Government's Rate 222 Support Grant Order which he had inherited. He was criticised by the hon. Member for South Ayrshire for having taken it on board, and the knives were flying into his back.
This is like a recitation of Hamlet without the Prince of Denmark, because the right hon. Gentleman left out completely a major change that has occurred—my hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur) drew his attention to it in an intervention, and my hon Friend the Member for Glasgow, Cathcart (Mr. Taylor) rightly criticised the right hon. Gentleman in his remarks—the impact of the rent freeze. I draw your attention, Mr. Deputy Speaker, to paragraph 5 of the White Paper. It says that Local authorities are aware of the need for restraint, and have been asked to hold their expenditure for 1974–75 at a level which in real terms is close to that of the current year. By achieving the necessary reductions in the growth of their expenditure, and in the consequent increase in their rate demands … How are they to do that when the Secretary of State, in his very first action on taking office, imposes a brand-new diminution in the revenues that they could otherwise have been expecting during the rent freeze?
My hon. Friend the Member for Dumfries (Mr. Monro) referred to the absence of the SNP from our deliberations. I am not in the least surprised. The SNP supported the right hon. Gentleman in his rent freeze; now its members avert their faces and their presence from the consequence that we have to discuss when considering this order. The Liberals supported the right hon. Gentleman. The rapid departure of the Liberal Whip was only to be expected. I wish that only occasionally we could expect the minority parties from Scotland to pay some attention to the effect of the policies they support.
Before we leave this order tonight, we ought to have some clearer evidence of how the Government expect to apportion the burden of their economically ludicrous rent freeze between the ratepayers and the taxpayers. All we have had to date is an absolutely flat contradiction in terms from the right hon. Gentleman and his hon. Friend the Minister of State. 223 On 20th March the Minister of State announced: I have said that we are not putting the burden"— of the rent freeze— on ratepayers."—[OFFICIAL REPORT, 20th March 1974; Vol. 870, c. 1009]. I wish the Minister of State would read HANSARD or occasionally have a word with his right hon. Friend the Secretary of State. His right hon. Friend, the day before in reply to his hon. Friend the Member for South Ayrshire, said in a Written Answer: There are likely to be some increases in rates due to higher deficits in housing revenue accounts."—[OFFICIAL REPORT, 19th March 1974; Vol. 870, c. 89.] Has the Minister of State met his right hon. Friend in the last 10 days? Do they ever converse? Do they ever compare notes about what should appear in HANSARD? This House needs to know before we approve this order.
I should warn the Minister having listened to the speeches of his hon. Friends tonight, that if there is a Division it does not sound as though he could necessarily count on their support. Before we complete our deliberations on this order we need to know exactly how this burden which the Government have wilfully and wantonly imposed upon the ratepayers of Scotland is to be shared between the ratepayers and the taxpayers. It is not good enough to read in The Scotsman, after the right hon. Gentleman's meeting with local authorities last week: Mr. Ross has meanwhile asked local authorities to hold the coming year's expenditure at this year's levels. How are they to do that if their revenue is depressed by the actions of the Government and if they are not given any indication of how that additional burden is to be shared out? All they can do is read HANSARD, and when they do, all they know is that the right hon. Gentleman and the Minister of State speak with two totally different minds.
I am delighted that some economies in public expenditure have been achieved by the Government with a restricted Scottish Office team, but if this is the sort of information that the nation is to get from the Scottish Office—one thing from the Secretary of State on one day 224 and the absolute reverse from the Minister of State the next day—all I can say is: take them both away and find somebody who can tell us what is really going on. We need this answer before we approve this order tonight.

§ Mr. Alick Buchanan-Smith (North Angus and Mearns)
I apologise to any hon. Member on the Government side who has not had an opportunity to speak. I intend to speak for only a few minutes because many points have been raised in the debate and we want to give the Minister of State plenty of time in which to reply to the detailed questions.
From some of the things which have been said from the benches opposite, one would think that the Government on coming into power had inherited a difficult situation in Scotland. All I would say—and I say this particularly to the hon. Member for Paisley (Mr. Robertson)—is that I do not think any Government have taken over with the economy in Scotland in a stronger position than it is at the present time. Any balderdash that is talked about a weak economy in Scotland is an absolute travesty of the facts, and I do not intend to allow any hon. Member opposite to get away with that sort of statement.

§ Mr. Robertson
Does the hon. Gentleman deny that his administration were cutting local government expenditure last summer, long before the December budget was brought in?

§ Mr. Buchanan-Smith
There are problems—there always will be—and no Scot will ever accept that things are as right as he would like to see, but it is a travesty of the truth to say that the Scottish economy was not strong.
Until March of this year we had a Government who were prepared to cut their own and public expenditure in an effort to control inflation so that the ordinary person did not suffer. The burden rested on the Government and public authorities rather than on the ordinary person.
My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) referred to the call in the report submitted by the Secretary of State for restraint by local authorities in an effort to control inflation. We support this and believe that 225 it is right. We shall watch the Government to ensure that they set a proper example in trying to control inflation. I say that because many of the things they have done so far will not encourage others to try to control inflation.
We hope that if economies are necessary the Government will accept their proper share of any cuts that have to be made and not seek to make the individual bear the burden of them. Unless inflation is controlled, much of what we have gained in Scotland in recent years will be squandered and lost.
There has been a lot of talk about priorities, and questions have been asked about where the money goes and what services are provided. I hope that the Minister of State will answer the questions that have been asked.
I share the concern expressed by the hon. Member for South Ayrshire (Mr. Sillars) about social work. There should be an efficient social work service. Paragraph 13 of the report submitted by the Secretary of State says that the social work service has developed considerably since 1970 and that the growth rate of about 14 per cent. in 1973–74 is higher than expected. It may be that improvements could be made in certain arms of the service, but a great deal has been done and the hon. Gentleman's condemnation of the service is not borne out by the facts or by what is in the report.

§ Mr. Sillars
My condemnation of the previous Government is that the social and economic conditions created by them meant greater pressure on the social work service than it should have been called upon to handle.

§ Mr. Buchanan-Smith
That is a roundabout kind of argument. Perhaps the hon. Gentleman would care to cast his mind back to 1970 and recall the large number of unemployed in Scotland then. There are now fewer unemployed and more vacancies, thanks to the policies of the Conservative Government.
The other priority is housing, to which reference has already been made, in particular by my hon. Friend the Member for Perth and East Perthshire (Mr. MacArthur). This shows the weakness of the reasoning of some Labour Members. If we are to pay attention to particular areas, like housing, what the hon. Member 226 for Paisley is asking for is not reflected in any sense of priority over the rent freeze, which benefits all tenants regardless of need. If we want to make the best use of scarce resources, surely they should be concentrated where they are most needed. Far better than the rent freeze would have been a concentration on the needs allowance or some other aspect of housing expenditure.

§ Mr. Robertson
The last Government three times drew attention to 500 empty houses in Paisley, which they said were bringing in no rent, but they did nothing to solve that problem.

§ Mr. Buchanan-Smith
It will be interesting to see how the Secretary of State solves that local problem, which is perhaps deeper than the hon. Gentleman suggested.
There is anxiety about the effects of the order, particularly the rent freeze, and I hope it will not be long before the right hon. Gentleman tells us how he intends to finance it. If it goes on the rates, this will affect the cost of living in Scotland. It could also affect the competitiveness of industry in Scotland, which has a bearing on the welfare and prosperity of Scotland's economy.

The Minister of State, Scottish Office (Mr. Bruce Milan)
I found it difficult to recognise the description that the hon. Member for North Angus and Meatus (Mr. Buchanan-Smith) has just given of the situation we inherited in Scotland and elsewhere in the United Kingdom. Some details have already been given by my right hon. Friend the Chancellor and other Ministers, and no doubt we shall hear more tomorrow in the Budget. To pretend that we inherited a healthy and vigorous Scottish economy flies in the face of facts accepted even by Conservative Members. It is with that situation as a background that the order is introduced.
My hon. Friend the Member for South Ayrshire (Mr. Sillars) said that the order could be given only a qualified welcome. I agree, because apart from the improvements that my right hon. Friend mentioned it is basically one we inherited and which, because of the shortness of time, the seriousness of the economic position and the inevitable constraints on public expenditure, we felt we could 227 improve only slightly. In happier circumstances I would have hoped that we could do much better than the last Government, but the seriousness of the economic situation that we face has prevented us from doing so.
I agree with my hon. Friend the Member for Paisley (Mr. Robertson) that it is important to get our priorities right. We have very much in mind some of the matters mentioned by my hon. Friends. On the subject of housing, we know that in local authority terms the number of houses completed in the public sector in Scotland in 1973 compared with 1970 was reduced by half. That is part of the inheritance left by the Tories to the Labour Government. I pledge to my hon. Friends that the Labour Government will give considerable priority to housing. I have very much in mind the problems mentioned by my hon. Friend the Member for Paisley—for example, Ferguslie Park—which are partly housing problems and, in other areas, partly social problems.
I agree with my hon. Friend the Member for South Ayrshire that on the subject of social work we have also inherited a serious situation. I thought it was a little strange that the hon. Member for Dumfries (Mr. Monro) asked the Labour Government to give priority to the improvement of provision for List D schools and other accommodation when he and his Conservative administration were responsible for a situation which has deteriorated to crisis point. In the few weeks we have been in charge, we have had pleas from different parts of the country about the urgency of dealing with the problem. The Government in-tend to give early attention to this matter.

§ Mr. Monro
I hope that the Minister will not put words into my mouth. If he reads HANSARD tomorrow, he will see that I asked that he should continue to encourage local authorities.

Mr. Milian
The hon. Member for Dumfries as a Minister had a very poor record—I am sure he will not dispute what I say about his record—in social work provision.

§ Mr. MacArthur
This is disgraceful.

Mr. Milian
Obviously the Labour Government will want to do very much 228 better than their Conservative predecessors. The same is true of nursery education. I was asked by the hon. Member for Dumfries whether there would be provision for nursery education this year, whereas the hon. Gentleman's own circular last December announced deferment of the nursery education programme by six months from March to September this year. That again is a situation which we have inherited from our predecessors. We are now reappraising the priorities and as we do so we shall hope to be able to tell the House and local authorities the kind of priorities that we wish them to follow in the coming year.
I turn from the particular to the more general questions that were put to me mainly by the hon. Member for Glasgow, Cathcart (Mr. Taylor). As for any reduction in differential between Scotland and England, this again was exactly what the Conservative Government intended to do. The percentages contained in the order are exactly those put by the Conservative Government to the local authority associations. I do not agree with the interpretation put upon the percentages by the local authority associations. Apart from anything else, on a strictly comparable basis the 68 per cent. provided for in the order is equivalent to 69 per cent., which is a real increase of 1 per cent. if we take into account adjustments for the National Health Service transfer to area health boards.
My noble Friend the Minister of State in the other place has told the local authority associations that he is willing that this point—which at the end of the day will be more than a matter of arithmetic—should be looked at jointly by officials of the Department and of the local authority associations. That exercise is now going ahead. But I do not accept the comparisons which the hon. Member was attempting to draw. There are particular circumstances in England such as water reorganisation and an earlier local government reorganisation which make his comparisons invalid.
The Opposition have made a good deal of the rents issue. I confirm what my right hon. Friend said about the position generally. It would not be possible within the Rate Support Grant Order to make compensating payments to the local authorities because there is no authority within 229 the legislation on the Rate Support Grant Order to make that kind of payment. Payments on housing are not part of the reckonable expenditure for rate support grant purposes. The adjustment which was made in the resources element in calculating the estimated revenues from rents in the following year compared with 1973–74 is concerned exclusively with the distribution of the grant between local authorities and is not concerned with the total amount of grant.
My right hon. Friend has already explained that we intend to see that the major part of the effect of the rent freeze will be compensated to the local authorities, a point which was confirmed during Question Time last week. That will require legislation and there will be ample opportunity for it to be debated when it comes forward. We all look forward to hearing an explanation of the ambivalent position adopted by the Opposition on this point. They seem to be saying that they are not in favour of any rent freeze, but they are not willing to say so in those precise terms.

§ Mr. Barry Henderson (Dunbartonshire, East)
Does the hon. Gentleman accept that a big burden has been placed upon ratepayers by the rent freeze which I am sure must have been expected by the Government when they imposed the freeze? When will the legislation be introduced? Ratepayers will be most anxious unless they are told.

Mr. Milan
The hon. Member has not added anything to what has been said by his hon. Friends. The local authorities have not complained to the Government about the delay. I am not aware of a single local authority complaining on that score. Tory Members are indulging in a good deal of humbug in pretending to be defenders of local authorities when the local authorities are prepared to wait until the Government have produced their proposals. That we shall do as soon as we can.
The hon. Member for Cathcart adopts a somewhat ambivalent position. He mentioned the SSHA houses as well as the local authority houses. He did not mention Western Heritable houses He has a large number of them in King's Park and I have many in my constituency. Before the rent freeze there was to have been an 800 per cent. rise in rents on Western 230 Heritable houses, largely negotiated by the hon. Member.

§ Mr. Teddy Taylor
Will the Minister give way?

Mr. Milian
That increase was to have come into force on Thursday but it has been frozen. Will the hon. Member say whether he believes that increase should have gone ahead?

§ Mr. Taylor
The rent on the homes the hon. Member was referring to were increased from £32 per annum to £240 per annum. In fact the rent was fixed at £340 per annum not by the Tories but by the rent assessment panel under an Act introduced by the Secretary of State in previous times.