LOCAL GOVERNMENT (SCOTLAND) BILL

HC Deb 20 January 1975 vol 884 cc1035-93

Order for Second Reading read.

Mr. Alick Buchanan-Smith (North Angus and Mearns)

On a point of order, Mr. Speaker. May we have an assurance that, due to the change in business, the debate on this Bill can continue for three hours after ten o'clock?

Mr. Speaker

The Standing Order provides for that contingency.

4.5 p.m.

The Secretary of State for Scotland (Mr. William Ross)

I beg to move, That the Bill be read a Second time.

This Bill is the last of four Bills in the programme of local government reorganisation. The main Scottish Bill—which became the Local Government (Scotland) Act 1973—followed the passage of the corresponding English Bill in 1972. Then there came a subsidiary measure, mainly on financial matters, for England and Wales—the Local Government Act 1974. A further Bill was required for Scotland, and most of it was worked out in consultation between the Scottish Office and the local authorities in 1972 and 1973. So the Opposition might have been expected to introduce a very similar Bill to the present one if they had remained in government last March.

Of course, with the Opposition's change of attitude to rating since going into opposition, and the present Government's decision last summer to set up an inquiry into the whole question of local government finance, some may say that we should defer all action until a more radical review of local government is possible. But let nobody deceive himself into thinking a radical change can be implemented quickly. The legislation required to implement any changes might well be complex—indeed, it is almost guaranteed to be so—requiring time to prepare and consider. Therefore, we should not deny to local authorities and ratepayers those improvements which can help them in the short term and can be made without prejudice to long-term changes.

So long as rating continues to be a major source of local finance, there are two changes which are important. The first is a proper system of rate rebates, so that the charge is moderated in relation to the individual ratepayer's ability to pay it, and this has already been achieved under the Act of 1973. Secondly, rate rebates need to be complemented by a proper instalment system enabling each individual's liability for rates—that is, for the net amount after deduction of any rate rebate due to him—to be paid in equal instalments throughout the rating year. This has proved extraordinarily difficult, even where rates are paid with rent.

Every consideration of instalments and rebates comes back to the problem that at present the individual's liability for rates under the present system is not known before, at earliest, July and in many cases not until October or November, half way through the local authority year—which means that any instalment or rebate has to be provisional for half the year, followed by an adjustment. To deal with this problem we must make a radical change to the Scottish rating system so that the rates due for each year are known at the beginning of the year.

Under the Act of 1973 the new local authorities are expected to prepare their budgets for each financial year and determine the rate poundage before the end of the previous year. But that is not enough. The levying of rates on individuals depends upon the valuation roll. For the last 120 years the rule has been that a new valuation roll for each year is prepared at the beginning of that year and finalised some time later. So rates cannot be levied with any accuracy until the adjusted roll is in the hands of the rating authority.

It now appears to be generally accepted that in future a new valuation roll should be made up only after each revaluation. Naturally, during the period for which it was in force, the roll would have to be continuously updated, to take account of new construction and other material changes.

The effect of the first few clauses of the Bill, together with the change of financial year, to which I shall refer in a moment, is that the valuation roll which will be made up under the present law during the coming summer—that is, the roll as at 16th May 1975—will remain in force until 31st March 1978, with changes being recorded in it as necessary. Then the next revaluation would be given effect to in a new roll which would be published early in 1978 and which would be in force from 1st April 1978 to 31st March 1983, subject again to the recording of changes.

These new arrangements could have have applied to the present local authority financial year which runs from mid-May—the Whitsun quarter day—in one year to mid-May in the next. But it had been envisaged that the local authority financial year would be brought into line with the Government's, and on further reflection it seemed that it would be best to make the change immediately. Clause 18 provides for that. To eliminate any doubt, I confirm that this does not affect the date for the transfer of functions from old to new authorities. The old authorities go out of office and their present financial year ends on 15th May 1975.

The new authorities have been in existence—at least in shadow form—since 7th May 1974, and the clause provides that for accounting purposes their first financial "year" will run from that date to 31st March 1976. However, they will be fully operational, and will levy rates, only for the last 10½ months of that year, from 16th May 1975 to 31st March 1976. For this shorter period, of course, the monthly or weekly amount of rates to be paid by any ratepayer should be the same as in a full year, which means that rate poundages should be proportionately less than of those for a full year. In the same way, the rate support grant order for 1975–76 has been worked out for a full year and then scaled down for the 10½ months.

Clause 4 deals with the arrangements for appealing against a valuation and introduces a new system of valuation appeal committees to match the new local government structure.

Clauses 5 and 6 deal with the special arrangements by which the operational properties of the public undertakings listed in Schedule 1 are valued for rating purposes. Normal methods of assessment are not practicable in these cases and it is necessary to prescribe valuation formulas for them. Valuation formulas are at present prescribed for certain of them.

Clause 6 confers power to make regulations, after consultation with the interests concerned, replacing any of the existing formulas I have mentioned by a new one.

The new rates instalment scheme is introduced by Clause 8. It provides for rates to be paid by 10 monthly instalments in each year. This leaves the month of April for issuing of demand notes and the making of necessary arrangements; the first instalment becomes due in May, and the last instalment is payable in February. This leaves the following March for catching up with arrears and should help to reduce the amounts outstanding at the end of the year on 31st March.

Of course, these instalment arrangements do not apply where the rates are payable with rent, and other ratepayers may choose to pay a single sum in October or, with the agreement of the rating authority, make other arrangements for payment. The subsidiary provisions on rating in Clauses 7 and 9 to 11 amend the existing law in relation to the other provisions of the Bill.

Clauses 12–15 and Schedule 2 relate to grants. Schedule 2 aims to improve the rate support grant system, which has served us reasonably well since 1967, giving greater flexibility as to the expenditure by reference to which the aggregate amount of grant is determined, and introducing an improvement in the distribution of the resources element.

I should mention particularly paragraph 5 of the schedule, which contains a new provision spelling out our undertaking to make special assistance available to local authorities which need to undertake exceptional expenditure as a consequence of oil developments. While the paragraph is expressed as relating to extraordinary expenses in general—not mentioning oil—the intention is to give assistance under it only to authorities affected by oil developments.

We considered whether the special assistance should be given by means of a specific grant outside the rate support grant system, but the expenditure in question is so closely tied in with ordinary rate-borne expenditure that it seemed better to deal with it within the rate support grant system, by adding to the aggregate amount of grant in respect of the extra expenditure, and then making a special distribution of this extra to the authorities concerned.

Clause 14 provides for the termination of most specific road and transport grants, At present these are paid at various rates and are subject to detailed and differing central Government control. They have been introduced piecemeal over the years and so result in anomalies and discrepancies. Some types of roads and transport expenditure are assisted by the Government at the rate of 75 per cent., other types at 50 per cent., some at 25 per cent. and others not at all. In place of the specific grants, rate support grant is to be extended to cover all current expenditure incurred by local authorities on roads and transport in their areas. By avoiding the detailed controls and the tendency to bias inherent in the present specific grant system, it is hoped that the new arrangements will allow the regional and islands councils a greater degree of flexibility and will facilitate a comprehensive approach to transport planning, especially in the cities and towns.

Clause 15 provides for other specific grants to be discontinued and absorbed in rate support grant, as and when possible, although we have not anything in mind in this regard at present.

The rate support grant order for 1975–76 has, of course, had to be prepared before the Bill could be enacted. This means that we have been able to give effect in the order only to those changes which can reasonably be anticipated. For example, we have been able to allow for the reduction of the period covered to 10½ months. After all, the effect on the order could be corrected by an increase order in a year's time if by any mischance the Bill was not enacted. We have also been able to provide for the absorption of road and transport grants into the rate support system.

Other changes by or under the Bill will have to wait until 1976–77—for example, the inclusion in rate support grant of expenditure on concessionary fares and the new arrangements for resources element.

The present arrangements for calculating the resources element cause much uncertainty for local authorities—both when preparing their budgets and throughout the year—about how much the grant will be worth. Uncertainty is inevitable so long as the net relevant expenditure of every authority enters into the calculations which determine each authority's share of grant. So, instead, the Bill provides for crediting a readily-determined sum of additional rateable value to each qualifying authority and calculating the grant as the product of the credited amount and the rate poundage fixed by the authority for the year. However, as I have said, the grant for 1975–76 must be calculated in the old way—as a proportion of relevant local expenditure. After grants, the Bill contains a number of financial provisions of different sorts. Clause 16 and Schedule 3 consolidate the existing law on the borrowing and lending of money by local authorities with necessary minor amendments. However, we have doubts about the form of the schedule. I hope in Committee to bring forward an improved and somewhat shortened version of the schedule. It is far too detailed at present and it is probably not appropriate to put it in fixed statutory form.

Clauses 17 and 18 amend the 1973 Act. The first fills a gap in that Act; the second I have already referred to in regard to the financial year.

The House will expect an explanation of Clause 19, which deals with the question of default. In the first place let me remind hon. Members of the purpose of an interim audit report in Scottish law. It is the first stage in a process designed to determine whether a loss or deficiency has occurred and, if so, who was responsible, and, if possible, to recover the amount of the loss or deficiency from the person or persons responsible. A surcharge is not a punishment. It is simply a means of recovering money which the courts will enforce. The Act of 1947 therefore requires the whole ascertained amount of the loss or deficiency to be surcharged on those concerned. After that it is up to the appointed auditor to pursue them by all possible means to secure the recovery.

The previous administration seemed to have recognised that these provisions of the Act of 1947 could give rise to unfair and anomalous situations. Their 1973 local government Bill provided that the Secretary of State, when considering audit reports on the accounts of the new authorities and recommendations on the reports by the accounts Commission, should take account of all the circumstances of the case and the means of the individuals concerned before deciding whether, and how much, to surcharge—a very considerable flexibility and latitude and discretion for the Secretary of State. Of course that Bill, which became the 1973 Act, applied only to the new authorities and, therefore, did not extend this provision to the existing authorities. We have decided that it is right to do so now. The wording is necessarily slightly different but the effect is the same. Like the 1973 Act, the clause allows a surcharge to be waived by the Secretary of State either partially or wholly, after consideration of all relevant information.

What is done in Clause 19 is, of course, different from what may be proposed for England. The reason for this is that the audit arrangements are quite different, and the Scottish Housing Act was very different from the English Act and the procedure under it in relation to authorities which failed to implement the Act also was different. In Scotland, every local authority eventually complied with the Act, though some were late in doing so.

In Scotland the issue dealt with in audit reports concerns what occurred in certain areas before the authorities implemented the Act. In these areas the rents were not increased as soon as the Act intended. The Exchequer was not affected because subsidies in Scotland did not depend on the rents charged. But this delay resulted in more being contributed from the rates towards the cost of housing than would have been the case if the Act had been implemented on time. There is no question of the ratepayers having to pay more in the future. The question is solely whether any of what has already been paid from the rates can be recovered from the councillors concerned, because, unlike the situation in England, the accounts are squared each year and rates levied accordingly.

The wisdom of the Conservative administration in seeking to remove anomalies for new local authorities is well seen by the difficulties which arose under the 1972 Housing Act for the old authorities. As I have already said, if the Secretary of State is satisfied by an audit report he must make a surcharge for the full amount involved. His latitude is very limited indeed, and on the latter point he has no latitude or flexibility at all. However, if no audit report is submitted no surcharge can be made. In other words, the situation depends entirely on the auditor. If he makes a report, the Secretary of State virtually has to act. If he does not make a report, the Secretary of State cannot act.

The situation over the 1972 Housing Act was that the estimated loss of rent income was about £4 million, compared with total rent income of about £80 million in 1972–73. In many areas the auditors, who are wholly independent in the exercise of their professional judgment, did not see fit to make reports on these losses, and, in consequence, well over half of the losses cannot even be considered for recovery from councillors in those areas for the benefit of the ratepayers. But audit reports were made in other areas for amounts totalling some £1.4 million out of this total of £4 million, and if the Secretary of State is satisfied that a loss in terms of the 1947 Act has been incurred, he will be obliged to surcharge the whole of this sum on the councillors concerned, numbering 227, to the tune of £1.4 million. The facts of none of these reports have yet been fully established. There are questions of interpretation of law which may have to be referred to the Court of Session.

Having explained the matter at some length, I hope that all hon. Members, recognising that there is no possibility of recovering sums of this order, will agree that the sensible course is to apply to these cases the procedure which Parliament has already enacted for the future. Of course, it is not possible to say at present what decisions would be taken in individual cases, for the simple reason that it will be necessary to establish the full facts and to consider all the information available.

Mr. Malcolm Rifkind (Edinburgh, Pentlands)

With regard to this repugnant clause, will the right hon. Gentleman inform the House whether this was done on the advice of the Lord Advocate? If that is the case, what was the advice, and was it the same as the advice given by the Attorney-General in a not dissimilar situation?

Mr. Ross

I assure the House that this matter can be dealt with by my hon. Friend the Under-Secretary of State when he comes to wind up the debate. But the Lord Advocate has been involved in this matter and it would be wrong for me to make assumptions about any advice he had given.

Mr. Teddy Taylor (Glasgow, Cathcart)

Is the question of the £20,000 in respect of Clydebank included in the £1.4 million and will the right hon. Gentleman say something about that aspect of the matter?

Mr. Ross

I do not think I wish to say anything about that aspect at the moment. If there is anything that requires to be said, my hon. Friend will deal with that matter when he replies.

I now turn to Part II of the Bill. This marks an important extension in Scotland of the principle of public accountability in administration by providing for the appointment of a Commissioner to look into complaints against local authorities and certain related bodies. His appointment, following on from those of the Parliamentary Commissioner for Administration and the Health Service Commissioner, means that most of the major fields of public administration in the country will be subject to a system of independent review by a person with full powers to seek evidence, examine witnesses and establish the facts behind a complaint. The exact scope of the Commissioner's work and the procedure he is to follow can be examined further in Committee.

The Commissioner will be appointed by the Crown with a general brief to look into complaints of maladministration. He will be able to look into the whole range of local administration, with only the few exceptions listed in Schedule 5, for example cases where the complaint could have been dealt with by a court of law or an appeal to a Minister or tribunal; matters concerning criminal investigation; local authorities' commercial activities—for example, transport undertakings—and their internal staffing. Under Clause 24 the Commissioner's field of action can be extended by an Order in Council removing items from the list of exceptions, but cannot be reduced.

The Commissioner's main weapon will be publicity, rather than compulsion. Whenever he makes an investigation he will prepare a report setting out his findings which the authority concerned must make available to the public, and where he finds maladministration proved he must satisfy himself that the authority is taking effective steps to put matters right. If not, he will prepare a further report, which again the local authority will have to publish.

The Commissioner and his office have to be housed and serviced. Clause 22 provides for a body designated by the Secretary of State to pay the salaries and expenses of the Commissioner and his staff, to provide them with accommodation, and to publish the Commissioner's annual report on his work, and for the body's expenses to be recovered from local authorities under a scheme made by the Secretary of State. I hope that it will be found possible to designate for these purposes a body which is already in existence to deal with local authority matters.

Part III contains formal provisions and minor amendments of enactments.

The Bill deals with a variety of matters of varying degrees of importance but in total of considerable importance to local government. It is wholly useful and largely—apart from probably one clause—a non-controversial measure. I commend it to the House. I hope that it will be found possible to pass it into law in the short period left before local government reorganisation takes place.

4.30 p.m.

Mr. Alick Buchanan-Smith (North Angus and Mearns)

I think that I may be in order if I first commiserate with the Secretary of State about his voice this afternoon. It sounded rather quieter than usual. I doubly commiserate with him because we are reaching a certain season, towards the end of January, when I know that he is particularly active in certain spheres. I hope that his health, at least concerning his voice, may return by next week so that on the three occasions when he has to use his voice for purposes other than political he has returned to his full strength.

Apart from that, there is not a great deal else on which I want to congratulate the right hon. Gentleman or to commiserate with him. What I found particularly disappointing in his speech was his rather cursory dismissal of any real intention on the part of the Government and the Labour Party to seek a radical reform of the rating system and of local government financing generally. As all hon. Members are aware, particularly with the tremendous escalation of rates throughout the country, there is serious anxiety and concern among people in all parts of the country—this is not confined to Scotland—who are worried about the burden of rates and whether rates is really a fair system by which to raise local government finance.

The right hon. Gentleman made a slightly unfair criticism of the Conservative Party. He said that we of that party were late converts to the view that there should be a radical reform of local government finance. But he missed the point that at least we are converts to this need. That is the point that matters.

In recent years one of the problems which have beset both major parties when in power is that we have all been too ready as politicians to say—we have said this in the House and outside it; members of the Labour Party have also said this—that the present system of local government finance has its deficiencies, and yet every time we have carried out a review of the system we have, in the eyes of the public, rather lamely said that there was no better system to put in its place. What has been lacking is the will and determination to find such a new system.

I am glad to be able to stand here today—as I was glad during the General Election campaign in October—and say that we as a party are committed to finding a radical solution, of the kind which the right hon. Gentleman rejected, to the whole question of the rating system, particularly concerning domestic ratepayers. As the House knows, we were committed within the lifetime of a Parliament to abolish the domestic rating system and at the same time, as an interim measure, to transfer the cost of teachers' salaries and to increase the Exchequer grants in respect of police and fire services. Therefore, under our proposals the domestic ratepayer would have seen immediate relief of the tremendous rate burden and a firm commitment to seek new means of financing local government.

One thing which discouraged me in what the right hon. Gentleman said was his rather timid and very limited approach to the whole question of the reform of local government finance. Indeed, even in the evidence given by the Labour Party to the committee that is now studying this question, one does not see any radically new ideas. In certain areas, particularly in relation to agricultural land, one even sees the case for extending rating as we know it. That is being advocated once again. Therefore, the Labour Party is disappointing in this respect. In its evidence, not only has it accepted a continuation of this method of local government finance, through the rating system, but it is even talking of extending it still further. Therefore, I condemn the right hon. Gentleman's timid approach to this matter.

Having said that, at the same time I appreciate and accept the need for this Bill at present, in certain respects, in order to deal with local government finance as a consequence of the Local Government (Scotland) Act 1973. I have spoken of the longer-term more radical reforms which I hope may prove possible. We view the Bill against the background of growing concern in Scotland about the burden of rates. The city of Glasgow District Treasurer has quite recently forecast an increase in rates of about 30 per cent. That must strike great worry into the hearts of many ratepayers in that area. We also have the worry in other areas of Scotland where rates are relatively low, the old local authority areas on the boundaries of authorities where the rates are higher. People there are desperately worried as to what their position will be when the reorganisation comes into effect in May. There is the case of Monifieth, on the edge of Dundee, with a rate of about 53p in the pound, whereas in Dundee the rate is just over 100p in the pound. There is great worry on the part of ratepayers in that area about what will happen as a consequence of the reorganisation of local government. Again, in Aberdeen the rate is about 87p in the pound, whereas in the landward area of Aberdeenshire it is about 70p and in my constituency in Kincardineshire it is even lower still. I must declare an interest as a ratepayer of Kincardineshire. I share my constituents' concern. What will happen to our rates after May as a result of the reorganisation?

That is my first question to the Minister of State. I hope I am right in assuming that the discretion that is given to the Secretary of State under Schedule 2(7) will be used to cushion the effect on ratepayers in Monifieth. Kincardineshire and other areas throughout Scotland, who otherwise will have to pay a very greatly increased rate simply as a consequence of the reorganisation of local government. It would be a great relief to ratepayers of those areas if the Minister of State could reassure them on that point.

But there is an even deeper point than this about local government finance, to which a number of my right hon. and hon. Friends will be referring today. That is the general worry at present over the rate at which the expenditure of local authorities is increasing. It is absolutely true that one element of these increases arises purely as a consequence of inflation. Yet what is worrying many people is that, although some of the increase is due to inflation—and some of it, I hope, to the cost of improved services—there is great anxiety that some of the increases now proposed may be related to inflation and may not be related to improved services. With certain local authorities ratepayers are worried whether extravagance is taking place.

A real effort is needed—I say this in no party political sense—on the part of the Government and the new local authorities, when they announce what the new rates will be and the rate poundages for the coming financial year, to explain how those are arrived at, how much is of an inflationary nature and how much is due to improved services, so that the ratepayers in Scotland will be able to judge whether the increases are justified. I do not say that in any destructive sense; rather I say it in an entirely constructive sense. Unless these matters are explained to ratepayers in Scotland, the reorganised form of local government in Scotland will get off to a very bad start, leaving a sour taste in the mouths of many Scots.

One point which perhaps needs explanation concerns the staff appointments of the new district and regional authorities. Perhaps there are good explanations lying behind some of the salaries being offered. I am worried that there is not sufficient explanation of the new posts or of the salaries at which they are being advertised. A number of those posts carry great responsibility but, nevertheless, there has been a great deal of criticism. There is a risk of many of our new reorganised local authorities in Scotland getting off to a bad start. Perhaps the Minister could say something about it when he winds up.

One or two of the new authorities have attempted, in a fairly mild way, to show that the total salary bills of the new authorities are comparable with the sum of those paid by the authorities which are being absorbed. Such reassurance is helpful, and I wish much more could be given more widely throughout Scotland so that ratepayers might be reassured about what they pay for.

Mr. Tam Dalyell (West Lothian)

Hear, hear.

Mr. Buchanan-Smith

The hon. Gentleman supports that point, which I have made in no party sense.

It is important that some explanation should be given because Scottish ratepayers are very anxious to know whether proper economy is being exercised in local government.

Economy is now probably of greater importance than at any other time in recent history.

I have dealt with the general aspects of rating. They are important in relation to the background against which we view the Bill.

Turning to specific aspects of the Bill, I should first like to deal with the more mechanical clauses in relation to the payment of rates. First, I welcome the introduction of the system of paying rates by instalments, which will introduce flexibility into the Scottish rating system. However, will additional staff be required to process the new system?

I agree that computerisation may be the answer. However, people in Scotland would like to know, in relation to the staff required and in relation to the computerisation programme of local authorities, whether the physical resources are available to give effect to the new proposals.

Secondly, whilst payment by instalments is clear in relation to local authorities, I should like the assurance that where rates are paid through another body, such as the SSHA, or through a development corporation the same facility of payment by instalments will be equally available to those ratepayers.

Reference was made to the 10½-month year in 1976. The Secretary of State hoped that the rate poundage would be proportionately lower for that period. I stress that the 1010½-month year could be a good excuse for hiding increases. Many ratepayers will be unaware of the 10½-month year, thinking that there will be 12 months in the 1976 rating year. I trust that Scottish local authorities will not charge higher rate poundages than appropriate. The 10½-month year could provide a smokescreen for higher rates.

The revaluation due in 1976 will be postponed until 1978 to give time for greater unification of the areas coming together. I understand that the assessors are seeking from the Government an assurance that in 1976 they should not be required to make any adjustment to the valuation roll, to reduce their work because of the heavy burden caused by unification. Reports of that have appeared in the Press, including The Scotsman today. I understand that such a request has been made to the Government. That proposal could have a material effect on the ratepayers.

If for one year there is to be a moratorium on the adjustment of the existing valuation roll, present ratepayers will have to carry the whole burden because the new ratepayers—for example those occupying new houses—will be left off the valuation roll. That is a curious suggestion. Perhaps the right hon. Gentleman will say whether that recommendation has been made to him. If so, what response does he intend to make? If it is intended to accept the suggestion, the effects on the existing ratepayers could be serious.

I now turn to two major areas of the Bill, one of which gives me cause for concern, while the other gives me cause for hope. The question of transport, the proposals for which are contained in Clause 14, causes me concern. During all the period I have been in Parliament, I have represented a rural constituency and I have never seen greater concern than has now been expressed about rural transport.

Last week the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) obtained an Adjournment debate on this matter. The attendance at that debate demonstrated the concern which is felt by people in Scotland. I accept that in removing specific grants for transport services the Minister is seeking to iron out some of the existing anomalies. I accept that what is proposed in the clause is of a reforming and improving nature. However, I am worried that the loss of the present specific grant element will mean that transport finance will be submerged in the rate support grant. I am worried that local authorities, at a time of economy, may try to cut back on such matters as transport. I am thinking particularly of the rural areas, where this matter may not be given so much urgency when it is submerged with the other services such as housing, which the local authorities may regard of greater priority and political importance.

That is the present worry. I express my concern over it. As the hon. Member for Roxburgh, Selkirk and Peebles said last week, the question of rural transport is a worrying one because of the high cost of petrol. There are very great increases in the basic cost of petrol, and on top of that there is the increase in VAT. Then we have the worry about the co-ordination of the different local authorities in subsidising bus services in rural areas. I believe that the Scottish Bus Group has to deal with about 150 local authorities. I hope that the reorganisation in May will ease this situation. My county council in Kincardineshire is at loggerheads with the various town councils about what should be subsidised and, indeed, whether there should be any subsidy. To some extent that issue will be ironed out by reorganisation.

The whole question of rural transport is important. I was disappointed that in a letter to me 10 days ago the Secretary of State rejected my suggestion that there should be a review of rural transport. There are ways by which help could be given. It was said in last week's Adjournment debate that such a review was taking place in England and Wales. If there is a need for a review in England and Wales, there is an equal need for a review in Scotland. I ask the right hon. Gentleman to think about it again. My concern about it is all the greater because of the Bill and because the question of transport services is submerged within the main area of the rate support grant.

Even though this element is submerged in the main rate support grant, I hope that in future the Secretary of State will still use his discretion to make grants in this area of transport in exceptional circumstances. That would be a great reassurance to people. The matter of transport is greatly worrying people in rural areas. I hope that the Secretary of State can give an assurance that he will keep a watch on the whole question of rural transport.

The second area in which I extend a welcome rather than express concern is in relation to the oil development areas. I speak not only as a Front Bench spokesman but also in my capacity as representing a constituency in an oil development area. I greatly welcome Clause 12 and Schedule 2 in relation to the special help which is promised. There is no specific mention of oil in the Bill, but I accept the Secretary of State's assurance—this follows from Circular 84/74—that this is to apply to oil-related development.

This is specifically related to oil at present, but has the right hon. Gentleman any other purpose in mind for the future? The schedule is drawn in a very broad way. It may be a good thing to have discretion for the future, but it draws attention to itself because of its broad nature. It would be a reassurance to those where other developments may take place to know that the power is here and that the Secretary of State is prepared to use it in relation to other developments and not solely in relation to oil.

I cannot resist the temptation of saying that there is no obligation on the Secretary of State to do this. I hope we can have an assurance that he none the less intends to use the powers contained in Schedule 2. Anyone representing an oil development area knows that there is great need for them. Last year the County Convener for Invernessshire, which is not as dramatically affected by oil development as some other counties, spoke of increases of about 10p in the pound as a result of the extra infrastructure the county was having to provide. The Finance Convener of Aberdeenshire County Council put it rather more dramatically, as The Scotsman reported last July. He said that they had had a pat on the back from Lord Hughes but not cash on the table.

I hope that these local authorities can see some cash on the table. In Aberdeenshire an increase is threatened of from about 15p on the domestic rate to about 17p on other rates. This demon- strates the burden which ratepayers in these areas are being asked to bear.

I do not complain about the short timetable. The local authorities were asked for a quick response to Circular 84/74. They were given till 9th December to state what their needs would be in 1975–76. It would be helpful if the Minister of State would tell us what reactions he has received. I have seen only Press reports. It would be helpful if the Government would give some indication of what is the expected rate increase or expenditure increase and precisely to what extent they will be able to put cash on the table to help ratepayers.

I come now to the narrow definition in the circular of the kind of development and service which will qualify for the extra help. In Committee and on Report of the Offshore Petroleum Development (Scotland) Bill my right hon. and hon. Friends sought to restrict the scope of that Bill to the exploration and extraction of oil, which we thought would be perfectly adequate to cover the whole question of oil development. We were told that it did not and that a much wider definition was needed. We had to use "exploitation" instead of "extraction" because the developments involved went far wider than just exploration and extraction. The definition of oil development work in the circular is given as "exploration and extraction"—the exact words which my right hon. and hon. Friends sought to write into that Bill.

I ask for an assurance from the Minister of State that the restrictive use of these words—I use his own comment—in the circular will not lead to any restrictions on local authorities in covering the normal type of expenditure which they have come to know in these areas is necessary in providing all the supporting services for offshore oil development; and also that any service that is positively incurred in relation to North Sea oil will qualify at least for discussion as to its eligibility for this grant.

Schedule 2(5) states that in assessing extraordinary expenses where services need to be provided the expected income of the authority from oil-related developments for that year is to be taken into account. It is fair that, if a local authority is to qualify for help, any income should be taken into account in assessing how much help it should be given.

But I am much more worried about the circular which refers not only to the income for the year to be taken into account, as the schedule does, but also to the rate income expected to result. It is worrying because the problem here is not of a long-term nature. In areas like the city of Aberdeen and the counties of Aberdeenshire, Ross and Cromarty and Inverness-shire, in the longer run the rateable value will increase. The problem is not so much one of income in the longer term; it is a problem of income in the shorter term, this year and next year, until these new developments have taken place and begin to yield rates.

The circular refers to the rate income which is expected to result, and I hope that because there will be an increase in income in four or five years local authorities will not automatically be disqualified from help in the short term. As the Convener of Aberdeenshire County Council said, what the ratepayers want to see is cash on the table. I hope the Minister can give us some reassurance on that point.

My final point concerns the most controversial part of the Bill, Clause 19. The Secretary of State went to considerable lengths to try to justify this clause and its inclusion in the Bill. I was surprised that the right hon. Gentleman could not answer the question whether the matter of the £20,000 fine was included, and I look forward to hearing the Minister on this point later. If the council concerned is to get away with a fine imposed in the proper course of the law, it will make the Bill and this clause in particular even more offensive than they are at the moment.

The right hon. Gentleman went to considerable lengths to say that the 1973 Act gave discretion to the Secretary of State to be flexible in such cases. I agree. This is a principle which was introduced by the Government of which I was a member. I do not disagree with that principle. What is of concern to us on this side of the House, however, is the retrospective nature of this provision. This is the really serious criticism that I make of Clause 19. It is retrospective. It helps people who have broken the law of the country as it was at a particular time. It is one thing to change the law in the future. It is quite different to bail out those who, in full knowledge of the law, sought to disregard the law as it stood. Clause 19 is a shattering comment on the Government's view of the rule of law.

In introducing this retrospection, the Government are including an incitement to others to pick and choose which laws they may observe. It is action such as this of a retrospective nature which brings politics and politicians into disrepute, particularly when the help which they give is intended to help those of a particular political colour who took certain action because of their dislike of the political colour of the then Government. The present Government are bailing out a minority of their own political persuasion who oppose the law because they are vocal and are members of the Labour Party. I believe that this is offensive to the rest of the community who may be less vocal but are just as important—that is, the majority of ratepayers in the rest of Scotland.

Therefore, while I welcome many parts of the Bill, and while there are parts which I hope we can improve in Committee, in Clause 19 the Government have spoiled what could otherwise be a very useful Bill.

5.5 p.m.

Mr. David Steel (Roxburgh, Selkirk and Peebles)

I begin by echoing what was said by the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith). I am disappointed that we have yet another piece of legislation perpetuating and, indeed, accepting the perpetuation of the rating system. The hon. Gentleman said that at least his party had been converted on this issue. That is true, but I remember many occasions when a Conservative Government were in office when we asked for changes in the rating system and received no answer at all.

The hon. Gentleman said that he had been converted, but there is a difference between securing the conversion of an Opposition and the conversion of a Government. The Tory Party is occasionally willing to be converted when in opposition but not when it is in government. However, we welcome converts in any part of the House.

When the effects of reorganisation on the level of rates are felt in the next couple of years, the public revolt against the rating system will be stronger than it is already. It is no answer to say that the Government already have one inquiry into local government finance. We ought to be looking ahead and seeing whether, as an interim measure, we could relieve local rates of a proportion of the burden of teachers' salaries and whether, in the long run, we could replace this ancient property tax with a more equitable system of local income tax.

The Bill contains a number of miscellaneous provisions which it is perhaps more appropriate to consider in Committee. I welcome very much the step we are taking in the Bill to set up a Commissioner for Local Administration, but I plead strongly with the Secretary of State that, as we are a year behind the English experience in this matter, we should be ready and willing to learn from their experience in setting up this system. I hope he will look sympathetically on amendments to this excellent part of the Bill which will allow complaints to the local government commissioner to come other than through a local councillor.

My colleagues in England tell me that there is provision in the legislation for the ombudsman to accept complaints other than through a local councillor where he is satisfied that no local councillor is willing to make a complaint, but it is a cumbersome system. One of the duties of a Member of Parliament is to be a local ombudsman where injustice is perpetrated by a local authority, and it seems to me to be a proper extension of that rôle that a Member of Parliament should be able to submit to the commissioner any complaint that he receives about a local authority where a local councillor may not be willing to do so.

The hon. Member for North Angus and Mearns made some kind remarks about the Adjournment debate on transport, and I do not wish to go over that as I have had the advantage of making a speech on that subject last week. There is, however, one matter that I should like to take up. From the reply to that Adjournment debate I understood that the inquiry into transport in rural areas was a United Kingdom inquiry. The hon. Member for North Angus and Mearns understood differently. I should like this matter cleared up this evening. If the hon. Member is right—he usually is—there is something wrong here. I believe that there should be Scottish Office participation in the inquiry, or else the Scottish Office should have its own inquiry.

The problems of transport in rural areas are more extensive proportionately in Scotland than they are in England and Wales. If we are having no part in this inquiry, steps should be taken to put that right. If I was wrong in believing that there would be Scottish Office participation in the inquiry, I hope that the situation will be remedied. The problems of rural transport are greatly aggravated by Clause 14, by the future rate support grant cutback and by the effect on the ability of local authorities to subsidise rural transport, and it is unfortunate that this matter is not treated with the seriousness with which it is treated in England and Wales.

We on the Liberal bench, too, take strong exception to Clause 19. My party, perhaps more than any other, has always had a rooted objection to retrospective legislation. I shall not rehearse the matter at length, but our objection is simply that if people are willing to pursue their political views to the point at which they come into conflict with the law, that is something for which they may, in varying degrees, be admired, according to the extent of one's sympathy with them, but if they do it in the belief that their friends in high places will subsequently change the law, they do not deserve such admiration.

We hear a good deal nowadays about the sovereignty of Parliament. I think that the sovereignty of Parliament is occasionally dented or pushed about by those outside who manage to persuade people inside subsequently to make changes in the law which Parliament had previously passed. It is a bad principle. It is a clear issue of principle, and we could probably argue about it all night without convincing one another either way, but we on this bench stand firm on it.

I hope that under the terms of the Long Title, which allows for minor amendments to the Local Government (Scotland) Act 1973, the Government will regard with sympathy an amendment which I hope to be able to move, either in Committee or on Report, to remove from the 1973 Act the requirement on the Secretary of State to make a police amalgamation scheme for the Lothians and the Borders. I shall not trouble the House with this at length tonight because I am sure that there will be an appropriate occasion, but I am sure that it would be right for the Scottish Office to reconsider this matter, because there have been two significant changes since the 1973 Act was framed. No doubt, it will not surprise the Secretary of State to hear this view expressed.

First, both regions have now come into being. There have been elections, and they have their democratically elected councils, which they did not have when we framed the 1973 Act. Both councils have said that they do not wish to proceed with the amalgamation scheme. Each is content to have its own police force. There is, therefore, a good democratic case for asking why one should go ahead and force two reluctant democratically elected local authorities into an amalgamation scheme which they do not want.

Mr. Dalyell

The hon. Gentleman knows that there has been a great deal of discussion. Does he dispute the professional police view about the advantages of amalgamation?

Mr. Steel

I am sure that the hon. Gentleman will wish to be fair. I take it that he refers to the professional police view as expressed by the Scottish Police Federation. That federation has never made any specific comment on this particular amalgamation, although the hon. Gentleman is right to suggest that the federation in general terms prefers large forces to small. I acknowledge that, but I come now to my second point, which I hope the hon. Gentleman will for his part accept.

The second change is that before the 1973 Act was passed police opinion in the Border area, where it was canvassed, was in favour of the amalgamation scheme, but police opinion recently canvassed throughout the force—it was done in November—is now very much against it. The view of the police, of police officers on the ground, as well as of the public authorities in the area is that they would be better off with a separate police force.

I hope to have a later opportunity to go into that in detail. I merely give advance warning now of an amendment which, I believe, it would be proper to make in the Bill. It would end a bone of contention between the two authorities—in fact, they are now both agreed—it would prevent the higher level of expected expenditure, certainly for the Borders area, and it would end an element of undemocratic procedure in the sense that, of necessity, a joint board is always less democratic. I hope, therefore, that it will be possible to accept an amendment of that kind in the appropriate part of the Bill.

5.14 p.m.

Mr. Peter Doig (Dundee, West)

I was pleased to hear the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith) say that the Opposition had now been converted to the need for a radical change in the rating system. I listened carefully to hear what he meant by that, and it turned out that all he meant was that expenditure on teachers and the fire services should be met by the Government. He suggested no other change.

I do not call that a radical change. It would make little difference to the present system, and it would certainly not reduce any of the unnecessary expenditure now experienced, which could, on the other hand, be cut by a radical change in the system. The hon. Gentleman should think again about it. If he cares to read some of my speeches on the subject, he will realise what a radical change would be. A radical change would be to abolish the rating system altogether. That is what is needed.

Mr. Buchanan-Smith

I said that it was our intention to abolish the domestic rating system.

Mr. Doig

If that is what the hon. Gentleman said, I did not hear it, but I may have misheard. All I understood from his speech was that he wanted to put expenditure on teachers' and the fire services directly on to the Government.

Why should we abolish the rating system? In the first place, more than half of all local authority expenditure is met from Government sources anyway, and in some places the percentage is higher than that. Thus, the Government are already meeting half the cost, but we still keep in being an expensive rating system. We hear a good deal about the alternative of a local income tax, but a local income tax would still cause substantial expenditure, and duplicated expenditure, because we already have an income tax system in Great Britain. It would be far simpler to continue raising revenue on the present national basis, but adding to it the amount of revenue required to finance all local government expenditure. I realise that a large sum of money is involved, but it is a large sum of money being raised now. The only difference would be that it would be raised in a different way.

What would be the advantage of raising it in that different way? First, as I say, unnecessary expenditure would be saved. Under the present system, we have surveyors of rating, with large staffs, who go out and measure premises, attach to them mythical values per square foot, and then, after a lot of complicated calculations, arrive at gross annual values for the various houses, shops, factories or whatever they may be. It is a stupid and farcical system.

We then have appeals against those assessments, entailing further expenditure. There have to be valuation appeal committees, and then there has to be a land valuation court to deal with arguments arising in relation to appeal committee decisions, and so on. It is a ridiculous system, and it raises the money in an unfair way.

It would be cheaper if the money were raised through national taxation, and it would be fairer as well. Under the present taxation system, the Government do not raise all their revenue from income tax or any other single tax; they spread it out in the fairest way possible. Local government revenue could be collected in the same way. It would be much cheaper because we could do away with the assessors, appeal committees and the rest.

I have already said that such a system would be fairer. At present, a good many wage earners who are not householders and pay nothing towards the rates are quite capable of doing so. If it were done on a national basis, they would have to meet their fair share according to what they could afford.

It would be fairer in several other ways. Under the present system, a person who improves his house is financially penalised for so doing. The Secretary of State for Energy has suggested that people should install central heatting and double glazing in their houses in order to save fuel. That is what the Government want, and it would at the same time provide more comfort. But what happens if someone makes these improvements? One of my constituents did both: he installed central heating and double glazing. The central heating increased the rateable value by £15 which meant that my constituent paid an extra £18.30 a year in rates. His double glazing caused the rateable value to rise by £8. It cost him £203 to have it installed and now he pays an extra £9.76 a year in rates. That is greater than his total saving in fuel. Where, therefore, is there an incentive to carry out improvements so long as this archaic rating system operates? We are setting one Government Department against another. One wants to save fuel and the other imposes a financial penalty on anyone who follows the advice of the first. These are examples of anomalies which show up the faults of the system. I have a letter here which gives all the details.

When the hon. Member for North Angus and Mearns speaks about a radical change, he should consider a truly radical change, and that would be total abolition of the rating system. The Bill does not abolish that system, and neither Front Bench advocates its complete abolition. We therefore have to make the best of it. Under it could arise the case which was explained by the Secretary of State where an auditor could decide to impose a surcharge on a councillor where the auditor feels that the councillor has not complied with the Act. On the other hand, my right hon. Friend explained that the Secretary of State had discretion in certain cases by which he could reduce the surcharge. He went on to give the global figure of cases at the moment and the number of councillors involved. I calculate that if the total sum was averaged out, each councillor would be surcharged £4,830—[Interruption]. I admit my calculation was a rough one and I could be wrong.

However, it is clear that very large sums are involved in this surcharge. Some MPs have had to pay surcharges that lasted for years, although that ceased recently. Many other councillors will go on paying surcharges for years to come. Not all the surcharges arise from a defiance of the law. A surcharge must have the approval of the auditor, and it is clear that some auditors do not give the matter a great deal of thought. I can remember the case in Dundee. The dispute concerned a committee fixing a sum for rent in a housing scheme and the council refusing it because it would be out of line with other housing schemes of a similar nature in the same district. It cost a great deal of money to have a public inquiry. At the end of it the then Secretary of State wrote to me asking for reasons why I should not be surcharged. Judging from my right hon. Friend's explanation, the auditor at the time must have considered that this was an appropriate matter to be surcharged upon—a question of judgment and no more by an unpaid group of councillors.

I could have been surcharged if the Secretary of State had decided to approve the surcharge. No doubt some Tory Secretaries of State would have done that knowing that only Labour councillors were involved. The opposite could also happen. There could be the case of a Labour Secretary of State having to decide whether or not to surcharge a group of Tory councillors—although it would be unlikely that it would be on the same sort of issue. A councillor could be surcharged because he made a mistake.

If councillors are to run the risk of being surcharged thousands of pounds because they may have made an error of judgment in an unpaid job it could lead to difficulty in getting councillors in the future. My right hon. Friend the Secretary of State should take that into account. If I were starting out again in life, knowing that I was liable to be surcharged to the extent of about £20,000 if I made an error of judgment—and in the case in which I was involved it was not even an error of judgment, because I think I was right—I would never stand for the council. I would never have allowed either of my sons to do so either. It represents a terrible risk for anyone to take. It would be amazing if we ever managed to get anyone to serve on coun- cils if they had a threat like that hanging over their heads.

I am sorry that the Bill does not impress me greatly. Many things are wrong with it, although I am slightly hopeful about one or two aspects. One hopeful point is that valuation appeal committees are to be appointed by the sheriff rather than by the Secretary of State. I hope that this improves matters. I can remember appealing on three points against a valuation on my own house. The first appeal committee rejected all three aspects. I paid the rates until the next revaluation and in a different valuation court made the same three points and was upheld on all of them. The case was taken to the Land Valuation Tribunal in Edinburgh where again my case was upheld. All this suggests that the first valuation committee was not very good. This sort of thing is happening all the time. I know of many people who have put the same argument to different valuation committees and ended up with totally different results. It is time that the committees were a little better instructed on what they should do and what they should look out for, and I hope that sheriffs in the future will do better than Secretaries of State have done in the past.

5.28 p.m.

Lord James Douglas-Hamilton (Edinburgh, West)

I am grateful for the opportunity to speak in the debate. We do not by any means condemn every clause of the Bill. It contains certain Conservative proposals. Clauses 21 to 32 in particular relate to the creation of the office of ombudsman, and that we particularly welcome. The last Conservative Government believed that it was essential to create a Parliamentary Commissioner who would review local government procedure. In October 1972 the Conservative proposals were outlined in a consultative document issued by the Scottish Development Department.

Another matter we welcome appears in Clause 12 and Schedule 2(5) which refer to grants to assist certain areas in Scotland. The Secretary of State mentioned that the proposals were related primarily to areas affected by oil developments. There is, however, tremendous feeling among all the political parties in Edinburgh that the outer city bypass should be started and completed as soon as possible to relieve congestion in the city and to ensure that heavy lorries do not use side streets. I hope that when the Lothian Region councillors apply to the Scottish Development Department on this point in due course they will receive a sympathetic hearing.

The first matter on which we fundamentally disagree with the Government concerns rates. I entirely agree with the hon. Member for Dundee, West (Mr. Doig) that what is required is a far more radical change. I should be happy to send him a copy of the Conservative election manifesto, which stated that the rates would be totally abolished within the next five years, or the lifetime of this Parliament, if we won the election.

We are also still pledged to transferring the cost of teachers' salaries, up to a certain number of teachers for each local authority, to the central Exchequer. I understand that the Labour Party gave evidence to the Layfield Committee that that proposal should be adopted. It seems to me that its evidence to the committee is more radical than the Bill.

We do not feel that the Bill goes far enough. We are very much in favour of increasing grants for expenditure on police and fire services in order to relieve the rates.

Obviously, rates in various parts of Scotland will differ greatly once the Housing Rents and Subsidies Bill is enacted. We want to act fairly towards all ratepayers and ensure that rates do not differ widely from area to area.

I wish to deal in particular with what the Secretary of State said about retrospective legislation on illegal payments by councillors. Under Section 201 of the Local Government (Scotland) Act 1947, if any councillors authorise payments out of the general rates fund for purposes which are not permissible the auditor must report to the Secretary of State for Scotland, who shall surcharge the councillors concerned. I was not clear what the right hon. Gentleman meant when he said that the auditors had not reported. It seems to me that under that section they are required to report. If they have not reported when they were supposed to do so, I shall be grateful to know the reason why.

The newspapers in Scotland are not always correct, but the Scottish Daily Express has estimated that on or about 27th November 1974 the total lost as a result of the refusal to implement the Housing Finance Act was about £1,431,931. I should be grateful if the Secretary of State could confirm that that is an accurate figure.

Mr. David Lambie (Central Ayrshire)

My right hon. Friend has already done that.

Lord James Douglas-Hamilton

Was it in the region of 24 local authorities that were defying the law in Scotland, and will the ratepayers of those authorities have to make good the sum which was lost?

Mr. William Ross

They have already done that.

Lord James Douglas-Hamilton

And when the Clydebank Council paid fines of up to £20,000, was not that sum paid out of burgh funds quite improperly?

Does not Clause 15 mean that the Secretary of State can indemnify any councils or councillors in Scotland which defy or break the law? If the clause becomes part of the law, how can any Government expect any councillor or council to be deferred sufficiently by the threat of a surcharge? The right hon. Gentleman said that a surcharge was not a punishment. When I was a councillor, if I had been faced by a surcharge I should certainly have regarded it as a penalty.

The hon. Member for Dundee, West spoke about certain errors of judgment. If the hon. Gentleman charged the Clydebank councillors with having committed an error of judgment, they would strongly disagree. I understand that they said that what they did was thoroughly deliberate, because they passionately believed in it as a matter of conscience. I was in court both times when Lord Wheatley made a pronouncement on the subject, using words to the effect that if the law was defied certain consequences were likely to follow.

The trouble with the Bill is that if the law is defied there may be no consequences. That would set an extremely undesirable precedent.

Many people in Scotland are self-employed people who strongly resent having to pay a great deal more on their insurance stamp. If they feel that certain others can get away with defying the law, with no come-back or penalty, they, too, may feel entitled to take the law into their own hands. We strongly oppose anyone taking the law into his own hands. However much we may sympathise with the self-employed who are paying out a great deal, and with ratepayers who have to cope with soaring rates, we support the law. The whole point of the rule of law is that one must obey laws one dislikes until they are changed through democratic means by Act of Parliament.

Our party strongly supports the rule of law. Civilised government is possible only as long as it is recognised that nobody can be a law unto himself. All persons are bound to obey the law of the land. No one has the right to take the law into his own hands. Law and freedom go in partnership. If the one is destroyed, the other will be destroyed and anarchy will be the result. Respect for the rule of law is indivisible. If one part of the law is brought into disrepute, encouragement is given to those who seek to defy other parts of the law.

The great strength of British Governments for centuries has been that no responsible political party has given encouragement to lawbreakers. All of them have held that the law is supreme and can be changed only by Act of Parliament. There is all the difference in the world between mitigating a penalty and removing it altogether.

5.36 p.m.

Mr. George Reid (Clackmannan and East Stirlingshire)

I am well aware that it has often been said that, whereas taxes are paid in sorrow, rates are paid in anger. Given the escalating costs of local government in Scotland, there will be many angry and hostile ratepayers in that country. The high level of salaries paid to local government officials, the general dissatisfaction at home and in the House with the reformed system of Scottish local government, and the uncertainties about the rôle for local authorities caused by the arrival of a Scottish assembly, will do little to temper that anger over the next year.

I appreciate that the Bill is primarily a piece of enabling legislation, tidying up the loose ends left by the 1973 Act. My main regret is that there has been no attempt simultaneously to tidy up the whole amorphous area of local government finance and to consider other potential sources of revenue.

In May we shall have sweeping changes in the geographical areas and powers of local government in Scotland, but without similar fiscal reforms in the system which has obtained since Stuart times. Without wide fiscal reforms, the freedom of decision of the new local authorities will be cramped. In effect, a seventeenth-century, purely notional system of local property tax will be perpetuated. There will be doubts a bouts the future financing of local authorities through the Scottish assembly. I believe that the regions will be favoured at the expense of the districts.

I appreciate that rating levels, rate collection systems and the application of rate support grant do not have the glamour or appeal of that new Lochinvar who has arrived on the scene, the Commissioner for Local Administration. I welcome his arrival for two reasons. First, the smaller the number of councillors, and the larger the geographical area they cover, the more remote people will be from their own councillor. To some extent the old personal ties will be removed. It will be difficult for a person with a sense of grievance to have a genuine hearing. In those circumsaances a final court of appeal is obviously to be welcomed.

Secondly, I welcome the Commissioner because local authorities in future will be big business. The Scottish Press is already full of dark talk of local Mafias, power bases and empire building. Whether or not those insinuations are true remains to be seen, but at least it is proper that the machinery for investigating those complaints should be to hand.

I hope that the Secretary of State will examine experience in England and allow a freer approach to the Commissioner. I hope that he will seek a rôle for him somewhat wider than the mere propagandist rôle he discussed earlier in the debate.

The second provisions which will clearly attract most attention and interest are the so-called "waiver" powers under Clause 19 which are reserved for the Secretary of State. In general I accept them, although I have reservations about any form of retrospective legislation. I am well aware that in recent years there has been doubt in local government as to where legitimacy lies. Does it lie through the ballot box, with councillors having a definite obligation to the people in their own community who elected them in specific local circumstances, or does it lie along narrowly defined statutory lines, a distinction of which the people of Clydebank are aware?

Clause 19 is probably a realistic assessment of the situation. It allows for a full review of local circumstances and information about the means of any person against whom a charge may be laid.

Mr. Rifkind

Does the hon. Gentleman accept that in taking into account all the circumstances it might be desirable to ensure that the person who committed an illegal act had knowledge at the time that this act was illegal?

Mr. Reid

There are circumstances which should be considered at that level. But let us also remember that there are differences in the audit and housing systems in Scotland which have a bearing on this situation. While retrospection may therefore, have to be engaged in, it should not be engaged in too willingly.

Mr. Teddy Taylor

Will the hon. Gentleman make quite clear what he is saying? Is he in sympathy with the Clydebank councillors for what they did?

Mr. Reid

I am saying that it was a difficult situation, and that there is some difficulty about the question where legitimacy lies between people who have obligations to their electorate and the narrow statutory confines which are placed upon them.

The "waiver" clauses, while they attract most attention in the Bill, will not have as much impact on the daily life of Scots as the financial, rating and grant provisions. I shall comment briefly on some of these matters without straying into fine detail which may be the subject of amendments in Committee.

In the valuation procedure we have an end of a tradition which dates back to 1845—namely, the abolition of an annual valuation roll and its replacement by a quinquennial roll. It makes sense, in this changed circumstance, to allow assessors to make alterations to rateable values at any time. All hon. Members will be well aware of situations in which householders have taken a substantial time to declare improvements in their properties, or situations in which industry have been rated at less than true sums because of error.

What interests me is the simultaneous change in rights of appeal. Quite clearly there will now be continuing work for local valuation appeal committees instead of frenetic activity in the autumn of each year.

I am concerned with the way in which that will work out in practice, given the size of some of the regions, especially Strathclyde. In Strathclyde the chairman is likely to be drawn from the Glasgow Valuation Appeal Committee. For Glasgow that is quite satisfactory. But in the case of remote districts, and even Renfrew and Inverclyde, it would be destructive of local autonomy if the chairman or deputy chairman were not locally connected. It is desirable that the model scheme should provide for the appointment of chairmen and deputy chairmen drawn from members of each valuation appeal committee and that such chairmen should all be deputy chairmen of the panel.

Likewise it is difficult to see how, in Strathclyde, one secretary and an assistant could cover the meetings of valuation appeal committees covering 19 district areas. Undoubtedly, many assistant secretaries are called for.

I should welcome some clarification of Clause 10 as it affects district councils, development corporations and the SSHA. I am not clear whether this clause merely gives power to rating authorities to make arrangements or makes it mandatory on a district council and development corporation to co-operate if the rating authority wishes to make an arrangement. Can it mean that the bodies who do not want to collect rates can put their houses on missives covering a period of a year or more? Some clarification on that point is necessary.

Earlier I referred to the likely imbalance caused by distribution of the rate support grant, with regions favoured at the expense of districts. Hon. Members will have received representations that the needs element should be allocated between the two in proportion to respective shares of reckonable expenditure, giving districts approximately 14 per cent. of the available grant.

There is a clear need for a more equitable system of distribution as the proposed district allocation makes no attempt to measure the needs of the various districts. Various methods have been suggested, such as density weighting on the basis of wards, factors for population increase, a fixed sum per head of population, plus a percentage of expenditure net of specific grant. I recognise that the distribution of the needs element poses problems. However, I hope that that is an area which Her Majesty's Government will examine again. Where there is a political will a financial way can be found.

What is totally wrong is the refusal to continue the specific relief granted last year under which ratepayers suffering an increase of more than 20 per cent. were relieved of 60 per cent. of the excess. That was not a special one-off measure. Quite obviously it was intended to ease English and Welsh authorities through their year of local government reorganisation. It is right and proper that Scottish authorities, at a time of roaring inflation and when they are going through a similar transition, should have the same relief.

That again reflects the basic problem of being tied, conservatively, to a traditional system of finance. With a Scottish assembly waiting in the wings it is now time to start considering new methods. We should be looking for a wider tax base, which grows with incomes. We should be investigating a local income tax, a local sales tax, a local VAT, a local payroll tax, a local vehicle duty, and surcharges for earning non-householders, in which category I believe there are between 600,000 and 700,000 persons in Scotland.

By all means let us keep our options open, but let us welcome the local finance opportunities which a genuine devolution of power to the Scottish assembly will bring. As part of that process surely we should consider the shift of police, fire services and education to central Government. At present, too many anomalies exist in those areas. For example, there are the different attitudes of different authorities to whether in-service training should be fully paid. There are the current ludicrous proposals from some quarters in Strathclyde—a region which has the highest rate of illiteracy in Scotland—that there should be no further recruitment of remedial teachers until the recruitment of general purpose teachers reaches a satisfactory level. There is the equally absurd suggestion that there will be no teacher recruitment at all in Dunbartonshire until Lanarkshire is brought up to scratch.

Those are the areas where there is a clear imbalance between national policy and local need. I make no pretence of my dislike of the reformed system of local government. The ideal model for Scotland is an assembly with broad strategic powers, an increased number of all-purpose authorities and strong community councils. I recognise that the present back-to-front botch-up has to be made to work in the short term and that the Bill will go some way towards that. Ultimately a new model will have to be introduced, and by that time I trust that we shall find a more equable and democratic system of local finance.

In this country all powers not specifically granted to local government are reserved to central Government. In Norway the reverse is true. That may well prove a starting point for genuine democracy at all levels in the new Scotland.

5.48 p.m.

Mr. David Lambie (Central Ayrshire)

I shall take up some of the matters raised by the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid). On Clause 19 I must declare an interest. My father, Treasurer Lambie, and my wife, ex-Provost Mrs. Netta Lambie, could be involved in the consequences raised by the clause if it is accepted tonight. I must make it clear that I am not speaking on behalf of my father. He is against the clause. He has been through local government since 1929. He will be in local government until 15th May. He has been a provost, a bailie, a treasurer, a convener of the finance committee and a convener of the planning committee. The only thing that he has not done is to serve a gaol sentence for carrying out his policy in local government.

My father was hoping that he would end his career in local government by serving a period in Barlinnie Prison for the principles in which he believes. At one stage in the Court of Session he thought that Lord Wheatley was going to send him to gaol. He was involved in a case of contempt of court. Unfortunately he was not gaoled because Lord Wheatley adjourned the court and beat a hasty retreat. He did not want to be the person who would gaol my father.

In speaking with this interest, I also speak with conviction on behalf of the 500 or more councillors involved in opposing the Conservative Government's Housing (Financial Provisions) (Scotland) Act. In addition to the 273 councillors indirectly involved, 227 were directly involved, and when the roll of honour is written in the history of local government during this period the names of these men and women will be writ large. I am proud to be associated with them and all those councillors throughout Scotland who stood up against the Conservative Government.

My right hon. Friend the Secretary of State for Scotland has stated that the total loss in rents was about £4 million, while the reports submitted by the auditors originally put the loss at about £1.4 million. I regard that not as a rent loss or a rate loss but a rent gain to the tenants involved in these towns, brought about by the actions of the Labour councillors.

The Opposition often talk about the ratepayers. They should not forget that 80 per cent. of householders in Scotland are tenants. Whether they be in council houses, in Scottish Special Housing Association houses, in new town development corporation houses, or in ordinary rented property, 80 per cent. stay in rented accommodation. The overwhelming proportion of rates are paid by council tenants in Scotland. I put it to those who, speaking as they do with English accents, do not know the people and the traditions of Scotland that they should remember that in comparison with England, where council tenants are in the minority, the overwhelming majority of Scottish people stay in council housing and, therefore, contribute the overwhelming proportion of the rates.

Only the rump of the Tory Party in Scotland is left in this House because the ratepayers got fed up with the policies of the Conservative Government. I am proud to be associated with Saltcoats, Clydebank and Cowdenbeath, whose councillors stood up to the Conservative Government when that Government were attacking their tenants. It would be disastrous for local government if we ever reached the stage when local councillors elected by the local people were not willing to stand up and be counted against vicious acts which they think have been imposed on their people by the Government of the day, whether that Government be Conservative or Labour.

Mr. Teddy Taylor

If this is a matter of great principle and not just a question of party politics, can the hon. Gentleman explain why his father and others implemented the Tory Act and imposed the rent increases?

Mr. Lambie

The hon. Gentleman must recognise that at the end of the day the power of councillors and local councils is limited in resistance against the actions of an all-powerful Government. The reason why the councillors had to capitulate eventually was the lack of support from the Labour and trade union movement in Scotland. However, the Labour and trade union movement gave an assurance that the Act would be repealed at the first opportunity, and we are grateful to my right hon. Friend the Secretary of State for Scotland and to my right hon. Friend the Secretary of State for the Environment for putting through that repeal now. The Government are carrying out their promise to the rent payers of Scotland. I am glad that the Tory Rent Act is finally to be removed from the statute book.

The Opposition have talked about retrospective legislation. Those of us who sat throughout so many long hours in the Standing Committee considering the Housing (Financial Provisions) Bill will recall that one of our main objections was that it introduced retrospective legislation on grants and subsidies. Under the measure, the first subsidy was to be the residual subsidy, but in this the then Government were breaking agreements which had been made since the end of the First World War between Governments and local authorities on housing finance.

Local authorities throughout Scotland, from the end of the First World War, built houses in agreement with the Government for guaranteed sums of money by way of subsidy over periods ranging between 40 and 60 years. Most of these agreements have not been fulfilled so far, yet the Conservative Government, many lawyers among them, introduced retrospective legislation to break the agreements, which had been made between local authorities and Governments of all colours—not only Labour but Liberal, National and Conservative. Local authorities embarked on large house-building programmes on the basis of guarantees given to them by the Government of the day that they would have subsidies covering periods of 40 to 60 years.

In the Act the Conservatives started the process of phasing out these subsidies. That is why we called the Act a piece of class legislation and a vicious attack on the people of Scotland, both in council and in private rented property. This was why the Labour and trade union movement in Scotland campaigned actively against the Act, and why it told councillors wherever possible that if they could get the support of the local people they should stand up and be counted on the issue of opposing implementation of the Act.

I am therefore proud to be associated with the Labour Government's decision now to introduce Clause 19 of this Bill and repeal the Conservative attack on councillors who were prepared to stand up against the vicious Housing (Financial Provisions) Act. I am disturbed by only one small thing in this context. Clause 19 contains the words the Secretary of State … may … if he thinks fit …". I hope that my right hon. Friend will stand firm and carry out the policy of the Labour and trade union movement in Scotland in all cases and give the people of Scotland some say again in the determination of rent levels.

5.59 p.m.

Miss Harvie Anderson (Renfrewshire, East)

I do not seek to follow the remarks of the hon. Member for Central Ayrshire (Mr. Lambie), many of which will be greeted widely with the contempt they deserve. I, too, regret having to perpetuate the rating system as set out in the Bill. I wish to speak briefly, so I shall not go into the detail, but, overall, I wish to express alarm at the burden of rates and my concern that the likely increase has been aggravated by local authority spending.

There are three particular facets of that. Much of local authority spending is, of course, statutory and much is desirable, but accumulatingly a burden is being placed on many that they simply cannot bear. I intend to quote only one example, but it is a good illustration. It concerns a man who has been retired for about 10 years and who on retirement bought his own small, comfortable dwelling-house. That was in 1964 when the rates were £66 3s. 3d. Ten years later the figure was £168.72, yet his pension had not stretched as the rates had been stretched.

That illustration could be repeated not hundreds but thousands of times in my own area. Such instances alert my ever-increasing concern about what is to happen under the new local authorities that have just been set up.

The new authorities cause me deep disappointment. I fully agree with the recommendations to which I subscribed as a member of the Royal Commission on Local Government in Scotland, but three factors have changed dramatically since the commission's proposals. First, there have been what I regard as the wholly unacceptable regional changes in our recommendations. They were made by the Government of the day, and I feel no shame in saying that I know full well that it was my own Government that made those changes. They dramatically altered the intention behind our recommendations. I deplored those changes then, and I continue to do so.

Secondly, there is now the widely accepted—though not by me—proposal for a Scottish assembly. Whatever one's view, that undoubtedly substantially alters the position, especially of the regions as envisaged by the Royal Commission during our full three years of deliberation.

Thirdly, there is the weight of bureaucracy and the disgraceful agreement on salary increases for the huge new establishments in both region and district. I mean that the establishment of the posts is far too big. The establishment has been agreed in a way that I hope the Minister will explain to the hard-pressed ratepayers.

How does it come about that at this time of limitation posts have been extended and many more people are employed, often to do only the same work, and in almost all cases, practically without exception, people are doing the same work for vastly increased salaries under the umbrella of the idea that is acceptable and permissible because of a change of title? I avoid the temptation to be led into using some of the extraordinary titles that have been developed in this connection.

All these are serious worries for every ratepayer. It is tragic that the new local government structure, designed to improve the operation of local government, which, I am the first to agree, was long overdue, should have been abused in this way.

So the present rating system becomes still less appropriate as a means of supporting local government. The Glasgow district rate has been mentioned, and I have quoted an example of my own area. It has been suggested that the Glasgow district rate will increase by 30 per cent. If that is so, I dread to think what will happen to those thousands of people who have only limited resources to meet that demand.

Schedule 2 refers to relief for domestic ratepayers, and there is a reference to those who, I suppose, will be categorised as needy. I am now talking of domestic ratepayers rather than authorities, which have already been mentioned. It is exceedingly difficult to identify the needy to whom rate relief should be given because there are thousands who are retired, independent and on their own and may not fall into a category definable as needy but for whom the hardship resulting from these dramatic increases is serious. Their problem should be on the consciences of all of us as we go forward with legislation of this kind.

At the same time, I must mention that the Secretary of State said that the first year of operation would cover a 10½-month period. I profoundly hope that in their instructions to the new authorities Ministers will ensure that that period is not used to cover a substantial rise that might not otherwise be apparent at first sight I have my grave suspicions about the working out of this provision.

Finally, I must mention Clause 19. It is utterly intolerable that there should be retrospective legislation to indemnify those who have simply and plainly broken the law. My noble Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) has already expressed better than I can our distaste for any infringement of the law. He who seeks to absolve any person or persons from complying with the law strikes at the roots of democracy itself. If there is one place above all others that should support democracy, by not only passing the law but standing firmly by it, it is Parliament and this Chamber. I therefore utterly deplore this attempt to enable people to get away with breaking the law upon which the whole framework of our country rests.

6.8 p.m.

Mr. Dennis Canavan (West Stirlingshire)

If local government is to be good government, it must be as local as possible and as democratic as possible. There must be local representation and local participation. There must be local decision making and local responsibility and a certain element of local financing.

In recent years many people experienced in local government in Scotland have expressed concern about what they would call the erosion of the rights and liberties of local government. We have seen, for example, conflict between central Government and local government over the implementation or non-implementation of comprehensive education. Also in education we recently saw how the Government could override the rights of local authorities in the provision of free school milk.

Still more recently we saw what has previously been described by my hon. Friend the Member for Central Ayrshire (Mr. Lambie), namely, one of the most vicious anti-working-class pieces of legislation that we have ever seen, the Housing Finance Act 1972. Apart from its financial implications, that Act breached an important principle in that local authorities were prevented from charging what they considered to be a fair rent for their own tenants. However, there has recently been introduced a Bill, which we hope will soon be passed, to restore that freedom of local authorities to decide what rent to charge. It is important that local authorities receive the power and the resources needed to exercise that power. I hope that the Bill will go some way towards the provision of these resources.

Recently in my part of Scotland there has been concern about reorganisation of local government. Many people are dreading its coming into effect in May. It is not just the size of the local authorities which concerns them. It is not just the remoteness, although that is an important point. Part of my constituency is to go into the Central Region, while part of it is to go into the Strathclyde Region. The difference in attitude is quite amazing between those who are to go into the Central Region, who are fairly happy with their lot in a compact geographical set-up, and those who are to go into Strathclyde Region, who are most upset.

The other day my local newspaper, the Stirling Observer, for which I do not have a great deal of respect—but I congratulate it on this point—reported that it could not find one person in the Strathblane area who wanted to go into the Strathclyde Region. The boundaries commission is investigating the possibility of a small area in my constituency round about Strathblane—at present in the Central Region—being transferred to Strathclyde. Why is there such opposition? I have discussed this with many constituents who are going into the Strathclyde Region. Apart from the provision of services, finance and such things, many of them fear that there will be a great increase in the rates as a direct result of reorganisation.

I hope that the proposals in the Bill concerning an improvement in the rate support grant arrangements will help to alleviate this anxiety. My neighbouring constituency Member, the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid), referred to the possibility of a conflict between a Scottish assembly and local authorities. I do not see a great deal of conflict there provided that the rôles are clearly defined. There is a distinct possibility of a conflict, however, over such matters as finance, resources and decision making, between the future Scottish development agency and a large planning authority like Strathclyde.

I welcome the proposals dealing with oil development, referred to in Clause 12 and Schedule 2. The rate support grant will be increased by sums related to the extraordinary expenses incurred in connection with offshore oil exploration. I hope that the combined effect of the Oil Taxation Bill and this Bill will be that the oil companies will pay indirectly for the whole infrastructure and support which is needed as a result of this new and developing industry being introduced over a short period of time. It is placing demands on local authorities in terms of the provision of housing, schools, roads and the entire support system needed to deal with an increase in population and industrial development.

Mr. T. G. D. Galbraith (Glasgow, Hillhead)

Is the hon. Gentleman saying that merely because these are private industries they should contribute towards the infrastructure costs? Would the same argument apply to the steel industry which is being developed at Hunterston in view of the infrastructure required there?

Mr. Canavan

I would suggest that it applies more strongly to private industries because they are reaping profits from the development of a project like North Sea oil. They are using local resources. The whole point of legislation such as the Oil Taxation Bill is to plough a good deal of those profits back, so that the Government can distribute them at a local level. No such legislation should be required for publicly-owned industries.

I welcome what my hon. Friend the Member for Central Ayrshire said about his own family and Saltcoats Town Council generally. I, too, have a local authority in my constituency, Denny Town Council, which resisted the vicious Housing Finance Act. It did so in good faith. It is not good enough simply to say that because a law is passed it therefore demands acceptance. [Interruption.] There is such a thing as provocative legislation. It was most unfair of the then Secretary of State to expect the councillors of Denny or Saltcoats or Cowdenbeath or Clydebank to do his dirty work for him. He had the power to put in a commissioner to implement his dirty Act. For some reason he refused to do that.

Miss Harvie Anderson

Is the hon. Gentleman saying that my Member of Parliament is not prepared to obey the law of this land?

Mr. Canavan

I will repeat to my constituent, the right hon. Member for Renfrewshire, East (Miss Harvie Anderson), what I have said, namely, that there are certain pieces of legislation which are provocative. The last Conservative Government certainly introduced quite a few pieces of such legislation. There is nothing wrong in councillors, who are elected democratically on a local manifesto, sticking to that manifesto. That is why I applaud what my hon. Friend the Member for Central Ayrshire said.

Mr. Lambie

My hon. Friend should surely make the point that all these councils were Labour-controlled. The majority of Members of Parliament representing Scottish constituencies are Labour Members. This was an Act imposed on the Scottish people by the English Tories. There is one thing we cannot stand, and that is an English Tory.

Mr. Canavan

I am grateful to my hon. Friend for supporting me. I welcome the last paragraph of the Explanatory and Financial Memorandum, which will I hope become a reality. It says that: The changes in financial arrangements will in some respects make for the more effective and economic deployment of staff and, in the longer term, provide scope for small savings in public service manpower. It is most unusual nowadays to have a Local Government Bill which says this.

Although I disagreed with the right hon. Member for Renfrewshire, East in her recent interruption, I fully endorse what she said during her speech about the abuse of certain promotion schemes in local government and the excessive salaries which have come about as a result of reorganisation. In many cases what happened was that a person transferred from one room to another had virtually the same responsibility. Although he was to have responsibility over a wider population, he was also to have more people to assist him in exercising that responsibility. Yet the salary was doubled or trebled in some instances. It is interesting to note that in many cases there was not much competition for the jobs. I know of several cases when only one or two people were inter- viewed because the Local Government Staffing Commission had it all carved up so that only those within a certain area could apply. When a teacher applies for a promoted post he may have to put up with competition from all over Scotland, indeed from all over the United Kingdom. But often the only competition which a local government officer had came perhaps from one of his junior assistants.

I welcome the proposed establishment of a commissioner. The terminology is perhaps a little unfortunate. Again, it is reminiscent of the Housing Finance Act, although the rôle of the commissioner, under this Bill will be somewhat different from that of the commissioner referred to in that Act. The wording is perhaps reminiscent of colonialism. I shall not argue too much about the terminology as long as the man does his job. We all know what he is supposed to do; he will be a sort of local authority ombudsman. Allegations of injustice are often made against local authorities. Sometimes we, as Members of Parliament, are asked to take up such cases. Unfortunately, we in Parliament do not have the necessary power or resources to carry out an investigation into such allegations as the ombudsman will be able to do.

There is another aspect of the Bill which slightly disturbs me. A recent facet of so-called democracy is that more and more people are being appointed to posts which carry considerable power. I wonder whether the method of appointment is perfect and whether it can be improved. Clause 21 (2) provides: Appointments to the office of Commissioner shall be made by Her Majesty on the recommendation of the Secretary of State after consultation with such bodies representing local authorities as appear appropriate to the Secretary of State. … With all due respect to Her Majesty and to the Secretary of State, I wonder whether that is enough by way of public accountability. I should like more appointees to be responsible to an elected body such as Parliament.

Another example of this relates to the valuation appeal committees. Clause 4(2) provides that … members of the panel shall be appointed by the sheriff after consultation with such persons as he thinks fit". I wonder whether it is satisfactory to appoint a valuation appeal committee member simply on the basis of whether a sheriff considers him to be fit. Perhaps the Minister will explain the situation when he concludes the debate.

This is an important principle. More and more direct appointments are being made by Secretaries of State and various other people. For example, the members of health boards and even of health councils are not directly elected. Are we going to see more and more people being appointed ex officio members to such bodies as school councils and possibly even community councils? I hope not. I should like to see the maximum possible number of elected representatives on such bodies. That would lead to true public accountability and would help to make local government representative of the people and answerable to the people.

6.23 p.m.

Mr. Iain Sproat (Aberdeen, South)

I do not think that during my relatively short membership of the House I have ever heard a more abominable principle advanced from the benches on either side than that advanced by the hon. Member for West Stirlingshire (Mr. Canavan), namely, that anybody has the right to disobey the law simply because he disagrees with it or finds it—in the undefined word of the hon. Gentleman—provocative. We find almost every piece of legislation introduced by the present Government provocative, but we would not dream of saying that that alone was justification for not obeying it. I hope that the Minister of State will take the opportunity to rebut the abominable principles advanced by the hon. Members for West Stirlingshire and Central Ayshire (Mr. Lambie).

Mr. Canavan

Will the hon. Member explain why so many English local authorities—previously it has happened with Scottish local authorities—which are Conservative controlled are deliberately dragging their feet over implementing plans for comprehensive education?

Mr. Sproat

There is a distinct difference between dragging one's feet and breaking the law, but if any Conservative authority were to break the law I should unite with hon. Members opposite in condemning it. It is absolutely incumbent on any Government to reassert the authority of Parlia- ment. Clause 19—no doubt we shall have the opportunity of discussing it in detail in Committee—allows people who have defied the law to get away with it. The Government appear to be supporting, tacitly if not implicitly, people who have broken the law, and that is wrong.

Let me temper those words of criticism with a few words of welcome. I welcome the provisions regarding the local ombudsman. We put forward this suggestion when in government in a consultative paper in 1972, and I am pleased to see it in the Bill. Local government is becoming more and more complex and therefore it affords more opportunities for error and unintentional injustice. It is good that a local commissioner should be able to deal with such matters. I hope that in Committee we shall have the opportunity of taking into account English experience as a result of the legislation passed in England.

Clause 12 and Schedule 2, relating to help for oil-affected areas, very much concern my area. I am by no means as happy as my hon. Friends the Members for North Augus and Mearns (Mr. Buchanan-Smith) and Edinburgh, West (Lord James Douglas-Hamilton) about this matter. I hope that they are right in giving their more or less unqualified support to what is proposed, but there are one or two matters which I should like cleared up. My hon. Friends and I have been pressing for a considerable time for aid for these areas. Therefore, we welcome what is proposed on a largely non-party issue. A huge extra burden is being placed on ratepayers in the north-east of Scotland and in parts of the Highlands for development which will benefit all the United Kingdom and therefore central Government support should be given.

However, the proposals in the Bill have caused considerable suspicion in Conservative Party and Labour Party circles in Aberdeen. As drafted, they are regarded as unsatisfactory and inadequate. At the moment the Secretary of State simply "may" take account of the situation in the oil-affected areas. I should like an obligation to be placed on him to take account of it.

I do not object strongly to this, but it is extraordinary that the Bill contains no mention of the question of North Sea oil. One is therefore compelled to refer to the Scottish Development Department's Circular No. 84/1974, paragraph 5 of which states that It is proposed that the grant distribution should take account of such other increases in the grants receivable (including the needs and resources elements of rate support grant) and of rate income which can be expected to result from oil-related developments. Authorities are therefore asked to include in the summary return a statement of the estimated growth in population and rateable value attributable to such developments". We must consider the definitions of "net" and "gross" with regard to that paragraph. Gross is what is being paid out now. Net is what will come in. But it is unfair to the local authority to be expected only to receive from the Government what is defined as net expenditure when net expenditure is calculated to include future receipts about which we do not know.

The Minister of State, Scottish Office (Mr. Bruce Millan)

If the hon. Gentleman will look at the tables attached to the circular he will find that that is not so. Local authorities are being asked to estimate the increased rating value in 1974–75 and 1975–76.

Mr. Sproat

I am extremely relieved to hear that. There is a misunderstanding that future receipts are supposed to be calculated.

Secondly, will the Government give a more precise definition of the services that will and will not qualify for Government aid. The circular states that there will be no help for such oil-related activities as petrochemical works or oil refineries. That is wrong. We should regard the wealth potential of oil as a totality. We hope that petrochemical works and oil refining will bring benefit to the community, and they should therefore qualify for Government aid if local authorities require to increase their infrastructure to advance those aspects of oil.

Again, we want a definition of what is meant by "100 per cent. oil-related". I understand the Government's argument that one cannot expect to get Government money for something that is not oil-related. On the other hand, improved roads, houses and schools will not be specifically and totally related to oil. For instance, would a lorry park in Aberdeen—for which we are pressing and which has become an urgent necessity because of oil developments, qualify under the Bill for total Government support? Would the Aberdeen local authority be able to ask the Government for the total cost of a lorry park? If not, what percentage of the cost of a lorry park would qualify for support?

No doubt we shall grill the Minister more closely in Committee, but perhaps at this stage he will give the guidance for which I ask.

6.32 p.m.

Dr. Jeremy Bray (Motherwell and Wishaw)

I wish to ask my right hon. Friend some questions about how in practice the Commissioner for Local Administration machinery will work. I have represented an English constituency as well as a Scottish one and I am not sure that the English experience will necessarily be a good guide to how the machinery will work in a Scottish context, although I welcome the appointment of a commissioner.

My experience is that Scottish local representatives personally have to carry a larger load of case work than do many English local representatives. Secondly, the party balance in many Scottish local authorities is different from that which applies generally in England. Thirdly, the relationship between the elected representatives and the officials is different, in that Scottish elected representatives expect to intervene to a much greater extent.

If we bear those differences in mind in asking what are the matters open to investigation, it seems to me from reading the Bill that if the commissioner develops his work in one particular way most housing cases might be open to his review, including a large range of questions on the letting of houses and repairs, so that virtually a dozen cases a week might be handed on to him by councillors. A large range of educational questions may fall to be dealt with by the commissioner, questions about school buildings, repairs to schools, the zoning of schools, the schools to which individual children are sent, and grants to students—for example questions about the responsibility of local authorities for Open University students. School staff seem to be excluded.

The objective should be for the machinery to work in a sufficient number of cases to influence the specific individual cases and to influence by precedent how that local authority handles that type of problem in general, but not to work in so many cases that the ends which the commissioner is intended to serve are defeated. The machinery of the commissioner and of local government might be so bogged down as to make the institution unworkable.

What is the scope of "local authorities"? Are community councils and school councils included? Will their members be able to refer questions, or are the councillors likely to be able to exert political pressure upon individual elected representatives of the local authorities?

Clearly, a great deal will depend not on the Bill or on the commissioner's intention but on the practice of local councillors as they develop the practice within the framework of their own political activities in the council. It is established practice that no pressure is put upon an individual Member of Parliament on his choice of matters to refer to the Parliamentary Commissioner. In local government the sheer number of cases is likely to be so vast that it will be difficult either in general or on any specific council for the individual councillor to be left to develop his own case law about which matters he passes on and which he does not. I should like to see the principle enshrined that in the last resort the individual elected representative decides which cases to refer to the commissioner.

I should be grateful if my right hon. Friend will say whether he regards the commissioner's power to consider a matter which has not been referred to him but has been referred to a council and then shelved as likely to be adequate to deal with a sufficient number of cases to make the institution fulfil the purpose for which it is intended. In my view it will be so because of the many channels of communication by which matters can be drawn to the commissioner's attention if not formally referred to him.

6.36 p.m.

Mr. Malcolm Rifkind (Edinburgh, Pentlands)

There have been several in- teresting contributions to the debate, but the House will be especially grateful to the hon. Member for West Stirlingshire (Mr. Canavan) for his useful definition of the difference between private and nationalised industries. He said that the difference was that private industry made profits. If that is the view of the Government on the desirability of extending the rôle of public ownership throughout the economy, the two sides of the House are closer than we previously thought.

Mr. Canavan

What I said was that it was far easier for the Government to take and distribute to the community the profits of publicly-owned industries, whereas for private industry certain additional legislation was needed, such as the Oil Taxation Bill.

Mr. Rifkind

That is a useful contribution to be made by an hon. Member who supports a Government who have recently declared their belief in not supporting nationalised industries and not interfering with their day-to-day administration. We understand that the new policy is that if the nationalised industries make a profit they should be allowed to keep it.

The Bill, like the curate's egg, might be good in parts but, unlike the curate's egg, it is inedible and indigestible. The Government have lost a golden opportunity to reform the rating system. They told the House not long ago that they had appointed the Layfield Committee to investigate local government finance, yet by introducing the Bill they are apparently prejudging the committee's findings.

The Secretary of State referred to the Conservative policy of transferring the cost of teachers' salaries to central Government responsibility. I am sorry that he appears to have been so modest in that respect. In evidence to the Layfield Committee the Labour Party, albeit belatedly, recommended that the cost of teachers' salaries should be transferred to the central Exchequer. If that is the view of the Labour Party, it is surprising that the Government should not have used the opportunity of the Bill to implement that part of their policy. We cannot say that it is not relevant to the Bill as a whole. We all know that Clause 19 is not relevant to the Bill as a whole. If it is now the Labour Party's view that the Conservative policy at the last election, two or three months ago, is correct and desirable, it is surprising that that policy is not introduced into the Bill.

The other important point to consider is that we have lost this opportunity to abolish the rating system as a whole. One of the main objections felt by many people to abolishing the system is that it might interfere with local government independence. Their view is that if local government must rely for all its resources and functions on central Government it will not have independence of action. I shall be interested to hear the Government's reply on this point. I should like to know how the Minister will reconcile this view with the Government's recent White Paper on devolution in Scotland and Wales. The White Paper says that it is the Government's present policy for assemblies to be financed by block grant from the United Kingdom Exchequer. If that is Government policy in respect of assemblies, we must assume that this will not prevent those assemblies operating in an independent and effective fashion. If assemblies are to be financed by a block grant from the Exchequer, why do the Government believe that local authorities should not be financed in an equally attractive way?

There is another part of the Bill which I find acceptable, namely, the facility to enable ratepayers to pay their rates monthly. I hope that the arrangement will be extended to the nationalised industries, such as the electricity and gas undertakings, to encourage consumers to make payments on a similar basis. Clearly the same degree of hardship applies to many members of the community in respect of their gas and electricity bills as it does to their rates.

One further acceptable part of the Bill lies in the appointment of local ombudsmen. I am sure that nobody would object to that proposal. However, there is something a little ironic in the fact that the Government, for the first time, seek to enable an independent inquiry to be made into matters of maladministration and yet also seek to introduce a clause which will encourage the Government to condone and approve such acts of maladministration on a massive scale. It is unfortunate that the birth of the local ombudsman should coexist in a Bill which, in Clause 19, gives what can only be described as a rogue's charter to all who wish to encourage defiance of law and illegal acts.

I should like to make three general points on Clause 19. First, I was sorry that the Secretary of State did not choose to give me a direct answer to a question which I asked him during his speech. I specifically asked whether, in drafting the clause, he had sought the advice of the Lord Advocate. He replied that the Lord Advocate was well aware of the clause and that we were not to presume what his view might be. But I asked whether he had been asked for his advice, and not whether the Lord Advocate was aware of the clause. No doubt all hon. Members are aware of the clause, but we should like to know whether the Government, in drafting a piece of legislation with such serious consequences in terms of administration and respect for law in Scotland, had the courtesy to consult the Law Officers about their views. This is a matter of considerable importance.

We know that in the southern half of the United Kingdom—England—the Labour Party, before the last election, consulted the present Attorney-General with a view to similar legislation. We also know that the Attorney-General's view was that such legislation would be inimical and contrary to the country's interests. Yet we now know that the Labour Government rejected his advice. I hope that we shall be told, in the Government's reply to this debate, whether the Lord Advocate and the Scottish Law Officers were asked for their advice. If they were not asked for advice, we should like to be told why. This is a matter of immense importance to the Scottish people.

The second important matter which arises on Clause 19 is a general point. The Secretary of State in his introductory speech referred correctly to a provision in an earlier Conservative Bill which would have given the Secretary of State power to consider all the circumstances of an individual case and, where appropriate, to alter, reduce or do away with any surcharge that might have been made. We do not object to the general law. We accept that there may be circumstances in which the Secretary of State, in respect of the country as whole, accepts the desirability of waiving all or part of a surcharge which might otherwise have been made.

There have been cases in which an individual councillor has done something illegal, but with no deliberate intent to break the law. In such a situation, nobody would insist that that person should suffer the full rigours of the law. There may be cases in which an individual councillor, having been carried away by strong convictions, has done something which, subsequently, he has regretted. But the clause is not concerned with that type of person. The clause has a specific purpose, and refers to a particular date. It is a retrospective clause, going back to September 1973. It is solely and directly concerned with the position of councillors who broke the law of the land.

With respect to the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid), it was not a question of finding out whether the law had been broken. These councillors, as was proudly proclaimed by the hon. Member for Central Ayrshire (Mr. Lambie), knew perfectly well that they were breaking the law and, with the exception of that hon. Gentleman's father, do not now wish to take the consequences of that act.

The hon. Gentleman—whose general speech was encouraging, in agreeing that people should take the legitimate consequences of their action—said that he hoped that the Secretary of State would make no exceptions in regard to the waiving of surcharge. Remembering that the hon. Gentleman began his speech by saying that his father should be allowed to go to prison, it is a pity that the hon. Gentleman should spoil such a declaration of principle by coming to such a petty conclusion. I think that the hon. Gentleman's father and all those who acted like him thoroughly deserve to be sent to prison. [Interruption.] I make no apology. That is not a case of one councillor mistakenly breaking the law or taking an action on a single occasion. This was a cool, calculated defiance of the law on successive occasions, despite appearances before the courts and despite repeated indications that they were defying the law. These were acts committed by a large number of councillors.

Having examined the provisions in this Bill, I almost feel sorry for the two Shrewsbury pickets. At least those pickets hold no public office and have no public responsibility. They are quite unlike the magistrates of Saltcoats or Clydebank and have taken no public oath to observe the law. Again, unlike the magistrates of Saltcoats, Clydebank and Clay Cross, they do not sit in judgment on their fellow men or sentence them having determined guilt. The two pickets took certain action and they are suffering the consequences.

I find it nauseating that in Clause 19 the Government are encouraging people to defy the law. It is regrettable that a Bill, which in general is non-controversial and which will do much to improve the administration of Scottish local government, has been spoiled by the inclusion of Clause 19. I hope that the Minister in replying to the debate will give careful consideration to all the points which have been made. I hope that he will tell the House what advice was sought by the Government before they decided to include this iniquitous clause in an otherwise generally acceptable Bill.

6.49 p.m.

Mr. John Robertson (Paisley)

The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) can make some claim to be whiter than white but he should not extend his innocence either to his hon. Friends or to the Conservative Party. On the subject of Clause 19, local authorities were required to anticipate the law and to take resolutions that were contrary to the then existing law in order to operate the timetable of the Tories' then Housing (Financial Provisions) Scotland Bill. If they wished to operate that timetable they had to take a decision at least one or two months prior to that legislation becoming law. What would the hon. Gentleman say about a local authority which took a decision which it had no right to take in anticipation of a law which had not yet passed through this place?

Mr. Rifkind

Its position would be exactly the same as the position of those who have paid taxes in anticipation of a Finance Bill which has not yet attained the consent of the House. In the event of that housing legislation not having been passed, no doubt the rent would have been repaid just as the tax would be repaid.

Mr. Robertson

The hon. Gentleman may satisfy himself with that kind of approach to the question, but it would hardly have done if he had been a member of Paisley Town Council. That council was in the position, on the best legal advice it could get—and fairly expensive advice from a very well known member of the Scottish Bar—that it was not entitled to come to a decision, at a meeting held on the first Tuesday in June, in relation to a Bill which was not yet through Committee. On the basis of very expensive advice it did not take that decision in that month, but it took a decision that when the Bill became an Act it would implement the provisions of that Act.

Unfortunately, although it is all right to take the decision, there arises the problem of implementing it. Implementation of the decision to raise the rents in Paisley meant that the council had to recall every rent card in the burgh. It had to programme a computer. That could not be done until the end of December. The council was left with the decision on whether to apply increases which would have been applied over six months over a period of six weeks, or to make an appeal to the Secretary of State, saying "Give us some time, find some way in which we can operate your Act and not break the law." But no relief was given. The result is that Paisley's councillors were found to be in the wrong and that they could be surcharged to the tune of £250,000, not for obviously breaking the law—they took the decision—but merely for an inability to operate the decision. That was the fault.

This was the fault of central Government. The Scottish Office at St. Andrew's House has never been noted for introducing very prompt action following the passing of a Bill into law. If grants are to be paid to local government it takes more than a couple of weeks for local government to get them. Sometimes local government is lucky to get them within a couple of years.

The leaders of the Tory Party in the House knew of these difficulties. They received a deputation from Paisley Town Council and the problem was put to them, but they would not alter the date when the Bill became law, although it could not be operated in the circumstances. Therefore, let us not have all this selective in- dignation about people breaking the law and getting into trouble. Particularly when dealing with a Tory Secretary of State for Scotland, one can get into trouble without trying. [Interruption.] My hon. Friend the Member for Central Ayrshire (Mr. Lambie) need not worry. I am sorry to say that it is not always just Tory Secretaries of State with whom one can get into trouble without trying. I am not blaming the present Secretary of State for this because if I remember aright he, along with many of my hon. Friends, especially in Committee, pointed out to the Tories what the effect of the passing of that previous Bill would be, and the Tories had no reason for not knowing what might happen. But they went on with it.

Ever since there have been council houses, especially in Scotland, the Tory Party has had a kind of neurosis about council house tenants. They have never quite been able to restrain themselves. Council tenants have been called second-class citizens. I could read out a catalogue of names used to describe council house tenants by Conservative Members, but it would take too long.

We have here the poor, innocent Paisley councillors, whose only wish was to operate that legislation but who now find that they may be surcharged to the tune of £250,000. I wonder whether hon. Members of the Opposition know of the old saying about taking bricks up a hill. It will be a dreadful job for all the councillors put together to find £250,000. The councillors might have a better time at Her Majesty's expense.

This is not a major Bill. One would like to see a major Bill dealing with the whole question of rating, its philosophy and so on. The old idea was that the house that a man built and the ground which belonged to him gave some indication of his substance, and that one could tax him accordingly by making a valuation and levying a rate. Those days are long gone, yet we seem unable to change the method of determining who is to pay rates and how much they are to be. Very often now it is those who are least able to afford the rates who are liable to pay the most. One thinks particularly of people living in cities such as Glasgow. If an ordinary worker in Glasgow with four or five children in his family must get a bigger house, he must, therefore, pay more rates, and he suffers. This is obviously wrong. A reform of the system is long overdue. We have been talking about it in the House for at least 14 years to my knowledge. It is time that it was done. Perhaps this Bill is not the vehicle for that.

However, the rating system and local government finance should have been reformed at the same time as the local government reorganisation was introduced. If that had been done, perhaps the new form of local government might have made more sense. We envisaged large local authorities having more autonomy, more power of decision and more freedom from central Government. Although their size has been altered, their functions, rights and powers of decision have not altered. They are exactly the same kind of bodies as we had previously. When we do revise the rating system let us also revise the relationship between central Government and local government. That would apply even if we have a devolved Parliament in Edinburgh. A new relationship in the spreading out of democracy and decision making must be achieved. However, I doubt whether it could be done through this Bill.

There is another aspect of the Bill which worries me—valuations and appeals against them. Much more thought must be given to that matter. It is very difficult for the private citizen to buck the findings of the valuation department. I have had it in mind on many occasions to appeal, but when I have seen what is involved and the amount of time and trouble necessary, I have always shirked it as being far too complicated and difficult. No help would be given to me—

Mr. Speaker

Order.

It being Seven o'clock, and leave having been given to move the Adjournment of the House under Standing Order No. 9 (Adjournment of specific and important matter that should have urgent consideration), further Proceeding stood postponed.