Local Government (Miscellaneous Provisions) (Scotland) Bill

HC Deb 09 December 1980 vol 995 cc801-81

Order for Second Reading read.

4.25 pm

The Secretary of State for Scotland (Mr. George Younger)

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

Since the present structure of local government in Scotland was set up by the Local Government (Scotland) Act 1973, the House has considered two further Local Government (Scotland) Bills, as well as a number of other Bills affecting local authorities in one way or another. It is clear enough from the title of the Bill that its basic purpose is to make adjustments to the present system, not to disturb its structure, which is, in our view, basically sound. It was certainly in accordance with this view that shortly after we took office last year we set up a committee, the Stodart committee, to look at the working relationships between local authorities and to consider whether any changes were necessary in the distribution of functions between the tiers. The committee has now completed its task and, as I have announced, its report is to be presented to Parliament by, I hope, the end of January next year.

The provisions in the present Bill have no obvious single theme but, looked at overall, they disclose a pattern which is illustrative of our wish to cultivate a strong and healthy local democracy which at the same time recognises its national responsibilities and acts accordingly.

This means two things. If local government is to be genuinely democratic, authorities must be free to carry out the local functions which they have been given by Parliament without unnecessary interference from the Government. But the other side of the coin is that authorities must keep in mind their responsibility not just to their own electors but to the country as a whole and must ensure that their decisions should reflect national as well as local interests. It must be the responsibility of the Government to see that some local interests are riot pursued regardless of other local interests and of the national welfare.

The Bill is, therefore, intended not only to achieve a lessening of the Government's controls over local authorities when the national interest is not concerned, and where there is a legitimate national interest in the conduct a local government—namely, in expenditure matters—to extend my powers of intervention. I now turn, therefore, to the provisions of part II in relation to rate support grants. Before offering detailed comment on the clauses in this part, I should like to give the House a brief explanation of the background and the reasons for their introduction.

At least until Opposition Members left office last year, it was common ground that the Government had a legitimate and, indeed, vital interest in the scale of local authority current expenditure. The reason is self-evident. Expenditure in this category forms a substantial part of total public expenditure—in Scotland, incidentally, it is 40 per cent. of expenditure within the Secretary of State's responsibilities—and it would not be possible to pursue sensible fiscal policies if this element were omitted from consideration and influence by the Government of the day. For an example of this, I turn no further than to the right hon. Member for Glasgow, Craigton (Mr. Milian), who is on public record many times during his period of office urging authorities to constrain their expenditure in the national economic interest. Perhaps his most notable contribution was during the debate on the Rate Support Grant (Scotland) Order 1976, when he drew attention to the need for any increases in individual programmes to be offset by reductions in others, to the need to control staff numbers, to the very high rate of growth shown by local authority expenditure relative both to gross domestic product and to total public expenditure, and to earlier statements by his Administration that growth in local authority expenditure should not continue.

The House will also be aware that majority opinion among local authorities has for many years recognised the principle that they must have regard to the national economic interest, and generally authorities have in the past kept their total expenditure plans reasonably in line with the fiscal policy followed by the Government of the day.

The right hon. Member for Craigton will remember that he has good cause to be grateful to many Conservative authorities as well as Labour ones who supported him over the cuts that he was forced to make after the IMF walked in to bail out the last Government. That remains true of 1980–81 in that authorities responsible for the greater part of expenditure are now showing a moderate and sensible approach to expenditure levels.

Some authorities have conspicuously failed to do so, however, and have made it clear that they will seek continual increases in expenditure levels notwithstanding the Government's urgent advice that moderation is essential, in sharp contrast to the constructive and sensible approach of their other colleagues of all parties in local government. I must tell the House and the authorities concerned that the Government simply cannot condone irresponsibility of this kind. We have a responsibility to the entire community to ensure that public expenditure as a whole is managed with proper regard for economic realities. If we fail in this, we shall impose harsh economic and social penalties on the community at large, as the Labour Government succeeded in doing by allowing public expenditure to soar out of control throughout their last period in office — a time when restraint: and moderation were clearly called for.

When I reviewed the need for means of taking action against the irresponsible minority, it was, of course, tempting to undertake a major revision of the present grant system. But I am anxious to maintain a constructive partnership with local authorities, and during extensive consultations with the Convention of Scottish Local Authorities I was informed that the present system—which seeks to compensate for variations in local needs and resources — is working reasonably well and is broadly acceptable to local authority opinion. I weighed this advice with great care. Having done so, I have concluded that the best course is to graft on to the existing system provision for discouraging high levels of expenditure by selective grant reductions.

I intend, therefore, that at the outset of each financial year each authority will be offered, through the traditional rate support grant settlement, a level of support closely geared to its local circumstances, and it will receive that support in full measure if it avoids planning for excessive and unreasonable expenditure levels. But grant reductions will be made, subject to approval by the House of Commons, if, when striking its rate, an authority proposes excessive and unreasonable levels out of line with the expenditure assumptions made by the Government in making the grant settlement. This power extends an existing provision of considerable antiquity under which the Secretary of State may reduce grant after expenditure has been incurred. That power, although potentially useful, is not fully effective for my present purposes because of the time lag between the expenditure and the grant reduction.

These proposals do not imply unwarranted interference with local authority autonomy or discussion. Hon. Members will note that authorities will remain free, as at present, to determine their priorities with a fair and substantial measure of support from the Government. For the future, however, assuming enactment of these provisions, the Government reserve the right to modify the level of support which they offer to any individual authority which plans for an excessive and unreasonable expenditure level. We cannot afford to subsidise economic irresponsibility.

Mr. Robin F. Cook (Edinburgh, Central)

The Secretary of State referred to the powers as being of "considerable antiquity". I think that he was referring to the powers of the 1966 Act and the legislation that preceded it. Those powers have never been invoked because never has an appropriate case arisen in which the Secretary of State — the right hon. Gentleman or his predecessors — felt that a local authority had so exceeded the expenditure as to afford a proper cause for the use of those powers. Since such a case has not arisen in 15 years, why is it now necessary for him to seek far more sweeping powers which will enable him to meddle at a much earlier stage in a local authority's financial year?

Mr. Younger

I am not sure whether that is good news. I do not know whether the hon. Gentleman speaks for the Lothian region. If he is saying that he hopes, as I do, that such powers not only have not been used but will never need to be used, no one will be more glad to hear that than I. They have not been used precisely because up to now no local authority has been unwise enough to incur the penalty which previous Governments put on the statute book. In case the hon. Gentleman is getting too excited, may I say that these powers have been repeatedly enacted and re-enacted by successive Labour Administrations, so that there is nothing particularly partisan about them.

The hon. Gentleman will also no doubt note that there will be no need for the powers to be exercised if all authorities show reasonable sense and moderation. If confrontation occurs, it will be by the deliberate choice of the authorities concerned.

Implicit in what I have said is that none of the penalty will apply to any authority other than one that has incurred unreasonable or excessive expenditure. Authorities that have not incurred such expenditure will suffer no penalty. It is a truly selective penalty which is extremely fair, and it is a great safeguard for everyone.

Mr. Gavin Strang (Edinburgh, East)

The right hon. Gentleman keeps referring to "reasonable expenditure". It is significant that it was he who first referred to the Lothian region. Will he give us an assurance that he will not regard, for example, the subsidisation of bus fares, which many people, irrespective of their political view, consider to have great merit, as being unreasonable? Surely he will not intervene in local government decisions in that way.

Mr. Younger

I am glad that the hon. Gentleman made that intervention, because it enables me to clarify a point that he may have misunderstood. I have no intention, nor am I taking any power, to look into the particular expenditure of any particular authority on any given revenue item such as bus fares. I am seeking only to take a look at the general planned expenditure of a local authority, and if in aggregate it appears to be unreasonable and excessive I shall have the power to take the action I am seeking in the Bill. It is not a question of my interfering in internal expenditure matters. They will remain matters for local authorities to determine within a reasonable overall level of expenditure.

Mr. Donald Dewar (Glasgow, Garscadden)

The Secretary of State tells us that his proposals will allow intervention at the estimate rather than the outturn stage. He has also agreed that under the powers of the 1966 Act there has never been an intervention by the Secretary of State. Looking back over the past few years, can he say whether there has been a year when, at estimate stage, it would have been reasonable for him to use the new powers?

Mr. Younger

I have not studied that matter, but I give the hon. Gentleman the same answer as I gave just now. This is a new phenomenon, because under successive Administrations, Labour as well as Conservative, it has been generally agreed that local authorities work sensibly within prevailing national economic policy. This has not hitherto been a partisan matter, because Conservative-controlled local authorities were particularly helpful to the right hon. Member for Craigton when he was in difficulty on the matter. I think that he was good enough to acknowledge that on one or two occasions.

I hope that this issue will not become one of partisanship, because this is a matter of principle as to whether the local authority set-up works within the bounds of national economic policy. Fortunately, the vast majority of local authorities do, and the vast majority today — authorities of all political persuasions — are working within general national economic priorities. That is how it should be. That is how I hope it will remain. That is why I hope that not only the old powers but the new powers will be used, if ever, very seldom.

Section 5 of the Local Government (Scotland) Act 1966, which is mentioned in clause 13, empowers the Secretary of State, subject to the approval of the House, to reduce grant to an authority if he is satisfied that the authority has incurred an excessive and unreasonable level of expenditure. Clause 13 extends that power by enabling the Secretary of State, subject to the same conditions, to reduce grant if he is satisfied that an authority, when striking its rate, has planned for an excessive and unreasonable level of expenditure. It also introduces certain additional criteria that will enable the Secretary of State to take into account all relevant considerations when considering whether he is satisfied that a particular level of expenditure is excessive and unreasonable.

Clause 14 amends the 1966 Act and makes provision for the Secretary of State to substitute a lower rate poundage for actual rate poundage in determining the entitlement to grant under the resources element of an authority, which plans for an excessive and unreasonabe level of expenditure. That will enable the Secretary of State to prevent such an authority from profiting by increased grant under the resources element from a high rate level resulting from unduly high levels of planned expenditure. It offers an alternative or supplementary procedure to that for which provision is made by clause 13. C1ause 15 makes provision for those powers to be effective from the financial year 1981–82.

Clause 16 makes provision for use by the Secretary of State of estimates of expenditure for purposes of the earlier clauses if an authority fails to provide the required information timeously. It is essentially a contingency provision. Clearly, it would be preferable in all cases to operate on information provided by the authority, but on the other hand it would be foolhardy to create a position in which these important policies could be frustrated by deliberate withholding of information.

It may also be for the convenience of the House if at this stage I mention a related provision in schedule 3. Paragraph 8 proposes a further amendment to section 5 of the 1966 Act, the general effect of which is to provide the secretary of State with wide discretion to restore to the original recipient all or part of a reduction in grant made under the provisions of clause 13 if its subsequent conduct justifies that, or to distribute up to the amount of the reduction to other authorities if restitution is not made.

I hope that my general comments on this part of the Bill will be noted not only by hon. Members but by those local authorities that are disposed to ignore current economic realities in framing their expenditure plans. I hope that they will note two points of profound importance. First, there will be no need for me to use the powers, and I certainly have no wish to do so, if all authorities follow sensible and moderate expenditure policies. Secondly, I shall not hesitate to use the powers forcefully and effectively, and to go on doing so in successive years, if they decline to bring their expenditure broadly into line with Government policy. The choice is very much theirs.

I turn to the question of capital controls, which is dealt with in clause 23. It is no less essential in present economic circumstances to maintain effective control of capital expenditure. Local authorities in Scotland have been generally co-operative in their participation in the financial planning system underlying its exercise of the power to control their capital expenses which section 94 of the Act of 1973 confers upon me, as they were with my predecessor. But the pattern of spending capital is clanging. A tendency to underspend, which was prevalent in many programmes until May 1979, has been followed by a tendency to overspend the diminished resources available. That resulted in minor excesses over cash limits last year. Local authorities have not found it easy to adjust their spending programmes to keep within a reduced cash limit, and for that reason I have had to review my powers under section 94.

The proposals in clause 23 are intended to improve our controls in two main ways. First, they will enable me to withdraw or vary, during the course of a year, any consent to incur capital expenditure. The power will be available only when the consent in question is not fully taken up. I grant that the power could be used to introduce a moratorium on capital expenditure projects during a year, but it is most likely to be used, if at all, when spending by some local authorities proves difficult to rein in and is likely to endanger cash limits. It might then be necessary to delay starts or slow down progress on others.

Secondly, clause 23 will allow me to extend by order the scope of section 94, either by amending the definition of capital expenses or by bringing within its scope other forms of expenditure akin to capital expenditure, such as certain forms of leasing, as well as to extend the definition of capital expenditure, if necessary, to cover all forms of capital financed from revenue. The present practice of Scottish local authorities is such that such extensions are not required at present, but I must he able to exercise control over expenditure that is included within the relevant cash limits. I stress that I ant seeking a power to take certain action. Before exercising it, I intend to discuss with the convention the need for changes.

Mr. Jim Craigen (Glasgow, Maryhill)

Do I understand that the Minister is anxious to encourage the practice of leasing?

Mr. Younger

I did not say that. I was simply trying to adjust the measures that are available to any Secretary of State in case there should be a growth of different practices such as leasing. Not only myself but any subsequent Secretary of State would find that necessary if new practices were to come into the way that local government finances its capital expenditure.

I turn to some of the other provisions of the Bill, beginning with the valuation and rating clauses contained in part I. Part I contains a variety of amendments to the Scottish valuation and rating code. Manifestly, they do not amount to the thoroughgoing reform of the rating system which I know some hon. Members would like to see and which remains one of our long-term objectives. The Bill is concerned not with fundamental changes in the system of local government finance but with improvements in the rating system for the time being. The powers conferred by clauses 1 and 2 might be required as a preliminary to more extensive reforms.

There is, of course, a strong case for regular revaluations of property to ensure a fair distribution of the rate burden, and on only one occasion has the regular five-year cycle of revaluations in Scotland been interrupted since it was set up by the Valuation and Rating (Scotland) Act 1956. But clearly there is no point in revaluing property if shortly thereafter rates are no longer payable on it, and it therefore seems sensible to introduce some flexibility into the arrangements for revaluations. Clause 1, therefore, will make it possible, by order, to change the dates for revaluations, while clause 2 will enable only certain classes of lands and heritages to be subject to the normal processes of revaluation. To make possible such a restriction in the scope of revaluations is entirely consistent with our policy towards domestic rates, which assumes that radical reform may apply to only one part of the rating system.

But reform may be some time off. In the meantime, it makes sense to maintain the rating system in good order, and clauses 3 to 11 will make useful improvements to the system in the interests of ratepayers and local authorities alike. The effect of clause 3 is that from the next revaluation, property in the commercial and miscellaneous classes will be valued by assessors direct to net annual value, which is the rateable value.

Clause 4 concerns the statutory table of deductions from gross annual value to which I have referred. Once clause 3 has taken effect, the table will be required for domestic property only, which will continue to be` valued first to gross annual value. The clause will enable any part of the table to be amended by order and thus introduce a valuable element of flexibility.

Clauses 5 and 6 relax minor requirements in the area of rating relief on property occupied by charities and on empty property. Clause 7 is intended to reduce the cost of rating authorities of collecting very small rate instalments, while clause 8 seeks to simplify the method of calculating the abated amount of rates due when a valuation appeal is pending.

Clause 9 will dispense with part-year increases in domestic valuations. Many hon. Members may have received representations from constituents about that matter. At present, assessors are required to alter a valuation roll not only to include new property but also to reflect changes in existing property. That means that ratepayers who alter their property—for example, by building extensions—are liable to be faced with supplementary rate bills in the course of a year. The effect of the clause will be that such increases in domestic values will take effect only at the beginning of the next financial year. That will benefit domestic ratepayers, who will no longer have to face supplementary' rate demands. It will also lead to a considerable saving of uneconomic work in rating authorities. It will be widely welcomed among many people who have been affected in the past.

Clause 10 makes a minor change in the constitution of the Scottish Valuation Advisory Council, while clause 11 amends the law on the enforcement of rate debts. At present, a sheriff officer enforcing a summary warrant against a rates debtor may seize not only the debtor's own goods or effects but also those in his lawful possession—for example, a commercial ratepayer may have goods on his premises left by a customer for storage or repair. It is unfair that a third party should be at risk of losing his property through no fault of his own, and the clause will remedy that position.

Part III of the Bill deals with housing support grants. The Housing (Financial Provisions) (Scotland) Act 1978 requires me when calculating the aggregate amount of housing support grants to estimate the aggregate income and expenditure on the housing revenue accounts of all Scottish local authorities, and the aggregate amount of the grants payable is the sum necessary to bridge the gap between reasonable local income and expenditure aggregates.

This worked well enough when every local authority had an excess of expenditure over income, because the figures for each authority had the effect of increasing the aggregate amount of grant. But the pattern of housing revenue accounts is now changing and we may expect the emergence of housing revenue accounts which are in surplus mainly because inflation has reduced the real burden of loan charges.

Obviously, if an authority has an excess of income over expenditure the inclusion of its figures will diminish the aggregate amount of housing support grant, with the result that there will not be enough housing support grant to meet the remaining authorities' reasonable need for support.

The problems which I have described were recognised by the housing finance working party, through which there is close contact between the convention and my Department.

Clause 18 will therefore allow me to fix the aggregate amount of housing support grants without regard to the income and expenditure of any authority if the inclusion of the authority's figures would diminish the aggregate amont of grants, and this will enable us to ensure that there will be enough grant to meet the needs of the remaining authorities.

Mr. Cook

Will the right hon. Gentleman take this opportunity to remove some of the confusion created by the clauses? Will he confirm that it is his intention to use these clauses—indeed, they can be used only in this way—only when local authorities are in real surplus and not when he thinks that they should be in surplus?

Mr. Younger

There is no intention to use these clauses in the way that the hon. Gentleman suggests. They are intended to deal with a position that would be disadvantageous to the generality of housing authorities. The precise purpose is to avoid an injustice to authorities generally if a considerable number of housing authorities that are in surplus are added to the aggregate. That would clearly be wrong and would work to the disadvantage of housing authorities. That is why we have introduced these provisions. There is no ulterior motive. These provisions are intended generally to improve the situation for housing authorities. I am sure that they will do so.

It is also possible under the prescribed method of distribution that an authority may not receive grant even where it has an excess of expenditure over income, and clause 18 will allow the exclusion of such authorities from the block calculation.

The purpose of clause 19 is to remove any doubt as to the competence of prescribing a method of distribution which does not allow a grant to be given to every authority. It is merely consequential on the previous provisions that I was mentioning. It also requires any particular exclusion to be stated in the table of grant entitlements which must be included in the statutory report accompanying every housing support grant order brought before the House.

Mr. Cook

I must confess that I am in a state of greater confusion following the right hon. Gentleman's response to my earlier intervention. I invite the right hon. Gentleman to tell me what is meant by the words that appear on page 8 in lines 24 to 27, which refer to the aggregate amount of relevant expenditure…which could reasonably be expected to be credited to the…housing revenue account. If those words refer to some curious figure that could reasonably be expected to be credited", what is that other than what he thinks the authorities should be receiving rather than the real amount that they are receiving?

Mr. Younger

The hon. Gentleman may be slightly put off by the form of the language. This is the normal means of expressing the amounts of expenditure that would normally be part of the credit side of the equation. It is done in this way in all the calculations of housing support grants.

It is the standard form of language and it will be familiar to those who have dealt with these issues. There is nothing sinister in these provisions. COSLA's working party has participated in the working out of these matters. I believe that this part of the Bill will be widely welcomed. However, if there is an unexpected outcome, we shall be able to go into that as we consider the Bill in its later stages. It is intended to be helpful. I think that the hon. Member for Edinburgh, Central (Mr. Cook) will find that his fear is unfounded. I hope that he will.

Mr. Cook

So do I.

Mr. Younger

Part IV deals with a number of diverse matters, one of which I have already described — namely, the adjustments to the scope of my controls over local authority capital expenditure.

Clause 21 and schedule 1 make minor improvements to the provisions concerning the Commissioner for Local Administration in Scotland. The Commissioner has agreed to these amendments, which are mainly concerned with procedures and accountability.

Clause 22 provides for the relaxation of various controls which the Government exercise over local authorities and gives further expression to our policy that local authorities should as far as possible be free to carry out their functions without unnecessary interference. The controls themselves are set out in schedule 2 and cover a wide variety of matters, such as the approval of various fees and charges, the power to prescribe various forms of documents used by local authorities, and planning procedures. The planning relaxations relate to central Government control over the form and content of structure and local plans in particular cases, to the requirements for all stopping-up and diversion orders over highways to be made by the Secretary of State and to some minor compulsory purchase procedures. These are all quite important relaxations of control by the central Government on local government, and I hope that they will be welcomed not ony in the House but throughout local government.

We came into office months ago committed to a reduction in the number of non-departmental public bodies, or quangos as they are somewhat inelegantly known, and clauses 24 to 26 provide for the abolition of a number of such bodies which have outlived their useful purpose.

Mr. George Foulkes (South Ayrshire)

Is it wise at a time when river pollution in Scotland is rapidly increasing—for example, in the Rivers Girvan, Doon and Ayr—to abolish the River Purification Advisory Committee, which has done sterling work? Will the right hon. Gentleman confirm that he has not allowed it to meet for the past year in spite of the chairman asking him repeatedly to allow the committee to meet? Is that not utter folly?

Mr. Younger

I appreciate the hon. Gentleman's feelings on that score. There is no shortage of advice on river pollution.

Mr. Foulkes

The right hon. Gentleman does nothing.

Mr. Younger

Advice on river pollution is available in plentiful quantities. It is not so easy to obtain the large amounts of finance that are needed to take the necessary action. We are not short on advice.

Mr. Barry Henderson (Fife, East)

Is it not the case that the existence and functions of the river purification boards have not been affected?

Mr. Younger

My hon. Friend is right. I thank him for pointing that out. I was speaking of the availability of advice from the River Purification Advisory Committee.

The bodies in question were all recommended for abolition in the Pliatzky report published earlier this year. Indeed the abolition of the five new town licensing planning committees was also recommended by the Clayson committee as far back as 1973. Given the age now reached by all the Scottish new towns, it is clear that ample time has been given to the planning of any special arrangements that might at one time have been necessary for them.

Clause 27 is designed to introduce a measure of fiexibilty in the operation of byelaws made by a water authority or water development board to prevent waste, undue consumption, misuse or contamination of water. Circumstances may arise where a water authority or board feels that the byelaws are inappropriate to, for example, a new type of fitting introduced since the byelaws were made, and in such cases the clause will allow the byelaw in question to be relaxed. That, again, will be generally welcomed by local authorities and those involved in the water service.

Lastly, I mention clause 28, which suspends the operation of two provisions in the Education (Scotland) Act 1980 that were brought into force as a result of a technical error. They relate to the provision of written summaries of guidance for school leavers. The clause will bring careers service procedures in Scotland back into alignment with those in England and Wales.

I make no claim that all the provisions of this varied Bill will be welcomed by everyone in local authorities or by Labour Members. I would rather that some of the Bill's provisions—those regarding control of spending—had not been necessary. I regret very much that some local authorities have not responded in a sufficiently positive manner to the advice that I have repeatedly given them in the past year and a half to bring their spending down to reasonable levels. However, events have shown that the powers that I am seeking are necessary and I make no apology for bringing them in. Above all, they are necessary in order to be fair to the vast majority of local authorities, of all political persuasions—Labour and Conservative alike—that are doing their best in very difficult circumstances to get their expenditure under control. I do not suppose that they like doing it any more than I do, but they are doing it and they are being thoroughly responsible in what they do.

It has until now been common ground between both sides of the House that local government expenditure has to be reasonable in the national economic interest. The right hon. Member for Craigton preached that frequently when he was Secretary of State. I very much hope that he will confirm today that that remains his position. If he confirms it, he, will not have a leg to stand on if he wishes to oppose the Bill this evening.

I invite the House to approve the Bill.

5 pm

Mr. Bruce Millan (Glasgow, Craigton)

I can confirm right away that we shall be voting against the Bill this evening. After this morning, the doubt must be whether the Secretary of State will be voting for the Bill.

One would suppose from the bland explanation that we have just had from the Secretary of State of the provisions of the Bill that it was a little tidying-up measure of no real consequence. However, it is a major attack on local democracy, as I shall prove when I come to the contentious parts of the Bill.

First, let me mention one or two of the other clauses. Part I of the Bill is concerned with valuation and rating. The amendments sought to be made are mostly technical and can no doubt be dealt with adequately in Committee. With regard to years of revaluation, I do not like any diversion from the normal quinquennial valuation. I say that not in any party spirit. It has happened under Governments of both parties, but it is undesirable that we should not have at least quinquennial valuations. If we do not, it simply gets the system out of date and is potentially unfair to various classes of ratepayer. I do not like the provisions in clauses 1 and 2 that deal with postponing revaluations.

Mr.Craigen

Does not my right hon. Friend suspect that there is some political calculation here, because 1983 will be the year before the next general election?

Mr. Millan

Of course I do. I am not quite as innocent as my hon. Friend supposes. That is why I do not like any measure that gives the Secretary of State power to change the year of revaluation. It is open to political manipulation, whichever Government are in power. Scotland has a better record than England on that matter in recent years. However, we can deal with that in Committee, too.

Clause 23 is again rather more than a tidying-up operation. As the Secretary of State was at least frank enough to admit in his description of clause 23, it will allow him to place moratoriums on local government capital expenditure. To ask us to believe that it is very unlikely to be used for that when the Government are at present imposing moratoriums in England and Wales on all housing capital expenditure and in Scotland on housing association capital expenditure is too much. If the clause goes through in this form, it will be used by the Secretary of State as justification for interfering even more drastically than he has so far with local authority capital expenditure. I therefore do not approve of it.

Clause 22 and schedule 2 deal with a mass of tiny reductions in the Secretary of State's control over local authorities. However, those relaxations are trivial compared with the massive increased powers of intervention in the affairs of local authorities that the other clauses will give to the Secretary of State.

Before turning to those clauses, I wish to deal with the housing support grant under clauses 18 to 20. The amendments are technical in one sense. The Secretary of State explained that. If a local authority drops out of the housing support grant calculations, it is necessary to exclude it from the calculations, otherwise a penalty is imposed on other local authorities. From a technical point of view, what the Secretary of State said is valid.

Unfortunately, the right hon. Gentleman does not understand his own Bill. He gave the wrong answer to my hon. Friend the Member for Edinburgh, Central (Mr. Cook) when he asked whether a local authority dropped out of housing support grant on the basis of its actual housing revenue account being in surplus or on the basis of the figures that are assumed by the Secretary of State, particularly in relation to assumed rents. The Secretary of State said that it is the housing revenue account. It is not. It is the assumed rent that determines whether a local authority will drop out of housing support grant. The authorities that lose grant—and at least one authority will lose grant altogether in 1981–1982—do so not necessarily because their actual housing revenue accounts are in surplus but because the assumptions about rents give them a theoretical surplus in their housing revenue account. That is the reason for the provision.

The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind)

The right hon. Gentleman is seeking to suggest that there is a sinister purpose for the clause. He uses the reference by his hon. Friend the Member for Edinburgh, Central (Mr. Cook) to the words could reasonably be expected to be credited to imply that. I am sure he will appreciate, if he considers the matter, that those words have been taken from the Housing Act 1978, which was passed by his Government.

Mr. Millan

I am sorry to disappoint the Under-Secretary. That is not accurate either. The words quoted are a substitute for the words that appeared in the 1978 Act. In any case, what the hon. Gentleman said is irrelevant to my point. Authorities drop out of grant not on the basis of their actual housing revenue accounts but on the-basis of assumptions about rents.

Mr. Rifkind

That has always been true.

Mr. Millan

But the Secretary of State gave the wrong answer. He does not know the Bill and he does not know how the system works. He was asked a specific question and he gave the wrong answer.

I wish to develop the point. It is far more than a technical amendment. The technical amendment is required, because otherwise there could be unfairness to authorities that are still receiving grant. However, one has to consider the matter in the context of what the Government did about housing support grant for 1980–81 and what they are doing for 1981–82. We do not yet have the order for the latter year, and we shall debate it in due course. However, there was a meeting the other day when the Government's decisions were conveyed to COSLA. I do not have the full details of the figures, as they have not been published, but let us consider what is happening with housing support grant.

The Government are assuming that in 1981–82 local authorities in Scotland will put their rents up by 40 per cent., and the calculation of housing support grant is being made on that basis—a 40 per cent. rent increase, at a time when the Government are asking workers to accept a 6 per cent. wage increase. That is not only for 1981–82. We are told that it will also apply to 1982–83. We discovered that only because somebody leaked a Treasury document to The Guardian. No statement was made in the House, any more than a statement was made about the original 6 per cent. decision. However, the Government are, for 1981–82, assuming rent increases of 40 per cent. in the calculations of housing support grant. According to the latest figures, that means that whereas the housing support grant for 1980–81 was £228 million, the settlement that was announced recently for 1981–82 is only £139 million — a reduction of £89 million in the Government's support to local authorities on housing. I shall deal later with the question of the freedom of local authorities to decide their rates.

If we look at the housing support grant per house, the figures are even more striking. In 1980–81 it was £255 per house and in 1981–82, on the figures that I have available—they may be altered by a pound or two here and there—it is only £156, a reduction of £99 in one year. One does not have to be a Main economist—to use the Secretary of State's words—to know that if there are two further reductions of £99 per house, theoretically every local authority in Scotland will be in surplus within the next few years and the housing support grant will be nil. That is the road down which the Government are going. They have reduced the grant by £99 per house, and if there are similar reductions in two successive years—the White Paper on public expenditure suggests that that is what the Government have in mind — no local authority will receive the housing support grant. These amendments, half of which are technical amendments, will affect the vast majority of housing authorities in Scotland.

The Minister finds that amusing, but the local authorities will not find it amusing, and when some Conservative Members discover that the reduction in grant for next year for their authorities is considerably more than £99 per house they will not find it amusing when they have to explain to their constituents how the Government are imposing rent increases on local authority tenants by a reduction of grant alone of more than £2 a week. I repeat that if this process continues Government support to local authority tenants in Scotland will be eliminated within a few years. That will he done at a time when all the tax concessions to owner-occupiers are being maintained and are increasing because of the monstrously high interest rates that owner-occupiers are having to pay. The Government will be making a massive attack on local authority tenants in Scotland in 1981–82. That is the significance of these clauses.

The Secretary of State has the hypocrisy to say that there is still some freedom for local authorities and that they do not have to increase their rents. He says that they can make their own decisions. But the assumption is that there will be a 40 per cent. rate increase, and the housing support grant is being cut accordingly. Then we have a "Catch 22" situation, because the local authorities are free to fix their rents at any level, but as well as having to impose massive rate increases—which will inevitably happen if the housing support grant settlement is imposed on local authorities, unless they raise their rates by 40 per rent.—they are being told that if they do not increase rents on the basis that the Government recommend there will be compensating reductions in their capital allocations. That is despite the fact that the capital allocations have, up to now, related to the local authorities' needs for capital expenditure. That was the reason why the previous Labour Government introduced the housing plan system. Now, for the first time, we have rents and capital allocations intertwined; and if local authorities do not raise rents as the Secretary of State dictates he will cut their capital expenditure.

The position is worse than that. If local authorities do not raise their rents and if they increase the rates instead, the Secretary of State will have powers under clauses 13 and 14 to decide that that expenditure is unnecessary and excessive and is leading to unnecessary and excessive increases in rates, and he will then reduce their rate support grant. Authorities that do not obey the recommendations of the Secretary of State on rates are faced with the choice of increasing the rates—which many will do—having their capital allocations reduced and penalties being imposed by the rate support grant being reduced.

What freedom is that for local authorities? It is putting them in a straitjacket, and it is a major attack on local democracy. The Secretary of State said that the Bill was a little tidying-up operation, but it does not disguise the fact that he is taking powers out of the hands of district councils in Scotland and taking away the responsibilities that should rest with them to determine their housing policies in terms of rents, rates and council house sales. That has all been done against a background of capital allocations. But the capital allocations are already being slashed. I was told on 24 July that the capital allocations for 1981–82 were being reduced from £260 million to £190 million—a reduction of well over 20 per cent. in a single year. Those reductions will continue, and there will not be a decent public housing programme in Scotland. That will affect not only new housing but improvements. It has already affected the SSHA, which is laying off a large percentage of its staff, and it is also affecting the housing associations. This Bill constitutes a major attack on local authority housing in Scotland.

If the clauses on the housing support grant are shameful, those on the rate support grant are even more so. The Secretary of State says that these are just one or two technical adjustments to provisions that have been incorporated in the legislation for many years. The provisions in the 1966 Act go back even further—I think to 1948. They have been around for a long time, but they have never been used. They are not the same sorts of provision as are now provided in the amendments that are being inserted by the Secretary of State. This is a complete transformation of the position and of the relationship between the Secretary of State and the local authorities.

The Secretary of State is fond of quoting back to me statements that I made about local authorities keeping their expenditure under control. I have always taken that view. I took it in Government, and I take it in Opposition. I do not believe that local authority expenditure should be allowed to get completely out of control. But it is not out of control, and the Secretary of State did not inherit a situation in which many irresponsible local authorities in Scotland were spending excessively.

The actual expenditure at the end of 1979–80—this was mostly under the present Government—despite what was originally provided in the Budget, was less than had been provided for in the Labour Government' s rate support grant for that year. Indeed, if we look back at what happened under the Labour Government—and, for that matter, under other Governments as well — it can be shown that where authorities have been asked to restrain their expenditure, their response has been extremely good. It is not true that local authority expenditure is out of control.

It was the Secretary of State who mentioned the Lothian region. Therefore, I want to deal with that region. The picture that is usually given by the Secretary of State is that there were huge rate increases in. the Lothian region in 1980–81 because of an irresponsible Labour authority and that everybody else behaved admirably and impeccably. He has not complained about all the other local authorities in Scotland. Indeed, he goes out of his way to say—[Interruption.] The Secretary of State mentions Strathclyde. Let us look at the figure given by the Secretary of State, in an answer on 1 April 1980, about the percentage increase in rates in 1980–81. The figure given for Lothian region—an "irresponsible" authority—was 41.5 per cent. The figure given for Strathclyde was 41.5 per cent.—exactly the same increase. That is a very responsible authority. I note that the Secretary of State is nodding.

When we look at the regional council increases generally, and not just in relation to Lothian and Strathclyde, we see a pattern which does not support the view that there are some irresponsible Labour authorities in Scotland imposing—

Mr. John MacKay (Argyll)

Will the right hon. Gentleman give way?

Mr. Milian

I shall give way in a minute. The hon. Gentleman is from Argyll. He does not have any colleges there and he does not have the Lothian region in Argyll, as far as I am aware. I want to make this general point and then I shall give way. If we look at the situation particularly in the regions, we find that the lowest increase for 1980–81 in terms of percentages was in a Labour-controlled region, the Central region. There are plenty of authorities controlled by friends of the hon. Member for Argyll (Mr. MacKay) which have massive rate increases in 1980–81, including, for example, the Borders region at 37 per cent.

Mr. MacKay

That is very interesting, but will the right hon. Gentleman read out the rate poundage? It will be seen that Lothian region's rate poundage is significantly higher than that of Strathclyde. Therefore, its percentage is, in real terms, much higher.

Mr. Millan

It is certainly true that the rate poundage in Lothian is a good deal higher than that in Strathclyde. The test that should be more appropriately applied is that of the amount of rate burden per head of population. One of the worst offenders is the Conservative-controlled Grampian region. There are all sorts of ways of looking at the figures, but in 1980–81 the increase in Lothian, as I indicated earlier, was no higher than the increase in Strathclyde.

Mr. Cook

My right hon. Friend will be aware and will no doubt wish to bring to the notice of the hon. Member for Argyll (Mr. MacKay) that the proportion of local authority expenditure met in Lothian by rate support grant is a mere 51 per cent. of the total, compared with a 65 per cent. average for Scotland, and that the total per capita expenditure by Lothian region is a mere 4 per cent. above the Scottish average and actually 4 per cent. less than the hon. Member's own Highland region.

Mr. Milan

The hon. Member for Argyll is not in the Highland region but is at the minute in part of the Strathclyde region, where the expenditure per capita is, I should imagine, a good deal more than it is in the Lothian region taken as a whole. The point is that the Government have been using the Lothian example to give the kind of general impression in Scotland that local authority expenditure is out of control and that there are large numbers of authorities that are spending the ratepayers' money without any regard at all for the consequences.

With regard to 1980–81, the rate increases everywhere in Scotland—

Mr. Younger rose—

Mr. Milian

Perhaps the right hon. Gentleman will allow me to finish this section of my speech. The rate increases in Scotland as a whole were massive, as I forecast at the time we debated the rate support grant order for 1981. I want to give the reasons why they were massive everywhere. Then, if the Secretary of State wishes to intervene, he can challenge what I say.

The rate increases everywhere in Scotland were massive in 1980–81 because the relevant expenditure on which the rate support grant was paid was unrealistically low, as we told the Secretary of State at the time. The rate increases were massive because the cash limit was faked by the Secretary of State on a phoney 13 per cent. inflation figure, and the underlying increase on which the cash limit was calculated was a total increase in expenditure of £307 million. The actual increase in expenditure because of inflation turned out to be £400 million.

Those were the reasons why everywhere in Scotland the rate increases in 1980–81 were very substantial. What is more, the position in 1981–82 will be just as bad, and in some areas it will be a good deal worse.

Mr. Younger

The right hon. Gentleman really has a nerve to take me to task for a so-called unrealistic cash limit of 13 per cent. when he bequeathed to me a totally unrealistic one of 5 per cent., which was a laughing stock. In case he has got the wrong end of the stick completely, I point out that it is not the contention that a vast number of local authorities are overspending. The contention is that a very small number of authorities are, if I may put it this way, taking the rest of them to the cleaners. The purpose of the powers is to take action against them and to take no action whatever against the vast majority of local authorities of all political persuasions which are spending reasonably.

Mr. Milan

We shall see what happens with regard to the use of these powers. The point that I was making—the Secretary of State did not answer it—was that the massive rate increases that we suffered in Scotland in 1980–81 were a direct responsibility of the Government's unrealistic and cheating rate support grant settlement of that year. What is more, the Government are obviously set on the same course of cheating the ratepayers in Scotland in 1981–82, because for next year they are to assume a further 3 per cent. reduction in the relevant expenditure, which is quite unrealistic. There will be a reduction in the rate of the grant from the present 68½ per cent. that has been announced by the Chancellor of the Exchequer, and there are to be cash limits which assume a 6 per cent. wage and salary increase for 1981–82.

The Secretary of State never makes any forecasts about rate increases. He is frightened to do that because he knows what the figures—[Interruption.] I shall give the Under-Secretary of State the record for the last two years of the Labour Government. My predictions were extremely accurate. If the Secretary of State or the Under-Secretary of State want to contradict them, they can do so.

The overall rate increase in Scotland for 1978–79 was only 6 per cent., and the domestic consumers paid 8 per cent. less than in the previous year. In the last year for which I was responsible, the overall rate increase for Scotland was 14 per cent. If we had had those figures for 1980–81 or could look forward to them for 1981–82, every ratepayer in Scotland would be very pleased. But the fact is that we shall have further massive rate increases in 1981–82.

What we have in the Bill is a smokescreen. It is trying to make the local authorities the scapegoat and to pretend that these great increases arise not just because of Lothian or one or two other authorities but because all the local authorities are very irresponsible, whereas the Government are terribly responsible.

There was an interesting editorial in the Financial Times, of all places, on Thursday 4 December. Admittedly, it was talking about England. Nevertheless, what it said is equally true of Scotland. The editorial began: The maladministration of local authority affairs which has become something of a feature of recent Government performance continues to lurch from bad to worse. Ill-conceived attempts to combine hasty but radical reform with arbitrary economies". It points out that if the Government could get their expenditure under control — including, for example, defence expenditure—as well as local authorities do, we should riot face some of the economic problems that now surround us. That is the background to clauses 13 and 14.

The Secretary of State referred to the powers conferred under section 5 of the 1966 Act. However, those powers go back to 1948. They are interesting because they appear in a different form. The original section said that he rate support grant would be reduced not only if a local authority's expenditure had been excessive or unreasonable but also if the local authority had not maintained a reasonable standard in the discharge of any of its functions. The Government wish to slash local authority expenditure. If that measure were applied now, no local authority would be able to demonstrate that it was maintaining a reasonable standard. All local authorities would have their rate support grant cut.

The provisions set out in the 1948 and 1966 Acts were couched in balanced terms. More importantly, they have tot been used since 1948. The intention behind them was not that the Government should intervene in the legitimate decisions of local authorities. The provisions were included as a means of protecting local authorities against those authorities that behave in a way that might directly reduce the grants available to other local authorities. Part II of Schedule 1 to the 1966 Act will be amended by clause 14. That provision was concerned not with unreasonable expenditure but with overrating. The manner in which the resources element was distributed meant that if a local authority were to overrate—that is, if it were to budget to spend "X" but to overrate for "X"—plus—it would receive an additional grant. That was unfair to other local authorities. However, it has nothing to do with the Government's present attempt to do the job of local authorities.

Clause 13 gives absolute power to the Secretary of State. He will determine what is excessive and unreasonable. Under the proposed subsection (1A)(b), the Secretary of State may have regard not only to the expenditure of other local authorities but to "general economic conditions". In case something might slip through the net, another little sub-paragraph has been inserted. It states: to such other criteria as he considers appropriate. In other words, the Secretary of State can use any criteria for his decision to cut the rate support grant of a local authority. The provisions could not be stated in more absolute terms. I defy the Secretary of State to defend that paragraph. It gives the Secretary of State complete power to intervene in the affairs of local authorities as he chooses and without regard to overall circumstances. He can decide to interfere—against the wishes of elected local members — and he can decide the level of a local authority's expenditure.

The relationship between a Secretary of State and a local authority must be based on an element of mutual trust. That is true whatever Government are in power. Apart from that, the Secretary of State has massive powers over local authorities. For example, he can reduce the rate support grant percentage. Indeed, he will do that. He has absolute control over the capital expenditure of local authorities. The Secretary of State already has massive powers. He is being given an additional power, which represents a direct attack on local democracy. Indeed, it is also a vindictive attack.

The Government are attempting to make local government the scapegoat for their policy failures. Their policies on unemployment have failed. Their policies on industry have failed, too, and Scottish industry is breaking down on every side. They have failed to prevent massive rate increases in Scotland. Indeed, as a result of their actions, massive rate increases are inevitable in Scotland in the current year. The Government will allow that to happen again in 1981–82.

We do not intend to allow the Government to make local authorities the scapegoats for the Govermnent's failures. We intend to ensure that responsibility for those failures is pinned where it belongs. namely, on the shoulders of the Secretary of State. That is why we shall vote against the Bill.

5.34 pm

Mr. Michael Ancram (Edinburgh, South)

I have listened with fascination to the speech of the the right hon. Member for Glasgow, Craigton (Mr. Millan). He said that the Bill represented a major attack on local democracy, and I waited to hear where he thought the major attack would come from. The right hon. Gentleman seemed to suggest that, as the Government were trying to gain a greater degree of control over local government spending, local government autonomy was somehow being diminished. He seemed to suggest also that the Government should rubber-stamp local government expenditure in order to protect that autonomy. I was fascinated by the right hon. Gentleman's argument because two years ago, when he spoke in favour of the Scotland Act, he de fended the idea that power over the revenue and expenditure of the Scottish Assembly should be held by the Government. At that time he told us that that was an extension of democracy. There is a strange divergence in his argument.

I was also saddened by the right lion. Gentleman's attitude. He spoke about the Government's vindictive attitude towards local authorities. Never once did he speak about the ratepayers. Year after year ratepayers in my constituency have suffered under the policies adopted by the Lothian region council, which has imposed excessive rate increases. If the Labour Party supports and represents the people, the right hon. Gentleman's attitude and concern for ratepayers should be greater.

Generally, I welcome the Bill because it shows that the Government at least are concerned about ratepayers. Part I contains relief provisions for valuation and rating, and I welcome them. They serve to underline the unsatisfactory nature of the present system of local government finance. As a lawyer, I practised for a short while in valuation matters. I know that a veritable jungle exists when it comes to rating valuation. Most of that jungle has been created by regulations and reliefs—similar to those given in the Bill—that try to provide a greater degree of justice in an inequitable and unjust system. The provisions to which I have referred underline the need for reform. Any system that seeks to raise finance for local government should not be based on property alone. Domestic and industrial rating should reflect more the ability to pay. I know that the Government have gone through the options. None of the options proposed in the past have been without problems. None of them have been perfect, but I sometimes wonder whether they were not better than our present rating system.

Although I accept that the Government cannot come to a hasty decision, I ask them to continue to search for a better formula to replace the present rating system. In particular, I ask the Government to look again at the possibility of having a local income tax. I understand that the main objection in the past has been that where a ratepayer was being paid by an organisation or firm that was not based in his own rating area there would be difficulties in making the requisite deductions under a PAYE system.

That argument was significant two or three years ago, but I wonder how significant it is now when one takes into consideration the advance in computerisation. I understand that the Government intend to introduce a system of computerisation into the Inland Revenue. In those circumstances, I should have thought that it would be worth considering again a local income tax. I accept, however, that such a system would need one proviso, namely, that in the way that it operated the person paying it would need to understand what proportion of his tax was being paid for national tax and what proportion for local tax. If we are to have local government, it must, obviously, be accountable. Apart from that, I welcome the provisions in part I.

I welcome part II of the Bill because I believe that it contains a useful extension of powers to control excessive and unreasonable expenditure. If any questions are raised—as they were by the right hon. Member for Craigton—about whether the powers are needed, I believe, contrary to what the right hon. Gentleman said, that we need look only at that band of happy spenders, that flock of cloud-cuckoos who left their own lands and became the controlling Labour group in Lothian region. If I had any doubts about the extension of the power of the Government to intervene in local government, I can only say that, representing as I do an Edinburgh constituency and being an Edinburgh and Lothian ratepayer, those doubts were quickly removed from my mind.

I shall not go through the whole list, having done so before, but I want to give a number of examples of what I regard as excessive and unnecessary expenditure. Last year, at a time of restraint, there was an increase in staff of about 1,500, many of whom were on the administrative side and not producing anything directly for the consumer.

I shall give another example. A strange newspaper was pushed through my door the other day called the Lothian Clarion. It appears that this paper is the propaganda sheet of the ruling Labour group in Lothian region. I am told that, as a ratepayer, I am subsidising this publication to the extent of £25,000 a year to provide good publicity for a small clique in the Lothian region. I find that the journalist who produces it is, surprisingly, the highest-paid journalist in Scotland. I understand that he receives £1,000 per issue. I am sure that there are not many other members of the NUJ who are subsidised to that extent.

Then there are the hare-brained schemes for the future. There is a suggestion that all transport in Edinburgh should not just be subsidised, as the hon. Member for Edinburgh, East (Mr. Strang) said, but should be free and that ratepayers should pay for the transport not only of other people in the city of Edinburgh but for the countless thousands of tourists who come there from America, Europe and Australia. It is proposed that those people should benefit from free transport at the expense of either the Government or the ratepayers.

Mr. Strang

The Lothian region bus system is an example to the whole of. Britain, in that it does not lose passengers at the rate that other areas are losing them. The system makes it easy for working people to travel quite long distances to work. Above all, it promotes energy conservation by encouraging people to go by bus rather than by private car.

Mr. Ancram

I agree with most of what the hon. Gentleman says, but to suggest that we should provide that transport free is to destroy the system and all its benefits. Even if that did not happen, the ratepayers would still have to pay.

My main objection to the Lothian region council is what I see as deliberate overspending to create political confrontation with the Government. I understand from remarks that I have heard that it has almost admitted that that is its intention. The council forgets that at the end of the day it is the ratepayers who are hit.

There is always the danger that attempts by the Government to control local finance can in themselves result in increasing the burden on the ratepayer, because local government passes the cost straight on to the ratepayer. We saw that happen last year. We must be aware of the problems that can result, not just in hardship to ratepayers, who see the cost of living in the capital city of Scotland continually increasing, but in the danger for businesses. The chamber of commerce in Edinburgh the other day suggested that as a result of last year's rate increase 3,000 jobs had been lost in the city, and this at a time when Labour Members, including the Lothian Labour councillors, are crying out against the Government because of unemployment. That cry rings very hollow after the effects of those rate increases last year.

It is in that light that I have looked seriously at the suggestions and proposals in part II. I and my constituents recognise a growing urgency as the annual rate settlement comes round again. I recognise that it is impossible for the Government to do what I hoped they would do last year, namely, impose a ceiling on rate increases, but I hope that the measures in the Bill will create a degree of control which in itself will give some protection to ratepayers.

As I understand it, clause 13, and, in a sense, clause 14, will neutralise the increase in local government spending by reducing the rate support grant by a similar amount. Here I have two worries, on which I hope that the Government will be able to reassure me. First, I hope that the retrospective nature of the decision by the Secretary of State on what is excessive and what is not will not be so retrospective that it will shut the stable door after the rate increase horse has bolted. If that happens, it will only further endanger the well-being of the ratepayers in the region. I hope that my right hon. Friend the Under-Secretary of State for Scotland will be able to allay that worry when he winds up the debate.

My second worry is whether the Secretary of State will be able to give sufficient pre-indication to councils of his view of the level at which expenditure becomes excessive and unreasonable by setting out, at an early stage, the sort of criteria mentioned in the new subsection (1A), inserted by clause, 13(b). Paragraph (b) of the new subsection refers to 'general economic conditions'

and paragraph (c) refers to 'such other criteria as he considers appropriate.

That will at least give regional and district councils the chance to take such matters into account in planning expenditure for the following year.

I am confident that even Lothian region council, if faced with the certainty that it would not have any extra spending money as a result of excessive rate increases, would not have the temerity or the gall to hit the ratepayer for wheat would be purely political motives. That would be not only irresponsible but an abdication of the right to govern, and even the Labour majority in the Lothian region electorate would not save it.

In fairness, I should add that I do not believe that the Government can expect local authorities to read their mind. The, Government must give an indication in advance to give the responsible councils the chance to make adjustments

Subject to receiving those reassurances, I welcome—as I believe my constituents do—the genuine attempt in the Bill at last to provide some control over the councils that decide to fly in the face of national economic need and at the same time expect the ratepayers to foot the bill for their small political ambitions.

As the right hon. Member for Craigton pointed out, local autonomy is a precious right, but no right is sacrosanct if it is abused. The Bill at last gives a sanction against such abuses. I hope that it will be a warning to people who, like those in Lothian region, have for too long seen themselves as answerable to nobody. I hope that the House will support the Bill.

5.50 pm

Mr. J. Grimond (Orkney and Shetland)

This is the sort of Bill that makes me weep. In spite of piles of recent legislation about local government, there is still a great need for a few simple reforms. Unlike the hon. Member for Edinburgh, South (Mr. Ancram), I do not think that the Bill will achieve them. I do riot believe that it begins to touch the heart of the matter which faces us in local government.

I was surprised by the complacency with which the Secretary of State spoke of his relationship with the local authorities. I seem to remember a circular sent round by the Under-Secretary, the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), saying that the authorities' level of staffing was totally unacceptable. I seem to remember the Prime Minister saying that one of the most serious matters that faced productive industry was the burden of the rates. I seem to remember many Government spokesmen saying that one of the difficulties of the Government in remaining on course was exactly the high level of public expenditure, both nationally and locally.

It is true that the local authorities have got their expenditure under much better control than the central Government have, but I thought that whether it was good enough was a matter that the Government disputed. To my mind, the local authorities are expanding without much logic, largely because of the appalling mass of legislation under which they have to operate. They are following very much the course that the Government have followed over the past seven years.

The first thing that needs to be done is to define local authority functions. At present, in addition to their traditional functions, which are important enough, they are becoming involved in industry, development, agriculture, fishing, archaeology, archives, art, dancing, port management and playgroups, to mention only a few of those that one reads about every day in the newspapers.

If the Government believe that local expenditure is in danger of going too high, they should cut out some of those functions. However, if, as they seem to say this afternoon, there is really only one local authority in Scotland of which they complain, it is wrong to introduce a Bill such as this for what appears to be a limited purpose—to deal with one authority. After all, the Government have powers already to deal with capital expenditure and the rate support grant. We have already heard quoted the provision in clause 13 which enables the Secretary of State, in cutting the rate support grant, to take into account any other criteria which he thinks appropriate. It should be resisted by Parliament if the whole thing is a trivial matter applying to only one local authority.

The constant growth in the functions of local authorities is causing great problems over finance and in other ways. Local councillors are neither elected nor equipped to deal with most of the problems. They are part-time, busy people.

Secondly, there is gross duplication. No fewer than five authorities now deal with agriculture in Scotland.

Thirdly, there is a conflict of interest between the councillor as representing his constituents and as a member of a local authority that is often doing the very things that are complained of. There are extraordinary secondary results. For example, there is the burden put upon Shetland, owing to the increase of rateable values, in paying its contribution for the northern police.

If the Government intend to see that local expenditure is under better control all round, and if the Bill is not simply a punitive measure against Lothian council, they must make up their minds to take one of two courses. One is to institute a prefectorial system, depriving the local authorities of many of their present powers and making St. Andrew's House directly responsible. I should regret that, but it is true that much of local authority finance comes from central Government. If that were done, at any rate we should know who was responsible.

The other course, and the one that I hope the Government will take, is to give the local authorities more discretion. It is no good the Secretary of State saying that the Bill relieves the local authorities of many obligations and that it gives them more freedom. The freedom given is trivial compared with the sanctions that may be brought against them.

If more freedom is given to local authorities, there must be new methods of raising finance. Here I agree with the hon. Member for Edinburgh, South. The Conservative Party promised to abolish the rates. What has happened to that promise? However bad a local income tax might be, if anyone now suggested the rating system all the civil servants would say "It would be totally impossible to run such a system." The right step for the Government is to look at new methods of local government finance.

If the Government are to allow local authorities discretion to take on wider and wider responsibilities—that may be right, if they are properly equipped and financed, and if they take the responsibility — the Government should look at the functions of other public authorities. For example, if the local authorities are going into development, as they are, what about the Highlands and Islands Development Board? If they are going into agriculture, what about the Crofters Commission? I should regret the break-up of the pool of expertise accumulated in the board and the commission, but it is illogical to have five bodies dealing with agriculture in Shetland. There is much to be said for local authorities taking up new functions, but it had better be done clearly and responsibly and be properly financed. In addition, the responsibilities in question must be taken away from other bodies.

The Bill falls plumb between the two stools. It partly gives the Secretary of State more power and then says "After all, he will not take any responsibility."I understand that the right hon. Gentleman can reduce the rate support grant if he thinks that the local authorities' estimates are excessive or unreasonable, but he takes no responsibility for the consequences. He takes pride in that. He says "I am not concerned with the results. It is up to you to decide what to do with the money. All that I shall say is that you are spending too much." There are no proper criteria for coming to that conclusion. There is a reference to general economic conditions; and (c) to such other criteria as he considers appropriate.

The answer is that if the Secretary of State is to act responsibly he will have to make inquiries into why and how the projected expenditure that he does not like has come to be thought necessary. There is a vast variation among local authorities. It is absurd to apply on a general rule of thumb to Orkney, Strathclyde, the Borders, Edinburgh and everywhere else. How is the right hon. Gentleman to judge? He will have to have more officials so that he can look into the question and decide whether the expenditures are justified.

There is an extraordinary provision that the Secretary of State may redistribute the amount that he has forbidden to one authority. Will that mean that authorities that have not asked for more will be given more money, which they must spend, because some others have been penalised? This is an extraordinary method of conducting local authority finance.

We come next to the curious provision in clause 23 by which the Secretary of State may withdraw his consent or vary the conditions upon which consent has been given for capital projects. Already the grants system is extremely wasteful. It encourages authorities all the time to spend every penny they can. How often have hon. Members been told when something is proposed "The Government will pay 75 per cent"? All local authorities with any sense will now enter into irrevocable contracts as soon as they can be assured that a grant has been approved. Instead of spreading the cost over the year, they will enter into such contracts because they cannot be upset by the Secretary of State.

In the Shetland Times last week there was an article—I do not know how accurate it is—which said that the SIC is proposing to spend £10 million more than the Government are prepared to allow, because the Government have got the figures wrong. I can well believe that. I should like to know how this matter will be resolved. It will be a most extraordinary situation for the local authorities if approved capital projects can be axed. It will kill any planning, proper budgeting or estimating if authorities cannot know months beforehand whether the matter has been approved or will be torn up. Parliament should not lightly pass over that matter.

I am as concerned as the Government about the constant increase in staff expenditure by local authorities. However, I am not clear that the effect of the Bill will not end up creating more staff. The last time the Conservative Party attempted to reform local government, the result was an explosion in staff expenditure.

In The Scotsman of 15 October there were some alarming figures. Many local authorities have greatly increased their staff. Lothian has already been mentioned by the hon. Member for Edinburgh, South. But Strathclyde has increased its staff by 1,464 and Shetland has increased the number of staff by 124. I do not think that the Government can say that the position is quite as satisfactory as the Secretary of State made out.

The point is that the Government either should take some responsibility off the local authorities and the ratepayers or, as I would recommend, should say to the local authorities "Do what you think best—but you must pay for it."

The Western Isles authority has a considerable number of staff—about 2,000. But the Countryside Commission is now to take part in the planning of the Western Isles. That sort of lunacy uses more staff and causes more expenditure. Yet the Government do not appear to be doing anything about it.

The Bill will create an ill feeling in some local authorities, and, after a certain amount of trouble, inflation will continue as before.

It may be argued that, as there is a Bill of this sort for England, Scotland must have one, too. I implore the Scottish Office not to saddle Scotland with this Bill. If it has sensible proposals of a basic nature for local government reform and finance, let it bring them forward on the lines not that local authorities should be more hampered but that they will be responsible to a greater extent for their own expenditure and decisions. Of course, the Government will have to support them up to a point. But we want to move towards a more sensible method of local finance and of making the local authorities and all their constituents more responsible for the way that they conduct their affairs. How can the Government, without an enormous number of staff, know better than the local authorities what their needs are?

It is true that under the present rating system some people can get rate rebates, so that they do not mind if the rates go up. It is true that industry may have little say in local government. But these anomalies can be tackled.

Essentially, if we believe in local government at all, the Bill is moving in the wrong direction. I ask the Government to withdraw it and to bring in a more sensible Bill.

6.3 pm

Mr. Ian Lang (Galloway)

Since 1 o'clock this afternoon I have been trying hard to work out how a carefully prepared and well argued speech on the teacher training colleges in Scotland might be recycled to apply to the Local Government (Miscellaneous Provisions) (Scotland) Bill. I fear that I have failed, but perhaps some of the less discerning Labour Members will hardly notice the join.

I welcome the Bill. However, I welcome some of its proposals with sadness, partly because the philosophical thrust of the Conservative Party has always been away from centralisation—for keeping in local hands as much control as possible—and partly because it is a sad reflection on the nature of local government that its participants should now tend to seek to use their position either to defy the Government or to advance a particular party political point of view. The days of selfless civic service seem to be long dead in some parts of the country. Too often, local authority councillors are seen as the frontline troops of the party political battle that takes place in this House, or even as representing a third House of Parliament.

The crucial feature of our form of representative democracy is balance. The evolution of checks and balances between Government and Opposition and between the different estate; of government is essential as a safeguard of our liberties. The Bill recognises a shift that has developed there. It may be to some extent a result of the 1975 reform of local government, which has few friends in the House or elsewhere. The Bill seeks to restore the balance not just of the relationship between local government and central Government but between ratepayer and local govern merit and, on a wider note, between the individual and the State. In that sense, it could be argued that this is a progressive Bill.

The biggest shift of all in local government has been the shift in manpower, which accounts for about 70 per cent. of local authority costs. In 1955 there were only 750,000 local government employees in Britain. Now there are 2 million. Fifty years ago the public sector employed 7 per cent. of our work force. Now it employs more than 30 percent. Governments of both political complexions have recognised that problem.

Mr. Norman Hogg (Dunbartonshire, East)

Does the hon. Gentleman accept that there has been a massive extension in the amount of legislation that local authorities are required to carry out and that the statutory functions of local authorities have changed markedly since the year that he quoted and that that accounts for the increased manpower? It is not that the local authorities wish to increase their manpower just for the sake of providing employment; it is out of necessity.

Mr. Lang

I accept that there is something in what the hon. Gentleman says. I shall come to that point later. I do not accept that local authorties increase their manpower just because they want to do so. This problem has been recognised by Governments of both political complexions. The previous Labour Government, which the hon. Gentleman supported, succeeded in cutting numbers by about 12,000, with no appreciable loss in services. That proved that it could be done. Now, with local government pending up by one-third in three years and with numbers up by 15,000, there is undoubtedly a need to do that again.

That represents an increase of about 6 per cent. in local authority manpower. Certainly, no one can claim that there has been a 6 per cent. improvement in the quality of local government service. The new element that has entered the debate is that local government is now adopting—

Mr. Cook

The hon. Gentleman referred to a most striking figure, and I should be grateful to know his authority for it. He said that local authority expenditure went up by one-third in three years. If he referred to the Government's White Paper on public expenditure, he would see that during the past three years that figure has actually fallen by £45 million in real terms.

Mr. Lang

I cannot lay my hands on the exact figures at the moment. However, it is clear that local authority employees have increased by 15,000, and that 70 per cent. of local authority expenditure is on manpower. In this area there has been no comparable improvement in the quality of local government service.

The new element entering into the debate is that local government is now adopting resistance not just to protect its empires but to make a political statement against the Westminster Government. Not all local authorities are alike, but this trend has become increasingly marked in recent years. It is one for which the Bill makes provision.

The Dumfries and Galloway regional council, for example, employed 34 fewer people this year than it did in January 1975. That figure would have been 80 fewer but for the 46 staff compulsorily transferred from central Government. It was also struck after including increases in the numbers of both police and firemen as a result of changes in establishment and the length of the working week. In June this year the number of employees in the Dumfries and Galloway regional council was down by 26 compared with June last year. Expenses have been well contained, despite its vast population in a widely scattered area. They are consistently low in the league of cost per head in all Scottish local authorities.

Why should the Dumfries and Galloway regional council be penalised for the extravagance of other regions such as Lothian and Strathclyde, each of which has recruited about 1,500 new employees in the past year? Those local authorities would argue that that was necessary to fulfil the new tasks imposed upon them by the Government. But it is estimated that the new tasks amount to less than 10 per cent. of the increases. If Dumfries and Galloway can absorb such duties without an increase in staff, surely other regions can absorb such increased duties.

I do not believe that the 3,227 increase in social service workers employed between December 1977 and December 1979 or the 1,113 extra employed on recreation, leisure and tourism are justified by Government requirements. Yet such increases have taken place in the two-year period, at a time of growing world recession and when there is a need for restraint in expenditure at all levels, private and public. Opposition Members who shed heavy tears at the high unemployment level should ask themselves whether they have considered how many productive, wealth-creating jobs have been lost and how many good, long-established companies have had their backs broken by the burden of rate increases—a burden that has been expanded without thought for those who must carry the increases.

Many hon. Members could give a number of examples of unnecessary expenditure by local authorities. Today's Glasgow Herald carries the announcement: Two Scottish regional councils are to make a joint appointment of a 'dancer in residence' with the help of money from the Scottish Arts Council. That is a £6,000-a-year job with Fife and Tayside regional councils, with the assistance of the Scottish Arts Council. I have heard of people tripping the light fantastics, but this is tripping the light incredible. Dancing is a delightful art form, whether it is disco, ballet or Scottish country. I am sure that the Scottish Arts Council is well able to justify its part in the appointment. However, I wonder what on earth a "dancer in residence" has to do with the provision of services in local government.

Mr. Tam Dalyell (West Lothian)

Has the hon. Gentleman had the courtesy, or has he bothered, to make inquiries of the council?

Mr. Lang

I have not had the opportunity to make such an inquiry, because I was present in the Scottish Grand Committee this morning and in the Chamber throughout the afternoon. I have no doubt that if the councils feel that the appointment can be defended they will manage to so defend it. I am sure that the press will afford them all the necessary courtesies. If precedent is followed, the dancer will soon want a partner. Then he will want an accompanist, and a clerical assistant; and they will all want premises and parquet flooring. I have no doubt that in a year or two the ratepayers of that part of Scotland will be able to attend free concerts by the "Fife Formation Dancers" assisted by the "Central Region Light Orchestra". The two regional councils are leading the Government a merry dance.

That is why I welcome the Bill. Many of its clauses are non-controversial and enlightened by any standards. I particularly welcome clause 13, which gives the Secretary of State power to reduce the rate support grant to a local authority where estimated expenditure is excessive and unreasonable. I welcome clause 14, which allows the Secretary of State to calculate the resources element according to a lesser rate poundage than the actual rate poundage. I also welcome clause 23, which allows the Secretary of State to withdraw or vary a consent given to a local authority to incur capital expenditure. One overriding criterion should guide the Government in their action. Profligate councils should not benefit from their profligacy and prudent councils should not be penalised for their good behaviour.

The explanatory and financial memorandum, under the heading Effect of the bill on public service manpower", states that some of the provisions should provide some scope in the longer run for minor savings in local authority manpower. I hope that the overall effect of the Bill will be much more substantial in relation to local authority manpower. Indeed, I wonder whether the Bill goes far enough. I ask my right hon. Friend to consider making it compulsory for regions and districts to publish their manpower figures annually, broken up by sectors, so that the ratepayer can see what he is paying for.

I wonder, too, whether my right hon. Friend should take power to impose a maximum ceiling for rate increases in any one year, perhaps related to the inflation rate. I recognise that the constituent parts of the retail price index might not be compatible with local government expenditure patterns. However, a limit of perhaps 150 per cent. of the retail price index increase in any one year, except on the Secretary of State's dispensation, might afford some protection to the ratepayer.

If my right hon. Friend is exercising control through the resources element, the rate support grant and capital expenditure, the pressure on rates, geared as they are by the two-thirds rate support grant contribution, could be considerable. I understand that the other powers will be exercised only after the rate poundage has been determined and that this cannot then be changed for that year. That is, perhaps, a measure of protection. However, I still believe that the added powers that I have outlined might be appropriate. It is vital that the burdens incurred by irresponsible local authorities should not be passed on to innocent ratepayers.

Mr. Cook

Will the hon. Gentleman give way?

Mr. Lang

I shall not, since I have already given way to the hon. Member.

An entirely bogus argument was repeated by the right hon. Member for Glasgow, Craigton (Mr. Milian), that the Government have no right to interfere in local government. I observe in passing that as two-thirds of the cash expended by local government is not ratepayers' money but taxpayers' money, collected by the central Government and distributed by them to local authorities, the Government have not only a right but a duty to intervene in order to protect the taxpayers whom they represent.

The right hon. Member for Orkney and Shetland (Mr. Grimond) said that in the long run it was desirable to replace rates with a fairer tax. Some form of local income tax, as my hon. Friend the Member for Edinburgh, South (Mr. Ancram) suggested, might be appropriate. That could be levied by the local authority and collected by the Inland Revenue through the PAYE system. The suggestion is that such a system would lead to the creation of 12,000 new Civil Service jobs. However, as my hon. Friend the Member for Edinburgh, South said, the increased use of computers might obviate the problem.

In the meantime, I wonder whether the Secretary of State will consider whether some items should come off the rates. For example, education is the largest single item of expenditure under the rates and it might be more appropriate for part of that to be taken over by the Government. Perhaps a measure of increased fairness could be arrived at by allowing rate payments to be a deductible expense against income tax.

Certainly, the burden of taxation has shifted unfairly to rates from income tax. In Strathclyde some ratepayers have experienced a sixfold increase in rates over a seven-year period. Other hon. Members will be able to produce similar examples. Until a fairer tax can be found, the Bill is a welcome measure to protect the individual against high-handed local authorities. It protects the virtuous local authorities from the less virtuous. It protects the Government's overall economic strategy from sabotage at local government level. It reasserts the sovereignty of Parliament itself. For those reasons, I give the Bill a warm welcome and wish it a speedy passage.

6.17 pm

Mr. Donald Stewart (Western Isles)

I hope that the hon. Member for Galloway (Mr. Lang) will excuse me if I do not deal with his speech in detail. He said that some good firms had had their backs broken. The firms and the CBI agree that the main reason for that is the action by the present Government since they came to power.

The Secretary of State said that the choice was that of the local authorities. It is obvious that the choice resembles that given by Henry Ford w hen he put his model T on the market. He said "You can have any colour you like so long as it is black." The Secretary of State says that local authorities can have certain powers as long as they do what they are told. The hon. Member for Edinburgh, South (Mr. Ancram) said that local autonomy was a precious right. So it is, but it cannot be bounded by anything that the Secretary of State of the day might wish to do.

The Bill is an attempt to extend Government control over local authorities. That is ludicrous when the majority of the Scottish people rejected a Conservative Government at the general election. They made it clear that they did not want the present Government's policies. A minority is dictating to the majority in Scotland. That proves that the Government think that the democratic process can be ignored there. As we heard today, the majority view is likely to be sacrificed to the axe-swinging English Treasury, even when members of the Government refuse to vote for and back their own policies. If a Government and their supporters do that, it is time they filed a petition in bankruptcy.

The explantory and financial memorandum to the Bill suggests that the Secretary of State is relaxing his control on local authorities — for example, in terms of the appointment of social work directors, dealt within schedule 2, paragraph 14, and other items such as the disposal of land forming part of an open space. But the financial rigidity with which it is to be imposed will make it virtually impossible for heal authorities to make local decisions of any importance. Where is the "local" in local government if its hands are tied behind its back and big brother is watching all the time?

An article in The Scotsman refers to the comparable English Bill, although it also applies to what is being attempted here today. It states: The Government are in the process of making the most decisive step yet in the shift from powerful, financially sound local authorities to dependent, centrally controlled satellites, according to a major critique of recent trends which is published his week. The authors of that critique said: Its efects will be within a very short time to replace genuine local government by the dependent outposts of a large central bureacracy … it marks the beginnings of a wholly centralised state. That has been done by the Conservatives, who allege that hey are so concerned with freedom.

The main point of contention is the rate support grant. Local authorities are to have their grant reduced when the Government deem their expenditure to be excessive and unreasonable. Clause 13(b) suggests that the Secretary of state should have regard to similar authorities. But the idea of comparison in Scotland is ridiculous, because of the disparate nature of the authorities in the various geographic areas and the population. Therefore, it is impossible to have arty meaningful comparison. How would one compare my constituency and local authority in the Western Isles, which will have to increase its rates by at least 47 per cent. and which has been designated by the Common Market Commission as one of the most disadvantaged areas in the British Isles, with, say, Orkney and Zetland, with its vast input of oil revenues, or with Strathclyde, Grampian, Lothian or any other area? No meaningful comparison is possible.

Objections to the Government's proposals are coming from a wide area, including independent members and COSLA as a whole. Little account has been taken by the Government of the difficulties caused by rising costs of labour, material and so on, and authorities have already had to trim services. This started at the time when the Labour Chancellor, with his IMF deals, made them go on cutting. If they constantly cut services, there will be opposition from the public about cutbacks in home helps, special provisions for the handicapped and so on. That has already started, and it will increase. Allowances must be made for those costs.

Allowances must also be made for functions that have been laid upon local authorities by Governments of various colours. If those functions are to be wished upon local authorities, the Government must continue their funding.

Rates will have to rise sharply if authorities are to maintain their services. It is one choice or the other. The Tories are for ever preaching about protecting the ratepayers. It is not a question of asking ratepayers to subsidise others; it is a question of trying to maintain standards.

As to housing, the main effect of the Bill is to reduce the housing support grant, which is the Government's contribution to the local authorities housing income. According to Shelter's figures, it would be reduced from more than one-third in 1979–80 to one-fifth in 1981–82. Increased rent must be seen against the background of unemployment and poor housing conditions in many areas, rural as well as urban. It is grossly cynical to contemplate charging more for inadequate housing. Unemployed rent payers will receive a rebate, which must be met by the Government in any case, so there is unlikely to be real gain against the background of Scotland's appalling unemployment figures. It seems likely that the level of support available through the housing support grant will continue to be reduced in the next several years.

The Secretary of State referred to the abolition of quangos in relation to clauses 24 to 26. One quango that has aroused great opposition in the Highlands and Islands is the Countryside Commission. Local authorities fear, with good reason, I believe, that it will inhibit development. Its control covers 20 per cent. of the Highland region and 40 per cent. of the Western Isles. Members of local authorities in those areas are local residents and, as such, have some regard to their environment. They do not wish to see it spoilt, but they know that people have to live and that there must be some development. This quango is the authority that assured the Inland Revenue that the Vesteys ought to get a big cutback if they kept the whole Assynt estate free of any development whatsoever. That does not engender belief in anything that the Countryside Commission might do. Those authorities have good reason to be afraid. I hope that it will be possible for an amendment to be accepted, if not to wipe out the commission at least severely to clip its wings.

We oppose the Bill. It has a facade of improvements, but in reality it is chipping away at freedom in Scotland and at freedom for the local authorities. It is an attack on the local authorities and, indirectly, an attack on the living standards of the Scottish people.

6.27 pm

Mr. John MacKay (Argyll)

I begin with part I of the Bill, which is concerned with the general problem of the rating system. I give a warm welcome — [HON. MEMBERS: "Ah".] I suggest that hon. Members should wait around. I might not give so warm a welcome to other parts of the Bill. However, I give a warm welcome to clause 1. Some considerable time ago, when my right hon. Friend the Secretary of State for the Environment announced that he intended to delay the English revaluation, I asked my right hon. Friend the Secretary of State for Scotland whether he had the same intention. At that point, he said that he did not have the powers. I am, therefore, glad to see that he is taking the first step along that line by seeking those powers in clause 1.

That means that the revaluation due in 1983–1984 can be delayed if the Secretary of State decides that it should be and comes to the House with a resolution to approve that. I see that the hon. Member for Central Ayrshire (Mr. Lambie) is not in his place. I know that we would agree on this, if not on much else. I know that the revaluation that took place in 1978–79 was a traumatic experience for many ratepayers and householders in Argyll and Ayrshire.

There are problems still unresolved arising from that revaluation. Indeed, one of them had to be resolved in the other place by putting a clause into the Local Government, Planning and Land (No. 2) Bill to exempt fish farms from rating, because the assessors would not accept that fish farming was an agricultural pursuit. I cannot imagine what they considered it to be, if not an agricultural pursuit. A great deal of difficulty was caused for the fish farming industry and there was a great deal of uncertainty about its future. That industry is of great importance for employment on the West Coast of Scotland and also for the provision of foodstuffs for the people of the United Kingdom. That is one example of the repercussions of the 1978–79 revaluation that is still with us.

Many other matters are not yet settled. The legal position may be settled but the aggravation remains. For example, one of my constituents is having a triangular battle with the Post Office and the assessor. The Post Office has decided that he lives in a rural area and should have only one postal delivery a day, and that there should be only one daily collection from his local post box. Yet the assessor has decided that he does not live in a rural area and that his rate assessment should, therefore, be considerably higher. The assessor, needless to say—and any hon. Member who has had dealings with the assessor knows that he always wins—has said that he takes no account of definitions that other bodies may give to where people stay. My constituency, like parts of Ayrshire, has been subjected to a traumatic experience as a result of that revaluation.

At the beginning, some doubt was expressed by the convener of the Strathclyde regional council, but it is now generally agreed that by revaluation alone more than £1 million was removed from the ratepayers of the county of Argyll. That excluded all the other increases that one naturally expects at times of inflation such as we have experienced during the last five or six years.

I think that I now understand clause 2, but I should like to make a few points about it. I presume that it means that a revaluation in 1983–84, or five years after that if we continue with this system, could be for certain items only. I presume that that is to allow for a separation of domestic and commercial rating and that a revaluation may take place in respect of commercial rating only, thus leaving domestic rating as it is, on the ground that perhaps during the next Parliament the Government will have found a way of removing domestic rating from the scene and financing local government in another manner.

I am a little suspicious of that method of going about things, because rates weigh heavily on commercial and industrial users. My hon. Friend the Member for Galloway (Mr. Lang) mentioned that point. Whether firms are profitable or are just getting by, the rate bill still comes in and it must be paid. It is not like other forms of taxation where if one makes a profit one pays tax but if one does not the tax man does not come. The rate man always comes.

Although the right hon. Member for Western Isles (Mr. Stewart) engaged in some knockabout arguments, I accept what he said. If asked, business men will tell us that high interest rates are a problem, but the House is not being honest if it fails to realise that the same business men will blame high interest rates, high wage increases and rates. They will probably say that all three are to blame. That has certainly been my experience. High interest rates are now on the way down, and it is to be hoped that that downward trend will continue. Wage increases, certainly in the private sector, are moderating substantially, but commercial and industrial people cannot see rates doing the same.

Mr. Dewar

Perhaps the hon. Gentleman will turn his mind to last year's rate support grant, which was almost certainly the shape of things to come. That forced large rate increases upon local authorities. Will the hon. Gentleman condemn that in the interests of the business men to whom he has just referred?

Mr. MacKay

That illustrates a problem to which I shall come a little later. It concerns the relationship between central and local government, how much of local government expenditure the central government ought to pay and at what stage the balance between central and local government gets totally out of hand. However, I agree that that is one of the input factors.

Mr. Foulkes

Perhaps the hon. Gentleman will also agree that many business men are going into liquidation or receivership because they are not getting local authority contracts, as a result of cutbacks in public expenditure.

Mr. MacKay

I have no doubt that some business men are not getting the contracts that they thought they should. Indeed, one of my criticisms of the Government's general policy of cutting expenditure is that they find it a good deal easier to cut capital projects rather than revenue projects. That applies to every Government, including the previous Government, because in 1976 the IMF came along and did the cutting for them. That fault can be laid at the door of the present Government, just as it can be laid at the door of their predecessors. It would be splendid if a way round that problem could be found, but it appears that it is extremely difficult to cut revenue.

There is an interesting situation in Strathclyde, where the council is no longer giving financial help under the sewerage Acts — which it ought to give — to private developers. It says that it has run out of money, although the staff that is supposed to operate those grants and schemes still exists, in spite of there not being much to do if no grants are given.

Mr. George Robertson (Hamilton)

What should Strathclyde regional council do? Is the hon Gentleman suggesting that it should build the sewerage systems that he considers to be essential, or should it sack the personnel that will be necessary if those sewerage systems are ever to he built at all?

Mr. MacKay

I think that a balance could be struck. What is the point of retaining staff if there is no work to do? If a reduction in staff could be achieved, some of the money saved could be used to allow some of the most important projects to proceed. However, I find it odd that half-way through the financial year, when it must be obvious and easy to predict the kind of expenditure that one will have, the council has run out of money. I strongly suspect that it has moved the money to some other sphere. In fact, I am pretty certain that it has moved the money to something for which it has under-budgeted. It then diverted the money away from this sphere, presumably because it involves private housing that the council considers to be of lower priority than that to which the money has been devoted.

I should like to add my voice to those of hon. Members who have already spoken about the basic unfairness of rating. I agree with the point made by the hon. Member for Glasgow, Garscadden (Mr. Dewar) about the balance between central and local government finance. It is difficult to be a local authority when so much of the money comes from the. Government and the rest comes from a system of financing that is unpopular with the portion of the electorate which bears it. The majority of the electorate who do not pay rates really could not care less one way or the other.

At one stage an hon. Member referred to the Layfield committee, which looked into this matter deeply. I know that it found insurmountable difficulties in all the alternatives. If there were no local government rating, if the committee had looked at some other form of local government taxation as being unsatisfactory and if someone had gone to the Layfield committee — for example, a Labour Member— and come up with the ilea of local rating, it would have rejected that, perhaps a great deal more quickly than it rejected the other systems.

We have become used to rating. It is simple and inexpensive to collect. It is what we live with. Therefore, when we look at the alternatives we try to find all the difficulties that are associated with them. Sometimes that blinds us to the difficulties of the rating system. There are difficulties associated not oaf with the actual assessments but with the way in which they are based on house values. Indeed, it is doubtful whether they are based on house values at all. At times they seem to be figments of the assessor's imagination. About two-thirds of the average electorate do not pay rates. I do not know whether that is representation without taxation, but it is certainly something like it. It means that a local authority can be less than interested in its ratepayers when it realises that thirds of its electorate do not pay rates. I am not suggesting that local authorities are like that, but there must be a temptation to punish the ratepayer on the ground that he forms a minority of the electorate.

I hope that my right hon. Friends in Scotland and England will look seriously at an alternative to rating, because I do not think that it is a system with which we can continue for ever. We must find some alternative.

Clauses 5 and 6 also relate to rating like so many other things, attempt to smooth over some of the problems of the rating system. These clauses relate to charities and remissions. I should like to refer to various community activities and assets that people work for, finance and build but find that year after year they are hit by the assessor, who asks for quite a lot of money. I am not talking about elaborate projects; I am talking about facilities such as playing-fields — if they are entirely community-based and have nothing to do with the local authority—pavilions and all the other things which are not charities, which do not get rating relief and which pay annual values.

At present, I am arguing a case with the Home Office, the assessor and anyone else who wishes to have an argument with me about it. It relates to what are called active television reflectors, which are an important means of getting television reception for many people in remote rural areas. As for the finances for those reflectors, the Highlands and Islands Development Board is very good at giving grants, the local authority is good at giving capital grants and the local community raises a considerable amount of money. That is fine for the capital grant. But then people discover that after the wee bit of equipment is put up on a hill, along comes the assessor and bungs on an assessment that means that they will have to pay rates year after year in order to receive television programmes—a facility that all the rest of us get from a mast that is paid for, in rating, by our licences.

These are the kinds of unfairness that the charities provision does not stop. They are very real, especially in the small communities. There may well be examples in the cities also. Communities carry out self-help and go for the capital part of self-help and work hard to get the capital but then discover that the assessor knocks them for six because of the running costs that he imposes on them. That is quite unfair.

If we are to continue with the rating system—this is something that my right hon. Friend might consider in a year or two, when he sees when the next revaluation will be—I think that the suggestion that I am about to make ought to have been in the Bill, but I shall let my right hon. Friend off for the fact that it is not in the Bill on the assumption that there will not, one hopes, be another revaluation. There have been many appeals in my constituency and in Ayrshire. The people who are appealing and questioning their assessments found the procedures most inadequate. They found that the assessor gave them information partially and very reluctantly. They found it very difficult to decide whether they ought to appeal and whether they had any grounds for appealing. When appeals reached the courts, it took some very clever legal footwork by at least one lawyer in Argyll, on appeals committees, to drag out from the assessor the basis on which he had made his assessment.

That is fine if one gets as far as the appeals committee. It is fine if one can afford a clever legal operator who can work hard at this and make sure that he drags the facts out of the assessor. But how will the ordinary person, looking at his rates assessment when it comes in after a revaluation, be in a position to judge whether it is fair, whether he should appeal and whether he should go to the lawyer who specialises in the matter and can help him if it reaches the appeals committee? The assessor ought to be forced to give very much more information to the ordinary ratepayer who questions him before he ever considers having to take the matter to an appeals committee.

Mr. Peter Fraser (South Angus)

While my hon. Friend is developing this theme of the inadequacies of our appeals system against valuation, will he bear in mind that those who make an appeal, either to the committee or to the court in Edinburgh, traditionally never get their expenses paid, and that this is undoubtedly something of a restraint against proper appeals?

Mr. MacKay

Absolutely. That is right. I came across this in many circumstances. One group got round the difficulty by banding together and persuading the appeals committee that rather than hear an appeal from every house in the area they should take a test case. They all put their hands in their pockets and got their lawyer. I am happy to say that he was the gentleman who pulled more facts out of the assessor than the assessor had ever willingly let go. Those people got a reduction in their assessment. Therefore, the money that they spent on legal fees was well worth it.

I come now, taking them together, to parts II and IV. [HON. MEMBERS: "Oh."] I am surprised that Opposition Members have not developed their arguments a little. The right hon. Member for Western Isles did so.

Mr. Foulkes

We cannot do so. The hon. Gentleman is talking all the time.

Mr. MacKay

There is a difficult relationship between central Government and local government. In part IV, my right hon. Friend is reducing his control over local government—some of the controls relating to planning, for example. I welcome that, because even though the planning authority—I am not particularly talking about my own—may not always make the correct decisions, I do not think that lots of inbuilt appeals to the Secretary of State necessarily improve the decision-making. However, I hope that my right hon. Friend will ask the local authorities to exercise their planning procedures with a little more feeling for the objectors. At present, an applicant whose application is refused has the power to appeal, but objectors do not have that power. I do not think that there is any way round that problem, but local authorities ought to work quite hard at making sure that objectors feel that their cases are heard. It is not just a case of a letter being put in. Objectors should know that the letter was read and that the point was listened to and answered.

Like the right hon. Member for Western Isles, I find it a bit of a contradiction that, at the same time as my right hon. Friend is relaxing controls on planning, local plans and the like, the Countryside Commission, in many areas of the Highlands, including parts of my constituency, is being given a little say in the planning procedures as an objector — a say that is not being given to other objectors. The commission does not have to object to the local authority in its planning decision. After the plans are passed by the local authority, the commission can put its objections to the Secretary of State, and then the Secretary of State can intervene on the planning decision.

I am sure that my hon. Friend the Minister remembers two cases in Argyll shortly after the present Government came to office, in which I think it was quite clear from the reporter's report on those cases that the Countryside Commission had absolutely no justification for asking the Secretary of State to call in the plans. I do not know whether the commission has whispered in my right hon. Friend's ear since then, but I am delighted to say that no other planning applications for my part of the world have been called in at the say-so of the commission.

However, I am a bit worried that the commission is being given rights that no other objector has been given. I accept that in areas of great natural beauty, which we have in the Highlands, more people than just those of us who stay in them have an interest in them. But if the commission could put in its oar at the planning committee stage, so that its opinion was read and listened to by the planning committee, the committee could judge whether the opinions of the commission were valid in certain cases. That would be better than giving the commission a privileged position without anything being in the Bill to give it that position in law. That is a most disturbing thing.

I come to the other side of the matter. I question to what extent the Government should interfere in local government. We have an obligation to make sure that we do not ask local authorities to carry out tasks that will cost them money and then complain that they are spending money. We have an obligation, along with them, to look at functions that are being duplicated by us and them, and perhaps saving either them or us money, but saving one of us money. When the Stodart committee reports, I hope that it will suggest ways in which the two tiers may be prevented from overlapping as much as they do. They overlap on industry, planning and tourism. They have officials and offices for those matters and others. That is wasteful and unnecessary expenditure. If the Stodart committee makes recommendations along those lines, I hope that the Government will listen carefully to them and talk to the local authorities, and see whether we can remove those extra unnecessary expenses on the ratepayer and the taxpayer.

The great problem, about which the hon. Member for Garscadden intervened, is that the Government pay two-thirds and the ratepayer one-third. I am being rough about this; we do not need exact figures. No one can say that the Government, on behalf of the taxpayers, should stand aside, take no part and say nothing about overspending by local authorities. Indeed, the one-third who pay rates often look to the Government to help them if their local authority is overspending.

I shall go into the problem of Lothian. My hon. Friend the Member for Edinburgh, South (Mr. Ancram) has done his bit on that. He has pointed out repeatedly the extra expenditure that Lothian undertakes. It annoys authorities that try to do their housekeeping, including Labour-controlled authorities, to see an authority such as the Lothian authority—in a much more prosperous area than Strathclyde—come out with a higher rate poundage than Strathclyde does. That is unfair.

However, what is more worrying—my hon. Friend did not mention it, but I read about it in the newspapers, although perhaps it is totally made up by the press; I do not know — is that both the Lothian region and, I believe, Dundee are actually spending more money in order to wreck the Government's spending plans and in order to embarrass the Government. I hope that that is not the case, but if it is surely no hon. Member can support such action,. That kind of motive, if it exists, is totally irresponsible. If those local authorities are pursuing that course of action they are bringing the whole of local government into considerable disrepute. That worries me, because local government is an essential part of our democracy.

Mr. Foulkes

I know that the hon. Gentleman has a lot to contribute, but does he not think that he is bringing this debate into disrepute by continuing at such great length when so many other hon. Members wish to contribute?

Mr. MacKay

I was just thinking about concluding, but I am greatly tempted now to continue and to annoy the hon. Member for South Ayrshire (Mr. Foulkes), bearing in mind the number of times that he has annoyed me by going on. However, I shall resist the temptation.

I do not know whether I shall serve on the Standing Committee that examines the Bill. If I do, I shall look for ways—including those that I have mentioned—to insert new clauses or to make amendments to cater for some of the points that I have been advancing. That statement may perhaps guarantee that I am not selected for the Committee.

On clause 28, Labour Members will be delighted to hear that when I first say the Bill I rushed off to the Library for a copy of the Education (Scotland) Act 1980. They will be equally pleased to know that I have nothing more to say about it, except that I welcome my hon. Friends decision not to implement these clauses at this time.

6.51 pm

Mr. Hugh D. Brown (Glasgow, Provan)

Some of my hon. Friends are being slightly uncharitable about the contributions of Conservative Members. I am referring not just to the length but to the quality of those speeches. Some of my hon. Friends will not be unaware that the conservative Members will reaffirm their vows of silence by the time that they get to the Committee. It is refreshing [or those of us who served on the Standing Committee that examined the Tenants' Rights, Etc. (Scotland) Bill, which sat 30 times, to hear those Conservatives today, because this is the only chance that we have had of understanding some of their views.

It has been a depressing day for the Government. The performance this morning in the Scottish Grand Committee will be well reported in Scotland. The Prime Minister's irritability at Question Time is being increasingly noted. The only other disaster that can befall the Government today is for the hon. Member for Glasgow, Hillhead (Mr. Galbraith) to make another speech.

Mr. Dewar

That is unlikely.

Mr. Brown

Yes. He is bound to have been exhausted by his efforts this morning.

There is much in the Bill that merits the close scrutiny that it will undoubtedly have in Committee. The Bill is in various parts, not all of which are related or linked. The contribution by my right hon. Friend the Member for Glasgow Craigton (Mr. Millan) was excellent, in contrast to the tawdry approach of the Secretary of State. the Secretary of State was far too technical and theoretical. He failed to face the underlying philosophy behind some parts of the Bill.

I want to deal only with the housing support grant and the housing aspects of the Bill. I understand that clause 23 is part of the mechanism that will or can be used by the Secretary of State to impose restrictions on capital expenditure by local authorities out of revenue. In other words, section 94 of the existing provisions is to be tightened and implemented to make sure that there is restrictive control over the capital expenditure programmes of local authorities. Will the Minister state the existing percentage of capital programmes that are financed out of revenue that could be caught by this provision in the current stage?

Clause 22 deals with the relaxing of controls. Everyone agrees with it in principle, although we feel that the example given about no longer requiring the sheriff to give permission to increase burial charges is not particularly relevant or likely to be a major issue at the next election. Nevertheless, it is a welcome trend in minor details, and I only hope that the Government, in their inability to produce anything worth while, will rot just gather these statistics together and claim for them more than they are worth.

I move on to stress the significance of the changes in the level of housing support grant. I remember the debates when we introduced the principle of these grants. Some of my hon. Friends were a little unfair at that time, but I do not complain about that. I think that they now realise that the principles that we were trying to apply were sound. Those principles were to ensure fairness between one housing authority and another.

The dispute is about the amount of Government support that is injected into the system and the method of distribution. The principle of applying the greatest help to those in greatest need is impeccable. It is a Socialist principle, and that was the rationale behind it. This Government, however, are using the machinery savagely to attack the local authorities.

My right hon. Friend the Member for Craigton mentioned the figures, and I shall repeat them I understand that the level of Government support in 1980–81 is about £228 million, falling next year to £140 million. That is mainly based on the assumption of rent increases. The Government cannot impose rent increases on housing authorities, but they can make it extremely difficult for the authorities to avoid rent increases if one of the options is a cutback in capital expenditure. That is part of the strategy of attack on the authorities, where the Government are not just being punitive but are preventing them from carrying out the policies on which they were elected and which it is worth while for them to pursue.

I should remind some of my hon. Friends not to express surprise at what we are receiving from a Tory Government. The Secretary of State was the man who introduced the Housing (Financial Provisions) (Scotland) Act 1972. I see him nodding, so he is not disputing that. I am sure that the right hon. Gentleman will not dispute that it was the intention, properly and fairly stated, that within about 10 years public expenditure committed to public housing should be phased out. The right hon. Gentleman is not disputing that, either. So, by this method he is almost back, at his second attempt, on target. That is an outrage in view of the problems being faced by some authorities.

Glasgow is expecting to have its capital expenditure reduced in 1981–82 from £61 million to roughly £55 million. I know that there may be variations in the figure. That is not a housing policy. It is an attack on local government, because it is consistent with the only policy that the Government have, that of selling off council houses. The Government must find some way of putting pressure on local authorities to see that they reduce capital expenditure, either by savagely increasing rents or by selling council houses. That strategy will fail. That is one of the factors that perturbs me. I hate to put myself in any category, but I am concerned at the unrest that exists in many of Scotland's local authorities. The Government must accept some responsibility for it.

Some Conservative Members need enlightenment on Labour Party politics. I wish that they would come to us and discuss them instead of getting their information from the Sunday Post, the Sunday Mail or wherever. There are many new, active, almost revolutionary councillors in Scotland. Being revolutionary has nothing to do with Marxism. [Interruption.] I am trying to make a serious point. They are new, keen and, in some cases, young members of Labour-controlled authorities, who may not have been members of the party for very long. They now find themselves in local government and in the majority. It is not surprising that within months of being returned in May with a substantial majority they want to show their strength. I wish that the Government would take on board the strength of feeling that exists in many Labour-controlled authorities on these matters.

Let us not forget that those councillors are disputing, wrongly in my view, the Government's mandate for selling council houses. There is a strong body of opinion against that. They will not be enamoured of these further attempts by the Government to restrict their ability to manoeuvre and to carry out the policies on which they were elected. I am sorry to have to say that. I am sorry that my hon. Friend the Member for Dundee, West (Mr. Ross) is not in his place. I regret that Dundee district council has taken the decision that it has. I do not think that it has a mandate from the Labour Party to do that. Whether or not it has a mandate does not matter. It has no right to say that it will not implement section 1 of the Act.

I must make it clear that I do not support that view, even though someone might extract this snippet of my speech for the reselection conference that I shall face some time soon. I shall go even further. I do not agree with the Glasgow branch of NALGO on the action that it has taken. The sooner that NALGO members get off their backsides—

Mr. Norman Hogg

I wondered when that point would be made. I am surprised at its source. The NALGO position on the matter was determined at a meeting of the national executive on 22 November, which said that it would not encourage NALGO members to engage in activities aimed at refusing to implement the Act. At 3.30 pm today, any decision on the matter was deferred by the national executive so that further consultations could take place. That is the union's position.

Mr. Brown

I am sure that my hon. Friend appreciates that I was attacking not NALGO as a whole but only the decision of the Glasgow branch that deals with the housing management department. I make no apology for that. I do not care how strongly that branch feels. I did not see any great evidence of the members of the Glasgow branch coming out in their hundreds to help us at the district council and general elections.

Mr. Norman Hogg

They were all in East Dunbartonshire.

Mr. Brown

My hon. Friend can justify the actions of NALGO if that is what he wishes, but I think that we are discussing a dangerous principle. I do not accept the right of a handful of people to thwart the elected representatives of either local or national Government. That is something that must be said. I feel strongly about the matter. We are being jockeyed into a position where an assumption is being made that, in some magic way, our Labour colleagues in local government can prevent rent and rate increases or avoid redundancies in such a way that if they accept any of these propositions they will be regarded as Right-wing reactionaries. I am not prepared to go along that road.

I am disturbed at the Government's attitude towards housing. They are blatantly putting the screw on district councils with housing responsibilities. I could quote the speeches of the Secretary of State and the Under-Secretary who during past years complained that we were not making available enough resources to deal with dangerous housing and houses with damp and condensation problems. The Under-Secretary even supported a quite irresponsible amendment on the housing support grant, and in an unbelievable manner.

New councillors have been thrust into positions of responsibility. In some cases they are compelled to say to people that, even if their houses are dangerous because of faulty wiring, capital expenditure allocation is such that the programmes will be delayed. If a house is unsatisfactory because of damp or condensation, they are having to tell people that they are sorry but they will have to put up with that because the allocation is not being made. In those circumstances, it is absurd to make wholesale condemnations of Labour-controlled councils which are desperately anxious about the position. They are having to retreat from some of the commitments that they gave at the district council elections. They are genuinely concerned about the responsibility for postponing programmes when people's expectations have been raised.

The Government should be ashamed of themselves. It is not only their attack on local government that is at fault. Their whole economic strategy and policies are wrong. They should feel ashamed when they consider some of the problems in the deprived housing areas in Scotland, because their first priority was to give concessions to taxpayers earning more than £10,000 a year. That is obscene. Their economic policy is wrong. It is forcing them to introduce legislation such as that before us today. I shall put in the maximum effort not only to vote against the Second Reading but to challenge the legislation throughout the country whenever I have the opportunity.

7.7 pm

Mr. Peter Fraser (South Angus)

When speaking from the Government Back Benches, I suppose that it is traditional to welcome a Bill. However, I am bound to say that I do not welcome the Bill—but I must face up, as must all Conservative Members, to the fact that it is, regrettably, necessary. My right hon. Friend the Secretary of State said that it is the responsibility of local authorities to have regard not only to their local areas but to the National interest. Until May of this year, I enjoyed a certain smug complacency on the issue. I represent a constituency that had a Tory-controlled regional council and two Tory-controlled district councils. However, since then I have had to have regard to the district council to which the hon. Member for Glasgow, Provan (Mr. Brown) referred, namely, Dundee district council. The hen. Gentleman deserves some credit for having spoken upon the matter. It was clear from his words that he was referring to that council. He referred to the attitudes of the new, young, wild men in the. Labour Party in local government.

Mr. William McKelvey (Kilmarnock)

Is it not a fact that the Dundee young councillors said in their manifesto that they would not raise rents? They are now keeping a political promise—something that is rare these days. They should be applauded for it. They were elected with large majorities.

Mr. Fraser

The hon. Gentleman does not realise that hat attitude is more prevalent than only in Dundee district council. Before the hon. Member for Provan spoke on that issue, it was only the hon. Member for Caithness and Sutherland (Mr. Maclennan), from the Labour Party in Scotland, who had the courage to say that Dundee district council was behaving irresponsibly. Now that the hon. Member for Provan has joined him, I must give him a warning. On Monday of this, week, the hon. Member for Caithness and Sutherland enjoyed a leader all to himself in the Dundee Courier and Advertiser. I wonder whether the hon. Gentleman wishes to have that credit bestowed on him when he goes forward for reselection.

Mr. Hugh D. Brown

I have stopped giving press handouts. I am not reported on anything that I say, so it does not really matter.

Mr. Fraser

I shall ensure that the hon. Gentleman receives a copy of the Dundee Courier and Advertiser. If lie does not receive it, I shall make sure that his management committee does.

There has been a dismal failure in Scotland to show responsibility for the national interest. As my right hen. Friend the Secretary of State for Scotland said, it is a problem that has confronted not only him. It one that confronted his predecessor, the right hon. Member for Glasgow, Craigton (Mr. Milian). The only politically controlled authorities in Scotland that showed responsibility for the national interest were the Conservative ones. My right hon. Friend has paid his compliments to them in the past for the opportunity that they have given him to try ID manage the economy of Scotland in the national interest.

I was astonished when I read the figures which appeared for the first time during the Summer Recess and which gave the breakdown of the employment of local government officials in Scotland. They revealed that after two and a half years there had been an increase of about 15,000 in the number of local government employees. We were told that Tayside region and Angus district had made massive cuts. They made cuts in staffing levels of 3 per cent. If that 3 per cent. had been reflected throughout Scotland, there would have been a decrease in the number of local government employees of 18,000 for 1979–80 rather than an enormous increase over two and a half years.

Labour Members have recently shown a new-found concern for the private sector in Scotland. If they really have that new-found concern, I ask them to ask industrialists to ask small businesses to ask those in commerce in Scotland if they have truly felt that a 3 per cent. reduction in the level of local government staffing has damaged their businesses or whether alternatively, and far more obvously, it has relieved them of a burden. There will be few companies in Scotland which will be able to come through the deep worldwide recession if they cannot make that 3 per cent. economy. They will have to be fit and lean.

Through the speeches of my hon. Friend the Member for Edinburgh, South (Mr. Ancram), it is clear that the Lothian region has been elevated to the top of the hit list for the Secretary of State for Scotland. I ask him in the forthcoming months to ensure that he has his sights trained northwards towards the Tay. I suspect that he will have similar problems in that area.

It has been claimed with no lack of concern by Dundee district that it anticipates increasing rents, if it is permitted to do so, and hope that it will not, by about 200 per cent. The reason for that is that the district follows avidly the economic school represented by the hon. Member for Dundee, West (Mr. Ross). Part of the economic thinking of the hon. Gentleman is that the rates burden for business and industry is irrelevant. He is willing to see imposed upon business and commerce in Dundee an additional rates burden, but he is at the head of the queue waiting to see my right hon. Friend the Secretary of State for Scotland to ask him to pour more money into Dundee to assist business. I think that everyone can see the inconsistency in that approach. Part of the present that my right hon. Friend might give to the hon. Member for Dundee, West is a small pocket calculator.

The most vexed issue of public expenditure is capital expenditure. I recognise that my right hon. Friend has considerable problems in trying to control all forms of capital expenditure. I raised the issue with him when he gave evidence to the Select Committee in Edinburgh. We should be working harder to secure the essential distinction between revenue expenditure and capital expenditure. The last things that we want are grandiose schemes that will boost the self-importance of certain local representatives.

I accept that increased capital expenditure cannot be allowed if significantly increased revenue implications can be identified. At the same time, I feel something of a sense of despair when seeking to support capital schemes promoted by Tory controlled authorities that are well aware that they must not in their wake bring in schemes that have high revenue implications. They are as well aware of that as I am, but they find from time to time that they are trapped in elaborate calculations to determine what they can spend when those calculations seem to be but dimly connected with the public sector borrowing requirement or any other measurement of any increase in public spending.

I hope that the Government will apply the stick firmly to local authorities that are irresponsible, especially on the revenue side. However, I hope that a carrot will be offered to responsible local authorities in the form of a more sympathetic approach to their applications for capital expenditure items. I hope that my right hon. Friend will be able to give effect to what I know he believes to be right, and that if there are sensible capital expenditure programmes in the right areas they will be of benefit to local communities and a boost to the private sector.

7.17 pm

Mr. Robin F. Cook (Edinburgh, Central)

I hope that you will forgive me, Mr. Deputy Speaker, if I preface my remarks by saying that I and a number of my hon. Friends think it unfortunate that on a night when eight Back-Bench Labour Members have been seeking to catch the eye of the Chair none of them will be successful in doing so until nearly eight o'clock in the evening.

I understand that minority parties have their rights in the House. I understand also that it is for the occupant of the Chair to safeguard those rights. However, it is perhaps unfair that they should be treated consistently as surrogate Labour Members and that we should find ourselves drawing towards the close of the debate to when only one Labour Back-Bencher and four Tory Back-Benchers—it is characteristic that none of the Tories could muster one hour's experience of local government — have contributed to the debate. I shall be obliged, Mr. Deputy Speaker — I think that this applies to some of my colleagues — if you will draw the attention of Mr. Speaker to my remarks.

Mr. John MacKay

I do not mind the hon. Gentleman hurling insults, but does he realise that I served on a local authority for five years before reorganisation?

Mr. Cook

I am much obliged to the hon. Gentleman. I accept that correction. I wish that the hon. Gentleman had put that information in his printed biography. I withdraw my earlier remark. I made an error and I apologise. I have acted on the basis of printed information and, as has so often happened, it has misled me. However, that does not alter the fact that we have had four Tory Back-Benchers participate in the debate and only one has served in local government.

Mr. Deputy Speaker (Mr. Richard Crawshaw)

Order. The hon. Member for Edinburgh, Central (Mr. Cook) is wasting time. The Chair is not unmindful of those who have been trying to catch the eye of the Chair as opposed to those who might enter the Chamber later.

Mr. Cook

The Bill should be resisted by the House because it marks one more step in the relentless march towards central control by the Government over local authorities and local authority decision-making. There is a cosmetic attempt in schedule 2 to pretend that restraints on local government are being removed by the Government. Some of the provisions in schedule 2 amount to no more than pleasing jests. Presumably they are intended to give light relief to those who sit in Committee considering the Bill.

Surely, that Committee is not intended to take seriously the provision that local authorities should no longer be encumbered with the obligation to lay down standards for cattle grids. The Committee will not be impressed to discover that local authorities will be given their own freedom and discretion on tree preservation and in deciding how they should style their chairmen's title. They are not the stuff of local authority elections. They are not matters that call for further local authority expenditure or staff. To pretend that that is removing in any serious degree central Government control over local authorities is totally bogus.

It is paralleled in the Bill by clauses that effectively garrot local autonomy by using local authorities' own purse strings to strangle them. Reference was made to clause 23 by my right hon. Friend the Member for Glasgow, Craigton (Mr. Milian). It provides an entirely novel power for the Secretary of State to revoke capital consent that he has given to local authorities, provided that they have not entered into a binding contract. There are no grounds provided in clause 23 as to when the Secretary of State may invoke those powers. He does not have to display any conditions or show that any condition has been fulfilled. He merely has to decide that he will invoke his blanket powers under clause 23.

That must worry the House. It is a power being sought by a Government who have shown that they are willing, by sudden, disruptive and damaging intervention in local authority affairs, to cut back their capital programmes. They are a Government who are so besotted by their own monetarist dogma that they have introduced a moratorium not only on housing expenditure but even on defence expenditure. They have put thousands out of work, bankrupted small firms and thrown the programmes of the Ministry of Defence and local authorities into disarray, and yet they have the nerve to pretend that these moratoriums somehow will contribute to economic recovery.

The clause is of rather academic interest to Lothian region, which already is not allowed to spend any capital money unless we speak nicely to the Secretary of State, send him a little essay in justification of the project and wait six months. I should like to share with the House some of the projects that have been caught by the provision. One is the provision of highways and sewers on industrial estates. That is the expenditure which Lothian region wants to undertake and which is called irresponsible. That is the controversial expenditure. That is what the Secretary of State is resisting. Private sector firms are encountering delay in the provision of factory units because Lothian region has not been allowed to finance highways and sewers.

There is also the provision of a social work centre at one of the growth areas within Lothian region at Livingston. Livingston now has over 10,000 households. It has no social work centre. Therefore, Lothian region applied last spring for permission to construct a social work centre at Livingston. [Interruption.] The hon. Member for Edinburgh, South (Mr. Ancram) finds that funny. I am sorry to see that. He has over his years in public service given an impression of concern for social issues and social services. I am sorry that he sees it as a jest that a major community in the region that he has the honour to represent in this House should be denied such a facility.

Since the spring, Lothian region has had no response to its application for capital consent. As a result, it has paid £20,000 to the contractor to keep alive the tender which has been held up by the Government. That is not saving money. It is an egregious waste of public money. That is' the kind of consequence of rule from St. Andrew's House.

It will become widespread if the House is foolish enough to entrust to the Secretary of State the powers that he is seeking in clause 23.

Mr. Rifkind

Has the hon. Gentleman considered why the Secretary of State feels it necessary to impose that restriction not on local authorities generally but on the one authority to which the hon. Gentleman refers?

Mr. Cook

I know perfectly well why the Secretary of state has taken such powers over this local authority. He is seeking a scapegoat. He is seeking to penalise one local authority which happens to have been hounded by the press, with great co-operation from the Under-Secretary of State and his hon. Friend the Member for Edinburgh, South, to whose speech I shall be turning shortly. There is no evidence whatsoever in the expenditure of Lothian region to justify the way in which it is being victimised by the Government. As I said earlier when I intervened in the speech of my right hon. Friend the Member for Craigton, Lothian region is spending exactly 6 per cent. more than the Scottish average per capita and substantially less than many other regions, which does not justify the way in which it has been singled out for treatment by the Government.

We all know well — I am grateful to the Under-Secretary for drawing our attention to the matter again—which authority will fall Foul of the powers in clauses 13 and 14, if they are carried. It will be Lothian region again. I shall tell the House why the Secretary of State is seeking new powers under clause 13 rather than relying on the existing powers in the 1966 Act. The reason why he is not relying on the powers in the 1966 Act is that they can be invoked by him only when the outturn figures are available He knows full well that the reason why the rate poundage in Lothian region this year is higher than that in other regional authorities is that it refused to accept the right hon. Gentleman's figure of 13 per cent. for price inflation and included a figure of 15 per cent. Lothian, like all other authorities, is heading for a deficit, but it is less than that which has been incurred by other regions. Strathclyde's deficit, even on a proportionate basis, is well over double that of Lothian region. Strathclyde—and one cannot blame it for that — accepted the Government's figure of 13 per cent. as the figure for pi-lee inflation.

The Secretary of State now knows, because we are sufficiently far through the year, that at the end of this year when the outturn figures arc available he will have very great difficulty using his powers under the 1966 Act. When he gets to court, it will be obvious that the difference between Lothian and other regions is not that it was more extravagant but that it was more prudent than the others in making better allowance for inflation. The Under-Secretary laughs, but it remains a fact that Lothian region's deficit is less than the deficits incurred by other local authorities.

That is, why the Secretary of State is seeking power that will give him the right to intervene at the estimate stage, although II honestly greatly doubt whether St. Andrew's House is in a better position to provide an estimate for each local authority than the officials and councillors who have represented those authorities over a period of years. However, he will be able in go to court without being encumbered by the awkward reality of discovering the out- turn figures across Scotland. That is why there is that provision in the Bill and why the right hon. Gentleman is seeking the power.

Mr. Rifkind

If the hon. Gentleman really believes that, can be explain why the Lothian region is the only regional authority in Scotland this year that has planned for a growth in its budget? That was a major factor in the rate increases imposed in that area.

Mr. Cook

It is not a major factor. The factor by which the growth planned by Lothian region increased rates is exactly 2½ per cent. of a total increase of 42½ pet cent. That shows the extent to which it was a major factor. I shall come back later to exactly what that growth was.

If the hon. Gentleman will allow me, may I first polish off my remarks on clause 13? The other reason why I find it objectionable is the totally outrageous sweep of discretion that it gives the Secretary of State. I noticed that when the right hon. Member for Orkney and Shetland (Mr. Grimond) made his speech he misquoted the conditions in clause 13. He said that the Secretary of State could invoke his powers under that clause on the basis of "such other criteria as were appropriate". The right hon. Gentleman had to correct himself. What clause l3 says is such other criteria as he considers appropriate". It would be entirely reasonable to say "other criteria as were appropriate", because that could be tested and challenged in the courts. However, by inserting his own no doubt complex and confused stream of consciousness into the process, the Secretary of State has made sure that no future court can peer into the way he was thinking and the kind of criteria that he considered appropriate.

What criteria will the Secretary of State consider appropriate? Will it be that there will be a new moon the next week? Will it be that the hon. Member for Edinburgh, South has made another speech attacking Marxists in the Lothian region? We do not know. The Bill does not tell us. The Secretary of State has just left the Chamber in case he might be tempted to tell us what he considers appropriate.

I wish to draw attention to one other power before moving to my general remarks—the power contained on page 24. It is a new power which has not been mentioned hitherto in the debate. I am not surprised. It is tucked away in a schedule headed "Minor and Consequential Amendments". However, within schedule 3 on minor and consequential amendments there is a whole new set of powers for the Secretary of State concerning what he can do with the money that he has docked from the offending local authority. According to paragraph 8, he can do one of two things. He can restore it to the local authority if he considers that their subsequent conduct has been such as to merit such restoration. Never in any Bill have I seen such vacuous, vague and flaccid terminology, giving such a wide and sweeping range of discretion to the Secretary of State. What will be the subsequent conduct that he considers to be such as to merit the restoration of the grant? Is it that an authority has stopped giving interviews to the press criticising him or, in the case of Dundee, that it has decided to drop its opposition to the Tenants' Rights Etc. (Scotland) Act? We do not know. We are not told in the schedule, and it would appear entirely proper for the Secretary of State to base his decisions on any of those examples. He can give the money to other local, authorities "as he thinks fit" — again, untrammelled by any condition, any formula or any challenge in the courts, but simply "as he thinks fit".

This is arbitrary government with a vengeance. This is a new power that no previous Secretary of State has enjoyed. The right hon. Gentleman can single out particular local authorities and reward them with extra money, and he can penalise other local authorities for unspecified reasons.

The irony is that, as with so much Government legislation over the past year, this is legislation based on myths—the myths that public expenditure in Britain is too high and is increasing because of local authority expenditure. Our public expenditure level is now one of the lowest in Europe. In terms of the purchase of goods and services, public expenditure has fallen as a proportion of GDP over the last five years. It is totally untenable to argue that local authority expenditure has increased over the same period. If Conservative Members would only pause in the middle of their diatribes and look at the Government's White Paper on public expenditure, they would find that between 1974 and 1980 expenditure by local authorities in Scotland fell by 9 per cent., while expenditure by St. Andrew's House increased by 7.6 per cent. It is not local authorities that are putting up public expenditure. Local authorities have borne the brunt of cuts in public expenditure over the last six years.

In producing a Bill that imposes new sanctions and new penalties on local authorities, the Government are clearly trying to single out local authorities as a scapegoat for their difficulties, and they have managed it with considerable finesse. Conservative Members criticise local authorities for employing bureaucrats, but the irony is that the Secretary of State for Scotland employs virtually no one but bureaucrats. I do not criticise them for being bureaucrats. Bureaucrats have an important, vital job to do. By comparison, the local authorities employ a small proportion of bureaucrats. The great majority of their staff are policemen, firemen, teachers and social workers. The hon. Member for Edinburgh, South referred to the increase in staff in the Lothian region. The increase for the last 12 months is 589, which includes 86 policemen and firemen, 207 teachers and 218 social workers. They are not bureaucrats. The figures cannot be denied.

The Under-Secretary of State criticised the Lothian region for new growth in its last budget. One half of that new growth included a mere £1 million for the social work department, to provide more home helps to cater for the increasing number of elderly people in the Lothian region, to provide a laundry for incontinent people who live at home and to provide an alarm system for elderly people who live at home and who do not want to go into a sheltered housing scheme. That last provision will save public expenditure in the long run. If the councils in the Lothian region decide that that sort of expenditure is necessary for their community, they should be free to take that decision and be answerable ultimately only to the community that elects them. If we reach the stage where the Secretary of State is empowered to decide that Lothian region council has made the wrong decision or that the electors made the wrong decision in electing it, we are in danger of extinguishing local authority autonomy.

I regard that not simply as tragic but as dangerous, because local authorities are an important element of democratic decision-making within our country and form part of the important system of checks and balances which is ultimately the only guarantee of personal liberty. We are dealing not simply with a technical change in the way in which the rating system works but with the fundamental issue of local democracy and the right of local communities to elect local people to reach their own decisions. That is why I think that the House should throw out the Bill rather than pass it as yet a further step on the road to dictatorship by parliamentary majority

7.35 pm

Mr. Bill Walker (Perth and East Perthshire)

I welcome the opportunity to speak in this important debate, but I wish that we lived in a country in which a Bill of this sort was not required. I am saddened that we have to introduce a Bill of this nature. Why do we do it? We do it because if democracy is to survive in this country the relationship between local and national Government should and must be better.

The population at large know that the relationship between the Labour Government and local government was bad, and they know, too, that the relationship between this Government and local government is not good. The population at large wonder why and ask why. I hope that I can make a contribution and shed some light on some of the problem areas. Sadly, I believe that politicians in local government and in Parliament are frequently interested only in scoring political points. Often the view is taken that the end justifies the means.

This has been an interesting day for Scotland, because it has brought forward two patriots, one from either side of the House, and I do not think we should ignore that. The speech of my hon. Friend the Member for Glasgow, Hillhead (Mr. Galbraith) in Committee this morning and that of the hon. Member for Glasgow, Provan (Mr. Brown) were both good, and they were good contributions to democracy. They were important speeches, which should not be brushed aside humorously.

I believe that the hon. Member for Provan believes in democracy—and he is a patriot, which is important. It may not be fashionable in some quarters, but the public at large are looking for more people who are patriots—in this House and elsewhere. The hon. Member for Provan and I are rarely likely to agree on political issues, but I hope that he will agree that I frequently speak to Labour councillors and to Labour Members of Parliament. I listen to what they say, although I do not necessarily agree with them. I hope he will agree also that I am not gagged in Committee.

No one in the House or elsewhere denies that we have a world depression and that there has been a loss of markets, yet some of our wounds are self-inflicted—for example, savage rate increases. The taxpaying, ratepaying industrial and commercial firms, without exception, are looking for substantial reductions in local authority expenditure, particularly in revenue expenditure.

I hope that the Bill, particularly clauses 13 and 14, will reward the law-abiding councils, such as Tayside and Perth and Kinross, and I hope, too, that it will penalise the non-law-abiding councils. I draw attention to Dundee district council, in which I have an interest because part of my constituency falls within it. Sadly, the history of the city of Dundee is one of constantly inflicted damage. The individuals living there do damage to that city, and local politicians seem almost hell-bent on destruction. They refuse to accept the law of the land, whether that law is passed by a Labour Government or by a Conservative one. That is not very clever, because in Dundee we are concerned with the creation of new jobs, and we cannot create new jobs if the image in the locality is damaging to their creation.

I agree that we must look carefully at the statutory obligations that we place on local authorities. We put statutory obligations on them and then we object when they bring manning levels up to what they regard as necessary to carry out those obligations. That is riot terribly clever, and it is something that we in the House should consider.

I should like to draw attention to the creation of nonessential jobs that do not arise from statutory obligations. I refer specifically to the activities of Dundee district council. I find it difficult to see how, in times of great economic pressure, it can justify a research officer. It may be that this research officer will help the lord provost or the leader of the administration to seek out new cities which, in the eyes of the political commissars there, would tie suitable for twinning, but perhaps if the council had had a research officer before it would not have carried out the most recent example of twinning.

In Dundee district it is common knowledge that the chief officials are not allowed to shed any labour, even if they consider it to be surplus. The council ignores the desire of the electorate to get value for its rates. There was me example of the Dundee Standard. The Dundee district council channelled substantial funds towards advertising in that newspaper. Sadly, in the eyes of some people, we have seen the demise of that paper, but that is not the view f the majority of Dundee citizens.

The controller of audit for local authority accounts, in reply to correspondence that he is having with me, says: The Auditors do not now consider it necessary to pursue the question of duplicate advertising in the Dundee Standard since the point has been rendered academic by that paper's demise"—

this is the important point— out they will be keeping a watching brief to raise the value for money issues again should there be any suggestion of the standard being revived and the practice of duplicate advertising resumed. That is the kind of thing to which industrialists on Tayside and in Dundee object.

It is important that we recognise that today there are many people in local government who, sadly, feel that they are being got at that somehow they are the victims Of every politician who wants a cheap headline. People who work for local government should recognise, more than anyone else, that they do not generate the nation's wealth. They have to be paid for out of the areas in which the wealth is created. If we have people in jobs that we cannot afford, something will give eventually.

We also have to recognise the attitude to work of local government employees in some areas. There is not the incentive to do as well in local government as elsewhere. The rewards are not there as they are in other areas. We should recognise that. Coupled with that is the fact that a number of people who work in local government are determined to get the best out of the system as it exists. That includes taking days off for sickness, and so on, in order to decorate their homes.

Mr. Norman Hogg

This is a scurrilous attack on local employees. Unless the hon. Gentleman is to say who they are and what their practices are, it is unacceptable that he should make that kind of ignorant attack.

Mr. Walker

I am confident that anyone outside this House who works for local government and who listens to the debate or reads about it will be able to look around his office or department and say "He is the one that we are talking about." The people who work in local government will judge whether I speak the truth as I see it or whether the hon. Member for Dunbartonshire, East (Mr. Hogg) is again making a political point.

It is important that we do not condemn the majority, who are good workers and want to do their best but whose attitudes are very much influenced by those of the spongers and the scroungers. We all know that it is very difficult today to sack a public servant simply because he is not pulling his weight. I have some suggestions to make on how the Government and other people could look at this problem and deal with it, first in regard to overmanning and secondly in regard to incentives.

We should perhaps consider having a higher rate of income tax for those who work for national and local government, and a lower rate for those who work in manufacturing and commerce, which generate the nation's wealth. For example, if 75 per cent. of the employees in an organisation could be classified as being engaged in manufacturing or commerce or creating wealth, they would enjoy a lower rate of income tax. That would in some way compensate for the difference between job security and lack of job security.

Local authorities should get rid of their large architects' departments, quantity surveyors' departments and direct labour departments. They should, instead, put the work out on contract to the private sector at the keenest possible price.

I draw the attention of Labour Members to the achievements of Tayside region, which has reduced its work force, and thereby made a contribution to a reduction in revenue expenditure, in the year eliding July of this year. There has been a reduction of nearly 500 in staffing levels. If that can be achieved by one region, surely the example can be followed by others.

I hope that the Government will look carefully at revenue expenditure and use the powers in the Bill which are directed largely at revenue expenditure and stop the insane cutback that successive Governments have made in capital expenditure projects. The nation needs those projects as part of the infrastructure in the battle that we face in competing with other nations. The seeds that we sow will produce the harvest that we get. That was true of the previous Government, and it is true of this one.

That is why I am unhappy about the introduction of the Bill. I wish that we did not have to introduce a measure of this kind. I wish also that we had responsible authorities, and I am saddened that one of the irresponsible authorities is in my own constituency.

7.48 pm

Mr. Norman Hogg (Dunbartonshire, East)

It is extremely difficult to maintain one's good temper and good humour when following a speech such as the one just made by the hon. Member for Perth and East Perthshire (Mr. Walker). Since I entered the House in May 1979 I have not previously heard such a speech. It was quite the most reactionary that I have heard here.

I am sorry that the speech was also irresponsible, although the hon. Member is fond of talking of responsibility and insisting that he is the custodian of true responsibility and that everyone else is in error. He would have made a splendid seventeenth century theologian. But his attacks on the Dundee district council and other local authorities have been scurrilous. I am sorry that I have to follow such a speech, because to some extent it has put me off my stroke.

It is interesting that as the day has been wearing on Conservative Members have started to apologise for the Bill. This morning, in the Scottish Grand Committee, they did not find it possible to support the Government with their votes, and tonight they are apologising for an important measure that is before the House. That is very significant. There is a very big difference between the Conservative Party's rhetoric at the last general election and the reality of what it does now that it is in power.

We remember all the slogans about Tory freedom—about how the energies of the people were to be released as a result of the great extension of freedom under the Tories. That is very different from what is being proposed in this measure and what has been brought before the House in recent months.

This morning, when the hon. Member for Glasgow, Hillhead (Mr. Galbraith) made his contribution in the Scottish Grand Committee, it was refreshing to hear a demand that the Government should keep their word and honour their commitment, for that is not what they have been doing since they came to office. It has been no surprise to those of us on the Labour Benches, because we did not expect anything different. What we have been having from the Government most of all is massive cuts in public expenditure.

Local authorities have had to carry the main burden. Recently, further cuts were announced in the mini-Budget. The Government are legislating in support of their dogma. They are not merely managing the economy but cutting the expenditure of various Departments and of local authorities. The Government legislated in support of their dogma in the Tenants' Rights, Etc. (Scotland) Act. The Bill represents an extension of that type of legislation.

The public expenditure cuts are having a cumulative impact on local authorities. We are beginning to see how those cuts will bite. Recently, I had an opportunity to discuss the situation with the provost of Cumbernauld, Bill Taylor, and his officers. I was disturbed by the problems faced even by a local authority of that size. I was told that it had overspent by 32 per cent. on comparative estimates—provided by the director of finance—for the period ended 31 October 1980. I was also told that part of the cost was due to under-budgeting by the previous SNP administration, which had sought to keep down rates during an election year. That local authority has no means of achieving the cuts demanded by the Government. It was £200,000 down before the elections. That is equivalent to 1½p on the rates.

That authority cannot make the cuts required. It faces high interest rates. At present, its loan charges amount to £300,000. The housing support grant has been reduced by £640,000. Such things are happening in local authorities. I have related the experience of one local authority in East Dunbartonshire.

The Government plan a wider attack. They wish to interfere directly in local authority expenditure. Governments do that, but this Government wish to extend their powers under clauses 13 and 23. Local authorities will no longer be able to determine their priorities. They will be subject to the Secretary of State's diktat and to his central bureaucracy. My hon. Friend the Member for Edinburgh, Central (Mr. Cook) pointed out that the Secretary of State employed only bureaucrats. He was right. I wish that people would recognise the services carried out by local authorities. The Secretary of State's bureaucrats will dictate to local authorities more and more. Irrespective of local need, the Government will dictate the position. Local councillors will no longer have the right to legislate for their areas without that legislation being subjected to the Secretary of State's approval.

Council committees will have to wait to see whether their plans have been given the Secretary of State's seal of good housekeeping. I am sorry that so many Conservative Members should have decided to support this measure, despite the fact that some have qualified that support with a degree of reluctance. They intend to go into the Lobby and to defend and support the Bill.

I am not sure what criteria the Secretary of State will use when determining whether an authority's expenditure is legitimate. I hope that the Under-Secretary will tell us what criteria the Secretary of State will apply when making such decisions. I fear that we shall hear only the expression of the Secretary of State's prejudices and paranoia about local authorities, such as Lothian regional council and Dundee district council. This measure was spawned by the prejudice and paranoia that he has displayed in the House month after month.

These questions must be answered. We must know what the criteria are to be. I do not know who will serve in Committee, but I am sure that Labour Members will press the Secretary of State on those criteria. I am sure that attempts will be made to table amendments to mitigate his powers. Those who believe that local government should be conducted against a background of maximum freedom will find this measure deeply offensive.

If the Bill is enacted, the Secretary of State will be given plenty of scope. It is sad that that should be so. I was amazed when I heard Conservative Members pleading for new ways in which to raise finance. The Layfield report has been issued. I should be interested to know what the Government think of it. I hope that the Government will tell us tonight whether they intend to do anything about any of its recommendations. I am sure that Conservative Members and some Opposition Members would welcome changes being made to the rating system.

When I re-read the Conservative manifesto this morning—something of which I do not make a habit—I noticed that there was no commitment to dispose of the rates, despite the remarks made by the right hon. Member for Orkney and Shetland (Mr. Grimond).

If the Bill is given a Second Reading, the House will damage the democratic structure of Scottish local government. If the House were to do that, it would approve of the onslaught on democratic institutions that has gone on since the Conservative Party came to power. The Bill will centralise power in the Secretary of State's hands. He has already demonstrated a blind adherence to Cabinet policy and a disregard for the interests of Scotland in favour of the well-being of the Conservative Party. That does not serve the interests of local government. Those who are concerned about the future of local government will oppose the Bill.

7.57 pm

Mr. Iain Sproat (Aberdeen, South)

The hon. Member or Dunbartonshire, East (Mr. Hogg) began his speech by raying that he was surprised that so many Conservative Members had had to apologise for the Bill. I certainly do not apologise for the Bill. I am equally certain that my hon. Friends did not apologise for the Bill. They were saying—the difference was distinct and clear to everybody on this side of the House—that they did not apologise for the Bill but that they were deeply sorry that the Secretary of State should feel the necessity to bring in such a Bill because a number of local authorities in Scotland had been behaving in a certain way. That is an important distinction that must be drawn.

I wish to direct a few brief remarks to part II of the Bill and to congratulate my right hon. Friend on doing something that should have been done long ago, namely, acquiring sufficient power to get a grip on local authority overspending. My constituents are fed up with paying, as taxpayers, for the spendthrift habits of certain other local authorities. I ant sure that the constituents of every other hon. Member feel the same, although Labour Members till not admit it.

Day after day we see examples of ridiculous overspending and waste. In recent months the worst examples f crazy spending by local authorities happen to have been i England: the £10,000-a-year dustmen, the £14,000-a-year janitor, the £500-a-week heating engineer—all draining the poor hard-pressed ratepayer.

Mr. George Robertson

Anomalies.

Mr. Sproat

It is no use the hon. Gentleman moaning about ratepayers having to pay for janitors at £14,000 a year. If he knew a few janitors in his constituency on £14,000 a year, he would get on to his local authority. if did not, the ratepayers certainly would.

Although such stories have not so far surfaced in Scotland, I dare say that it is possible to find examples that are just as appalling. We read in this morning's newspapers of two councils that are to pay on the rates for a "dancer in residence". What a time this is to employ a man on the rates to show people how to do ballet or Scottish country dancing! I have no objection to the Scottish Arts Council helping no subsidise that sort of thing, if that is what it thinks is tie best way to spend its money, though I do not. I certainly should object as a ratepayer of Fife and Tayside to the idea that my rates should go towards paying the annual salary of a "dancer it residence". That is simply one example from this morning's newspapers.

We have already heard from my hon. Friend the Iv ember for Edinburgh, South (Mr. Ancram), who has done so much to bring the legendary activities of Lothian regional council to the attention of the ratepayers, of the it sane waste of. I think, £25,000 a year on a Socialist propaganda sheet, the Lothian Clarion. I wonder what is thought by the ratepayers in Lothian who do riot happen to be Socialists, or who are Labour Party supporters but not of the extreme variety that produce that newspaper, at out the £25,000 of their rates going on that publication.

My hon. Friend the Member for Perth and East Perthshire (Mr. Walker) gave the example of the Dundee Standard. What a ludicrous waste of ratepayers' money that is!

It cannot be said that there is no waste of ratepayers' money in Scotland when we can pluck from the air examples such as the Lothian Clarion, dancers in residence and a research officer fixing up for Dundee to be twinned with an Arab town. With all that sort of rubbish, it is indefensible to say that there is no waste by Scottish local authorities.

Mr. Ernie Ross (Dundee, West)rose——

Mr. Sproat

The waste must be stamped out, and I am glad that in the Bill my right hon. Friend the Secretary of State is taking steps to do it.

I now give way to the silent Member for Dundee, West (Mr. Ross).

Mr. Ross

Dundee district council does not employ a research officer at this time. The decision to twin with the city of Nablus was taken by the local authority, supported by two independent ratepayer members of the authority.

Mr. Sproat

I am delighted that the authority no longer employs a research officer. That is a sterling example of the excellent work done by my hon. Friend in rooting out abuses. The more he can root out, the better.

In the past 12 months there has been a cut of about 20,000 in the number of persons employed by local authorities in England and Wales. Some of our English colleagues may say that that is not enough, but at least it is a cut. The biggest and most shocking example of waste in Scotland is that, far from cutting by 20,000, we have increased the numbers by 4,000. That is the scandalous refusal to recognise the economic realities that my right hon. Friend has done so much to try to bring before local authorities. I hope that one of the most important results of the Bill will be that we can crack down on councils that deliberately—as in the case of Lothian—take on more staff at times of economic difficulty in order to bring about a confrontation with the Government.

The right hon. Member for Glasgow, Craigton (Mr. Millan) made a rather snide remark about Grampian region, a remark which I am sure will have caused great offence to my hon. Friends the Members for Aberdeenshire, East (Mr. McQuarrie), for Aberdeenshire, West (Mr. Fairgrieve), the Under-Secretary of State, and for Moray and Nairn (Mr. Pollock). Grampian has been the best housekeeper of all the regions in Scotland over the years. I recall the conversations that I had with the regional convener, Mr. "Sandy" Mutch, when the right hon. Member for Craigton was Secretary of State for Scotland. Mr. Mutch would say "We have this ludicrous new proposal from the Government, but it is our duty to obey them", and the region would do its best to implement Socialist policy. It ill becomes the right hon. Gentleman to start making attacks on Grampian.

Mr. George Robertson

My right hon. Friend's comment was that in the last round of rate increases the Central regional council—Labour-controlled—had an increase of 17.3 per cent., which was lower than that recorded in the Grampian region, at 18 per cent.

Mr. Sproat

That was not what the right hon. Gentleman said. He talked about the rate burden on individuals in Grampian, as the hon. Gentleman will find in Hansard tomorrow. Of course, I accept that point, but what is irritating to us on the Conservative Benches is that the right hon. Gentleman says it in that snide, whining way of his—(Interruption.]—I challenge anybody to deny that that is a fair description of how he spoke this afternoon—without pointing out Grampian must bear almost alone the burden of the oil infrastructure, which is a massive burden on the rates. It has to bear that harsh burden in terms of roads, houses and schools, yet we receive little support from the rate support grant. Grampian is out of pocket by millions of pounds as a result.

My right hon. Friend said this afternoon that he would look closely at the needs of local authorities. I hope that he will look closely at Grampian's needs in connection with oil development, because the development of North Sea oil is a national necessity. Therefore, it should have national funding rather than rely so heavily on local funding.

The right hon. Member for Craigton said in vivid language that the Bill was a major attack on local democracy, and other Labour Members talked about cutting away the freedoms and principles on which local government is based. That is rubbish. As so often in politics, we find two excellent principles opposing one another. One is that we should maximise the freedoms given to local authorities. The other is that the Government have a duty to see that the taxpayer gets proper value for money. Those are both valid principles. It just happens that in the present case the one is vitiating the other. Certain authorities, such as the Lothian regional council and Dundee council, are abusing their freedom to such an extent that taxpayers elsewhere are having to fund their crazy Socialist schemes.

When those two principles come into conflict, my right hon. Friend is right to say that of course we want to maintain the proper freedoms of local authorities but that where they abuse them we must look to our duty to protect the taxpayer. That is precisely what he is doing, and no more. No local authority that keeps within the limits of normal expenditure will ever find itself in danger of being hit under the Bill.

For all those reasons, I strongly support my right hon. Friend.

8.10 pm

Mr. Ernie Ross (Dundee, West)

I welcome the opportunity to make a few comments on the Bill and to correct one or two inaccuracies about my local authority.

It gives me no great pleasure to follow the hon. Member for Aberdeen, South (Mr. Sproat). One of the most obscene effects of the Bill will be that unemployment queues throughout the length and breadth of Scotland will necessarily grow. I am certain that in two or three months' time the hon. Gentleman will return to his favourite pastime of attacking those on social security who, because of the Bill, will be condemned to the dole queue for a considerable period. I find it unacceptable to listen to the hon. Gentleman when he addresses the House, because he never takes the opportunity to make it clear that those in the dole queues are not, never were and never will be social security scroungers.

Despite the hypocritical polemics extolling the virtues of local government that we have had from Conservative Members, the Government's policies will inevitably lead to the destruction of meaningful local democracy. Certainly, nothing could be more accurate than that as regards Dundee. Everything that we are attempting to do through the Dundee district council was made clear prior to the May election. We spelt out clearly what we would do when we took power, and we had the overwhelming support of the people of the city. We also had one of the highest votes in the four major cities.

No one can argue that the Dundee district council was not democratically elected and that the ratepayers were not fully aware of the policies that we would pursue when we took control of the council—policies directly opposite to the policies pursued by the previous Tory-controlled council, which did nothing to help Dundee's image, employment, housing shortage or other problems affecting the ratepayers.

Mr. Bill Walker

Is the hon. Gentleman saying that because Dundee district council was democratically elected on the policies on which it campaigned, it can do as it wishes? If so, he must accept that the national Government, who fund two-thirds of the expenditure and were also elected on their policies, can implement their policies, because they hold the purse strings.

Mr. Ross

It is for the national Government to decide what support they will give to the various local authorities. The Bill seeks to prevent local authorities which disagree with the allocation from seeking to raise revenues legitimately by increasing rates. The Bill sets out to deny that right to the Dundee district council and other local authorities which are not prepared to accept the Bill and the policies pursued by the Government.

The myth that cuts are necessary to help to restore the economy and are in a sense a patriotic duty has been well and truly hammered home by the media and by Conservative Members, but no one standing in any dole queue in Scotland would agree with that now.

Mr. Peter Fraser

Given the hon. Gentleman's support for the Labour-controlled Dundee district council, will he make it clear whether he supports the council's intention to raise rents in the city by 200 per cent. in the next financial year?

Mr. Ross

I shall come to that point later. I support my colleagues on the Dundee district council in everything that they do. I am prepared to say that here or on any other public platform.

Conservative Members have not commented on the pressures on local authorities because of the massive interest debt that they have to pay. The Bill does not seek to alleviate that interest debt. The policy of selling council houses can only add to that debt and make it more difficult for local authorities to make both ends meet. I am not an expert on local rates. Therefore, I should like to quote the comments of the treasurer of the Dundee district council when he addressed the local branch of NALGO recently. He said: The situation facing Dundee District Council was that because of Government restrictions on public expenditure at the present time and, in particular, its attacks on council housing and council tenants, the present Labour Administration must consider a variety of horrifying alternatives. One of these alternatives was the possibility that 2,000 of the council's 3,000 employees were facing the prospect of redundancy within the next few months. In order to stand still the District Council was faced, through Government cutbacks in expenditure, the emptying of reserves by the previous Tory Administration and inflation in general, with finding £11 million more Man last year from local sources. As Councils only have three real sources of income and Government grants were being slashed almost on a weekly basis, the only alternatives, in order to maintain services at their present level, were increasing council house rents or rates. Even if council house rents were raised the £3 per week the Government was demanding, a rates increase would still be required, and council tenants would be faced with an increase in rents and rates of something like £4 per weak. The Labour Administration regarded this as completely unacceptable and yet another symbol of the Tory Government attacks on working people and their families. Dundee's rents were already above the Scottish average. He went on to make it clear that the Trade Union representatives would be involved in consultation with the Administiation at all times and in a spirit of co-operation he was sure ant they could together overcome tie difficulties which faced the council, its employees and the general public. It is in that spirit that I support my local authority colleagues in their effort to offset the worst examples of Government policies.

I should like to comment on some of the speeches made by other hon. Members. I apologise for not being present when the hon. Member for South Angus (Mr. Fraser) made his speech. Unfortunately, I had to leave the Chamber. However, I understand that the hon. Gentleman referred to the public comments made by my hon. Friend tie Member for Caithness and Sutherland (Mr. Maclennan) in his attack in the local media on the Dundee district council. No one in Dundee would accept D. C. Thompson as an unbiased or objective observer of local politics or anything else in this country. We regret that my hon. Friend the Member for Caithness and Sutherland did not feel it necessary to inform his colleagues of his intention. It is up to him whet her he supports us, but when he goes to the organs of D. C. Thompson to attack us we find it unacceptable and a matter that he must justify to his local party.

The hon. Member for Perth and East Perthshire (Mr. Walker) said that the Dundee district council was hell-bent on destruction, with the creation of new jobs being ruined by the image of the locality. He referred also to the research officer that we intended to appoint to assist the local authority with its responsibilities. He also referred to the local authority advertising in the Dundee Standard. I here is a good possibility that the Dundee Standard will recommence publication very shortly. The hon. Gentleman can then pursue his comments with the Ombudsntian.

On 23 October the hon. Gentleman, with his hon. Friend the Member for South Angus, attended a one-day conference in Dundee organised by the Dundee district council. The one comment teat was made time and again by those who took part in the conference, the one comment that came back from every seminar that was organised in an attempt to attract industry, was that the lack of o infrastructure held back Dundee's ability to attract industry. The one comment made time and again was that the main responsibility lay with the way that the media had failed to give any balance d coverage of what was happening in Dundee and simply ran scare stories that tended to worry people from time to time.

An attack on workers in Dundee was made in the Scottish Grand Committee. The Dundee and Tayside chamber of commerce has trade it clear that the type of ill-informed and irrational comment made by the hon. Member for Perth and East Perthshire has done more damage to Dundee's image than has anything else. The hon. Member forgot to say that Dundee district council has appointed a sports supremo and has lowered its charges for use of the leisure centre. It has done that because of the need and because of the present Government's policy. It has taken that action to ensure that the unemployed do something instead of hanging about and becoming involved in activities that allow people to suggest that they are having holidays in the Bahamas or are social security scroungers.

Comments have been made about the Tayside regional council. In last Thursday's article "Man about the Town House" in the Evening Telegraph and Post, the convener of the Tayside regional roads department is quoted as saying: There has been a virtual ban on staff replacements and this has left 48 jobs unfilled. That has been adversely affecting efficiency because there has been a staff imbalance in that department. A close look at the situation has shown that of the 48 unfilled jobs 29 can be removed from the establishment permanently. This has been agreed. What happens next is that some of the remaining 19 jobs will be filled to correct the imbalance.

I place beside that quote a reply that I received from the Under-Secretary of State, who said on 13 November 1980 that 12,916 young people under 18 who had not entered employment since leaving school were registered as unemployed in. Scotland. The corresponding figure for Dundee was 637. He said that the number of males registered for more than one year as unemployed in Tayside was 2,774. At least 19 people have been registered at the employment exchange for at least a year because of the policies adopted by Tayside regional council. We do not accept such policies.

I refer Government Members to the decision by Dundee district council to create 90 jobs for young people to ensure that they are not committed to the dole queues as Government policies dictate. I shall vote against the Bill. It does nothing for Scotland. It does nothing for Dundee. It does nothing for the unemployed. Government Members would do well to remember that the Bill will create further argument and further social and class divisions. At the end of the day, Goverment Members will be rewarded through the ballot box by their removal. We shall get rid of the Bill, just as we shall get rid of the Conservative Government.

8.25 pm

Mr. Donald Dewar (Glasgow, Garscadden)

I read a preview of this week in Parliament in the Scottish press; which described the Bill that we are discussing as "tedious". I do not know whether it is tedious, but it is complicated. In order to understand it, one must refer to previous legislation and put together a kaleidoscope. The Bill raises a general principle and defines the differences of approach to local government democracy.

I declare a non-interest. Occasionally I visit the Dundee district and the Lothian region, but I represent neither. My interest in the Bill is that it will affect not only contentious local authorities. The hon. Member for Aberdeen, South (Mr. Sproat) referred to the Lothian legends that were put about by the hon. Member for Edinburgh, South (Mr. Ancram). I agree that the Lothian region's reputation is a legend, and probably a Tory myth. It does not bear much relation to reality. I congratulate the hon. Member for Aberdeen, South on being careful with words for once and on getting their meaning more or less right.

The legislation will affect local authorities throughout Scotland. It will affect Strathclyde and Glasgow district and others. It deals with the nature of local democracy and the rights of local authorities to do their own housekeeping, to establish their own priorities and to keep them. It deals with the ability of local authorities to represent fairly and faithfully to the electorate the remit given at the ballot box.

When one reads the cold and dispassionate prose of a Bill, one is often left wondering what it means in practice. We must know more than that which is interpreted by a person of common sense and good will. We must know what Secretaries of State for Scotland, particularly Conservative Secretaries of State, will do in practice when they operate the measures in the Bill. Having listened with care to the Secretary of State, I am still unclear about the exact impact of some of the measures, particularly clauses 13 and 14 and later clauses dealing with local government structure. We feel that we are facing something that is either unnecessary—which I do not really believe, although I should like to—or distinctly sinister. That fear is shared in responsible local government circles. The feeling is extremely dangerous in itself.

The Bill contains such phrases as "excessive and unreasonable expenditure". One is entitled to ask what is "excessive and unreasonable". The difference between the new formula and section 5 of the 1966 Act is the point in the spending process at which the Secretary of State might intervene. Under the new legislation, that can be done at the point when estimates are before the local authority rather than waiting to see the ultimate outturn.

The Under-Secretary of State, to his credit, is always competent on details. I am sure that he has a sound knowledge of what has happened to local authority expenditure in the last three or four years. I repeat that I should like him to consider whether what has happened in Lothian or in any other local authority over the past four years has justified the activation of clause 13 at the estimate stage on the ground that the proposed expenditure was "excessive and unreasonable". If he says that that procedure will not be activated, as happened with the 1966 machinery, we shall at least acquire some understanding, though perhaps in a negative way, of the Government's intentions. If he describes circumstances in which it will be activated, he will provide an interesting guideline by which to evaluate the proposals.

Let us look at the bland statement in the explanatory and financial memorandum. It merely says that clause 13 extends the Secretary of State's powers". That is no help in trying to understand the Government's intention. The Secretary of State is a reasonable man, as we all know. That is his constant pose. He agrees with almost any proposition that is put to him, until he is called upon to take action. I want to know how he will interpret the measure. Perhaps his surrogate, the Under-Secretary, can shed some light on the matter.

I do not believe that this measure has been introduced as some sort of legislative lumber. Surely we are not to be put through an exhausting Committee stage—I can promise the House that it will be exhausting—purely and simply to tinker with the fine print of a legislative enactment that, since 1948, has never been used by Secretaries of State of either party. That would be a pathetic situation, and, to be fair to the Government, I do not think that that is the case. The legislation must mean something, and we are entitled to know what it does mean.

The hon. Member for Edinburgh, South, in his somewhat intemperate but typical attacks on his local authority, made clear that he thought that its actions were excessive and unreasonable. Perhaps the Under-Secretary will tell us whether this year, for example, he would have used the new machinery and, if so, what the effect would have been on the expenditure of that local authority.

I have seen some minutes of a meeting that took place on 17 October 1980 between the Secretary of State and the COSLA finance committee. Clause 13 was discussed at the meeting. The minute said—I assume that it was an agreed minute: Spending performance relative to the guidelines would not be the sole determinant when the Secretary of State considered the use of his powers to reduce grants. The Secretary of State would also have regard to trends in the volume of local authorities' expenditure and other relevant considerations. It was put to me very forcefully by senior local government representatives that they had pressed hard for a definition of those "other relevant considerations" but that they ended up none the wiser. I hope that we shall be given some information by the Under-Secretary before tonight's long watch is over.

I share the genuine concern that exists, as I think the Minister will accept, about the predicament of local authorities in Scotland. If my suspicions about the Bill's importance are justified, the Bill is clearly another "cabin'd, cribb'd, confin'd" threatening piece of legislation, amounting to a major attack on the freedom and room for manoeuvre of Scottish local authorities.

Government policy is forcing up rates inexorably and dramatically. In Strathclyde, which is by far the largest local authority in Scotland, the shortfall in cash limits was about 5 per cent. That authority was given certain cash limits, although the calculation was made on the likely outturn of wage increases and prices, and those cash limits turned out to be far too conservative. If one takes 1 per cent. shortfall as representing 2p in the Strathclyde rate, the shortfall will amount to a rate increase of nearly 20 per cent. for the coming year before anything else is included. That has been enforced by Government policy. Strathclyde is left with a deficit of about £30 million, which has to be funded initially out of the new rate.

If one assumes that in the coming year cash limits will be calculated on an estimate of pay increases of 6 per cent. and price increases of 11 per cent., it will be seen that there will be a cumulative process, which will leave local authorities in an extremely unpleasant and unsound financial position, through no fault of their own but entirely due to the guidelines being enforced by the Government.

That is the first part of the problem. The Government are deliberately forcing up rates by substantial amounts. Also, as we all know, they are attempting to force authorities to cut the services that they are providing for their areas. If a local authority wishes to manoeuvre, as I believe is its democratic right, and tries to reduce the impact on the services it provides by raising rates, it will be caught under clauses 13 and 14.

It is a serious situation. No doubt the Secretary of State will say that in real terms the rate support grant during the coming year is likely to fall by only 3 per cent. But it is much more than 3 per cent. A region such as Strathclyde or any other major local authority has an immense number of statutory obligations that must be met.

Those obligations include the pupil-teacher ratio, the lire services and the sewerage services. That 3 per cent. will inevitably have a heavy impact on the limited areas of discretionary services.

I have heard it suggested by responsible local authority officials and elected members that the impact on discretionary services could be as much as 30 per cent. Even if one says 3 per cent., it will not end up as 3 per cent. There was supposed to be a fall of 2 per cent. last year in the value of the rate support grant, but it ended up as a fall of 7 per cent. once the cash limits had been involved. If one takes the same sort of ratio, that 3 per cent. may become 11 per cent., and its impact upon discretionary services such as the home help service and nursery school places will be nothing short of catastrophic.

It is not irresponsible for an elected local authority to say "We would like to raise the rates to a limited extent hi an effort to try to preserve humane and decent services." After all, the local authorities will eventually take the consequences at the ballot box. Yet, if they say that, they will be immediately clobbered by the Government in respect of next year's rate support grant. That is a thoroughly bad situation for the whole structure and credibility of local democracy in Scotland.

The situation is infinitely worse with regard to housing authorities. My right hon. Friend the Member for Glasgow, Craigton (Mr. Milian) quoted the alarming—that is not an overstatement—figures for the housing support grant and said how that would tumble wider the Government's present plans at a time when, at lest in comparative terms, more and more is being done for those who are holders of mortgages.

As someone who used to practise law and is still in touch with those who do, I should point out that the proof of the pudding is the practical advice that men of business give their clients. If someone comes into a law office in Scotland at present and discusses his financial situation, he will be told that the best legal advice is "Get the biggest possible mortgage you can, because it is such a bargain, given the tax concessions that are attendant upon it." Someone who earns a substantial middle-class salary and who has a mortgage of only £2,000 or £3,000 is a financial mug. He is plain daft, and will be told so by his professional advisers. At the end of the day, that makes the point as dramatically and Practically as needs be.

Although the housing support grant is being cut by 10 per cent., the situation is much worse than that, because Government policy will deliberately force up council house rents by up to 40 per cent. I represent a constituency in which there are 26,000 council houses. A lot of those people are now in genuine hardship because of the general impact of the Government's economic policies and, to be fair, the general recession that is affecting the industrial world. If council house rents in Scotland are forced up from £5.83 to £8 a week, as is contemplated, the impact will be considerable. Of the 10,300 householders in the Drumchapel scheme, about 25 per cent. are currently receiving rent rebate and another 1,098 are paying their rent direct. It is being deducted direct from benefit by the local authority, in consultation with the DHSS. One possible result of forcing up rents in the way that has been suggested is the ludicrous proposition that more and more people will have to get rebates. It is not a practical social policy to say in defence of unreasonable limits that 43 per cent. of the population is so poor that it is not being asked to pay the whole amount in any event.

Where does that 43 per cent. go? If wages are held down to 6 per cent. and inflation to 15 per cent., and if council house rates are pushed up by 40 per cent., we shall end up with 80 per cent., or some such figure, in areas such as mine receiving a rebate. As a result, the whole system will be reduced to an unjust farce. More importantly, a lot of people in my area—perhaps because of bad take-up, or because they are on the margin—will have to bear this increase directly, arid they will quite properly resent that.

I am not one of those who believe that one can have an indefinite freeze on house rents or that house rents should in some way never reflect general inflation trends. However, at a time of economic recession I object to forcing up artificially the rent levels in council housing by a factor of three, four, five or six times what the Government are asking in terms of pay rates and several times the going inflation rate. It makes no sense whatsoever. It will breed frustration, dissent and genuine and well-justified anger in constituencies such as mine.

At the same time as the Government are doing that, they are cutting back on the capital allocation that will be available to local authorities. One may visit an area such as Drumchapel, or Garscadden, at the bottom end of my constituency, or Garscube Netherton, and sit in a house that was built in the early 1930s and has never been rewired since then. If the local authority representative says "I know that it is dangerous. I know that the plugs are overheating and that there have been many fires in the scheme. But I am awfully sorry, we have no money to rewire. And, by the way, the Government are asking us to raise your rent by 40 per cent. for this totally unsatisfactory house", that is a recipe, again, for something positively explosive.

It is not just a "Catch 22" situation for the local authorities; it is "Catch 22" squared. It is a thoroughly unrealistic position into which to place elected local representatives. It is a squalid travesty of social justice. It is positively wrong—I use these words with care—and bordering on evil to say, as the Government are now saying, that we should link the capital available for housing inprovements to the level of rents.

Housing capital should clearly be a matter of need. We may not be able to satisfy the need as generously as we want because of general financial privation and lack of public finance. We all accept those realities. But to say that if we do riot force up council house rents to a predetermined level that the Government want we shall have less money for rehabilitation, rewiring, and tenants' grants is basically an evil concept and one that should be thoroughly rejected.

There is far too much in the Bill that smacks of centralism of the worst sort, but it also smacks of a total insensitivity to the realities of life in housing schemes, certainly in industrial central Scotland, part of which I represent and in which I operate.

The Bill is fundamentally wrong. Therefore, it cannot be put right in Committee. That is why I shall vote against it tonight and why I shall be right to do so.

8.42 pm

Mr. Albert McQuarrie (Aberdeenshire, East)

In following the speech of the hon. Member for Glasgow, Garscadden (Mr. Dewar), one has the impression, as has been so often the case this evening, that we are discussing not the Local Government (Miscellaneous Provisions) (Scotland) Bill but a housing and rents attack Bill for Opposition Members. In fact, this is a small Bill which makes a number of changes to existing legislation relating to financial and other matters concerning local government. It also provides for improvements in the valuation and rating system. It provides for changes in the Secretary of State's powers to reduce rate support grants". In that connection, the hon. Member for Garscadden said that clause 13 stated only that it extended the Secretary of State's powers—full stop. What the hon. Member did not read, and what I would have expected him to be doing anyway, with his legal mind, was reading the small print, which says that clause 13 not only extends the Secretary of State's powers but gives the Secretary of State powers to reduce any element of rate support grant payable to a local authority where he is satisfied that the authority's estimated expenditure is excessive and unreasonable. That is the important factor in clause 13. Concerning the Secretary of State's powers, that is the factor in which we are interested.

However, the Bill involves a wide range of changes. There are 33 clauses and four schedules. Many of the clauses are minor clauses and certainly not totally committed to the RSG or to rent increases, as we have heard from Opposition Members.

In the limited time available to me, I should like to comment on the clauses that cause me concern. Clause 6 empowers a rating authority to grant a rates remission in respect of land and heritages unoccupied and unfurnished for three months. I have no objection to such a remission being granted where there are genuine reasons for the land and heritages remaining unoccupied. However, properties are often held in that state by their owners for one simple reason—greed. The owners wish to obtain a greater rent, and it would be wrong if the Bill were to entitle them to a remission of rates when they are not making the property properly available.

Mr. Rifkind

I think that my hon. Friend may have misread the clause. The law presently provides that the three months during which property has been unoccupied must be in one financial year if it is to secure a rates remission. The Bill simply means that the three months can be spread over two financial years. It is a tidying-up procedure of which I am sure my hon. Friend will approve.

Mr. McQuarrie

I accept my hon. Friend's explanation. In my local authority experience, however, I have encountered such cases as this. I hope that the Bill will not enable a person who has property empty purely for the purpose of seeking a higher rent to obtain a rates remission.

Clause 7 causes me concern because it changes the arrangements by which householders can pay their rates by instalments, replacing the prescribed sum by one of £20. It also gives a local authority power to fix such lesser figure as it may think appropriate. This may not seem a great deal of money to most people, but it is to elderly persons who live in properties in Scotland with low rateable values. It will cause these people worry if the local authorities fix the figure at £20 and if they are therefore required to pay their rates in one fell swoop instead of the weekly instalments to which they are accustomed. I hope that the local authorities will think seriously before fixing the figure at £20 or even at a lesser amount.

Clause 13 has been the subject of comment from both sides. It covers rate support grant. It could be unlucky for some, to echo the call in the bingo halls, and justifiably so. In spite of what Labour Members have said, a number of local authorities in Scotland have simply increased the domestic rate year after year to finance grandiose schemes, which are of no benefit to ratepayers, such as the construction of huge edifices to house the bureaucrats and their massive empires that have been created over the years.

I am sorry that no part of the Bill in any way abolishes the domestic rate. If it did, we might be able to rid our local authorities of the problem of a continually increasing domestic rate. My party's manifesto in 1974—the hon. Member for Dunbartonshire, East (Mr. Hogg) referred to it—promised that the domestic rate would be replaced with a new tax based on ability to pay. I realise that my Government are not accountable for that manifesto, but the abolition of the domestic rate is a must if the never-ending spiral is to end.

What is the point of reducing the rate support grant if the authority is to retain the right to increase the rates, penalise ratepayers and thereby obtain the money denied it by the Government? That is what will happen with local authorities that refuse to remain within the cash limits. If rating authorities are to be controlled and compelled to implement the Bill, further provision should be made to safeguard ratepayers from blatant disregard by the authorities of strict controls on spending.

I support my hon. Friend the Member for Aberdeen, South (Mr. Sproat), who spoke in praise of the Grampian regional council and the way that it had considered the rate support grant and operated its rating powers. That applies also to my district council of Banff and Buchan and to the district council of my hon. Friend the Member for Moray and Nairn (Mr. Pollock). Those district councils, and the Grampian region itself, have looked after the interests of the ratepayers. If local authorities continually resist the overtures of the Government to impose a realistic rate, we must give serious consideration to a total reform of the dometic rate to bring it under the control of the Government. That would be a more satisfactory position for the electors.

I am delighted to note that the Bill abolishes the Scottish River Pollution Advisory Committee.— [Interruption.] The sections applying to the appointment, constitution and function of that body under the Rivers (Prevention of Pollution) (Scotland) Act 1951 will cease to have effect. I am sorry that the Bill does not propose to abolish that Act—[Interruption.] The Act has been used illegally for many years by river bailiffs to hound farmers—[Interruption.]

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. I have to listen very carefully in a Scottish debate, and I cannot hear if hon. Members continue to interrupt.

Mr. McQuarrie

Because Opposition Members live in towns, they have never heard of river pollution on farms. As I said, the Act has been used illegally for many years by river bailiffs to hound farmers in Scotland and to penalise them when they have protected rivers on their farmlands from erosion. The bailiffs wasted the time of the courts by presenting prosecutions and then withdrawing them after the farmers had been involved in considerable costs in preparing a defence against this needless, action. Perhaps the Secretary of State will bear that point in mind when he is considering amendments to the Bill.

Schedule 2 relaxes the control over local and other authorities. I refer especially to the items connected with section 24 of the Burial Grounds (Scotland) Act 1855. It is proposed to remove an authority's requirement to have its scale of fees for burials approved by a sheriff. I do not think that that alteration is necessary, because the existing section of the Act is satisfactory. It provides a safeguard for the ratepayer. Far too many local authorities are charging extortionate rates for burials in an effort to make more use of cremations. The curb on the authorities' powers through requiring them to seek the approval of a sheriff for any proposed increase in the charges should re main in the Act. [Interruption.] I should hate to bury the hon. Member for Stirling, Falkirk and Grangemouth (Mr. E wing).

Opposition Members will be interested to know that I have examined all the clauses of the Bill and not simply the housing support provision. I hear someone saying that it is a burning issue. Yes, it is a burning issue, but it is not the whole Bill. With regard to the Cremation Act 1902, I am sorry to say that no provision has been made in the Bill to amend the charges for medical certificates before a cremation can take place. I accept that it is right that two doctors should certify a death before cremation takes place, but I can see no reason why the family doctor, who is already paid by the National Health Service, or the doctor in the hospital who initially certified a person as de id should be paid an additional fee for signing the death certificate, especially as the cost of both of these certificates has to be met by the deceased's relatives. [Interruption.] It may be that some Labour Members are deceased in their places and are not taking in these important points.

Mr. Deputy Speaker

It does not sound as if they are.

McQuarrie

Perhaps they look it, Mr Deputy Speaker. I am sure that my hon. Friend the Under-Secretary of State will want to consider these matters when the Bill has been finalised.

I turn, finally, to clause 11, which seeks to diminish the powers of sheriffs' officers to poind, seize, remove or secure property belonging to … the debtor". The actions which all hon. Members will be aware of in relation to the recovery of debt by the seizure of goods by sheriffs' officers are some of the most degrading incidents in modern society. The terror and shame that are inflicted on some debtors should not be tolerated in any decent society.

The Bill will go a long way to improve the present situation, but I should have liked to see additional clauses writ en into it to protect the citizen from the sudden dawn raids which are regularly reported in the press, too often with a heavy-handedness and a total disregard for the feelings and circumstances of those concerned, many of whom have been forced into debt through no fault of their own.

I welcome the elements of the Bill. I hope that my right hon. Friend the Secretary of State will take due cognisance of the serious matters that I have raised—they may have seemed flippant to Labour Members—and that require the consideration of the House before the Bill is given a Third Reading. I welcome it and I shall be supporting it.

8.57 pm

Mr. John Home Robertson (Berwick and East Lothian)

I hope that the hon. Member for Aberdeenshire, East (Mr. McQuarrie) will forgive me if I do not take up his remarks on cremation and river pollution. I want to dwell on other, perhaps more relevant, and perhaps more important, areas of the Bill.

I suppose that it was inevitable that the Government would produce a Local Government (Scotland) Bill sooner or later, in spite of the unhappy experience of a Conservative Government's earlier foray into that area when they gave the people of Scotland the doubtful benefits of regionalisation. I am afraid that the people of Scotland will be rather disappointed by the miscellaneous provisions that the Government have laid before the House. They are a pitifully miscellaneous set of provisions in many respects.

The Government came to power with a mandate to roll back the power of Whitehall and to boost the influence of local institutions. In fact, they have chosen to do exactly the opposite. If anyone has any doubt on that score, I advise him to look at the cover of the Bill, where, for example, it is stated that part II, which deals with rate support grant, adds to existing powers possessed by the Secretary of State. It adds that clause 13 extends the Secretary of State's powers to reduce any element of rate support grant". We are seeing no reduction in Government control over local authorities in the Bill. One might have hoped that such a radical Government as this would consider the possibility of doing something about domestic rating. A number of hon. Members, especially Conservative Members, have referred to the undesirable aspects of the rating system. I feel strongly about it. It is one of the most unfair and arbitrary forms of revenue raising known to man. It is disappointing that the Government are doing nothing on that front.

One might have expected such a radical Government as this to consider revising the two-tier system of local authorities. I understand that that issue has been left to the committee that is chaired by my distinguished constituent, Mr. Anthony Stodart, who, I gather from the Secretary of State, will report in January, by which time the Bill will be in Committee and there will be little likelihood of the Committee considering that aspect of local government.

Parts I and II cover rating and the rate support grant system. In commenting on the provisions dealing with the rating system, it should be emphasised that they do not reduce the burden on Scottish ratepayers by one penny. They merely bring the whole convoluted system into line with the procedures in England and Wales. To that extent, there is no joy in them for those of us who would like to see a radical review of the local government finance system.

The Secretary of State's claim that he is the ratepayers' friend is wearing thin. People know that it is the right hon. Gentleman, rather than local authorities, who is responsible for the rates explosion over the past two years. My right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) gave the figures for rate increases over the past year. He said that rates in Lothian region and Strathclydes had increased by 41.5 per cent. and in the Borders region by 37 per cent. He also mentioned other regional councils. Virtually all the increases in rates are a direct result of the Government's fiddling with the rate support grant and its relevant expenditure.

It should again be emphasised and re-emphasised that it is the Government's fault, and not predominantly the fault of local authorities, that the explosion in rating has taken place.

The Secretary of State's vendetta against Lothian regional council has already been touched on. It is a squalid and arbitrary confrontation, set up by the Government for purely political purposes. I have two comments to make. The first is that Lothian region is correct, and remains so, in making a stand against the cuts in education, social services, home helps and so on that the Secretary of State is asking it to impose. The second is that it might have been politically misguided in taking its excellent idealism just that little bit further and budgeting for growth, because that decision has enabled this opportunist Government and Secretary of State for Scotland to give the impression to the people of Lothian and Scotland generally that the whole of Lothian's huge rate rise is attributable to the growth element in the budget.

Nothing could be further from the truth. The Secretary of State knows as well as we all do that the growth element in Lothian region's budget accounts for only a few pence in the rates. It is at most 3 per cent. The biggest portion of the rate increase is attributable to the activities of the Secretary of State and his tampering and tinkering with the rate support grant.

In spite of those facts, the Government are using the confrontation with Lothian as a pretext to bring in unprecedented and draconian new measures that will enable this and future Governments to make savage and direct attacks on the activities of individual local authorities throughout the country.

It is worth dwelling on the fact that not only Lothian and Strathclyde have had high rate increases. The Borders region, controlled by the Conservatives and some of their friends, has also had a massive rate increase. In that case it was entirely the result of the Secretary of State's tampering with the rate support grant. It is a fine spectacle these days to see the so-called Marxists of Lothian regional council standing shoulder to shoulder with the backwoodsmen of the Borders region at the Convention of Scottish Local Authorities when they protest at the fact that the Government are compelling them to cut their essential services and continue to fleece their ratepayers.

I wish to deal now with housing and the housing support grant. As we know, the Government are steadily increasing the proportion of the housing revenue account of local authorities that comes from rents. In 1979–80 it was 49 per cent. of the housing revenue account. It was 50 per cent. in 1980–81 and it will increase to 63 per cent. in 1981–82. Where is that money coming from?

Many of us had hoped that if local authority tenants had to pay more in rent at least they would derive some benefit from reductions in their rates. But no, the rate fund contribution to the housing revenue account is to remain static at about 16 per cent. throughout this period. The only beneficiary of this rejigging of funds for the housing revenue account will be the Chancellor of the Exchequer and, through him, those privileged few who have benefited from the Government's tax cuts. Their contribution to the housing revenue account will drop from 35 to 34 to 21 per cent. over the three years in question. If the Government intend to keep to their expenditure plans up, to 1984, rents will continue to go up and rates will continue to go up—I am glad that the Under-Secretary of State does not dissent—while the better-off taxpayers will benefit.

I spoke earlier about massive increases in rents. In the East Lothian district, in my constituency, the council found it necessary to put up rents last April by 17 per cent., or 81p. The Government say that that increase was wickedly irresponsible and that rents should have gone up by 30 per cent., or £1.40 a week. That is a directive from a Government who claim that their prime aim is to reduce inflation. Yet they are compelling local authorities to put up rates by 30 per cent., and, as we understand, they want them to raise rates by 40 per cent.—over £2 a week—next year. The Government are guilty of a number of dishonest tactics, but the practice of compelling local authorities to do the Chancellor's dirty work has gone beyond a joke. Tenants and ratepayers are paying more, and only supertax-payers are paying less.

The Bill will penalise the more responsible local authorities. Councils which manage their affairs properly and provide decent services, with reasonable rents and reasonable charges, such as the East Lothian council in my constituency, will have their Government subsidies cut, which will mean that the ratepayers will have to pay more. Other authorities with high rents and high charges—on which the Government seem to be keen—and councils which provide rock-bottom services will do very well out of the scheme. What is more, there will be no penalties under the Bill for local authorities that underspend and provide substandard services. That is deplorable.

The Prime Minister talks about incentives and enterprise, but her Secretary of State for Scotland has produced a ludicrous rag-bag of counter-incentives, which is a charter for Tory joy-riders, who do not give a damn about the standard of services that are provided in their areas. Those are the so-called responsible local authorities that the Government want to encourage.

A great chunk of the Bill deals with the powers of the Secretary of State over unreasonable councils. It is for him to define what is an unreasonable council, but who can protect us from unreasonable Secretaries of State? The Secretary of State is unrepresentative, and if we did not know that before we certainly discovered it this morning, when he could not find any hon. Member to vote for his wretched colleges of education measures.

I am under pressure to get a move on, despite the fact that I have been present in the Chamber throughout the debate.

This is a deplorable Bill, which will do nothing but damage to local authorities and will do nothing to roll back the influence of the Government. I sincerely hope that the House will reject it.

Mr. Deputy Speaker

I understand that the winding-up speeches are timed to begin at 9.20 pm, and I should like to be able to call two hon. Members before then.

9.10 pm

Mr. Alex Pollock (Moray and Nairn)

I think it was my right hon. Friend the Secretary of State who, in opening the debate., stressed that the main thrust of the Bill was a med at local authorities likely to ignore economic realities. In that sense, I think that I can fairly say that the local authorities within my own constituency need have little to fear from his measures, since they have a most creditable record in that field, partly because of the traditions of thrift and canniness in the North-East and partly because of the excellence of the representatives on those local councils.

I wish merely to make two brief comments in relation to part IV of the Bill dealing with miscellanous matters. Clause 22 is headed Relaxation of control over local authorities and refers in turn to schedule 2, which includes a commendable list of subjects—which have been touched on in part by my hon. Friend the Member for Aberdeenshire, East (Mr. McQuarrie)—from burial grounds through cremation to methylated spirits, over all of which the iron fist of the Government is to be relaxed. That schedule extends to nearly nine pages, and inasmuch as we need legislation to reduce legislation that is certainly not one page too many. But what concerns me is that there are two measures which are lot in the Bill which might usefully have been considered by the House when looking at it in Committee. One has been touched on already by my hon. Friend the Member for Argyll (Mr. MacKay) — the question of the role of the Countryside Commission in planning matters affecting the Highland region. It is a matter of some concern, as my hon. Friend the Under-Secretary of State well knows, and here I would take with me from the Labour Benches at least the hon. Member for Caithness and Sutherland (Mr. MacLennan). That is perhaps something for which to be grateful.

The other matter on which I should like to touch is the Government proposal to consider the introduction of charges for planning applications going through local authorities. That is a measure that could well have merited consideration within the framework of a Bill such as this, so that the whole idea and implication of it could have been more fully considered by the House. None the less, in spite of those reservations, I am sure that I speak for my constituents when I say that we welcome the determination of the Secretary of State to keep a firm grasp on the nation's finances and to keep his responsibility for having the money spent in a responsible fashion.

9. 13 pm

Mr. George Foulkes (South Ayrshire)

I am forced to be brief, but commendably, following the hon. Member for Moray and Nairn (Mr. Pollock), I may have a few more minutes than I expected.

I have only three points to make. There has been some criticism today — my hon. Friend the Member for Glasgow, Provan (Mr. Brown) was among the critics—of councillors in local authorities. It will be much more difficult to get anyone to serve in a local authority once the Bill gets, through, because it will be totally frustrating for local authority members. They will have no power, no freedom and no authority whatever. They are being snatched from them. What do they get? They get power over fees for cremation, the safe of methylated spirits and the provision of cattle grids. I can imagine Dick Stewart and other people enjoying that great new freedom. But in the areas of real control of capital and revenue expenditure they will be circumscribed by the Secretary of State, as my colleagues have pointed out on a number of occasions.

I get fed up hearing time after time from Conservative Members about the bureaucrats in local authorities. As hon. Members have said, these are home helps, teachers, bus drivers, bin men—people providing vital services. Whatever the hon. Member for Edinburgh, South (Mr. Ancram) may say—I have corrected him on previous occasions and will continue to do so—only a very small percentage are involved in administration.

My second point concerns quangos. In an intervention, I complained about the abolition of the River Purification Advisory Committee, which will save a very small amount. I was going to say a "piddling little amount", but that seemed inappropriate. Yet it is doing a vital job.

I could suggest how the Secretary of State could save a great deal of money. He could get rid of a number of quangos in Scotland by getting rid of new town development corporations. They are homes for many retired brigadiers, who can earn a great deal of money. Many of them hold the elected members of local authorities in contempt. I hope that power will be handed over to the elected members of local authorities as quickly as possible.

Thirdly, I turn to the most serious matter. I think that my hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) said that the authorities that underspend would not suffer any penalties. I disagree. Authorities that underspend will suffer penalties. Given the current level of expenditure by every region with the exception of the Lothian region, the regional councils stand in default of the Social Work (Scotland) Act 1968. Those local authorities have not only powers but duties. In part II, section 12 states: It shall be the duty of every local authority to promote social welfare by making available advice, guidance and assistance on such a scale as may be appropriate for their areas. It could be argued that Grampian, Tayside, Dumfries and Galloway are in default.

Section 14 states that it shall be the duty of every local authority to provide adequate home help for households in need. Tayside, Grampian, Dumfries and Galloway stand in default of that section.

Section 15 states: it shall be the duty of the local authority to receive the child into their care". Again, I contend that Dumfries, Galloway, Tayside and Grampian are in default of that section. The sooner that action is taken against authorities that are not carrying out their statutory duties, the better. However, such action should not be taken against Lothian region, which is carrying out its responsibilities.

I, for one, would support the Secretary of State if he took action against those defaulting local authorities. We have been given a hundred reasons for voting against the Bill. I have given three more.

9.17 pm

Mr. Barry Henderson (Fife, East)

I hope that the hon. Member for South Ayrshire (Mr. Foulkes) will forgive me if, in the interest of brevity, I do not take up his remarks.

This is a modest Bill. It might be said that it could have been wider in scope and that it could have been introduced earlier. It is badly needed, because there is a need to control the total amount of money that local government spends. Last year the amount spent in Scotland totalled £3,750 million. That is quite a lot of peanuts. The taxpayers, for whom the Secretary of State for Scotland is responsible, coughed up 68.5 percent, of that amount. No one who coughs up 68.5 per cent. of £3,750 million could fail to take an interest in the total amount spent.

The Bill is desperately needed because justice must be done to the prudent authorities. We have heard much talk of freedom. One of my fundamental political beliefs concerns the freedom of a citizen to do what he wants. However, there is a point at which one man's freedom conflicts with that of another. It is the legislator's business to draw a boundary between those two interests. Therefore, my right hon. Friend the Secretary of State for Scotland is right to ensure that a local authority that enjoys the freedom to spend at will does not take away money from another local authority that has been careful with its money over a lengthy period and taken reasonable care of its ratepayers' services.

If I had more time, I should have taken up with my hon. Friend the Under-Secretary a number of questions about capital allocations. It cannot be right to continue the present system, under which if capital works subsequently obtain a contribution for the whole or part of the cost from another source—even a private company, for example—the total gross expenditure is deemed to be part of the authority's capital allocation. A letter that I have just received from my right hon. Friend in response to that point was not satisfactory and requires further work in the Department.

I should like my hon. Friend the Under-Secretary to clarify the question of the use of proceeds from the sale of council houses. A number of people are confused about this. Some have the impression that the proceeds can be applied to build houses over and above the number authorised under the housing capital plan and that the present capital allocations could be exceeded by an amount equivalent to that realised by the sale of council houses. On the other hand, there are those who say that the money can only be invested in, or otherwise applied to, a capital purpose connected with the housing revenue account.

I hope that as well as providing a greater reduction in controls my right hon. and hon. Friends will note what a number of my hon. Friends have said about long-term rating reform.

9.21 pm

Mr. George Robertson (Hamilton)

This has been a remarkable day in Scottish politics. This morning there was the Government's humiliation in the Scottish Grand Committee, where they could not even face the prospect of voting for their own proposals. That was followed by this major debate on one of the most far-reaching Scottish local government measures that we have seen. The debate has been characterised by a list of Government supporters dragooned into making speeches and obliged, by means of a smokescreen, to divert attention away from the key areas of the debate and on to such esoteric subjects as cremation, methylated spirits and rating and valuation.

One of those who spoke tonight and did not speak this morning, but who was also one of the main abstainers on the Government side, was the hon. Member for Edinburgh, South (Mr. Ancram). He came out with his rehearsed and many times delivered speech about the alleged iniquities of the Lothian region. By the purest of coincidences, there came into my hands this evening a document leaked from one of the 1974 elections, in which the hon. Gentleman was given his come uppance by the electors of Berwick and East Lothian. In the hon. Gentleman's October election address, printed in the blue of his party, we read: You Know Ancram Works For You! As if to provide some proof, there are reprints of a number of newspaper headlines, only some of which I shall read out. They include: Public transport needs immediate help says MP". MP stresses urgent need for more houses". MP's plea to Healey for small firms aid". MP wants maternity ward kept open".

Last but not least, in the true vein of most of the Conservative speeches tonight, there is the headline: Central Government should subsidise festivals, says Ancram". The report in small print underneath should interest the hon. Member for Aberdeenshire, East (Mr. McQuarrie): Financial assistance from central government should be made available for Festivals, Common Ridings and Gala Days", said the doomed Member for Berwick and East Lothian, the Mad Marxist of Morningside.

Mr. Ancram

Would not the hon. Gentleman accept that after five months of Labour Government that was the sort of thing that all hon. Members were asking for?

Mr. Robertson

That poor answer shows that it requires a great deal of rehearsal for the hon. Gentleman to make some of the statements that he is noted for in the House.

The Bill is no less than a Christmas catalogue from the Government for more centralisation, more bureaucratic paternalism and more of that kind of sanctimonious "We know best" attitude which have come to characterise the Government's relationship with elected local government. In this one area of government outwith the Palace which is still left in this country where the sanction of the ballot box prevails, the Bill and its big brother, the Local Government, Planning and Land (No. 2) Act 1980, mount a full frontal attack on the foundations of local government accountability and representative democracy. What price Tory freedom when big brother Government must usurp the role of the ballot box? What price local discretion when Whitehall and New St. Andrew's House can pull all the strings, and not just most of them?

If there is financial excess or parsimony in local government, why not let the final arbiter be the ballot box? Has the party that stemmed from local government, the party of Austen Chamberlain among others, so little faith in the intelligence, perception or judgment of the electorate that it must now impose this galaxy of controls, reserve powers and constraints to protect the elector from his own folly, or, perhaps, his own wisdom?

The new powers in the Bill on rates, spending, grants, lending and borrowing, definitions, time limits and timetables bring to the Scottish Office an entirely unprecedented and unique new role of overseeing and directly controlling the work and functions of local government in Scotland. They give the commissars of New St. Andrew's House some more Politburo powers to eliminate the freedom of action of any but that small elite behind the closed doors who make Scotland's decisions for the Scots.

Do the Government really care about local democracy? Do they care about the lasting damage that they will cause through the Bill to local government in Scotland?

Only nine years ago, in 1971, it might conceivably have been thought that the Conservative Government cared about the basic principle of local representative democracy. In February 1971 the Conservative Government published a White Paper entitled "Local Government in England". The keynote of that document quoted in the Layfield committee's thorough-going report on local government finance was: A vigorous local democracy means that authorities must be given real functions—with powers of decision and the ability to take action without being subjected to excessive regulation by central government through financial or other controls … above all else, a genuine local democracy implies that decisions should be taken—and should be seen to be taken—a; locally as possible. That White Paper followed only 12 months after a White Paper from the Labour Government which had in almost identical, terms reaffirmed the commitment of that Administration to the rights, duties, obligations and responsibilities of local government.

What happened to the consensus of 1970 and 1971? Thereafter, the Layfield committee and the Wheatley Royal Commission on Local Government in Scotland also tackled the vexed question of the relationship between local authorities and the Government, especially as affected by local authority finance. That is what we are debating this evening. We are not talking about cremations, the liberation of methylated spirits Administrations or the minutiae of rating and valuation. It is essentially an assault on local authority responsibility and accountability. The Layfield committee's report clearly stated: The increasingly detailed intervention by the government which has been occurring is incompatible with that measured consideration of local expenditure needs and priorities, judged by local conditions and requirements and with local taxation decisions reflecting local expenditure decisions, which lies at the heart of fully responsible local government. The Wheatley Commission came down clearly on the side of local authorities and maximum flexibility. The commission said that the Treasury view was for local authorities to raise more of their own finances, so that they have 'sufficient incentive to take spending decisions responsibly and to secure economy and value for money'. The whole tenor of the detailed studies on local authorities and their finances in the last 10 years is decisively in favour of less Government intervention, more local autonomy, more responsibility and more chance for the electorate to make the ultimate decision on the capacity of local government to look after itself.

What do the Government intend to do? In July last year, the Secretary of State was interviewed by Mr. David Scott of The Scotsman. Mr. Scott is a perceptive reporter and he asked the question that came first to mind, given the rumours about the intention of the Secretary of State for the Environment for local government in England. Mr. Scott asked: There has been talk of legislation to limit rates rises. Can you confirm that this is a possibility? The Secretary of State replied: There has been some discussion on this in the South. But I am my own master in Scotland on this matter and I do not envisage that this; action will be necessary as I expect local authorities; in Scotland to act in a responsible manner. No one can tell me that the Bill was dreamt up in the last two or three weeks, or even in the lead-up to the Queen's Speech. It was predestined throughout the last Parliament.

The Bill has three principal functions hidden behind a smokescreen. First, it tightens up the regulations relating to the rate support grant by providing more power to intervene and interfere arbitrarily. Secondly, it tightens the housing support grant and accelerates the trend to higher rates, lower support and massive cuts in resources for housing which was envisaged in the public expenditure White Paper. Thirdly, it tightens capital control through the various loan sanctions that already exist in the Scottish Office portfolio. Capital consent and sanctions which were, as the Layfield committee said, designed originally purely as a safeguard against local authority impropriety are now to be strengthened and tightened so that the commissars at New St. Andrew's House can have the same power as the commissars in the Department of the Environment in declaring moratoriums on all council house building programmes when the whim arises.

Clause 13 is remarkable. Its powers are unprecedented, arbitrary and absolute. The Secretary of State can do what he wants with any local authority which transgresses any standard that the right hon. Gentleman cares to invent. The Secretary of State is extending the powers in the 1973 Act, which go back to 1948 and which have never been used.

The Bill allows the Secretary of Slate to compare the expenditure performance of one local authority with that of others, to make a comparison in relation to the general economic conditions and, to ensure that nobody fails to get caught, to do anything else that he brings to mind. His powers are absolute. The Secretary of State will have power to invent any criteria and to apply them to any local authority in Scotland. One is driven to ask why he bothered to include clause 13 (a) and (b) when he has clause 13 (c).

It is interesting to make a comparison with the Local Government, Planning and Land (No. 2) Act — that tome that rivals the Bible in size and which was enacted recently. The power that the Secretary of State for Scotland has taken unto himself is substantially greater than that which even the Secretary of State for the Environment thought relevant to the English provision. Section 5 of the Local Government, Planning and Land Act provides for the Secretary of State for the Environment to reduce any element in any authority's rate support grant, on one condition only. That condition is a comparison with other local authorities. He does not have the fail-safe, "Catch 22" devices invented by the Scottish Office to give this draconian power to the Secretary of State for Scotland. Moreover, even if the Secretary of State wanted to reduce the level of rates in the way that has been suggested, could this possibly work? It is still open to a local authority to rate in a future year for the shortfall in its rate support grant element in the year that has been affected.

The powers contained in clauses 13 and 14, and the new additional powers for a moratorium contained in clause 23 on loan consents, will mean more interference, more meddling, less flexibility and less and less responsibility and accountability in local government in Scotland. We are asked to accept at face value the modest, moderate intentions of the Secretary of State for Scotland, who tells us that he will not use the powers against anyone other than the ultimate transgressor on any conditions that he cares to invent. He says that in a reasonable manner to a reasonable reception in a reasonable House, but the history of the Government over the past 12 months clearly indicates that they will indeed use these powers. They will use them ruthlessly, regularly and arbitrarily against anyone who offends against their prejudices.

Mr. Lang

Will the hon. Gentleman therefore say whether the Labour Party, if it is ever returned to power, will repeal this measure?

Mr. Robertson

Yes. I dare say that the provisions regarding cremations, methylated spirits and the various other matters that have ranked so high among the priorities of Government Members tonight will have to be the subject of some consideration. But, so far as these draconian powers are concerned, the answer to the hon. Member for Galloway (Mr. Lang) is quite clearly "Yes".

What can we learn from the past 12 months of Tory Government? What can we learn from their attitude to local authorities? They have used local councils as stalking horses for their own discredited ideologies. Local authorities have been left to do the dirty work for Ministers who swan around the public engagement circuit. Local authorities are left to take the decisions about sacking teachers, closing old folks' homes, cancelling adult training centres, indefinitely postponing promised house modernisation programmes or cutting back on the fostering of unwanted children, while Ministers juggle with the intricacies of the PSBR and hide behind the subversive legal jargon of this kind of meddlers' manifesto.

All the draconian powers against which the Conservatives have set their faces over the years are contained in the Bill to inflict damage on local authorities that they will arbitrarily pick upon. This debate has produced from the Government Benches speeches of great length without great content, but the Government have still not told us which are the local authorities with such dreadful records that these draconian powers had to be introduced.

My hon. Friend the Member for Edinburgh, Central (Mr. Cook) gave us chapter and verse of the Lothian experience and the detail that contradicts all the mad gesticulations of the hon. Member for Edinburgh, South. My hon. Friend the Member for Dundee, West (Mr. Ross) was too modest in his defence of his city's district council, which, let it be said, in the last round of rate increases cut its rate by 14 per cent. It was surrounded by Tory district councils that increased their rate and a Tory regional council that increased it by 18 per cent. [HON. MEMBERS: "It was a Tory council".] Dundee was not Tory-controlled at the time the rates were fixed.

The statistics produced in their own selective way have shown that the profligacy cannot be substantiated in any of the ways put forward by Conservative Members. The Conservative Party cries for freedom and the dismantling of controls but gives us a Bill of new controls that are more draconian, arbitrary, sweeping and pernicious than any that have been seen in this country before. Conservative Members cry, when it suits them, for local government discretion and democracy, yet they rob local government of all its powers, discretion and mandate. They cry for control of inflation, yet they impose on local authorities conditions which demand huge rate increases and new burdens on services. They cry tears for the level of the unemployed, but every week they shamelessly exhort local councils to sack and dismiss more and more of their employees, who will have no hope of alternative work.

This is a Government without principle, scruple or vision. They are a Government without support in Scotland. This is a dangerous, needless and senseless Bill, which will damage the very foundation of local democracy in Scotland. It must be vigorously resisted, and I call on all my right hon. and hon. Friends to vote against it this evening.

9.40 pm

The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind)

The speech of the hon. Member for Hamilton (Mr. Robertson) will, if nothing else, be memorable for the fulsome if unintended tribute to the Dundee Conservative group and its decision last May.

Before turning to the provisions of the Bill, it would be right for me to preface my remarks by offering my congratulations to the right hon. Member for Glasgow, Craigton (Mr. Millan) on his appointment to the Shadow Cabinet. For the second year running, having been frustrated by the democratic processes of his party, the right hon. Gentleman was rescued by the powers of patronage—

Mr. Foulkes rose—

Mr. Rifkind

It would appear that he has confounded the fears of his friends and the prophecies of his enemies and shown for the second year running—

Mr. Dennis Canavan (West Stirlingshire)

The hon. Gentleman crawled to Thatcher and she appointed him.

Mr. Deputy Speaker

Order. Perhaps I will be allowed to hear what the hon. Gentleman is saying.

Mr. Rifkind

The right hon. Gentleman has clearly shown that resurrection is still possible even in the 1980s.

Mr. Foulkes

Will the hon. Gentleman give way?

Mr. Rifkind

I will later, but not at the moment.

It looks as though the whole Shadow Scottish team will be with us for some time to come, contrary to the expectations of a few weeks ago. We were told that the election of the right hon. Member for Ebbw Vale (Mr. Foot) would lead to a radical change in the Scottish team. We were told that that aged revolutionary, the hon. Member for Renfrewshire, West (Mr. Buchan), would be the new Shadow Scottish Secretary and that the hon. Member for Edinburgh, Central (Mr. Cook) would be his radical deputy.

Mr. Foulkes

On a point of order, Mr. Deputy Speaker. Perhaps the Under-Secretary can tell us to which clause he is referring.

Mr. Ted Graham (Edmonton)

Santa Clause.

Mr. Deputy Speaker

It is a rather long preamble.

Mr. Rifkind

In the Opposition's attitude to the Bill, we have seen that rather than a revolutionary revival of the Labour Party it is the ancient regime that is back again. There has been a restoration of the Bourbons. They have learnt nothing, but it would appear from their speeches that they have forgotten everything about their own practice in local government, the severe curbs that they placed on local government and the major reductions in manpower that they forced local authorities to observe during their own period in Government.

There are two main previsions in the Bill, and I shall concentrate my remarks on them. However, I wish to comment briefly on certain points that were raised during the debate. The right hon. Member for Craigton and some of his hon. Friends spoke a great deal about housing. They will appreciate that the Bill has only a marginal affect on housing.

Even if the right hon. Gentleman's worst prophecies were correct—which they are not—it would not alter the fact that he and his friends, if they understand the clauses that relate to housing support grant, will wish to vote for them. It is for that reason that the Convention of Scottish Local Authorities has not criticised these clauses and recognises that they arc highly desirable. None of the other comments that we had from the Opposition on housing matters today bore any relevance to the contents of the Bill, and they can be debated at the proper time when the housing support grant will fall to be considered by the House.

My hon. Friends the Members for Edinburgh, South (Mr. Ancram), for Aberdeenshire, East (Mr. McQuarrie) and for Galloway (Mr. Lang) spoke of the problems of the rating system and indicated their wishes to see a reform of that system. They will be aware that the Government have for some time been conducting a review of that system. But I say to my hon. Friend the Member for Edinburgh, South that when he says that he supports a local income tax I am not sure whether he has considered whether he would really wish the local authority to which he has devoted his remarks to have control over the level of tax that he would pay on that basis.

My hon. Friends the Members for Galloway and for Perth and East Perthshire (Mr. Walker) talked respectively about the publication of manpower statistics and direct labour departments. These are provisions in the Local Government, Planning and Land Act. There will, therefore, be the introduction of the very policies in favour of which they spoke as a result of that legislation.

The major point now in dispute between the two sides of the House concerns the extent to which the Government should he entitled to intervene in the business of local authorities and override a local discretion.

Mr. Canavan

Zero council housing.

Mr. Rifkind

I shall come that point if the hon. Gentleman will contain himself.

I believe—I do not think that I am saying anything controversial in this respect—that there are three major areas in which any sensible Government would recognise the need for national interest and for the national Government, on occasion, to override what local authorities would wish themselves to do. I do not dispute the views of local authorities when elected members say that they are elected in the same way as MPs and have the same local mandate as MPs. They are quite correct in that assumption. They are also correct to say that they often recognise local priorities more effectively than any national Government could hope to do. They are equally correct in saying that they are often aware of local circumstances and local pluralities that might justify different treatment for their locality compared with other areas.

But, as against those perfectly valid comments, there are major areas in which the national interest must prevail.

Mr. Canavan rose——

Mr. Rifkind

I shall give way to the hon. Gentleman shortly, if he lets me conclude this point.

Mr. Henderson

The hon. Gentleman has not been here.

Mr. Rifkind

It is certainly true that the hon. Gentleman has not been present for virtually the whole of the debate.

There are certain areas in which I think all hon. Members would accept that the Government must have the right to intervene — for example, in the setting of regulations, such as fire regulations and road safety regulations, and matters of that kind, where the public as a whole accept uniform standards.

There are also matters of great political controversy on which, although they could be implemented locally, successive Governments have fought general elections and received the endorsement of the electorate to implement policies locally against local wishes. For example, the previous Government took such a position on comprehensive education irrespective of local authorities' wishes. I freely accept that the present Government have taken a similar position because of the endorsement of the electorate, in the same way as the Labour Government claimed such an endorsement when we dealt with the question of the sale of council houses. to sitting tenants.

These are not controversial matters, in the sense that all parties and Governments acknowledge that right when an election has been fought and won on that basis.

Mr. Canavan

Will the hon. Gentleman give way?

Mr. Dick Douglas (Dunfermline)

Will the hon. Gentleman give way?

Mr. Rifkind

I give way to the hon. Member for Dunfermline (Mr. Douglas).

Mr. McQuarrie

He has not been here, either.

Mr. Deputy Speaker

Order.

Mr. Douglas

Just because one does not make a lot of noise in this place, that does not mean that one has been absent.

I have raised this matter previously. Will the Undersecretary give some indication of where in the Tory manifesto there was provision for the disgraceful sale of the Ministry of Defence houses in Brucefield, Dunfermline? Miller of Edinburgh will make over £1 million by sitting on their backsides. The hon. Gentleman knows that, because he met a deputation of my constituents on this matter. They are being sold down the river by the disgraceful way in which the present Government have abrogated their responsibility.

Mr. Rifkind

The hon. Gentleman can raise that point when we debate housing matters. I have previously answered him on the subject and have corresponded with him about it. I shall not take up the small amount of time remaining to extend the debate on an issue that is irrelevant to the Bill.

The third major area in which any Government, including the previous Government, must recognise the rights and duties of the Government to intervene is when the expenditure of local authorities has inevitably a significant effect on the national economic strategy of the Government of the day.

My hon. Friend the Member for Fife, East (Mr. Henderson) and other hon. Members spoke of the huge sums—running to thousands of millions of pounds—that are spent by local authorities. No one questions that their spending of that money must affect the total of public expenditure as well as the Government's counter-inflation policies, irrespective of which Government are in power. Since total local authority expenditure is relevant to national government and must be considered in the context of the national interest and given the major contribution that the Government and Parliament make towards it, it is naive and unrealistic to suggest that the Government should not have the final say on what they give local authorities to finance that expenditure.

We are considering here not powers to prevent local authorities determining the level of rates but the extent to which the Government should be able to decide how much money they give to local authorities. To suggest that it is improper or illegitimate for the Government to do that is so naive and out of touch with reality and the practice of the last Labour Government as to be neither credible nor objective.

The right hon. Member for Craigton knows that by the substantial pressure that he put on local authorities while he was Secretary of State he succeeded in reducing local authority manpower by the greatest amount in any one year over the past 20 years. The drop was between 10,000 and 12,000. It was done not because the local authorities wanted to do it but because of the pressure that the right hon. Gentleman quite rightly put upon them. When he suggests that somehow it is acceptable for local authorities to be pressed by a Labour Government but improper for a Conservative Government to do the same, he demonstrates an inconsistency that does not impress the House. In suggesting that Labour Governments are somehow different from Conservative Governments in this respect, the right hon. Gentleman reminds me of the remark that was once made that whereas under Conservatism man exploits his fellow man, under Socialism it is the other way round.

There are two differences between the attitudes of this Government and those of its predecessor. First, the Labour Government had the support not only of Conservative local authorities but of Conservative Members of Parliament when they sought, in the national interest, to reduce local authority spending. However, the support of Labour Members for this Government in pursuing that course is conspicuous by its absence.

The second major difference is that over the past 18 months — and particularly in the Bill — we have consciously sought to take powers that will be applied not indiscriminately against all local authorities but selectively against local authorities that are primarily responsible for our current problems. It is unfair to local authorities that act prudently to find that in spite of their prudence and their reductions in expenditure they are penalised and treated the same as all other local authorities.

If there is one major difference between the Bill and the previous legislation, it lies in the selective nature of the powers provided. We do not apologise for that; on the contrary, we are proud of it. The local authorities prefer it to the bludgeon that the right hon. Member for Craigton used when he was Secretary of State.

Many of the comments of Labour Members have referred to the power to withdraw grant from a local authority that is proposing to spend, or is spending, sums that are judged to be excessive and unreasonable. We have been told that this is a radical and draconian new measure quite different from any previous legislative power. I refer those who hold that view to the terms of the 1966 Act. It was enacted by a Labour Government and it repeated the terms of the 1948 Act, which was also enacted by a Labour Government. It provided specifically that when a local authority's spending was, in the view of the Secretary of State, excessive and unreasonable, rate support grant could be withdrawn.

The only significant difference between the provisions in the Labour Government's Act and the provisions in the Bill is that under the Labour provisions the local authority had to have spent the money before grant could be withdrawn. In our case, we propose to act on the budget for proposed spending. The Labour Government, through the provisions in their Act, wished to close the stable door after the horse had bolted. We prefer to do it before the damage has been done. That seems a more sensible course of action. When Opposition Members question whether the term "excessive and unreasonable" is a proper approach to these matters, they should remember the comments of the Labour Minister in charge of the Labour Government's measure when it passed through the House. It was the right hon. Member for Greenock and Port Glasgow (Dr. Mabon), who said: One does not give more money to those who behave extravagantly. All that one can do is to take away money. He continued, in regard to the excessive and unreasonable criteria: this is the only sensible way of going about it without denying that local government rests on local democracy. He ended his remarks by saying — and this sounds phoney in today's circumstances: This is not a party matter; it is a matter which involves every hon. Member."—[Official Report, Scottish Grand Committee, 7 July 1966; c. 176–8.] That was the attitude of the Labour Minister when he put forward proposals to deal with excessive and unreasonable expenditure. It is sad that his Labour successors whom we see before us today take such a puny and indefensible attitude when dealing with a similar problem.

My hon. Friend the Member for Edinburgh, South asked whether the powers would be sufficient to prevent local authorities that are determined to spend excessively from doing so. Of course, he is right. There is nothing in the Bill that can veto a proposed rate increase by a local authority. That cannot be done under any of the provisions. Any rational local authority would think hard about continuing with proposals to spend excessively and unreasonably, knowing that the powers would be available to my right hon. Friend. In Scotland once it has fixed its rate, such an authority has no power to fix a supplementary rate. If, as a consequence of its excessive and unreasonable proposals, it loses an equivalent amount of rate support grant, the authority would penalise its ratepayers without having a single extra penny of resources to make available for its excessive and grandiose schemes.

Mr. Cook

The Minister said that the advantages of the measures is that they shut the door before the horse has bolted. Surely he will confirm that he said that the powers, if invoked, will come far too late to affect the rate that has been struck. As a result of the measures, the ratepayers will end up paying the rates that he thinks excessive and unreasonable, but they will not receive the services because he is withholding the grant to pay for them.

Mr. Rifkind

It is precisely that reason that will convince any rational authority not to embark on that course. I am glad that the hon. Gentleman has confirmed the value of the proposals. Some local authorities do not object to penalising their ratepayers if that gives them more money to spend on grandiose schemes. No rational authority will wish to incur the opprobrium of the public and, at the same time, not have an additional penny to spend on its favourite projects. If we are dealing with rational authorities, which, for the most part, we are, that will be a sufficient and adequate response to deal with the problems raised by hon. Members

The question before the House is whether, given that in the case of one or two Scottish authorities there has been excessive expenditure, the powers are reasonable or unreasonable. Will they be used selectively or indiscriminately? Opposition Members suggested that there will be an indiscriminate use of the powers. They have not provided one iota of evidence, because the truth of the matter is that it will depend on the attitude of local authorities. I have no doubt that the vast majority of local authorities will moderate their expenditure and will try to keep their spending plans in line with the national interest. If they do so, they have nothing to fear.

The Opposition do not know why they are opposing these measures, which merely add to the powers that Labour Governments have used. Their reaction against the Bill is Pavlovian and does not command the respect of the people of Scotland. I call upon my right hon. and hon. Friends to support the Bill. They can be sure that the people of Scotland will welcome what they do.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 315, Noes 260.

Division No. 15]	[10 pm
AYES
Abse, Leo	Browne, John (Winchester)
Adley, Robert	Bruce-Gardyne, John
Aitken, Jonathan	Bryan, Sir Paul
Alexander, Richard	Buck, Antony
Alison, Michael	Budgen, Nick
Amery,Rt Hon Julian	Bulmer, Esmond
Ancram, Michael	Burden, Sir Frederick
Arnold, Tom	Butcher, John
Aspinwall, Jack	Butler, Hon Adam
Atkins, Robert(Preston N)	Cadbury, Jocelyn
Atkinson, David (B'm'th,E)	Carlisle, John (Luton West)
Baker, Nicholas (N Dorset)	Carlisle, Kenneth (Lincoln)
Banks, Robert	Carlisle, Rt Hon M (R'c'n )
Beaumont-Dark, Anthony	Chalker, Mrs. Lynda
Bell, Sir Ronald	Channon, Rt. Hon. Paul
Bendall, Vivian	Chapman, Sydney
Benyon, Thomas (A'don)	Churchill, W. S.
Benyon, W. (Buckingham)	Clark, Hon A. (Plym'S'n)
Bevan, David Gilroy	Clark, Sir W. (Croydon S)
Biffen, Rt Hon John	Clarke, Kenneth (Rushcliffe)
Biggs-Davison, John	Clegg, Sir Walter
Blackburn, John	Cockeram, Eric
Blaker, Peter	Colvin, Michael
Bonson Sir Nicholas	Cope, John
Boscawen, Hon Robert	Cormack, Patrick
Bottomley, Peter (W'wich W)	Corrie, John
Bowden, Andrew	Costain, Sir Albert
Boyson, Dr Rhodes	Cranborne, Viscount
Braine. Sir Bernard	Critchley, Julian
Bright, Graham	Crouch, David
Brinton, Tim	Dean, Paul (North Somerset)
Brittan, Leon	Dickens, Geoffrey
Brocklebank-Fowler, C.	Dorrell, Stephen
Brooke, Hon Peter	Douglas-Hamilton, Lord J.
Brotherton, Michael	Dover, Denshore
Brown, M.(Brigg and Scun)	du Cann, Rt Hon Edward

Dunn, Robert (Dartford)	Kitson, Sir Timothy
Durant, Tony	Knight, Mrs Jill
Dykes, Hugh	Knox, David
Eden, Rt Hon Sir John	Lamont, Norman
Edwards, Rt Hon N. (P'broke)	Lang, Ian
Eggar, Tim	Langford-Holt, Sir John
Elliott, Sir William	Latham, Michael
Emery, Peter	Lawrence, Ivan
Eyre, Reginald	Lawson, Nigel
Fairbairn, Nicholas	Lee, John
Fairgrieve, Russell	Lennox-Boyd, Hon Mark
Faith, Mrs Sheila	Lester Jim (Beeston)
Farr, John	Lewis, Kenneth (Rutland)
Fell, Anthony	Lloyd, Ian (Havant & W'loo)
Fenner, Mrs Peggy	Lloyd, Peter (Fareham)
Finsberg, Geoffrey	Loveridge, John
Fisher, Sir Nigel	Luce, Richard
Fletcher, A. (Ed'nb'gh N)	Lyell, Nicholas
Fookes, Miss Janet	Macfarlane, Neil
Forman, Nigel	MacGregor, John
Fowler, Rt Hon Norman	MacKay, John (Argyll)
Fox, Marcus	Macmillan, Rt Hon M.
Fraser, Rt Hon Sir Hugh	McNair-Wilson, M. (N'bury)
Fraser, Peter (South Angus)	McNair-Wilson, P. (New F'st)
Fry, Peter	McQuarrie, Albert
Galbraith, Hon T. G. D.	Madel, David
Gardiner, George (Reigate)	Major, John
Gardner, Edward (S Fylde)	Marland, Paul
Garel-Jones, Tristan	Marlow, Tony
Glyn, Dr Alan	Marshall Michael (Arundel)
Goodhart, Philip	Marten, Neil (Banbury)
Goodhew, Victor	Mates, Michael
Goodlad, Alastair	Mather, Carol
Gorst, John	Maude, Rt Hon Angus
Gow, Ian	Mawby, Ray
Gower, Sir Raymond	Mawhinney, Dr Brian
Grant, Anthony (Harrow C)	Maxwell-Hyslop, Robin
Gray, Hamish	Mayhew, Patrick
Greenway, Harry	Mellor, David
Grieve, Percy	Meyer, Sir Anthony
Griffiths, E.(B'y St. Edm'ds)	Miller, Hal (B'grove)
Griffiths, Peter Portsm' h N)	Mills, lain (Meriden)
Grist, Ian	Mills, Peter (West Devon)
Grylls, Michael	Miscampbell, Norman
Gummer, John Selwyn	Mitchell, David (Basingstoke)
Hamilton, Hon A.	Moate, Roger
Hamilton, Michael (Salisbury)	Monro, Hector
Hampson, Dr Keith	Montgomery, Fergus
Hannam, John	Moore, John
Haselhurst, Alan	Morris, M. (N'hampton S)
Hastings, Stephen	Morrison, Hon C. (Devizes)
Havers, Rt Hon Sir Michael	Morrison, Hon P. (Chester)
Hawkins, Paul	Mudd, David
Hawksley, Warren	Myles, David
Hayhoe, Barney	Neale, Gerrard
Heddle, John	Needham, Richard
Henderson, Barry	Nelson, Anthony
Heseltine, Rt Hon Michael	Neubert, Michael
Hicks, Robert	Newton, Tony
Higgins, Rt Hon Terence L.	Nott, Rt Hon John
Hill, James	Onslow, Cranley
Hogg, Hon Douglas (Gr'th'm)	Oppenheim, Rt Hon Mrs S.
Holland, Philip (Carlton)	Osborn, John
Hooson, Tom	Page, John (Harrow, West)
Hordern, Peter	Page, Richard (SW Herts)
Howe, Rt Hon Sir Geoffrey	Parkinson, Cecil
Howell, Ralph (N Norfolk)	Parris, Matthew
Hunt, David (Wirral)	Patten, Christopher (Bath)
Hunt, John (Ravensbourne)	Patten, John (Oxford)
Hurd, Hon Douglas	Pattie, Geoffrey
Irving, Charles (Cheltenham)	Pawsey, James
Jenkin, Rt Hon Patrick	Percival, Sir Ian
Jessel, Toby	Peyton, Rt Hon John
Johnson Smith, Geoffrey	Pink, R. Bonner
Jopling, Rt Hon Michael	Pollock, Alexander
Joseph, Rt Hon Sir Keith	Porter, Barry
Kellett-Bowman, Mrs Elaine	Prentice, Rt Hon Reg
Kershaw, Anthony	Price, Sir David (Eastleigh)
Kimball, Marcus	Prior, Rt Hon James
King, Rt Hon Tom	Proctor, K. Harvey

Raison, Timothy	Taylor, Robert (Croydon NW)
Rathbone, Tim	Taylor, Teddy (S'end E)
Rees, Peter (Dover and Deal)	Tebbit, Norman
Rees-Davies, W. R.	Temple-Morris, Peter
Renton, Tim	Thatcher, Rt Hon Mrs M.
Rhodes James, Robert	Thomas, Rt Hon Peter
Rhys Williams, Sir Brandon	Thompson, Donald
Ridley, Hon Nicholas	Thorne, Neil (Ilford South)
Ridsdale, Julian	Thornton, Malcolm
Rifkind, Malcolm	Townend, John (Bridlington)
Rippon, Rt Hon Geoffrey	Townsend, Cyril D, (B'heath)
Roberts, M. (Cardiff NW)	Trippier, David
Roberts, Wyn (Conway)	Trotter, Neville
Rossi, Hugh	van Straubenzee, W. R.
Rost, Peter	Vaughan, Dr Gerard
Royle, Sir Anthony	Viggers, Peter
Sainsbury, Hon Timothy	Waddington, David
St. John-Stevas, Rt Hon N.	Wakeham, John
Scott, Nicholas	Waldegrave, Hon William
Shaw, Michael (Scarborough)	Walker, B. (Perth)
Shelton, William (Streatham)	Walker-Smith, Rt Hon Sir D.
Shepherd, Colin (Hereford)	Wall, Patrick
Shepherd, Richard	Waller, Gary
Shersby, Michael	Walters, Dennis
Silvester, Fred	Ward, John
Sims, Roger	Warren, Kenneth
Skeet, T. H. H.	Watson, John
Smith, Dudley	Wells, John (Maidstone)
Speed, Keith	Wells, Bowen
Speller, Tony	Wheeler, John
Spence, John	Whitney, Raymond
Spicer, Michael (S Worcs)	Wickenden, Keith
Sproat, Ian	Wiggin, Jerry
Squire, Robin	Wilkinson, John
Stainton, Keith	Williams, D.(Montgomery)
Stanbrook, Ivor	Winterton, Nicholas
Stanley, John	Wolfson, Mark
Steen, Anthony	Young, Sir George (Acton)
Stevens, Martin	Younger, Rt Hon George
Stewart, Ian (Hitchin)
Stewart, J.(E Renfrewshire)	Tellers for the Ayes:
Stokes, John	Mr. Spencer Le Marchant
Stradling Thomas, J.	and Mr. Anthony Berry.
Tapsell, Peter

NOES
Abse, Leo	Carter-Jones, Lewis
Adams, Allen	Cartwright, John
Allaun, Frank	Clark, Dr David (S Shields)
Alton, David	Cocks, Rt Hon M. (B'stol S)
Anderson, Donald	Cohen, Stanley
Archer, Rt Hon Peter	Coleman, Donald
Armstrong, Rt Hon Ernest	Concannon, Rt Hon J. D.
Ashley, Rt Hon Jack	Conlan, Bernard
Ashton, Joe	Cook, Robin F.
Atkinson, N.(H'gey,)	Cowans, Harry
Bagier, Gordon AT.	Cox, T. (W'dsw'th, Toot'g)
Barnett, Guy (Greenwich)	Craigen, J. M.
Barnett, Rt Hon Joel (H'wd)	Crowther, J. S.
Beith, A. J.	Cryer, Bob
Benn, Rt Hon A. Wedgwood	Cunliffe, Lawrence
Bennett, Andrew(St'kp't N)	Cunningham, G. (Islington S)
Bidwell, Sydney	Cunningham, Dr J. (W'h'n)
Booth, Rt Hon Albert	Dalyell, Tarn
Boothroyd, Miss Betty	Davidson, Arthur
Bottomley, Rt Hon A.(M'b'ro)	Davies, Rt Hon Denzil (L'lli)
Bradley, Tom	Davies, Ifor (Gower)
Bray, Dr Jeremy	Davis, Clinton (Hackney C)
Brown, Hugh D. (Provan)	Deakins, Eric
Brown, R. C. (N'castle W)	Dean, Joseph (Leeds West)
Brown, Ron (E'burgh, Leith)	Dempsey, James
Brown, Ronald W. (H'ckn'y S)	Dewar, Donald
Buchan, Norman	Dixon, Donald
Callaghan, Rt Hon J.	Dobson, Frank
Callaghan, Jim (Midd't'n & P)	Dormand, Jack
Campbell, Ian	Douglas, Dick
Campbell-Savours, Dale	Douglas-Mann, Bruce
Canavan, Dennis	Dubs, Alfred
Cant, R. B.	Duffy, A. E. P.
Carmichael, Neil	Dunn, James A.

Dunnett, Jack	McKay, Allen (Penistone)
Dunwoody, Hon Mrs G.	McKelvey, William
Eadie, Alex	MacKenzie, Rt Hon Gregor
Eastham, Ken	Maclennan, Robert
Edwards, R. (W'hampt'n S E)	McNally, Thomas
Ellis, R. (NE D'bysh're)	McQuade, John
English, Michael	McTaggart, Robert
Ennals, Rt Hon David	McWilliam, John
Evans, loan (Aberdare)	Marks, Kenneth
Evans, John (Newton)	Marshall, Dr Edmund (Goole)
Ewing, Harry	Marshall, Jim (Leicester S)
Faulds, Andrew	Martin, M(G'gow S'burn)
Field, Frank	Mason, Rt Hon Roy
Fitch, Alan	Maxton, John
Flannery, Martin	Maynard, Miss Joan
Fletcher, Raymond (Ilkeston)	Meacher, Michael
Fletcher, Ted (Darlington)	Mellish, Rt Hon Robert
Foot, Rt Hon Michael	Mikardo, Ian
Ford, Ben	Millan, Rt Hon Bruce
Forrester, John	Miller, Dr M. S. (E Kilbride)
Foulkes, George	Mitchell, Austin (Grimsby)
Fraser, J. (Lamb'th, N'w'd)	Mitchell, R. C. (Soton Itchen)
Freeson, Rt Hon Reginald	Morris, Rt Hon A. (W'shawe)
Garrett, John (Norwich S)	Morris, Rt Hon C. (O'shaw)
Garrett, W. E. (Wallsend)	Morris, Rt Hon J. (Aberavon)
George, Bruce	Moyle, Rt Hon Roland
Gilbert, Rt Hon Dr John	Mulley, Rt Hon Frederick
Ginsburg, David	Newens, Stanley
Golding, John	Oakes, Rt Hon Gordon
Graham, Ted	Ogden, Eric
Grant, George (Morpeth)	O'Halloran, Michael
Grant, John (Islington C)	O'Neill, Martin
Grimond, Rt Hon J.	Orme, Rt Hon Stanley
Hamilton, James (Bothwell)	Owen, Rt Hon Dr David
Hamilton, W. W. (C'tral Fife)	Paisley, Rev Ian
Hardy, Peter	Palmer, Arthur
Harrison, Rt Hon Walter	Park, George
Hattersley, Rt Hon Roy	Parker, John
Haynes, Frank	Parry, Robert
Healey, Rt Hon Denis	Pavitt, Laurie
Heffer, Eric S.	Pendry, Tom
Hogg, N. (E Dunb't'nshire)	Penhaligon, David
Holland, S. (L'b'th, Vauxh'll)	Powell, Raymond (Ogmore)
Home Robertson, John	Prescott, John
Homewood, William	Price, C. (Lewisham W)
Hooley, Frank	Race, Reg
Horam, John	Radice, Giles
Howell, Rt Hon D.	Rees, Rt Hon M (Leeds S)
Howells, Geraint	Richardson, Jo
Hudson Davies, Gwilym E.	Roberts, Albert (Normanton)
Hughes, Mark (Durham)	Roberts, Allan (Bootle)
Hughes, Robert (Aberdeen N)	Roberts, Ernest (Hackney N)
Hughes, Roy (Newport)	Roberts, Gwilym (Cannock)
Janner, Hon Greville	Robertson, George
Jay, Rt Hon Douglas	Robinson, G. (Coventry NW)
John, Brynmor	Rodgers, Rt Hon William
Johnson, James (Hull West)	Rooker, J. W.
Johnson, Walter (Derby S)	Roper, John
Jones, Rt Hon Alec (Rh'dda)	Ross, Ernest (Dundee West)
Jones, Barry (East Flint)	Rowlands, Ted
Jones, Dan (Burnley)	Ryman, John
Kaufman, Rt Hon Gerald	Sandelson, Neville
Kerr, Russell	Sever, John
Kilfedder, James A.	Sheerman, Barry
Kilroy-Silk, Robert	Sheldon, Rt Hon R.
Kinnock, Neil	Shore, Rt Hon Peter
Lambie, David	Short, Mrs Renée
Lamborn, Harry	Silkin, Rt Hon J. (Deptford)
Leadbitter, Ted	Silkin, Rt Hon S. C. (Dulwich)
Leighton, Ronald	Silverman, Julius
Lestor, Miss Joan	Smith, Cyril (Rochdale)
Lewis, Arthur (N'ham NW)	Smith, Rt Hon J. (N Lanark)
Lewis, Ron (Carlisle)	Snape, Peter
Litherland, Robert	Soley, Clive
Lofthouse, Geoffrey	Spearing, Nigel
Lyon, Alexander (York)	Spriggs, Leslie
Lyons, Edward (Bradf'd W)	Steel, Rt Hon David
McCartney, Hugh	Stewart, Rt Hon D. (W Isles)
McDonald, Dr Oonagh	Stoddart, David
McGuire, Michael (Ince)	Stott, Roger

Strang, Gavin	White, J. (G'gow Pollok)
Straw, Jack	Whitehead, Phillip
Summerskill, Hon Dr Shirley	Whitlock, William
Taylor, Mrs Ann (Bolton W)	Willey, Rt Hon Frederick
Thomas, Jeffrey (Abertillery)	Williams, Rt Hon A.(S'sea W)
Thomas, Mike (Newcastle E)	Williams, Sir T. (Warrington)
Thomas., Dr R, (Carmarthen)	Wilson, Gordon (Dundee E)
Thorne, Stan (Preston South)	Wilson, Rt Hon Sir H.(H'ton)
Tilley, John	Wilson, William (C'try SE)
Tinn, James	Winnick, David
Torney, Tom	Woodall, Alec
Varley, Rt Hon Eric G.	Woolmer, Kenneth
Wainwright, E.(Dearne V)	Wrigglesworth, Ian
Walker, Rt Hon H.(D'caster)	Young, David (Bolton E)
Watkins., David
Weetch Ken	Tellers for the Noes:
Welsh, Michael	Mr. Terry Davis and
White, Frank R.	Mr. George Morion.

Question accordingly agreed to.

Bill read a second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).