HC Deb 17 December 1980 vol 996 cc289-97
The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind)

With your permission, Mr. Speaker, I should like to make a statement. My right hon. Friend—

Mr. Dennis Canavan (West Stirlingshire)

On a point of order, Mr. Speaker. Will the Minister say why the Secretary of State for Scotland is not making the statement?

Mr. Speaker

That is not a point of order for me, because I do not decide who makes the statements.

Mr. Rifkind

If the hon. Member for West Stirlingshire (Mr. Canavan) had exercised his customary patience in these matters, he would have found out.

My right hon. Friend the Secretary of State for Scotland is this afternoon informing the Convention of Scottish Local Authorities that the 1981–82 rate support grant for Scottish local authorities will be derived from total relevant expenditure of £2,458.5 million—at November 1980 prices. The relevant expenditure figure is 2.7 per cent. less than the figure on which grant for 1980–81 was based. That reflects my right hon. Friend's allocation of priorities within the Scottish block of expenditure in the light of the Government's public expenditure decisions announced to the House by my right hon. and learned Friend the Chancellor of the Exchequer on 24 November.

The new grant percentage represents an actual reduction—compared with 1980–81—of 1 per cent. A further 0.8 per cent. adjustment replaces an ad hoc abatement made since 1978 in respect of rates on local authority properties and will have no net effect on the cash received by local authorities. That results in a grant percentage of 66.7. Aggregate grants for 1981–82, on expenditure at November 1980 prices, will be £1,639.8 million, of which rate support grant will be £1,503.1 million.

There will be a cash limit of £94 million on additional grant for 1981–82 towards pay and price increases beyond November 1980. It includes provision for increases of no more than 6 per cent. on average in pay settlements in this round and provisionally for the next. It contains provision for price increases of no more than an average of 11 per cent. between 1980–81 and 1981–82. Total grant payable in increase orders may be above or below the cash limit to take account of variations in expenditure due to changes in interest rates, which are not subject to cash limits. My right hon. Friend intends to make additional grants in respect of increased costs of £24.5 million for 1979–80 and £203.1 million for 1980–81. Grants for 1980–81 may be increased again in a second increase order next year.

The main object of the grant distribution formula will be stability, as recommended by the convention. Within this general objective, my right hon. Friend will reduce the ratio of resources element to needs element from 1:7, as in 1980–81, to 1:9 in order to restrict the additional resources element payable to authorities striking comparatively high rate poundages. My right hon. Friend will lay the necessary orders for the approval of the House as soon as possible, together with a report of the considerations underlying his proposals.

Mr. Bruce Milan (Glasgow, Craigton)

There are one or two figures in the statement that are not clear. I should be grateful if the Under-Secretary would clarify in particular the additional grants for 1980–81 in relation to the cash limit for this year. What is clear, however, is that the effect of today's proposals will mean further savage increases in rates in Scotland.

Is the Under-Secretary aware that in the current year average rate increases in Scotland have been more than 30 per cent., which is more than twice the figure in the last year of the Labour Government and five times what it was the year before that? This year we are faced with further massive increases on something like the same scale, 30 per cent., as the unfortunate Scottish ratepayers, whether they be domestic ratepayers, industrial or commercial ratepayers, have already suffered in the current year.

The responsibility for these huge rate increases is firmly on the shoulders of the Government, however much they may try to wriggle out of it. The reasons for these increases will be, first, the cut in the percentage grant, which the Minister has just announced, and, secondly, the unrealistic spending limits for next year, which will represent a cut not of 2.7 per cent. but a good deal more than even 5 per cent., compared with what the local authorities are budgeting for and are likely to spend in the current year. It will also arise from the unrealistic inflation levels that are assumed in this grant, and in particular the ludicrous 6 per cent. figure.

How does that figure, for example, relate to the settlement that has already been achieved for the police or for the firemen? Are the police and the firemen to be faced with 6 per cent. limits next year? If they are not, where is the additional money to come from? The additional money will undoubtedly come from the rates.

These are the reasons why we are to face next year the huge increases in rates that we have already faced in the current year. As well as increased rates, we shall have poorer services and the 40 per cent. higher rents recommended by the Government. The proposal today simply adds to the catalogue of disaster—the industrial closures, the bankruptcies, the increasing unemployment and the dereliction which are a consequence of the Government's policies for Scotland.

Mr. Rifkind

The right hon. Gentleman is, if nothing else, predictable in his response to statements of this kind, but I shall deal with the specific questions that he raised.

The right hon. Gentleman asked for extra details about the £203 million additional sum paid for 1980–81. The full amount of the cash limit for that year was £194 million, which will be paid, except for a small abatement of £900,000 which is a technical adjustment to offset a revaluation error, plus the additional grant on loan charges, amounting to £10 million, thereby giving the total that I indicated in my statement.

The right hon. Gentleman asked about the recent settlements for the police and the firemen. These are included in the 6 per cent. I think the right hon. Gentleman will agree that, certainly in the case of the firemen, the local authorities were well aware of the percentage that would be provided by the Government and clearly took that into account in any settlement that was made.

The right hon. Gentleman made some rather dramatic statements about rate increases as a consequence of this statement. Rate increases obviously will depend on the budgets determined by local authorities, but if they respond in a reasonable way to the sums being provided in rate support grant there is no reason to believe that any rate increases will he substantially more than the level of rate increases last year.

Mr. Michael Ancram (Edinburgh, South)

Will my hon. Friend accept that his statement will be warmly welcomed by those in Scotland who are seeking a return to the principle of good housekeeping in local government, and should not be regarded as an excuse to raise rates but rather as an incentive to make necessary savings? However, in the light of increasing unemployment, and particularly the increase in youth unemployment, will he tell the House whether there are any provisions within the rate support grant allocations to deal with this problem?

Mr. Rifkind

I am grateful to my hon. Friend for the general welcome that he has given to the statement. Unemployment in general is a very wide issue, but I can tell him that in the realms of further education, which is of importance to youngsters leaving school, there will overall be an enablement for slightly increased numbers of students to attend further education colleges in Scotland.

Several Hon. Members


Mr. Speaker

Order. If hon. Members co-operate and are as brief as possible, I shall try to call those hon. Members who have already risen.

Mr. Russell Johnston (Inverness)

Is the hon. Gentleman aware that the 1 per cent. reduction that he mentioned is seriously misleading because it does not take account of the squeeze effect of wage settlements and interest rates on services? Is he making any allowance for those authorities which had to renew their debt burdens at exceptionally high interest rates? Earlier, the hon. Gentleman said that the figure of 6 per cent. allowed for policemen and firemen. Does that assume a 6 per cent. settlement for teachers?

Mr. Rifkind

The 6 per cent. figure represents an average increase that local authorities should take into account when determining pay settlements during the year. The hon. Gentleman will be delighted to know that interest rates are not covered by cash limits. Any increased loan charges that fall on local authorities as a result of increases in interest rates are met by the Secretary of State.

Mr. Donald Stewart (Western Isles)

Given this attack on Scottish local authorities and on the living standards of people in Scotland, will the Minister comment on the Glasgow university study which pointed out that expenditure cuts in Scotland were being determined by English Ministers and that the influence of the Scottish Office had been seriously diminished? Will he put an end to our position as scavengers at the tables of English Ministers?

Mr. Rifkind

The right hon. Gentleman will be aware that the formula to which he referred was introduced under the Labour Government and is being continued by the present Administration. I have no reason to believe—nor did the gentleman who wrote the article suggest—that the system works to the disadvantage of the people of Scotland.

Mr. Barry Henderson (Fife, East)

As some local authorities have attacked the living standards of ratepayers and the competitiveness of small businesses, is my hon. Friend satisfied that the rate support grant formula and the Local Government (Miscellaneous Provisions) (Scotland) Bill will enable him to protect the legitimate interests of prudent authorities, particularly those that have a good record in that respect? Will he ensure that high-spending authorities do not get away with it?

Mr. Rifkind

This year my right hon. Friend has chosen not to have a general abatement, which would have affected all local authorities in Scotland, but to concentrate on the individual local authorities responsible for the problem. This rate support grant settlement makes a further change in the needs-to-resources ratio, and that will particularly benefit prudent authorities.

Mr. Harry Gourlay (Kirkcaldy)

Is the Minister aware that I used to regard him as a man who lived in a practical world? However, his statement shows that he is living in cloud-cuckoo-land. Is he aware that the Fife regional authority has boasted that it is one of the lowest rated authorities in Scotland? Because of cutbacks, and because the authority has kept down rates, there is a street in Kirkcaldy that has so many ripples that if one goes down it at a normal speed it feels like crossing the Atlantic in the middle of a storm. As a result of the hon. Gentleman's statement, the Fife authority will have to make massive rate increases. What will the hon. Gentleman do to ensure that that does not happen?

Mr. Rifkind

There is nothing in the statement that will require a local authority to make massive rate increases. For example, the reduction in the distribution percentage of 1 per cent. is equivalent to 2p in the pound. If local authorities reduce their expenditure to the levels provided for relevant expenditure for rate support grant purposes, it will lead to a reduction in the amount that would otherwise fall on the rates.

Mr. Iain Sproat (Aberdeen, South)

Will my hon. Friend confirm that some 70 per cent. of local authority revenue spending goes on staff wages? Is it not shocking that over the past year or so Scotland has increased its manpower whilst there has been a manpower cut of about 20,000 people in England and Wales? Can my hon. Friend give the latest figures for that increase, which places a monstrous burden on Scottish ratepayers?

Mr. Rifkind

My hon. Friend is correct. It puts the inevitable protestations and objections of Scottish local authorities into perspective. My right hon. Friend the Secretary of State for the Environment announced that over the past 12 months there had been a reduction of between 35,000 and 40,000 in local authority manpower in England and Wales. However, during the same period local authority manpower in Scotland increased by some 2,000. Local authorities cannot say that the Government are providing inadequate resources when, at the same time, they are recruiting staff and putting an additional burden on local communities.

Mr. David Lambie (Central Ayrshire)

Is the hon. Gentleman aware that this further attack on the living standards of the people of Scotland, particularly council tenants, will not be accepted lightly and is a recipe for further revolution in Scotland? Given that unemployment in my constituency is reaching 18.7 per cent., and given that the Secretary of State has asked Cunninghame district council for rent increases that will total more than £3 a week, how does the hon. Gentleman expect people not to fight and create civil disobedience?

Mr. Rifkind

I shall not comment on the hon. Gentleman's earlier thoroughly irresponsible remark. If he is genuinely interested in responding to the problems of unemployment, he will do all in his power to ensure that massive rate increases, caused by the refusal of local authorities to reduce expenditure, do not take place. Nothing would be more likely to destroy businesses and jobs in Scotland and in the hon. Gentleman's constituency.

Mr. Peter Fraser (South Angus)

Will my hon. Friend note that on occasions such as these the Opposition show no regard for the private wealth-producing sector and that they find it astonishing that local authorities should enjoy at least a 6 per cent. increase in wages when those in the engineering and textiles industry will have to settle for next to nothing? Will my hon. Friend visit Dundee district council and ask it why it has promised to increase rates by up to 200 per cent. if there is to be a reduction of only 2.7 per cent.?

Mr. Rifkind

My hon. Friend is correct to say that if an irresponsible authority is determined to impose unacceptable burdens on its ratepayers, that has nothing to do with the statement that I have made or with this year's rate support grant. Scottish local authorities have been responsible, over the past 12 months, for an increase in manpower. Therefore, they cannot suggest that it is impossible to make savings on expenditure. When the right hon. Member for Glasgow, Craigton (Mr. Millan) was Secretary of State, he was extremely successful in ensuring a major reduction in local authority manpower. It is a pity that in Opposition he cannot support the policies that he practised in Government.

Mr. William Hamilton (Fife, Central)

Is the hon. Gentleman aware that this statement must be considered against the fact that 5,000 people have been added to the dole queues in Scotland for every month that the Government have been in power? How does the hon. Gentleman think local authorities can keep rates stable and retain the existing standard of services? It is impossible. Does not the hon. Gentleman accept that this will affect the old, the sick, the infirm and the poor? How does he defend the Government's increasingly evil social policies of vandalism?

Mr. Rifkind

The hon. Gentleman should have prefaced his remarks by reminding the House that unemployment doubled when the Labour Government were in office. The hon. Gentleman spoke about the old, the sick and the poor. He will be interested to know that the rate support grant settlement allows for an increase in real terms in the provision for social work.

Mr. Bill Walker (Perth and East Perthshire)

Will my hon. Friend confirm that at least 50 per cent. of council tenants in Scotland receive substantial support from the Government and that many of them pay no rent because the Government pay it for them? My hon. Friend will be pleased to know that council house sales in Perth and Kinross are going well. This week, the first high rise flat has been sold and many more are on the books. Will my hon. Friend confirm that Perth and Kinross district and Tayside region can look to the Government for support, because they have been successful in their housekeeping?

Mr. Rifkind

In Scotland, as elsewhere in the United Kingdom, one-quarter of council tenants pay no rent and a further quarter receive a rent rebate as a result of their low incomes. That must be taken into account in any consideration of an appropriate rent increase.

Mr. John Home Robertson (Berwick and East Lothian)

The Minister's statement is a masterpiece of obscurity. Will he tell us in plain English and in real terms what rate increases and cuts in services will be experienced by both his constituents and mine and, in particular, by those of the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton), who is a constituent of mine and who lives in North Berwick?

Mr. Rifkind

The hon. Gentleman might find that even plain figures result in total obscurity from his point of view. The effect of any rate settlement will depend on the response of individual local authorities. If local authorities respond in a sensible way, as many have done during the current year, they will find that they can provide vital services for their communities without massive rate increases.

The effect of last year's rate support grant settlement and all the various factors which were taken into account led to rate increases which ranged from a reduction of 15 per cent. in one authority to the highest increase of more than 50 per cent. in another. There is a broad variation. If Opposition Members and local authorities look to their own specific requirements and to their obligations towards ratepayers, a sensible outcome can be assured.

Mr. John MacKay (Argyll)

Will my hon. Friend confirm that this small decrease in the taxpayer's input to local authorities should not mean a massive increase in the ratepayer's input, as the Opposition are suggesting, unless local authorities continue to increase their staffing, make no effort to cut their costs and do not attempt to keep within the 6 per cent. staff salary increases that the Government have laid down for this year?

Mr. Rifkind

Yes. I can illustrate that this is a reasonable settlement. In education, local authorities will find that pupil-teacher ratios will be marginally improved at primary level and will not be affected at secondary level. Because of falling pupil numbers, more money per child will be spent on education next year than in the current year. That is primarily because of falling pupil numbers, but it illustrates how reasonable and fair the settlement is to local authorities.

Mr. Jim Craigen (Glasgow, Maryhill)

How many people does the Minister expect local authorities to sack during the coming year to comply with this unrealistic settlement, given the pressure on local authorities of inflation and high interest charges? Does the hon. Gentleman agree that the Secretary of State for Scotland should do his own dirty work by taking over the running of the whole of local government in Scotland so that he will have to sack the people when it comes to the point?

Mr. Rifkind

The rate support grant settlement will give more to Scottish local authorities in real terms than they had in 1977–78. If local authorities are able to reduce their manpower to the new figure that they achieved then, after pressure from the then Secretary of State for Scotland, the Government will be content.

Mr. Allan Stewart (Renfrewshire, East)

Further to the outrageous question asked by the hon. Member for Central Ayrshire (Mr. Lambie), does my hon. Friend agree that the only revolting thing in Scotland is the hypocrisy and irresponsibility of Opposition Members in failing to face economic reality?

Mr. Rifkind

My hon. Friend is correct. Opposition Members might find that, if their words are not put forward in a more careful fashion, their prophecies will be self-fulfilling. I am sure that the hon. Member for Central Ayrshire (Mr. Lambie) would not wish that to happen. However, he should reflect on what persons in his position can do to influence people in Scotland or anywhere else.

Mr. John Maxton (Glasgow, Cathcart)

Is the Minister aware that if the Glasgow district council and the Strathclyde regional council follow his so-called reasonable course—not to put up rates but to cut services—in areas such as Castlemilk, where unemployment is already more than 20 per cent., it will mean yet further deprivation in terms of cutbacks in social services and in education, higher rents and fewer repairs to houses? In such circumstances, is it surprising that people should become desperate? It is not irresponsible of us to suggest that some action may be taken by these people, but it is irresponsible of the Government to carry out this sort of action.

Mr. Rifkind

If the level of local authority expenditure in 1977–78 was acceptable to the hon. Gentleman and his right hon. and hon. Friends, it is grossly irresponsible to suggest that the amount that will be available to local authorities next year, which will be greater in real terms than was available at that time, is unacceptable. It suggests that the Opposition are refusing to face economic reality and to live up to the policies they put forward when they were in Government.

Several Hon. Members


Mr. Speaker

Order. I propose to call hon. Members representing Scottish constituencies first, because when we had statements on England and Wales I called only hon. Members from those countries. I shall come to other hon. Members at the end.

Mr. Norman Hogg (Dunbartonshire, East)

In view of the Minister's response to the hon. Member for Aberdeen, South (Mr. Sproat) and subsequent comments on manpower, in consequence of this settlement how many school teachers and local government officers will lose their jobs and how many local authority manual workers can expect to be made redundant?

Mr. Rifkind

I have already pointed out that the pupil-teacher ratio will be either maintained in secondary education or improved in primary education. If we are able to do that, it is not unreasonable to assume that falling pupil numbers will lead to some reduction in the need for teachers. I cannot believe that the hon. Gentleman, who is usually fair and reasonable in these matters, would seriously suggest otherwise.

Mr. Robert Hughes (Aberdeen, North)

Has not the Minister yet grasped the essential fact that the reason why there are high-spending authorities compared with others is that many authorities have severe and deep problems with which to deal and that they have begun to tackle them, whereas authorities which have not kept up with expenditure have not been supplying proper services for generations? The most niggardly authorities of all are those like the Grampian region, which is shutting 10 infant schools in the city of Aberdeen.

Mr. Sproat


Mr. Hughes

Yes. I hope that we shall get the support of the hon. Member for Aberdeen, South (Mr. Sproat). Is it not clear from the statement that there is a threefold attack on local authorities: first, by reducing the Government's proportion going into services; secondly, by cutting back on cash limits; and, thirdly, by switching the balance away from authorities which have faced the tremendous responsibilities with which they have to deal?

Mr. Rifkind

The hon. Gentleman is right in saying that many authorities have greater needs than others. The distribution formula in the rate support grant, with its emphasis on the needs element, is based on providing for local authorities in the way that the hon. Gentleman would like to see. I should have thought that as the Government have continued the extraordinary expenses portion which local authorities in his area receive, because of the extra burden caused by oil-related expenditure, he would have been the first to congratulate the Government on their action.

Mr. David Myles (Banff)

The hon. Member for Aberdeen, North (Mr. Hughes) cast an awful slur on the Grampian region. Will my hon. Friend congratulate the Grampian region on the way that it has managed to cope so well with the infrastructure necessary for North Sea oil?

Mr. Rifkind

My hon. Friend is correct in saying that the Grampian region has coped extremely well with all the major changes and problems that oil development has produced for the region during the past few years. That must be one reason why the Conservative Party retains its substantial majority in that region.

Mr. David Marshall (Glasgow, Shettleston)

The Minister has often reaffirmed the Government's support for the GEAR project in the east end of Glasgow, which arguably is the most deprived area in Europe. How does he reconcile that support with this statement on the rate support grant? Is he prepared to make special provision for the GEAR project?

Mr. Rifkind

The hon. Gentleman will recollect that the Labour Government did not make any special provision for the GEAR project. Nor have this Government. Like the Labour Government, we have said that we hope that local authorities will continue to give the same degree of priority to the needs of that part of Glasgow.

Mr. Canavan

Will the Minister come clean and admit that this is yet another Tory attempt to force Scottish local authorities to cut essential services, such as housing and education, and even the social work services for the elderly, the sick and the disabled? Is he aware that many of us will give maximum support to Labour-controlled local authorities to fight the Government on this matter with every means at their disposal because they have a better mandate and an absentee Secretary of State who does not have the guts to come to the Dispatch Box but sends one of his junior lackeys to present this Scrooge-type package to the people of Scotland eight days before Christmas?

Mr. Rifkind

If the hon. Gentleman had done even an elementary amount of homework on this subject, he would have realised that there has to be a statutory meeting with the local authorities at which the Secretary of State is required to announce the decisions on the rate support grant. I am sure that the right hon. Member for Glasgow, Craigton (Mr. Millan) would not disagree with that observation.

As regards what I might kindly call the substance of the hon. Gentleman's question, he should remember my earlier remark about there having been an increase in real terms in the provision for social work. Housing does not come under the Scottish rate support grant, so it is not relevant to the statement that I have made today.

Mr. Kenneth Lewis (Rutland and Stamford)

Without wanting to embarrass my hon. Friend as a representative of an English constituency, may I ask him to confirm that, while it is right for Scottish Members to fight for their constituents, in relative terms of Government support from the Exchequer Scotland was doing better than England before the announcement and will still be doing better after it?

Mr. Rifkind

There is nothing in the rate support grant settlement that I have indicated to the House that would in any way change the position of Scotland relative to other parts of the United Kingdom. I thank my hon. Friend for his remarks.

Mr. Arthur Lewis (Newham, North-West)

As another English Member, may I ask the Minister whether he agrees that Scotland is in great difficulties over unemployment, deprivation and so on? We talk of cuts and restrictions, but will he bear in mind that on the very day that he makes his announcement the Prime Minister has stated that she is appointing a professor at £50,000 a year—£1,000 a week—to advise her on monetarism? [Interruption.] It is not a laughing matter. It is a disgrace when old-age pensioners, the sick and the disabled in Scotland will have to pay that man £50,000 a year.

Mr. Rifkind

Without knowing whether the hon. Gentleman's observation is correct, I can assure him that any salary that may be paid to the gentleman to whom he refers will not have to be found out of the Scottish rate support grant.

Mr. Millan

The Minister said in answer to my original question that he saw no reason why rate increases next year should be any greater than in the current year. Is he really saying that the Government would consider it a triumph if rates increased next year by the 32 per cent. that we are suffering in the current year? If the increase next year is not to be 32 per cent., what will it be?

Mr. Rifkind

The right hon. Gentleman misheard what I said. I shall repeat it and hope that it is understood on this occasion. If local authorities respond reasonably in their expenditure to what the Government have provided, there is no reason why rate increases next year should not be substantially less than in the current year.