Rate Support Grant (Scotland)

HC Deb 10 February 1982 vol 17 cc977-1029 3.48 pm

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

I beg to move,

That the Rate Support Grant (Scotland) Order 1982, a copy of which was laid before this House on 22 January, be approved.

In one sense at any rate the debate today on the rate support grant order will be something of a watershed in these events, of which I calculate that I have so far attended 19 in this House. Today we are able, for the first time that I can remember, to have a debate on the Floor of the House at a reasonable hour. If on nothing else, I think I shall carry the whole House with me in saying how grateful we are to my right hon. Friend the Leader of the House and all concerned for this change in the business. I wish I could assure you, Mr. Speaker, and the House that I can guarantee that this will happen every year. I fear that I cannot do that. All I can say is that, while this Administration are in office, we shall do our best to produce a better time for debate than has been the case in the past.

I should also like to reassure any hon. Member who may be worried that the debate is being held only a few weeks before authorities must fix their rates for 1982–83. Authorities have been given expenditure guidelines and provisional estimates of entitlement to the needs element of grant, as in previous years, but, provided that the House approves the order tonight, local authorities will receive the definitive circular only about five days later than they did last year. Little time has therefore been lost by postponing the debate. I believe that we have struck the right balance between having adequate time for debate at the right time of day and adequate notice to the local authorities concerned.

Like other right hon. and hon. Members I have received a copy of the letter that the Convention of Scottish Local Authorities has circulated to all hon. Members for the debate. I have read it carefully, as I am sure other hon. Members have. It makes a number of points and suggests lines along which the debate should go. I expect, therefore, quite fairly, to hear from Labour Members complaints that the Government are being impossibly hard in seeking to reduce local authority spending at all, or it may be that we shall be accused of not recognising the efforts that local authorities are making to economise in their spending, or indeed that the guidelines are unrealistic. I do not accept any of those charges.

For the time being, for the sake of this debate, let us put aside the idea of getting expenditure down to guidelines. Let us forget about guidelines and pretend that they do not exist. Let us look at the trend in the actual expenditure that local authorities have been incurring during the past three years against the background, by common consent, that the country has been going through an extremely difficult period of a major international recession, when the ability of many people and of many businesses to pay for all sorts of things has been declining severely.

Let us look at the trend in actual expenditure, which has nothing to do with guidelines or anything else. At constant prices, that is, allowing for inflation in all cases, expenditure for 1979–;80, the first of the three years, had increased by no less than 3.2 per cent. over 1978–79. So expenditure was increasing dramatically. This was followed by a further increase of 1.6 per cent. in the next year, 1980–81. In 1981–82 expenditure planned by authorities, even after allowance is made for the reductions which were enforced by selective action imposed by the Government, showed an increase of 0.2 per cent. All of those figures, without exception, show increases in real terms after inflation has been allowed for.

We are dealing, therefore, in spite of all that has been said or may be said, and whether we criticise the assumptions made of the guidelines or anything else, with a situation in which there have been no reductions at all. It is generally accepted, I think even by Labour Members, that we are facing considerable economic difficulties.

The right hon. Member for Glasgow, Craigton (Mr. Millan) and his colleagues were also faced with considerable difficulties in their grant settlement in 1977–78. At that time the right hon. Gentleman urged authorities to exercise stringent control over expenditure levels and to avoid increases in the immediately following years. He had not achieved that by the time he left office. Since then he seems to have been persuading local authorities not to pay attention to requests to keep down increases in expenditure. The levels of expenditure that I am asking authorities to reduce are still considerably above the level about which the right hon. Member for Craigton was speaking when he was in office.

Labour Members and some local authorities have frequently made the suggestion that the Government have been asking for the impossible in the levels of expenditure proposed in the last two rate support grant settlements. I must ask the House to reject firmly any such view, for which there is no evidence.

A number of authorities, including, for instance, Eastwood, Kyle and Carrick and Midlothian district council, have managed to cut expenditure by substantially more than the 4.5 per cent. proposed by the Government over the two year period in our calculations. Other authorities, including, for example—these are only examples—ssDumfries and Galloway regional council, Grampian regional council and Glasgow district council, have made significant reductions, while falling short of the full cuts pressed upon them by the Government. So suggestions that the Government asked for impossible cuts are groundless, as proved by those examples.

It is a question of the will of the authorities as to whether they are successful. I hope that all authorities will proceed in 1982–83 to make the adjustment commended by the Government in the national economic interest. It would be an act of great irresponsibility for anyone to encourage authorities to adopt a contrary approach by continuing to plan for growth or to maintain unreasonable levels of expenditure to the danger of the national economy on the one hand and the extreme distress of many of their ratepayers on the other hand.

I should also refer to the experience of ratepayers over the past three years ending in 1981–82. All rates have increased substantially. That has been partly due to the inflationary difficulties that have afflicted the economy at large, but the key to modest rate levels is expenditure, and it is expenditure which, as I have said, has actually been increasing during all this period. There is, however, clear evidence that ratepayers can be protected from excessive rate increases if the right policies are pursued. I have in mind particularly Grampian regional council whose rate increase over the three years at 61 per cent. has been the lowest of all regional councils in Scotland. On the other hand, no hon. Member will be surprised to hear that the authority showing the highest rate increase—at 155 per cent. —over the same period is Lothian regional council. This is an authority that has shown little regard for the difficulties of its domestic and non-domestic ratepayers. That is amply borne out by what has been said in public and what has been written to many hon. Members, including myself, over the last year.

I ask the House, therefore, to reject the view that swingeing rate increases are somehow inevitable or that they flow automatically from the terms of any rate support grant settlement, whoever makes it. The dominating factor in the experience of ratepayers and the increases that they suffer is the attitude of individual local authorities to spending policies. That is overwhelmingly borne out by what has been happening over the past few years.

Mr. J. Grimond (Orkney and Shetland)

I accept the view that local authorities should economise, but I would ask the Secretary of State, first, what rate of inflation he assumed when he set these limits for local authorities, and secondly, how far he has taken into account the position of different local authorities. My local authority in Shetland is in a rural area experiencing great difficulty and is rather peculiar in Scotland. Is that taken into consideration adequately in his proposals?

Mr. Younger

I appreciate the point made by the right hon. Gentleman. Taking the second half of his question first, I know that in Shetland circumstances have been exceptional over the last few years. It is impossible to fit that authority into a normal pattern. Yes, it gets considerable help and assistance in many ways in the rate support grant settlement. This reflects, as best it can, the peculiar circumstances of Shetland. On inflation factors, as the right hon. Gentleman will know, we have made clear the figures that we allow, which are basically 4 per cent. for the wages component and 9 per cent. for the prices component. Those are the figures that are allowed in the rate support grant settlement and that are notified to local authorities.

Mr. Grimond

Surely the Government themselves have been endorsing wage settlements under their own control far above 4 per cent.

Mr. Younger

Of course, these are averages, as the right hon. Gentleman will appreciate. Some people will find themselves getting increases above the average, some below the average and some on the average. That is the way it works. May I add one thing. If it is the experience, as indeed it is, of local authorities that some of the calculations made for inflation cannot be applied directly to individual transactions, that is exactly the same position that all private firms and businesses are in every year. They must make an assessment. If the assessment turns out to be wrong, they must make reductions in their spending to compensate. There is nothing new about that, except for local authorities, which in the past have been insulated from those pressures to a great extent, as has central Government.

There is widespread speculation about rate levels in 1982–83. Decisions have still to be taken by authorities, but it seems likely that the pattern will differ from that in recent years. I have seen reports, for example, that the Lothian increase may be very low and that in other regions the increase will be a good deal higher. If that proves to be true it will be extremely interesting, because it will go to show how directly and clearly helpful were the actions that I took in 1981–82 to reduce the expenditure level of Lothian region. Indeed, in 1982–83, if it turns out to be true—we do not yet know—Lothian ratepayers will see a direct and indentifiable benefit. The message, which is clearly underlined, is that the level of expenditure is the main determining matter.

Mr. Gordon Wilson (Dundee, East)

Does the Secretary of State accept that there is a converse of that? If Lothian region is limited by the Government's policies, how does the right hon. Gentleman describe the position of Tayside and Grampian regions, which voluntarily cut their costs below the level that most people would accept, were thanked by the Government for so doing, but now must face extraordinarily large rate increases?

Mr. Younger

Lothian has so far not done what I said might happen. One hopes that it may, but that has still to be proved.

I am coming to the effect on other authorities, which is a very important matter. The trend of expenditure over a number of years shows a clear message coming out of the conduct of authorities. Tayside is a very good example of an authority that has tried very hard and has been quite successful.

Mr. Gavin Strang (Edinburgh, East)

The right hon. Gentleman has now referred twice at considerable length to the position of Lothian region, a region to which lie is opposed because it provides a high level of service, particularly in education. Great concern is felt in Lothian at present, extending beyond the Labour movement, that even if the regional council fixed an increase in rates 'well below the average increase this year for all the Scottish regions the Scottish Office might still penalise it, as it did last year, by retrospectively deducting a sum of money from central Government support. Can the Secretary of State give us an assurance that he will not pursue the sort of vendetta that some of us fear, particularly if our rate increase is much lower than increases elsewhere?

Mr. Younger

Most of that intervention was not correct. I have no objection to Lothian regional council providing services as best it can. What I object to is its expenditure being excessive. Calculations that one can make from outside suggest to me that the council should be thinking about making a rates reduction, because £30 million was taken off its expenditure last year. If it did that, there would be no effect either way on what I did or did not do with regard to imposing a grant penalty on the council this year.

I very much hope that I shall not even have to contemplate such a thing. If I did, I would not impose the penalty unless I presented an order to the House and the House approved it, which it would do only if the council could be demonstrated to be incurring excessive and unreasonable expenditure. I very much hope that I shall not have to contemplate any such action against any local authority, including Lothian region, and that the hon. Gentleman will agree with me about that, anyway.

Mr. Dennis Canavan (West Stirlingshire)

The right hon. Gentleman must be aware that his right hon. Friend the mace bearer of the Tory Party, the Secretary of State for the Environment, has ditched the proposals to cut any local authority's rate support grant during the course of the financial year. Will the Secretary of State for Scotland follow suit, instead of doing what he did last year to the likes of Lothian, Stirling, Dundee and Renfrew? It would be very unfair if the Government adopted punitive measures against Scottish local authorities when that action cannot be copied south of the border.

Mr. Younger

The English system of local government finance is totally different. It does not apply in the way that the hon. Gentleman said. Even if it did, I, unlike him, would not automatically follow whatever the English did. I run the matter according to Scottish needs and in the Scottish manner. I thought that that was the best way.

Mr. Michael Ancram (Edinburgh, South)

My right hon. Friend told the House that he hoped that there would be only a small percentage rise in the Lothian rates this year. Does he accept that, because the rates have gone up by one and a half times over the past three years, it will be a small percentage—if it happens—of a much larger amount than most ratepayers are being asked to bear in other parts of Scotland?

Mr. Younger

I agree with my hon. Friend. The level of rates is just as important as the increase or decrease. My hon. Friend is right about that very important point. If there is a decrease in Lothian, I hope that it will at least show what the effects of expenditure are. Lothian's level of expenditure is an important matter, because the rate poundage this year, at 112p, is the highest of any region. It contrasts with Strathclyde and Highland regions' 80p and Grampian's 66p. The point that I am making is that the actual rate poundage levels as well as the percentage increases must be seen together in order to understand the effect on individual ratepayers.

The year 1980–81 was the first full year in which authorities had the opportunity to respond to the necessity for expenditure restraint. Regrettably, their expenditure in that year was nearly £70 million more than was allowed for in the rate support grant settlement, despite assurances that I received from the Convention of Scottish Local Authorities that the excess would in the outturn be much lower than that. I took CoSLA at its word. I accepted its calculations, and on the basis of its assurances decided not to impose a reduction in grant within that financial year, which—the hon. Member for West Stirlingshire (Mr. Canavan) will be interested to know—was something that the English did then. I did not, because CoSLA advised me that it probably would not be necessary.

That was a mistake. I should not have listened to what the convention said. I should not have taken its advice, because in the outturn the overspend was just as large as it had originally looked as if it would be. Therefore, I must now remove grant from the authorities to a total of £50 million, against an overspend of £70 million.

I know that that decision has caused concern among local authorities, but I believe that the House will accept that it would hardly be right for them to be exempt from a grant penalty similar to one imposed elsewhere simply because they made an inaccurate forecast of their expenditure. That would not be fair to anyone.

Local authority budgets in 1981–82 indicated that the authorities were planning to spend no less than £180 million above the Government's planning figure—no small amount. I informed the House last June that I proposed—with considerable moderation, I thought—to withhold only £100 million of grant, as against the £180 million overspend. The convention made representations to me, to which I listened very carefully, and in the event I announced last December that I would withhold only £58 million.

Thanks to the action that I took under the Local Government (Miscellaneous Provisions) (Scotland) Act 1981, £31 million of that total is being withheld selectively from certain authorities which planned particularly high levels of expenditure, leaving £27 million to be withheld across the board. That amount, difficult though it no doubt is for some authorities, is a small proportion of the original overspend of £180 million. I do not think that anyone, given the circumstances, could regard that as being in any way unreasonable.

I make no secret of the fact that the convention and a number of individual authorities have expressed serious concern about the distribution of these overall grant penalties through the grant distribution formula embodied in the relevant rate support grant order. I accept that there is an element of rough justice in that approach because the scale of the individual grant reduction cannot be precisely related to the level of planned expenditure. An overall grant penalty has to be imposed in one way or another. The right hon. Member for Craigton, in 1977, and I, in the proposals at present before the House, have chosen to do this on the basis of the established distribution formula. If authorities generally, and hon. Gentlemen do not like this, they should accept the responsibility for identifying some preferred alternative course. There is no alternative under present legislation to distributing a general grant reduction through the distribution formula, but I would be very willing to consider any proposals made in the course of the debate, or at any other time, or put to me by authorities, to adopt a different approach that commanded wide support.

One possible alternative would be to distribute the amount of grant withheld pro rata to the excess shown by individual budgets over the authority's guideline. Authorities may well argue that this would place undue weight on guideline figures which hitherto have been. treated as no more than indicative, but authorities cannot have it both ways, and I am very open to suggestions on this from hon. Members or from CoSLA.

Mr. Robert Maclennan (Caithness and Sutherland)

If the right hon. Gentleman is prepared to admit, and has admitted, that the arrangement is inequitable, why has he not brought proposals before the House about how to deal with this inequity? He has not shown himself slow to bring legislation before the House to deal with other matters affecting local government finance and the House has been asked to act very quickly, and no doubt it could do so again.

Mr. Younger

The hon. Gentleman ought perhaps to have thought that through before he said it because this Government have done something about this at long last. I believe that the hon. Gentleman—;I am not sure which party he was in at the time—voted against the only effort that has been made to do something about it. The effect of the 1981 Act was greatly to lessen this admittedly unfortunate effect of the across—the—board reduction working unfairly against individual authorities. So to that extent I have moved in the direction of the hon. Gentleman and I am sorry that he did not feel able to support this in the House.

I turn now to the issue of manpower. Staffing levels and expenditure are inseparable and reductions in the latter cannot be achieved without saving in staff costs, which account for nearly 70 per cent. of total local authority current expenditure. Many local authorities protest that they are anxious to contain expenditure, yet they have avoided committing themselves to a systematic attempt to reduce staffing levels. I know this in not easy, but it is not easy either for ratepayers to pay the wages of employees who may be surplus to requirements.

Of course some authorities have tried hard and conscientiously to cut out extravagance, to seek value for money and especially to contain and reduce manpower. I recognise that and I commend those authorities. Ratepayers will be better able to judge their authorities' performance under the new Joint Manpower Watch arrangement, which publishes manpower details for individual authorities as well as total figures for different groups. This was done for the first time last month when the figures for September 1981 were published.

That was almost the only heartening thing about the 1981 figures. It is true that the numbers have begun to drop and that this is a step in the right direction, but a great deal more needs to be done. As a whole, local authorities are still employing about 11,000, or nearly 5 per cent., more people than they did in December 1977. Moreover, the small reductions achieved in the past year are almost entirely a product of significant reductions in the number of teachers and lecturers, because of falling school rolls, and in the number of manual workers, which fell by 3 per cent. during the year. The number of other staff actually increased by about 1 per cent. over the year from September 1980 to 1981.

By contrast, in England, south of the border—so beloved of the hon. Member for West Stirlingshire—reductions have not been speedy but they have been steady and the total employed has fallen almost every quarter since we took office. I am not asking local authorities to do something that I am not doing in the Scottish Office. Since we took office, the staff of the Scottish Office has fallen from 11,156 at 1 May 1979 to 10,545 at 1 February this year. When account is taken of the transfer of staff to and from other Departments, which produces a net addition to the Scottish Office of over 100, the total reduction is about 700 staff, or about 6 per cent. This reduction has been achieved despite the fact that the staff of the prison service and the State hospital has been allowed to grow by about 180, these areas being exempt from staffing reductions.

In effect, this means that the rest of the Scottish Office has already lost over 10 per cent. of its staff, and further reductions are planned. By 1 April 1983 the reduction in the Scottish Office, including on this occasion the prison service and the State hospital, will be just under 9 per cent. So no one can say that I am preaching to others what I do not myself practise. Until local authorities begin to tackle positively the problems of reducing the pay roll they cannot hope to reduce expenditure. The policy in many areas of maintaining employment at all costs inevitably means that the amount of money available for expenditure on services and items other than staff salaries, not to mention the ratepayers, gets squeezed disproportionately.

As I told the House a moment ago, Scottish local authorities are employing nearly 5 per cent. more staff than they did in 1977. It would be a telling criticism of my request to them to get back to lower staffing levels if we could say that there was such an abysmally low standard of service in 1977 under the Labour Party that it was unacceptable. Nobody can honestly say that. Of course the level of services provided in 1977 was not unacceptably low. Surely authorities could return at least to those manning levels or something near them without the catastrophe that some are so ready to predict. I do not accept the argument that local authorities have had to increase their staff solely to cope with new statutory duties. Substantial discretion is given to authorities in the discharge of their statutory functions, most of which rests not on recent legislation but on statutes dating from well before local government reorganisation. Yet numbers have increased by about 100,000 staff, or 50 per cent. over the last 10–15 years within more or less the same statutory framework.

I turn now to my proposals for expenditure arid grant for 1982–83. I begin by drawing to the attention of the House a fundamental change in the basis of determining the expenditure figure for grant purposes. In previous RSG settlements grant was initially calculated on an expenditure figure expressed: in terms of prices prevailing in the November prior to the grant year. It was then the practice to make available additional grant, subject to a predetermined cash limit, on cost and price changes occurring after November.

My right hon. and learned Friend the Chancellor of the Exchequer announced in his Budget speech on 10 March 1981 that from 1982–83 the Government would conduct their expenditure plans on the basis of cash instead of volume. As a result, the relevant expenditure figure for grant purposes has been assessed on the basis of 1982–83 cash prices using the principal assumptions that pay awards will average 4 per cent. and prices will increase on average by 9 per cent. between 1981–82 and 1982–83. Thus the order for which I am seeking approval provides for a total figure of grant that will be increased only in the event of a rise in interest rates affecting loan charges. The concept of a main order followed by an increase order will no longer apply. Local authorities have been given full notice of the Government's intentions and it has been made clear to them that they must make their spending plans accordingly.

This discipline that I am asking authorities to accept is one long familiar to the private sector of the economy and to every private individual in daily life. In framing their budgets they should plan for a prudent level of expenditure in cash terms and then ensure that the costs of the services that they provide are kept within that cash figure. 1 accept that this is not easy because it implies that in particular circumstances some reduction might have to be made in some elements of the service if money runs out. Nevertheless, I ask the House to accept that the difficulties will be much less than those which arose from the previous approach, under which local government sought to maintain a predetermined standard of service irrespective of the scale of cost increases affecting local government expenditure.

I urge local authorities, therefore, to plan for expenditure in conformity with the assumptions made in the settlement. Current expenditure guidelines have been issued to all authorities as an aid to sensible budgeting in line with the settlement and they allow for an adequate standard of service, but the target I have set will mean significant reductions in the level of expenditure that authorities have planned for the current year. Any authority that has failed to exercise reasonable restraint in the current financial year will inevitably face a more difficult task in reducing expenditure in 1982–83.

Mr. Bruce Millan (Glasgow, Craigton)

What will the average reduction next year have to be compared with the current year's budget?

Mr. Younger

We shall consider that when the time comes, but at this stage we are not forecasting what will happen. However, we know what the forecasts are and the figures with which we shall have to deal.

Setting priorities within local circumstances is one of the main tasks of local government. Exactly the same problem must be met in placing any public expenditure programme. We must find ways of protecting those things that are essential in priority and use the money available to concentrate on them. If authorities plan for expenditure significantly above the levels commended to them in the grant settlement I shall not hesitate to use the full range of statutory powers available to me. We took resolute and effective action last year. If necessary, that can be repeated, but I very much hope—I am sure it is the hope of everyone—that it will not have to be.

The rate of grant for 1982–83 is 64.2 per cent. —2–5 percentage points lower than for 1981–82. The effect of this reduction on rate-borne expenditure will be the same as the effect of the 3.1 per cent. reduction to be made in England. I have no doubt that hon. Members will complain about this reduction, but I remind them that the right hon. Member for Craigton and those who supported him did very much the same thing in 1977–78, when the grant was cut by no less than 4 percentage points—from 72.5 per cent. to 68.5 per cent. That was at the time of the 1977–78 grant settlement.

In an article he wrote in The Scotsman not long ago, the right hon. Gentleman told us that he thought a legitimate weapon for the Government to use in persuading local authorities to reduce spending was a reduction in the rate of grant. He was right to say that, having done it himself. In case it is suggested, as I think the right hon. Gentleman did on the last occasion, that this was a technicality and was not to do with reduced expenditure—he said in the House that it was to do with local government reform—I have with me the report on the rate support grant order for 1976. That document was produced by the right hon. Gentleman, and in paragraph 19 on page 7 he makes his position quite clear. It states: Local authorities have been advised by Circular that it was the intention of the Secretary of State to reinforce the Government's public expenditure policy by reducing in real terms the financial resources which local authorities would receive from the Government in 1977–78 by setting the percentage of relevant expenditure for that year below that for 1976–77". That was below by 4 per cent. Therefore, do not let us have any more complaints about the reduction in the rate of grant—a perfectly legitimate thing to do. Labour Members will have their work cut out if they want to make anything of that.

I propose to change the arrangements for the distribution of grant in only minor respects from those adopted in earlier years. The domestic rate reduction will remain at 3p in the pound, and the scheme for special assistance to authorities affected by oil developments will continue with payment of £ 17 million in respect of an initial calculation for 1982–83 and a further calculation for 1978–79. The amount of resources element will be increased by about a quarter, and that goes some way to meet the views of the convention in order to improve the equalisation of local rating resources.

Needs element of £3.9 million will be distributed among regional and islands councils in accordance with the incidence of youth unemployment in their areas. This is to enable them to enrol more 16-to-18-year-old students in full-time vocational further education courses. The general portion of the needs element—by far the largest part of the grant—will be distributed on the population formula prescribed in schedules 3 to 5 to the order.

The additional assistance for Islands areas is also continued. For the first time, I have thought it right to take some account of the widely differing circumstances in the Western Isles on the one hand and Shetland and Orkney on the other. I am aware of the problems created for the northern isles by oil developments, but these have resulted in local rating resources in excess of those available to other authorities.

Grant support to Orkney and Shetland will therefore be slightly lower than in previous years—for Shetland, £397 per head and for Orkney, £388 per head. These figures are well above the average figure of £320 per head for regions inclusive of districts. I have provided for an increase of about £13 per head to the Western Isles in recognition of its problems.

Let me summarise the main points. First, if the House approves the order, local authorities are being provided with resources from the Government that will enable them to maintain services at an adequate level, but they must reduce their expenditure as a whole. Some have proved that they can do so. Others can now do so and I hope that they will.

Secondly, I hope that they will heed the advice that I have given them since 1979 to reduce their staffing levels, which are still much higher than they ought to be. I am not asking them to do anything that private industry, other local authorities and the Scottish Office are not having to do.

Thirdly, by importing the principles of cash planning, this grant settlement invites authorities to recognise, and take account of, the economic reality and discipline that the private and public sectors must observe, do observe and have observed for years.

Fourthly, ratepayers, whether domestic, industrial or commercial, must recognise that the Government's firm intention is to help them by encouraging local authorities to reverse the trend of expenditure which, as I have demonstrated, has been ever upwards in recent years. As a result of that, local authorities must moderate increases in rates, which it is clearly demonstrated follow reductions in expenditure.

On those bases I commend the order for approval by the House. It is in the interests of every ratepayer in Scotland that local authorities should pay close heed to the need to reduce their expenditure accordingly.

4.27 pm

Mr. Bruce Millan (Glasgow, Craigton)

I begin by saying something agreeable, after which I shall say very little that is agreeable. I acknowledge the help given by the Government so that we could have this debate at this time. The same can be said of the housing support grant debate that will take place later today. I hope that by mutual agreement we shall be able to divide the time so that we may have a reasonable debate on each of these important subjects. If this arrangement works satisfactorily, I hope that it will become the pattern for the future. It is a welcome change, and at least on that score the Government deserve our thanks.

I am afraid that the Government do not deserve our thanks on anything else. This debate is being held against a background of local authority bitterness and anger about the way in which they have been treated by the Government. That treatment is unknown in local government—central Government relationships in Scotland. Anyone present at the meeting that Labour Members had this morning with a deputation from CoSLA can affirm and attest that there is considerable anger amoung local authorities, even among traditional Government supporters, about the way in which they have been treated. That anger is not just about the merits of the order but about the fact that under this Government negotiations have become an absolute farce.

As one of the representatives said this morning, "The Government pronounce what they will do and there are no genuine negotiations at all". Indeed, the main elements of the order were announced on 2 December, on the day of the public expenditure statement by the Chancellor of the Exchequer in the House, a full fortnight before the meeting with the local authorities that was meant to settle these matters.

Let us be under no misapprehension. There is considerable concern among local authorities about the way in which they have been treated by the Government. It is no exaggeration to say that there is a crisis of confidence.

The two questions that ratepayers ask about rate support grant settlements, without going into the technicalities, as I shall inevitably have to do in a minute, are, how much will their rates go up in 1982–83, and who is responsible for the increases that they shall have to pay? The answer to the first question is that the rates will go up considerably. I shall later say something about what I think the figure will be, unlike the Secretary of State, who is always apprehensive about giving an estimate or any information. Secondly, the reason for the increases will lie fairly and squarely on the Government and not on the local authorities, which, by and large, have tried manfully, in the difficult circumstances of recent years, to behave responsibly towards their ratepayers, and to act with regard to the national economic situation.

I want, as I have done in earlier debates on RSG orders, to run through the various elements which will contribute to the considerable increase in rates that we shall have in 1982–83. The Government have repeatedly said that I was scaremongering, and that the increases would be modest. The estimates that I have given have always been on the low side and I do not intend to exaggerate today because the position is disastrous enough for both local authorities and their unfortunate ratepayers.

Ratepayers will have to pay a penalty for 1980–81. The Secretary of State for Scotland explained to us today why he is imposing that penalty. He said that in 1980–81 there was excessive expenditure of £70 million—that is, excessive in terms of the Secretary of State's assessment of what is excessive. Some of us do not accept that it is excessive at all. What he did not say was that CoSLA has produced, in the document that has come to the Opposition and to the Secretary of State, reasons why some of that socalled excess was not because of extravagance by local authorities but for legitimate reasons. Whether or not these reasons are valid, the Secretary of State, neither today nor in his negotiations with the local authorities, has attempted to answer the points made by CoSLA about the so-called excessive expenditure in 1980–81.

CoSLA demonstrated, to its own satisfaction and to the satisfaction of many Labour Members, that the real so—called excess is much more likely to be £35 million than £70 million. That is a matter for argument, but we have not heard any argument from the Secretary of State, who simply said that no attention should be paid to CoSLA representations and that the Government have said that the excess was £70 million, of which £50 million will be imposed as a penalty.

It does not matter how the £50 million is distributed. It can be done over three years, as the Secretary of State is doing, but apart from the whole process being objectionable in principle—we object in principle to this kind of retrospective adjustment—the whole of that £50 million will fall on the Scottish ratepayer in 1982–83 and will add to the considerable rate increases in that year.

There is also the question of 1981–82 and the penalty that is being imposed on the local authorities for the current financial year. The Secretary of State has fairly pointed out that some of that penalty has been imposed as an individual penalty on particular local authorities such as Lothian. However, we remember that when the Bill was passing through the House, giving power to the Secretary of State to do that, one of the great arguments for the power was that all the good authorities—good according to the Secretary of State—would not have to worry because they would not be punished in any way.

However, a £27 million penalty for 1981–82 is being imposed on every local authority in Scotland whether or not it has met the Government's so—called guidelines. [Interruption.] The £27 million will be imposed as a general penalty on local authorities in Scotland, despite the Secretary of State's boast. [Interruption.] I shall come to the six authorities a little later.

Mr. Grimond

I noticed that when the right hon. Gentleman said that the £27 million was being inflicted on local authorities whether or not they abided by the Government guidelines, the Secretary of State— [Interruption.] The Secretary of State is now shaking his head, but he was nodding before. I understand than this is an across—the—board penalty, regardless of whether the local authorities in question exceeded the expenditure guidelines.

Mr. Millan

I was coming to the effect of the guidelines in the current year. The Secretary of State told us that they were realistic—but they were so realistic that 59 out of 65 local authorities in Scotland budgeted well in excess of them. Admittedly the other six had a refund made to them, so they will not suffer the penalty. The refund is of £700,000 out of a penalty of £27 million. [Interruption.]>The Secretary of State is now agreeing with me.

Local authorities have attempted to meet the Secretary of State's wishes but have not been able to do so because the figures were unrealistic. They are being penalised by the £27 million penalty, which is a general penalty for local authorities in Scotland. We have objected to that in principle, but, apart from that, that penalty will go straight on the rates for 1982–83. That is another element in the large increases which ratepayers in Scotland will be paying in 1982–83.

There is another exceptional item which I shall mention for the sake of completeness. Because of industrial valuation appeals in Fife, local authorities will be faced with repayments of rates of about £24.7 million in the current year. In those circumstances, there is a case for the Government to make some rates contribution or take account of the reduction in rates. The Government have refused, just as they have refused so far—and this will interest the right hon. Member for Orkney and Shetland (Mr. Grimond)—to give a pledge that when there are reductions in rates arising from clause 3 of the Bill going through the House at the moment because of the change in valuation proceedings and oil installations they will make a contribution to local authorities for these items.

We have been told by the Government that it is extremely unlikely that they will make a contribution. In any case, we shall have to wait and see, although with no great optimism. However the £24.7 million will fall on the ratepayers in 1982–83, with the Government making no contribution. That is another part of the burden that will fall on the ratepayers and contribute to the large increases that we shall have in 1982–83. Presumably that cannot be blamed on local authority extravagance. A valuation appeal which goes against a local authority, whatever else it is, is not extravagance. However, the ratepayers will pay.

When we come to 1982–83 and the settlement with which we are concerned, we see the enormity of what will happen to ratepayers in Scotland. There are a number of elements in this. First, local authorities, like everybody else, are affected by the inflation rates, which are higher than the Government were originally estimating, and higher than was being provided for in the order. Secondly, there is the cut in grants from 66.7 per cent. to 64.2 per cent., a reduction of 2½ per cent. The Government cannot pretend that that does not have an effect on ratepayers.

Mr. Younger

What about the 4 per cent?

Mr. Millan

I will come to the 4 per cent. in a minute.

One thing about the Secretary of State is that he is predictable. If he includes what he thinks is a good point in his speech in one year, he repeats it every year thereafter.

Mr. George Foulkes (South Ayrshire)

The Secretary of State is short of civil servants.

Mr. Millan

Having listened to the Secretary of State today, I can say that if he wants to make further reductions in the Civil Service in Scotland he should sack his speech writer. The 2.5 per cent. cut in grants means about 8 per cent. on rates. I do not think that the Secretary of State will question that figure.

The grant was reduced by 4 per cent. in 1977–78, but the Secretary of State always forgets to tell us of the background to that reduction and what happened in the years before. In 1974–75, the last year for which the then Tory Government were responsible, the rate of grant was 68 per cent. The Labout Government, who were elected in 1974, increased the rate of grant for the next two years by no fewer than seven points, from 68 per cent. to 75 per cent. In the following year it was 74 per cent. The increase was related to the special expenses being borne by local authorities during reorganisation. For that reason among others the 4 per cent. reduction was made in 1977–78. It was made, in any case, against a background of increased expenditure, in real terms; of no less than 20 per cent. by local authorities over the previous two years. That is entirely different from the present situation. Obviously no Government could have allowed it to continue.

Mr. Younger

How does the right hon. Gentleman's remark square with his own words when he said that the change in grant was the result of the intention of the Secretary of State"— that was the right hon, Member for Glasgow, Craigton (Mr. Millan)— to reinforce the Government's public expenditure policy by reducing in real terms the financial resources which local authorities would receive from the Government". That was his own explanation.

Mr. Millan

I have just said that. In the two years prior to 1977–78, expenditure by local authorities on revenue account increased in real terms by 20 per cent. That situation could not be allowed to continue under any Government. I stand by what happened then. Even when the figure was reduced by 4 per cent., it was, in equivalent terms, still 2 per cent. higher than it has been under the Tory Government in 1973–74 and 1974–75.

I turn now from the cut in grant which will add to the burden on ratepayers in 1982–83 to the relevant expenditure on which grant has been calculated. The Secretary of State gave the impression this afternoon that the relevant expenditure on which the Government are paying grant is perfectly reasonable. It is easy for local authorities, he suggested, to reduce their expenditure to the level for which the Secretary of State is asking. However, when I asked him what that meant in reductions compared with the budgets and the likely outturn in the current year, he said that we must wait and see. He said that we would know about it later.

We can know about it now. All the facts are on the record. Of course, we do not hear such interesting pieces of information from the Secretary of State. The figures come from CoSLA. If the figures are wrong, the Secretary of State will no doubt correct them. CoSLA has calculated what it will need in 1982–83 if its budgets are frozen at the 1981–82 level, if it takes account of real increases in inflation up to November 1981 and if, from November 1981 to the end of 1982–83, it acts on the Government's wholly unrealistic inflation assumptions of 4 per cent. for wages and 9 per cent. for other expenditure.

Even acting on those assumptions, CoSLA calculates—I believe accurately—that standstill budgets in 1982–83 would require budgets which are 6.3 per cent. higher than the cash limit which the Secretary of State is setting down for 1982–83 and on which he is paying rate support grant. It is nonsense for the Secretary of State to claim that local authorities can get down to the budget figures on which he is paying grant in 1982–83. Even if there was a freeze, and even using these unrealistic inflation figures it would mean budgets 6.3 per cent. higher than those for which the Secretary of State has provided.

The Secretary of State did not answer my question this afternoon. I am not sure whether he does not know the answer or whether he simply chooses, for his own reasons, not to answer. I asked the same question on the Second Reading of the Local Government and Planning (Scotland) Bill on 7 December. The right hon. Gentleman said that hon. Members would have to wait for this debate to hear the answer. However, this afternoon he did not give the answer. He always claims that he is doing well for Scotland compared with what is achieved by his English colleagues south of the border. The figure given by the Secretary of State for the Environment for the real reduction in expenditure that he expects in 1982–83 to get down to his figures was not 6.3 per cent., but, on the basis that I have quoted, only 4 per cent. The Secretary of State for Scotland is therefore asking for a bigger reduction in local authority expenditure in 1982–83 than is being requested of local authorities in England, which will not reach the figures either.

It is nonsense and hypocrisy to pretend that local authorities in Scotland can get down to these cash figures in 1982–83. The Secretary of State knows very well that this will not happen. He also knows that the additional burden that then arises will be borne by the ratepayers. It will be added to the large increases to which I have already referred for 1982–83.

Only six out of 65 authorities have come within the guidelines for the current year, 1981–82, that, according to the Secretary of State were so realistic. The other 59 budgeted for more and, in some cases, considerably more. Now that the guidelines are available for 1982–83, there is not a chance that anything like a majority or, for that matter, even a small number of local authorities in Scotland will be able to meet those guidelines. I forecast now that the guidelines will be breached by virtually every local authority in Scotland. The guidelines are no longer an indicator to local authorities. The Secretary of State is using them as the basis on which he imposes penalties on individual local authorities. At the same time, he refuses to give local authorities full information on how the guidlines are made up.

The local authorities have asked for figures showing how the individual guidelines of particular authorities, service by service, are made up. The figures must be available in the Scottish Office. If there is a wish for open government, why cannot they be supplied to local authorities? It would be an incentive to them. They would know what they have to do to meet the Secretary of State's wishes.

Whether or not he gives the information, the fact is that the Secretary of State is using the guidelines in a mandatory way. Yet he knows, as does the Under-Secretary of State, that there is not a chance of local authorities being able to get expenditure down to the level of these guidelines even if inflation turns out to be what the Secretary of State estimates. It is nonsense. To allow 4 per cent. for wages and salaries and 9 per cent. for other services would mean an average rate of inflation of 5½ per cent. a year. Even the most optimistic Government supporter does not believe that the average rate of inflation will come down to 5 or 5½ per cent. a year for local authorities in 1982–83.

The figure has already been exploded. The manual workers' settlement will already have cost local authorities £13 million in the current year in excess of the 4 per cent. provision. Expenditure relating to the police and firemen and a whole range of other services, including the teachers, have still to come. The Government know that they will not achieve the inflation figure for 1982–83 for which the order provides.

There is nothing unusual about this situation. It happened last year. The Government provided what they called realistic figures for inflation. The Opposition argued that these would not be achieved. What was the outcome? In 1981–82, the current year, the Secretary of State provided for average inflation figures on Government assumptions of 7.3 per cent. This would have meant total inflation expenditure of £150 million. We are talking not about speculation but about what has happened this year. The inflation rate has been not 7.3 per cent. but 10.5 per cent. The total expenditure has been not £1:50 million but £225 million. All that additional expenditure falls on the ratepayers and the Government do not pay their part.

It is no wonder that the local authorities do not trust the Secretary of State or that they are bitter about the way in which they have been treated, because it was known when the figures were put forward in last year's orders that they are phoney, just as we know that this year's figures are equally phoney and a confidence trick played on the local authorities. More importantly, they are an attempted confidence trick on the Scottish ratepayers, who must pick up the tab.

The result is that there will be a considerable increase in rates in 1982–83. The position is more uncertain this year than before because of the way in which the Government have changed the basis for the settlement. However, I should be astonished if the overall increase lin rates in 1982–83 is not over 20 per cent. or 25 per cent. I stand by that figure. That will be added to increases during the past two years, under a Government who always say how concerned they are about the ratepayers, of no less than 32 per cent. and 36 per cent. successively. If we have another 20 per cent. or 25 per cent. on top of that, it will mean that Scottish rates will have more than doubled under the munificence of a Government who profess to have concern for the ratepayers.

Even the good boys, about whom the Secretary of State is always talking, are in difficulties. As we saw in the newspapers recently, Grampian regional authority forecasts a 21 per cent. increase. The Secretary of State also mentioned Eastwood. I wish that he had heard what the representative of Eastwood district council said about the Scottish Office at our meeting with CoSLA this morning. If he believes that he has a friend in Eastwood, he could not be more mistaken. Although it is a good Conservative authority, it, like every other authority in Scotland, is being treated badly by the Government. We shall have major increases in rates next year and poorer services.

It is especially offensive that, at a time when there are 347,000 people unemployed in Scotland, the Secretary of State comes to the House and boasts about how he has forced local authorities to put more people on the dole. That is what he is attempting to do.

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

Will the right hon. Gentleman give way?

Mr. Millan

The Under-Secretary of State will have plenty of time to make his speech later. The Secretary of State took about 40 minutes to make his speech. I do not wish to do the same.

Of course the ratepayers will suffer in 1982–83, as they have suffered during the past two years under the Government. Opposition Members have every sympathy with them and with the industrial ratepayers. The Government have been clobbering industry, because the 347,000 unemployed represent industries and factories that have closed down or that are on the brink of bankruptcy. They are suffering from the Government's high rate policy, just as the domestic ratepayers are suffering. However, they should take their complaints not to the unfortunate local authorities but to the man responsible—the Secretary of State for Scotland. Because he has let down the local authorities and ratepayers, and has penalised every ratepayer in Scotland, we shall vote against the order tonight.

4.54 pm

Sir Hector Monro (Dumfries)

We have rarely seen a horse running more true to form then we have witnessed in the past half—hour. The right hon. Member for Glasgow, Craigton (Mr. Millan) seemed to tell the House that when he was Secretary of State in the late 1970s everything was sweetness and light and that the rate support grant order went through without argument. I seem to remember furious and critical debates on the rate support grant and the right hon. Gentleman's parsimonious attitude to local authorities. I am surprised that he can trump up such an approach this afternoon. I know that he has been boosted by all sorts of lobbies this morning. He had to make a show of listening to them and accepting everything that they said, but it is sad that a man of his standing in the House. should be so critical when he has no reason to be so.

The restriction of public expenditure by Government, local authorities and nationalised industries is right. It is the key, coupled with reasonable wage awards, to the reduction of inflation and the road back to better employment figures. There is no Government money and no local authority money. The money about which we are talking comes from the taxpayers and the ratepayers. Therefore, we have every right to expect a high standard of housekeeping and prudent expenditure, which is efficiently and economically carried out. Of course the ratepayers are hard pushed. They have high bills for heat, light and power and when the rate demands arrive they say that enough is enough. The rates are a severe burden on shopkeepers, small businesses and on every individual.

Mr. John Home Robertson (Berwick and East Lothian)

Why cut the rate support grant?

Sir Hector Monro

The hon. Member for Berwick and East Lothian (Mr. Home Robertson) is the most frequent sedentary interrupter that I have ever known. We look forward to hearing something constructive from him later in the debate, but I must not be over-optimistic.

Mr. Home Robertson

If the hon. Gentleman does not like sedentary interruptions, perhaps he will listen to the point that I made. If he is not in favour of rates increases, why does he support the Secretary of State in cutting the rate support grant? He cannot have it both ways.

Sir Hector Monro

I would have thought that the hon. Gentleman came to the debate to listen to the arguments. So far I have not said anything about the rate support grant.

We sympathise with local councillors. I was one for 15 years and I know the extreme difficulty of balancing the books in the light of the rate support grant. I know how frustrating it is to have to put to one side plans that one has envisaged being fulfilled by now and realising that it is not the correct policy in terms of public expenditure. However, the Government should react to the ratepayers in trying to bring home to the spendthrift authorities, which do not include Dumfries and Galloway, the necessity of keeping expenditure under control. The ratepayers have every right to be incensed about high—spending local authorities.

Opponents of my party speak about Government cuts, often in press headlines. Government expenditure is higher in real terms today than ever before and no cut has been made, even allowing for inflation. The cuts about which we talk are cuts in projected expenditure that were optimistic when they were forecast and prepared some years ago. The Secretary of State set a target of bringing back expenditure to 1978 figures, in real terms but said that he and those of us who believe in reducing public expenditure, did not believe we had achieved it. Every year since 1978 more and more has been spent by local authorities.

As my right hon. Friend said, the Government have set a fine example of manpower. The Scottish Office has made a substantial reduction in its staff. In the areas where reductions have been made, they have been as high as 10 per cent. since June 1979. However, local authorities have increased their staff. I accept that during that period and for longer beforehand they have had some additional responsibility.

It is right that the figures should be emphasised time and again. The figures for full—time equivalents show that in June 1978 248,000 people were employed by local authorities; in June 1979, there were 256,000; in June 1980 there were 260,000 and in June 1981 there were 260,000. I am glad to hear that there was a slight reduction in those figures by September last year. Basically, over that period the number of local authority full time equivalent employees had increased by 12,000. Even the figures in the good authorities have remained static.

The Government have every right to praise authorities that have kept within the guidelines—I am glad that they have done so—and to repay the clawback where that is appropriate. I am glad that my area has benefited from that. In 1981–82 Dumfries and Galloway was paid back £589,000. Nithsdale and Annandale and Eskdale received a windfall of £130,000 and £110,000 respectively. That is good news for local authorities which try to keep within the Secretary of State's guidelines. I hope that he will receive more thanks from them than he has had so far in public.

The rate support grant order is the most complicated formula ever devised to give equality of Exchequer grant across the board. I have many misgivings about the accuracy of that formula. Is there sufficient weighting for rural areas? That question is probably going through the mind of the right hon. Member for Orkney and Shetland (Mr. Grimond). Are the alternatives too difficult to introduce at this stage? Does my right hon. Friend the Secretary of State feel that the areas of Scotland that are far from the central zone are getting a fair crack of the whip? I believe that there is not the equality that I should like to see.

I am particularly interested in Dumfries and Galloway and its four districts. Its allocation is incomprehensible. The local authorities have kept to the guidelines, yet they have ended up in a difficult financial situation. I am sure that my hon. Friend the Member for Galloway (Mr. Lang) will agree on the points relative to his constituency.

The Government rightly reduced the contribution to local authorities by 2½ per cent. Dumfries and Galloway has cut its controllable expenditure by a similar amount, yet by its commendable action, and for various extraneous reasons, the rates will have to go up by between 35 per cent. and 40 per cent. I pray that that increase will be substantially less. I hope that my right hon. Friend will see that its allocation is reassessed by the Government.

Mr. Foulkes

Will the hon. Gentleman spell out in detail the extraneous factors causing the substantial increase of 35 per cent. in the rates in Dumfries and Galloway, because that would be interesting.

Sir Hector Monro

A body of Opposition Members seems to be keen to anticipate what I have to say. I would hardly make such a statement without saying more at the appropriate moment in my speech.

There must be something unacceptable about a formula that results in so many anomalies. The comparatively low rates in south-west Scotland exaggerate the percentage increase. The four district councils in my area expect to increase their rates by between 12 per cent. and 20 per cent. That means an increase of between 1p and 2½p in the pound. Set against inflation that would not seem unreasonable, particularly as rents have gone up by about 1.85p per week. However, that increase of 1p to 2½p adds up to district rates varying from 8p to 12½p. To that we must add the regional rate.

Last year the regional rate, excluding the district rate, increased from 56p to 68p, or by over 20 per cent. This year it looks likely to rise to 90p. My regional authority has strongly pressed the Government to reconsider the matter. If we add in the district rate, the area poundage will be over £1, which may be small for some regions in Scotland, but for Dumfries and Galloway it is extremely high. I ask my right hon. Friend the Secretary of State where the formula is failing. The hon. Member for South Ayrshire (Mr. Foulkes) laughs lightheartedly, but if he can produce a better formula, this is the day to do so. Overall the formula seems to put a greater weighting on areas of high population than those of relatively small population, which are large geographical areas that require substantial servicing.

Mr. Foulkes

Will the hon. Gentleman give way?

Sir Hector Monro

I have not reached my reply to the hon. Gentleman. I ask him to wait.

My right hon. Friend the Secretary of State may feel that it is not for him to reply to this question. Is CoSLA representing the rural areas adequately in its discussions with him? Is CoSLA having a sufficient impact in the negotiations on wages and salaries?

I said to the hon. Member for South Ayrshire that I would talk about the extraneous reasons for the increase in rates. Straight away we come to the complicated area of the valuation decision in Fife. That has had a major impact on the regions that were involved because of that decision. The cost for Dumfries and Galloway was about £2 million, which came out of the blue, as did the cost for every other regional authority.

Dumfries and Galloway appreciates the clawback awarded by the Secretary of State, but there is still a balance of £1.25 million to pay for the clawback of 1980–81. My right hon. Friend has already mentioned the problems facing the authorities. There has been an agreement on an average wage rise of 4 per cent., and there has been an average cost rise of 9 per cent. set against higher inflation throughout the period.

I want to see tight control of public expenditure. However, I want to hear that the formula is absolutely fair across the board. The local authorities must maintain the services that they have to carry out by statute. Additionally, this year they have had the problems of an acutely difficult winter. There may be more to come and more expenditure may accrue. My right hon. Friend may say that he will take into account the exceptional circumstances for local authorities looking after roads and water services during that difficult period.

Mr. Foulkes

The hon. Gentleman outlined some of the minor extraneous factors that resulted in the major proposed increase in rates in Dumfries and Galloway. Is not the major reason for the increase in the rates the reduction in the rate support grant? The Government are reducing the money they are giving to that area, the ratepayer must pay a substantially increased amount? Is that not the reason, and in trying to support the Government, has not the hon. Gentleman scored an own goal?

Sir Hector Monro

Not all. The hon. Gentleman was obviously not listening to my opening remarks about the necessity of cutting expenditure. If local authorities do not do that, they are bound to balance their books by increasing rates. My point is that where they make a genuine effort to cut expenditure, in line with the wishes of the Secretary of State, it seems that the formula is weighed against those rural areas as opposed to the higher population areas of the central belt. The hon. Member For South Ayrshire should not try to ask leading questions on which he will not get the answer he expects.

We have not touched on, because it does not apply, ihe issue of capital expenditure, but the Secretary of State knows its importance because I have written to him about water services in Dumfries and Galloway for schools and facilities for the disabled. On the other hand, one must return to what the Secretary of State said; if we are to contain inflation in Britain we simply must contain public expenditure. There is no way of getting round that point. That is why he has rightly set out to bring home to those spendthrift local authorities that they must see that in the same light. We cannot continue expanding expenditure and the number of local authority employees without that having a consequent impact on inflation. It is good that the number of employees has levelled out, that local authorities have got the message and that they are beginning to spend less than they were last year or the year before.

However, it is no use saying that we have achieved a goal. We have only begun to reach the point where we can say that we are going in the right direction. We have a very long way to go until local authority public expenditure is within bounds and can help towards bringing down inflation, and, therefore, increase employment opportunities, which are so important in Britain today.

5.13 pm

Mr. David Steel (Roxburgh, Selkirk and Peebles)

It is unusual that all hon. Members can begin their speeches agreeing on one point—congratulating the Secretary of State.

Mr. Donald Stewart (Western Isles)

I am not following that custom.

Mr. Steel

The right hon. Gentleman must reserve his right to be disagreeable at all times, if he insists, but I wish to congratulate the Secretary of State—because I have nothing else to congratulate him on—for at least arranging for the debate to be held in daylight hours. We should not allow that improvement to pass lightly.

The hon. Member for Dumfries (Sir H. Monro) observed that the rate support grant is an extremely complicated formula. I go further than that and say that I suspect that only half the Scottish Members understand it. I err on the side of generosity, but those hon. Members who understand it fall into one of two distinct categories—those in the Scottish Office or who have served in the Scottish Office who may, giving them the benefit of the doubt, have some insight into how it works, or those who have served in local authorities, particularly on finance committees. The rest of us, who fall into neither of those categories, find it something of a mystery.

As a constructive suggestion, we should have a more general debate on the financing of Scottish local authorities earlier in the year and before the RSG settlement is arrived at so that we can receive our local authorities' views on their budgets and the external and internal aspects of them. That leads me to the point that local government finance needs urgent review.

The hon. Member for Dumfries missed out an important element when comparing the rural areas such as those he and I represent with other areas of Scotland. Our local authorities have never been spendthrifts. Of course, one can find councillors and local newpapers unearthing examples of local government folly in our areas as in any other, and rightly so, but, by and large, local authorities in small and sparsely populated parts of Scotland did not have the fat into which they could cut when the Government came down on them like a ton of bricks. That makes a big difference to the quality of services.

I suspect that no account is taken in the RSG of the inequality of local government services provided, for the same amount of rates, at a basic level in the small rural areas and towns of Scotland compared with perhaps those provided at a more substantial—I hesitate about using the word "luxurious" because nothing is luxurious in the local government areas—and sweeping level in the more populous areas of Scotland. Therefore, the Government's across-the-board approach to the curtailment of local authority expenditure inevitably falls more harshly on areas such as those I represent, for the obvious reason that they are asked to cut not into the fat of their expenditure but the muscle. That happens with local government in the borders.

Another complicating factor in the RSG is that this is the third year out of the last four that there have been openly declared changes in the RSG formulation between the needs and resources element. If one is in local government and trying to make some sort of assessment of expenditure on more than a year-to-year basis, it becomes extremely difficult if the Government openly change the basis of the formula three times in four years. We are entitled to plead with the Scottish Office, on behalf of local government, at least to try to achieve some measure of continuity and settlement on how the formula is reached.

On the guidelines laid down by the Secretary of State, I come immediately to the inflation figure that the Government have assumed. Where do they get that figure from? Is it just plucked out of thin air? If it is not, we should like to know where it comes from, because it certainly looks as if it is plucked out of thin air. Local authorities are told that the settlement assumes an average of a 4 per cent. increase in wages. When interrupted earlier, the Secretary of State elaborated on that by stressing that it was an average and not a norm. A 4 per cent. average, of course, assumes that some people are below it, and I want to know who in local authority employment is below the average of 4 per cent. I have written to the Under-Secretary about the scale of increases which we know that certain senior local government officials have received. Of course, they are nationally agreed and are not directly within the control of any individual local authority. Some senior officials certainly received a pay increase of over 20 per cent. under the 1981 pay awards.

Mr. Rifkind

Will the right hon. Gentleman accept two points on this matter? First, will he agree that the actual wage settlements local authorities reach are within their own power and are not dictated or determined by outside factors? It is ultimately within their own powers as the employers.

Mr. Canavan

Not if it is a national agreement.

Mr. Rifkind

I am referring not to individual local authorities, but to local authorities as a whole, which are the employers involved in negotiations. Will the right hon. Member for Roxburgh, Selkirk and Peebles also accept that, whatever figure the Government chose in advance as their contribution towards wages in the local authority sector, it would almost certainly be seen as a factor to influence the ultimate settlement? That occurred last year when the Government set a 6 per cent. figure on local authority manual workers who originally asked for a 19 per cent. wage increase. They eventually agreed to a settlement of just over 7 per cent. Would that have been probable if the Government had suggested a much larger figure?

Mr. Steel

I have slightly more sympathy with the Under-Secretary's second point than the first because I am an unreconstructed incomes policy man. The Under-Secretary's trouble is that he does not believe in incomes policy in theory, but he practises it in an arbitrary manner on only one sector of the economy. He would have much more success in controlling wage inflation if the Government accepted an incomes policy as a whole. However, that is getting off the point.

The Under-Secretary was not right in his first assertion. The small district councils, such as those represented by myself and the hon. Member for Dumfries, probably have no input into the local authority settlements. If local authority officials are graded throughout the country, those with a relatively onerous burden of work will make wage claims that will apply throughout the country. Let us not argue whether that is right or wrong. In 1981 there were two pay settlements of more than 20 per cent. Where does the 4 per cent. figure come from? I am not discussing the rights and wrongs of settlements—they have happened.

The Government, with some justification, take credit for achieving a new pay settlement with the police force. An inflation rate element is built into that substantial increase. The police had fallen behind in pay, and the Government approach was probably right. However, it is no use the Government claiming credit for that while at the same time telling local authorities, which are bound by that agreement, that there is a notional figure of 4 per cent. allowed for wages.

Let us examine the 9 per cent. allowed for expenditure. Local authorities, like any household, must cope with increasing bills and price increases for everything, including fuel. No one in his right mind would suggest that the inflation rate on ordinary expenditure could be contained within 9 per cent. The Government are inflicting a settlement on local authorities, having plucked figures out of the air or decided them at random. They are the figures which, in an ideal society, the Government want to achieve. The Government are largely responsible for the inflation rate, which is determined by their policies, but if they fail the ratepayers must pay the penalty. That is reflected in the level of rate increases now being announced by local authorities in Scotland.

The Grampian region, a Conservative-controlled authority, has announced a 21 per cent. increase. I do not know what the increase will be in the Borders, but there is talk of 25 per cent. Such rate increases add substantially to the overall inflation rate. They affect our industrial life and domestic ratepayers. I do not know what other hon. Members are experiencing, but in my constituency they are also affecting social life. For example, the rate valuation on clubs has increased substantially during the past few years. Almost every voluntary club in the Borders is experiencing financial hardship. With the cutbacks in personal spending that everyone is enduring, people are joining a smaller number of clubs. The rates are an enormous burden and some clubs are now in grave difficulties.

When will the Government go beyond simply publishing Green Papers and fulfil their election promise to reform the rating system? There would be more cheer for us in the middle of this complicated debate if we had an indication of that.

I turn briefly to the effects of the settlement and the various cuts in my area. The Borders regional council grant loss over three successive years has been about £1,800,000. That is a substantial sum for an authority administering a sparsely populated area in Scotland. I agree with the hon. Member for Dumfries that the council is also enduring unexpected increases in expenditure, for example, on roads, which suffered badly during the early part of the winter. If cuts in expenditure are made, there will be no real long-term saving because the roads will deteriorate further and there will be consequent increases in the cost of repairs in later years.

There will be no house building programme in Tweeddale district council because there will be no housing grant this year. That is extraordinary in an area where people are demanding houses. In Ettrick and Lauderdale the cuts in the housing grant are equivalenttoa£4aweekincreaseincouncil rents. The council is increasing its rents by £2.40 a week, but that does not include any rates increase still to come. Those are substantial increases on individual households, whether they be council tenants or householders, at a time when unemployment in the Borders has risen by 150 percent. over the figure that the Government inherited when they took office. That does not take account of the massive extension of short-time working and lack of overtime, which means that individual household incomes have been savagely reduced.

Throughout Scotland individual expenditure has risen substantially while income has reduced. It was, therefore, not surprising to read a report in The Guardian this morning which, although it did not specify the local authorities surveyed, stated: In the past six months rent and fuel arrears have risen between 33 per cent. and 100 per cent. The unemployed and the low-paid with large families are equally falling into debt. There is a real danger that, because of the rate support grant settlement, the poverty gap will grow throughout Britain.

Mr. Younger

Most of the right hon. Gentleman's remarks are relevant to the housing support grant order. However, is he not overlooking the fact that those whom he has mentioned, especially the unemployed, will receive rent rebates and, therefore, will not be affected?

Mr. Steel

Local authorities are making strenuous efforts to ensure that those entitled to rent rebates receive them. But that is not a cop-out from the fact that the average person will have his living standards substantially squeezed because of the settlement.

There is growing doubt among the elected members of the local authorities in my part of Scotland—which are largely independent and composed of many varieties of political opinion—

Mr. John Home Robertson

Not in Berwickshire.

Mr. Steel

I do not speak for Berwickshire, where the hon. Gentleman has to suffer an entirely Tory district council. The councils in my area are largely independent, and have no political axe to grind.

There is growing doubt about the viability of the two-tier system of local government in sparsely populated areas. The Secretary of State said that the Stodart committee had examined that matter. It did not. It examined minor changes of functions. The Secretary of State and the Under-Secretary should enter into discussions with local authorities. I cannot speak for all of Scotland, but an area with a population of 100,000 cannot sustain the expense of a two-tier system of local government. Without going into great detail about changes of boundaries and responsibilities, I think that it would be immensely successful if the Government began discussions with local authorities on how to introduce a one-tier system and reduce the overall cost of administering local government. The Government should concentrate on that, together with a fundamental reform of the rating system.

5.28 pm

Mr. Allen Adams (Paisley)

I find it appalling that the Secretary of State should come to the Dispatch Box today and boast about the loss of 1,000 jobs in the Scottish Office. The Conservative Party appears to think that it is good to shed 1,000 jobs and add to the dole queue—and that against the background of 350,000 unemployed in Scotland. It is shameful and unbelievable that a Minister should boast that he has created unemployment.

I have been wondering what I could call the Secretary of State. I read in the newspapers that the word stool-pigeon is unparliamentary, so I cannot use that word, although I can understand it if people outside think that. Perhaps I can say that the policies that he has outlined this afternoon show that he and his Government could be described as barnacles on the ship of progress. I trust that that is not unparliamentary language.

This afternoon we have had the usual diatribe of meaningless jargon. Statistic after statistic has been quoted. I do not understand what has been said, and I am sure that most hon. Gentlemen do not understand it either. The vast majority of people in the country will wonder what the formula for rate support grant means. It could be said that the Secretary of State for Scotland has used statistics in the way that a drunken man uses a lamppost—for support, not illumination.

Let us look at the facts. They make the case not for a decrease but for a substantial increase in public expenditure in Scotland, certainly in the west of Scotland I cite my own area, the Paisley and Renfrew district, as a good example of a place where more public funds are needed.

I contend that, in the rate support and the housing order that is to follow, the Government are seeking to shift the burden from the ratepayer to the rentpayer. This Government's essential creed is that rates are too high, and rents are too low, and that the balance should be redistributed so that the average person living in a council house pays more than he is paying now. The Secretary of State is saying that the Renfrew district council will get £4 million less in rate support grant than it says it needs. The twist here is that, if it tries to meet that deficit by increasing the rates to make up the difference of £4 million, next year the Secretary of State will give it even less money. Year by year, the Government are stealthily withdrawing central Government funds. Far from protecting the local ratepayer, the Government are making it clear that they intend that the entire burden of local democracy shall eventually be borne by the local ratepayer and, if they get their way, more and more by the local rentpayer.

Ludicrous figures have been given. The formula involves a 4 per cent. increase in wages. How can any government justify a local authority worker who has a wage of £60 to £70 a week, which means a take-home pay of £50 to £55, getting a rise of only 4 per cent? That is all that is allowed in the rate support grant. It means that the man will have only £60 at the end of the year, while inflation rages at 15 to 18 per cent.—which I expect it will be by the end of the year.

What will happen to rents? In the Renfrew district, rents will probably have to be increased by about 30 per cent. No doubt the Secretary of State will say "Yes, of course, but the person who is unemployed will no doubt get an increase in rent rebate. No doubt there will be an increase in rate rebate". That is all very well if the person is unemployed. The policy will hit the man in the middle of the scale earning £70, £80, or £90 a week, who will not qualify for any rebate. The average working man who lives in a council house—about 60 per cent. to 70 per cent. of the population in Scotland—will be considerably worse off by about £8 a month.

This rejigging has meant that in the past few years local authorities have been unable to build council houses. Were they to obtain borrowing permission, the high interest rates would make it extremely difficult for them to pay back the interest loans—but, of course, they have not had that permission. The situation is the same throughout the West of Scotland, but Paisley is a good example. There 10,000 people are now on the waiting list for council houses. Ten years ago only 1,000 people were on the waiting list. Now there are 12,000 people on the exchange list. That is because the housing there is old and damp and was built 30 or 40 years ago. The housing support grant—we cannot divorce rates from rents—in the Renfrew district is nil because the housing is old and the council has a big housing debt.

If 10,000 houses were built in Renfrew district in the coming year it would need more money from the Government—assuming that the Government gave borrowing consent. As a result, young couples who were taken out of old tenement properties by their parents 20 or 30 years ago now find that, because the local authority has not the wherewithal to build new council houses, have to go back to the slums which their parents left a decade or two ago.

The Government have turned their backs on council housing. They do not believe in it. They believe that coucil houses should be for the poorest people in society. They believe in welfare housing. They believe that housing should be provided only for the poorest people, the old, the sick and the disabled, and that local authorities should be encouraged to sell everything else to the fit, the able, and those in work. In my area, unfortunately, that has to be viewed against a background of 17 to 18 per cent. unemployment or—in cold, hard figures—17,000 to 18,000 people on the dole, who will not take kindly to the fact that the local authority cannot provide services which it was in a position to provide up to a couple of years ago.

We must turn our face against the whole concept of Government policy. We should not argue about £1 million here or £1 million there, about £100,000 here or £100,000 there. The underlying principle of Government policy is essentially wrong and misguided. This country needs a huge injection of public money into local authorities and public works to get people back to work. One of the ways to get people back to work is to put money into local authorities and thereby encourage them to employ people, buy products, and build roads and schools. Roosevelt did it in the 1930s, and he proved that it could work. This country now needs another Roosevelt. We need a New Deal, and new men in Government.

5.40 pm

Mr. Bill Walker (Perth and East Perthshire)

The hon. Member for Paisley (Mr. Adams) must believe that public money grows on trees. I can only assume that there are many trees with public money in his part of Scotland. Public money comes from the public, and the public have reached the point where they are not prepared to give any more.

Mr. James Hamilton (Bothwell)

Does the hon. Gentleman agree that the £13 billion spent on the unemployed and social security is also public money?

Mr. Walker

All money spent by the Government is raised in taxes or borrowed. Sadly, previous Governments have borrowed too much, leaving successive Governments with a crippling burden of debt at national and local level. Revenue expenditure is hit because the money comes from possible revenue expenditure and, equally, capital expenditure is savagely hit.

The Perth and Kinross district council welcomes the decision by my right hon. Friend the Secretary of State to give it some protection from the general abatement of rate support grant. As a responsible and prudent authority, it has contained its expenditure within last year's guidelines.

Mr. Ernie Ross (Dundee, West)

Will the hon. Gentleman tell the House and the people of Perth exactly what councillor Proudfoot, the leader of the Perth and Kinross district council and chairman of the finance committee, said to the hon. Gentleman when they met at 2 o'clock this afternoon?

Mr. Walker

I am delighted to have the opportunity to do so. On five separate occasions councillor Proudfoot said that he fully supported Government policy. I took note of what he said at my meeting with him at 2 o'clock, because I thought that some hon. Member would refer to it.

Mr. Foulkes

rose—

Mr. Walker

I shall not give way.

I draw my right hon. Friend's attention to the difficulty that the Perth and Kinross district council and the Tayside region will have in keeping within this year's guidelines. The Government's figures suggest that 4 per cent. has been allowed for an increase in wages. However, both authorities calculate that the increase in wages in their areas will be about 8 per cent. The Government calculate that there will be a general inflation rate of about 9 per cent. The authorities calculate that the figure will be nearer 13 per cent. I caution my right hon. and hon. Friends that I cannot see the Tayside region or the Perth and Kinross district council keeping expenditure within this year's guidelines.

No one will deny that both authorities have been very good. They have complied with the wishes of successive Governments—both Labour and Conservative. But I place on record that both authorities will be in some difficulty this year, although they wish to comply with the Government's guidelines. Indeed, councillor Proudfoot took the opportunity of telling me that five times this afternoon.

I am concerned mainly about employment prospects in Tayside and the impact of rates on commerce and industry. The situation is particularly acute in the Dundee area, where many of my constituents work. The postition may not be as punitive in Perth and Kinross, but the rates can and will create problems for some employers in the district and, sadly, may lead to further redundancies. Penal increases in commercial and industrial rates in the Dundee district in recent years have increased redundancies in the area. Redundancies will continue if the past level of increases is maintained.

In 1979–80 the non-domestic rates in Angus were 23.3 per cent. For Dundee the figure is 38.4 per cent. and for Perth and Kinross 24.3 per cent. In 1981–82 the figure for Angus will be 24.3 per cent., for Dundee 46.6 per cent.—I stress that figure—and for Perth and Kinross 24.9 per cent.

It is interesting that the savage increases in Dundee have not been consistent. Under a Tory-controlled Dundee, the percentage fell from 38.4 percent. to 33.7 per cent. Therefore, substantial savings can be made. Sadly, many of my constituents work in Dundee district, and they see their jobs put at risk by the savage and penal level of non-domestic rates. Much is made about domestic rates, but I wish to emphasise the link between the level of non-domestic rates and jobs. After all, we hear a great deal from the Opposition about jobs.

Mr. Home Roberston

rose—

Mr. Walker

I do not care to give way at present. However, 70 per cent. of local authority—

Mr. Ernie Ross

Will the hon. Gentleman give way?

Mr. Walker

I shall give way, as I have mentioned Dundee district.

Mr. Ross

Will the hon. Gentleman list the firms in Dundee that have closed because of allegedly high rates?

Mr. Walker

The Dundee Courier will be delighted to supply the hon. Gentleman with that information, because it regularly includes such news. I should bore hon. Members if I were to give the details, because the list is so long. The hon. Gentleman and I try to work together to protect jobs. There are times when we may differ, but it is important to draw attention to the relationship between the costs that employers face and the prospect of maintaining jobs. Hon. Members who do not recognise that link must be living in cloud-cuckoo-land.

At present, 70 per cent. of local authority current expenditure consists of staff costs. It is interesting that in June 1979 there were about 256,700 local authority employees. In June 1981, that figure had increased to 262,200. That is a substantial increase, especially when the rest of the country is facing savage redundancies. How can local authorities justify maintaining large staffs in departments when their needs have dramatically and drastically changed? I cite, for example, the departments for architects and quantity surveyors. If there are substantial cuts in expenditure on capital projects, how can architects—employed as a result of the massive expansion programme of the past 20 years—be gainfully employed? How can local authorities maintain such staffing levels?

A comparison can be draws between Dundee district, with its architectural and general services department, and Perth and Kinross. Perth and Kinross employs only 10 per cent. of the number employed by Dundee. Although some allowance must be made for local differences, it is hard to justify a 90 per cent. difference in manning levels. I do not understand that. Surely it is sensible to give work to private architects and quantity surveyors, and to face costs only when major projects are in hand? That would be a logical step.

Mr. Ernie Ross

ross—

Mr. Walker

Changing commitments and a changing population mix mean that authorities will require the services of individuals trained in different disciplines. Change must bring that upon us. However, there is substantial evidence to show that that does not happen, and there are many instances of imbalances between manning levels and local needs.

I was fortunate to attend and address a conference held by local authority directors of personnel. There was some considerable interest. The directors understood what I was trying to get at. [Interruption.] I like the Opposition's jollity, but it so happens that I am trained in personnel management.

I have been a fellow of the Institute of Personnel Management for many years. I was able to speak to the personnel directors on a professional basis. We understood each other. They accepted that there were many instances where necessary changes had not taken place. I suggested that they were not carrying out their professional duties properly if they were not advising their employees of the need for change. I am delighted to say that at the end of the conference I was told that my speech was refreshing; it was unusual to have someone speaking to them on the basis of one professional to another with an understanding of the problems that personnel directors face.

Every year we seem to be faced with the constant and unsatisfactory situation in which highly emotive charges are made about the level of services and the alleged link with the level of the rate support grant. The level varies enormously. However, it is obvious that money is not the only link. There are other factors that we must look at.

The time has come for Parliament to face the challenge of replacing the present unhappy and unsatisfactory rating system. During the present world recession, all Governments—in particular, the Government of the United Kingdom—need to reduce expenditure. Local government expenditure cannot be excluded from that need. Expenditure must be contained if inflation is to be reduced, because inflation is the real destroyer of jobs. If we are to improve Britain's ability to compete in world markets, the sooner we face the challenge of local authority finance, the better.

5.53 pm

Mr. Donald Stewart (Western Isles)

rose—

Mr. Ernie Ross

Follow that.

Mr. Stewart

It would be beyond me to follow the speech of the hon. Member for Perth and East Perthshire (Mr. Walker). We realise now, if we had not already done so, that the hon. Member is a real all-rounder. He is learned in all kinds of disciplines, philosophies, professions and so on. In spite of that, he grasped the essential point made by my hon. Friend the Member for Dundee, East (Mr. Wilson) about Tayside. Although the Tayside councillors had been good boys, according to the guidelines laid down by the Secretary of State, their fate was exactly the same as that of the other local authorities—they were clobbered in the same way.

The hon. Member for Dumfries (Sir H. Monro)—who is just leaving us—talked about cutting expenditures. The Secretary of State mentioned a number of employees in his Department with whom he had dispensed. We were told that one of the great achievements of local Government reorganisation would be that there would be economies of scale; that there would be far fewer officials running around under the new authorities. As with so many of these assurances, within a decade they are shown to be manifestly absurd.

The cutting of expenditure presents local authorities with a problem. Many of the functions with which they are now saddled were laid upon them by both Labour and Conservative Governments. At the time, local authorities had little or no objection because they were adequately funded. The hon. Member for Paisley (Mr. Adams) said that there was a steady withdrawal of Government funds to local authorities. That is true, but it started with the Labour Government. The public expect those functions to be continued. The Government would be very annoyed if any local authorities were to drop them, yet the Government are steadily withdrawing the funds with which they originally supported those functions. The Government are carrying on the tradition of reduced local financial autonomy that was started under the Labour Government, when expenditure was cut by the then Secretary of State.

The Government are hitting certain programmes particularly hard, including transport, education, housing—it almost looks as though the Government will abandon housing—and environmental services.

In December 1981 it was announced that the rate support grant would be cut further, bringing it down to only 64.2 per cent. of the relevant expenditure. The cuts in the rate support grant, together with the increasing use of legal powers and sanctions against councils stepping out of line, have been central to the Government's wild strategy of slashing public expenditure.

Dr. M. S. Miller (East Kilbride)

Is the right hon. Gentleman aware that, at a time when the Government are reducing the rate support grant to local authorities, there is one area in which they are urging local authorities to spend more money and that is on so-called defence against a nuclear holocaust? What does the right hon. Gentleman think of that stupid idea of the Government?

Mr. Stewart

My view on that subject is well known. I regard such expenditure as having nothing to do with defence; in fact, if it were to be cut substantially the country would be in no more danger than it is at present.

The Government have been unable to control the money supply in the way that they planned to do, and have now resorted to an attempt to use local government as a scapegoat for the failure of the monetarist policies.

It is interesting to note that the restrictions and controls applied by central Government to the Scottish local authorities are still increasing, thanks to the Local Government and Planning (Scotland) Bill, while in England, because of adjustments to the Local Government Finance (No. 2) Bill, restrictions on authorities there are being eased. In England and Wales there will be no super clawback, and the circumstances in which local authorities can be penalised for overspending are being eased.

The Tory Government are being doubly harsh on Scotland. That is not altogether surprising, because Scotland did not vote for a Tory Government. It may be the Tories' way of paying Scotland back—[Interruption.] My party is not in power and making slashing cuts in public expenditure. It is the right hon. Gentleman and his friends, who have no mandate whatever from Scotland, who are carrying out these dastardly cuts.

The previous Labour Government were little better, following the reorganisation of 1975. They steadily cut back local government expenditure. Total expenditure was cut by 8.7 per cent. between 1975–76 and 1979–80. Capital expenditure was cut considerably, falling by 26–7 per cent. in that period. It was the Labour Government who started cutting back rate support grant. They introduced cash limits in 1976–77 and were the first to allow the Secretary of State for Scotland to cut rate support grant if a local authority was incurring excessive and unreasonable expenditure. That power was granted under the Local Government (Scotland) Act 1966.

The Labour-controlled authorities, having fulfilled their pledge to protect their services from Tory cuts, refused to use the only political argument that can challenge the diktat of the Secretary of State—the nationalist message that the Tories have no mandate to govern Scotland. Thus, even the most determined of Labour efforts to protect public services will fail, because the Labour Party ultimately accepts that the Secretary of State and the Tories have a right to impose the cuts. That is the dilemma that the Labour Party has to face.

I now turn to the position in my own constituency. The latest announcements on rate support grant for the coming year will, according to the convenor of the council, force the Highlands council to the brink of bankruptcy. The Government, in their calculations for the council's rate support grant, have based any increase that is due to compensate for inflation on 9 per cent., whereas, as we all know, the inflation figure has been 12 per cent. The Government have allowed for only a 4 per cent. wage rise, instead of facing reality and allowing for 7 per cent. That point has been amply dealt with by other speakers this afternoon, so I need not go into it except to say that the figures are quite unrealistic.

As things stand, the Western Isles council will exceed the guidelines by some £2.74 million. The council has already pointed out to the Secretary of State that it has been treated more harshly in its opinion than any other local authority in Scotland. The Secretary of State was claiming that the Government had made special arrangements for the council. The hon. Member for Paisley was trying to think of a word he could use to describe the Secretary of State. In view of the Secretary of State's claim to have given special consideration to the Western Isles council, whatever the council is calling him, it certainly is not Santa Claus. The council convenor, the Rev. Don Macaulay, has stated that to take £2.74 million out of a budget which was cut by £1.8 million last year is impossible.

The Scottish National Party remains committed to the abolition of domestic rates and supports the introduction of a system of local income tax as a means of supplying local authority finance in conjunction with a national Government grant system. In the meantime, we consider it ridiculous, unjust and unacceptable that a country such as Scotland, with £6,000 million per year accruing from Scottish oil alone, should be subject to such treatment from any British Government.

A mere 5.4 per cent. of the oil revenues would enable Scottish local authority expenditure to be returned to pre-1979 levels. Much more could be done if we had self-government for Scotland. That will have to wait for a little while. Even the 42 Labour MPs from Scotland show little willingness to take the political step of following the independence path that would save Scotland from disaster and would mean that Scotland would never have to put up with another piece of legislation such as we have before us today.

6.2 pm

Mr. David Lambie (Central Ayrshire)

Unlike the hon. Member for Perth and East Perthshire (Mr. Walker) I am no professional in these matters. I do not understand the order we are debating. If there is a formula, I do not understand that formula and I do not think any hon. Member understands it.

My experience of taking part in rate support grant arid housing support grant order debates since entering the House has been that no matter what the formula is or whether one understands the formula, all one needs to look at is Government policy. By doing that and looking at the financial aims of the Government one ends up with a result and does not need the formula.

The only person I ever knew in my political experience who could understand these formulae in the days of the equalisation grant was my father, who used to be treasurer of the burgh of Saltcoats. He did not use the formula but he could use his head. He was a representative of the Convention of Royal Burghs and he always made sure that the convention did not agree to finalise the negotiations until he discovered what the effects would be on Saltcoats. If Saltcoats would still have the lowest rents in Europe and rates well below the Scottish average then the formula satisfied him, and he agreed that the convention should sign. Unfortunately now there are no negotiations, a point made by the representatives of local government. CoSLA.

Mr. Foulkes

There is no burgh of Saltcoats either.

Mr. Lambie:

That is correct, but my father is still there.

The Secretary of State criticised my right hon. and hon. Friends for supporting similar orders tabled by previous Governments. That accusation might be made against one or two of my right hon. and hon. Friends but, as I always say, in these matters my hands are clean. Since entering Parliament in 1970 I have taken part in most of the debates on rate support grant orders. In the period of the Conservative Government from 1970 to 1974 they used to con us, as they con all new Members, by telling us that on no account could we vote against such an order. At that time the debate took place before the Christmas Recess. We were told that we could criticise the order but that we should not vote against it, otherwise the local authorities would have no money to pay their employees and we would be blamed for causing unemployment arid redundancies.

When the Labour Government came into office in 1974 we discovered that we could vote against these orders. On many occasions my hon. Friend the Member for West Stirlingshire (Mr. Canavan) and I initiated debates on the orders and voted against them. So some of us have always opposed the tendency of national Governments to interfere with the rights of local government by transferring to it duties of national Government without transferring the necessary finance to carry out the duties.

That has been happening over the 11 years or so that I have been a Member of Parliament. That trend has nearly reached finality. Now we have in control not a democratic Secretary of State for Scotland but a dictator, a person with more dictatorial powers than the Polish military regime has over local government services in Poland. We have a Secretary of State who instructs local authorities by statute to do certain things and then does not provide them with the necessary money. That is why the ratepayers of Scotland are facing increases of 20 to 25 per cent. in their rates this year.

Some hon. Members have referred to rate poundage. When we are considering the rates we should not look at the rate poundage alone but at valuations and the rate poundage. I represent an area with some of the highest valuations in Scotland in the town of Troon. The high valuations also spread to the neighbouring towns of Prestwick and Ayr, which are represented by the Secretary of State for Scotland, so he knows the problem. It is not the rate poundage about which our constituents are worried but the high valuations on which they pay their rates. I think increases of 20 to 25 per cent. will be the minimum. The problems that the Secretary of State and I faced last year will be nothing to the problems we will have this year because of the implications of the order.

I have been in contact with the main local authority in my constituency. Cunninghame district council has asked me to make several points to the Secretary of State, and I should like answers from him or from his hon. Friend when he winds up. Up to now the annual expenditure guidelines were based not on an assessment of the circumstances of individual local authorities but rather on past expenditure. As a result, local authorities which were high spenders in previous years receive a higher percentage of the total money allocated for local government.

The Secretary of State claims that the guidelines for 1982 and 1983 are based on a more sophisticated technique of client groups. Whatever the merits of this, it is important to note that the figures brought out are being adjusted in the interests of stability. After the Government have applied their formula they say that it might create certain anomalies and that therefore they should consider the concept of stability. The idea of stability brings out a national guideline for 1982–83 which at the end of the day is significantly less than the guideline for 1981–82. They modify the formula, but in the end it is clear that the Government are giving less money to local authorities.

It would be helpful to me and my district council if the Secretary of State would explain what he means when he says that the guidelines for 1982–83 remain indicative. Does that mean that he accepts that there is a degree of guess work about them and that they cannot and do not take into account and reflect local circumstances and needs? My own district council put that question to officials at St. Andrew's House during the summer and have not received an answer, I should like an answer from the Secretary of State tonight. It is no use our voting on a rate support grant order when we do not know these concepts.

Cunninghame district council made a specific request that it be provided with a copy of the calculations for its guidelines for 1981–82, which amounted to £6.62 million. My right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) asked how local authorities knew whether the guidelines were adequate, whether they were getting fair play, unless they knew the basis of the calculations. Clearly, the calculations exist. Cunninghame district council believes that—as the Secretary of State has contrasted, in the House and elsewhere, the guidelines and the planned expenditure—it is entitled to have a copy. I ask the right hon. Gentleman to give hon. Members a copy or to send copies to our local authorities.

No matter what happens in this debate, the Government will win, because they have a majority. Therefore, the local authorities will face enforcement of the order. In my constituency we have 24.7 per cent. unemployment.

Nearly every third male is unemployed. We face massive increases in rents, whether we live in an Irvine development corporation house, a Scottish Special Housing Association House or a district council house—increases of between £2 and £3. We shall now face massive increases in rates if the order goes through without amendment.

Therefore, I wonder how long the Scottish people, including those whom I represent, will put up with the present Government, whose policies are creating mass unemployment and mass poverty. How long will the Scottish people put up with representatives such as those on the Tory Front Bench? Their policies are not working in Scotland, and we should have a general election now to get rid of the present Government and bring in a Government that will look after the interests of the working people of Scotland.

6.14 pm

Sir Russell Fairgrieve (Aberdeenshire, West)

Rather than deal with the detailed arguments of the hon. Member for Central Ayrshire (Mr. Lambie), I should like briefly to philosophise on the problems that cause these regular debates on rate support grants and on some of the truisms that we seem to miss.

The first matter, in both local and national Government, is the continual reference to public money. We cannot too often remind ourselves that there is no such thing as public money. When we call for money to be spent, nationally or locally, we mean that the taxpayer must fork out a bit more.

Like my hon. Friend the Member for Dumfries (Sir H. Monro), I had the privilege of being a member of a local authority for about 10 years and, as with my hon. Friend, it was before reorganisation. I know that many hon. Members on both sides of the House have served on local authorities. I was always amazed how people—whom one knew in one's town as running a tight, competent business—almost seemed to forget what money was—how it went out of fashion—when they became councillors. The way in which they, as councillors, spent money was totally unlike the way in which they dealt with it in their own businesses.

Mr. Lambie

That is unfair.

Sir Russell Fairgrieve

I am reminded of the story of the local government meeting where item 4 on the agenda for the purchase, laying out and construction of a site for industry costing £25 million went through on the nod, but item 7—the purchase of a secondhand bicycle for a school janitor—took 25 minutes of hard argument. That is one of the problems when people do not consider money in the same way for everything.

Mr. Donald Stewart

I think that on reflection the hon. Gentleman will regard that comment as an unfair assertion against local authorities in Scotland. I served on a local authority for a considerable time. Business men and people of other professions serving on the county council on which I served and on other councils known to me had some regard for the fact that they were spending public money. There may have been the odd person here and there who had a drunken sailor attitude, but generally the attitude was very responsible. I do not think that the hon. Gentleman should leave his assertion on the record.

Sir Russell Fairgrieve

I am not denying the existence of responsibility, particularly in Scotland. I said at the beginning of my speech that I would philosophise. I am talking about human nature and what happens when the responsibility is not directly our own.

Manpower costs money. Nationally, at Government level, both in England and Scotland, numbers carrying out the same job have dropped. In local government, numbers have dropped in England but not in Scotland. That must worry us.

We have begun to learn the hard way that not every problem is solved by throwing money at it. Similarly, not every problem is solved by throwing people at it. We have seen that in British industry, many parts of which are efficient, where loss-making is prevented when firms operate with fewer rather than more people.

I have some sympathy with the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel)—I do not agree with him on many other points—that perhaps there is a case in a country the size of Scotland for only one tier of local government. However, after the traumatic constitutional debates that we have had, it would be wrong to make further changes in this area for many years.

A change in the rates system must be made. Almost any system would be better than the present system. With more than 50 per cent. of local government expenditure being funded by the national Exchequer, there is probably now a case for rates being replaced by national taxation, each local authority being given a block grant and deciding how to spend its money. Although not perfect, that would be a better system.

Having tried to outline some of the human problems behind the concept of public money, I shall be glad to support the order.

6.20 pm

Mr. Jim Craigen (Glasgow, Maryhill)

Other than The Press and Journal, I do not know the local papers in West Aberdeenshire, but I shall read the Perth Advertiser this weekend, because I met councillor Jim Proudfoot this morning and the message I got was certainly rather different from the one which the hon. Member for Perth and East Perthshire (Mr. Walker) conveyed this afternoon. Moreover, when the hon. Gentleman started to talk about public expenditure, I thought he was at least going to tell us that he had been a city chamberlain or a banker. I would point out that the Chancellor of the Exchequer could save £435 million for every 100,000 unemployed people he gets into employment. That is the kind of public expenditure saving that we ought to be talking about.

The rate support grant order for 1982 is totally unrealistic as regards the services that Scottish local authorities are obliged to undertake. The indexation in terms of pay settlements and cost of living increases is totally inadequate, and rather dishonest in the measure that they seek to establish for local authorities and the control that they must exercise over their own financial affairs.

The hon. Member for Aberdeenshire, West (Sir R. Fairgrieve) referred to the reform of local government finance. There was very little forthcoming in the consultative document published just before the new year. When the Government took office we were led to expect that there would be considerable reform of local government finance, but all that emerged from the Green Paper was TINA—there is no alternative to the present system of domestic rating.

The decision to go ahead with the partial revaluation of industrial and commercial properties in 1983 is somewhat cynical for a Government who continue to tell us that they are anxious about the plight of industry and commerce. Significantly, they will not have a revaluation of domestic properties, because it is too near the general election. Perhaps in the meantime somebody in a little room in S t. Andrew's House is working out the possibilities of moving over from rental values to a system of determining rateable values on capital values.

My hon. Friend the Member for Central Ayrshire (Mr. Lambie) referred to rent levels. Of course, the Government are hoping to get more experience of house prices in both the private and the public sectors as house sales in the public sector expand. It may be that we shall have such a system.

Mr. Lambie

As regards the Government thinking about going over to fixing valuations on the basis of the capital value, does my hon. Friend realise that was what was wrong with the revaluations in Troon, Prestwick and Ayr? The Strathclyde assessor illegally used capital values to assess the value of properties in the area. That is what all the trouble is about.

Mr. Craigen

My hon. Friend is such a keen defender of the citizens of Troon that the Secretary of State wants that area in his own constituency in the parliamentary boundaries reorganisation.

The local authorities want to know what these ground rules are. They would like to know the methodology that is operating from New St. Andrew's House. Ministers tell us that local authorities are free to draw up their own priorities. When we try to probe them on these priorities they say it is up to the local authorities to determine their own priorities. When we go to the local councils, the councillors say "What can we do? We are dependent on the resources that we are largely getting from central Government and they are giving us inadequate resources, so we cannot draw up the priorities that we would like."

Reference has been made to the client group, as though this is some precise and scientific system rather than, as it is, an arbitrary guideline determined by the Secretary of State for Scotland. I understand that someone in the Scottish Office may know the A to Z of client groups, but he knows only because somebody in the Department of the Environment has told him, since officials there have had much more experience of the operation of that system.

What is worrying the local authorities now is the fact that these guidelines are being used in a very precise way for the distribution formula. The situation is like the case of the old examiner who, when marking papers, would stand at the top of the staircase and throw them down the stairs, and the student would be marked according to the step on which his paper landed. I think that Glasgow has landed on the bottom step, because, although the Secretary of State praised Glasgow district council's efforts in reducing costs by 5 per cent., still 15 per cent. above the guidelines because of the difficulty of trying to contain expenditure below present costs.

In my constituency modernisation programmes involving rewiring or new window frames and other necessary updating measures are having to be pushed back for years. New building is coming to a halt. Sheltered housing projects which we hoped would go ahead are being delayed. The problems of single persons are becoming even more acute in Glasgow. Although the population of the city is decreasing, the number of households is increasing. This is a real problem for single people trying to get housing.

The people who did a great deal to finance the return of this Conservative Government are now getting very little in the way of work. Many private building firms are already on their knees. The cut in the housing support grant will have a considerable effect on private sector building companies, in a city with just under 100,000 unemployed in the travel-to-work area.

I have heard the Secretary of State more than once talk about the number of people getting rent rebates as though that were a matter of great pride. It is an indication of the low incomes in the city and elsewhere. It may be that he does not understand the implications. In Glasgow, more than 100,000 people depend on rent rebates. That is not a matter in which I take particular pride, and I do not think that the Secretary of State for Scotland ought to take pride in it. If he is determined to tell local authorities the precise level of rent that must be charged, why does he not have national rent levels? At least it would be more honest. The public would know where they stood as regards rents.

Turning to the rate support grant, I hope that the right hon. Gentleman will pay some heed to the plea put forward by the Strathclyde regional council regarding the debt that it has had to write off two years running. In Glasgow, people are literally being priced off the buses, and it looks as though there may have to be another increase in bus fares. It is becoming difficult for people to travel to work, more difficult for people to travel in search of work and certainly very difficult for young people who want to go out for an evening's entertainment. This is having an effect on the city centre.

The regional elections are coming up. We are not talking about whether there will be one tier of local government left, as the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) said. There will be no local government if this Government have their way, because we are reaching the stage where the Secretary of State wants to fix the rate poundages and do everything that local authorities are supposed to do.

We have also reached the point where local government service calls for the qualities and versatility of an elected Houdini. The Secretary of State and his Ministers at the Scottish Office, instead of applying their minds and energies to trying to strengthen the fabric of Scottish social and economic life, seem to be devoting more and more of their attention to finding new ways of manacling, shackling and boxing in the local authorities. I shall be very surprised if local government in Scotland survives more years under this present Secretary of State.

6.30 pm

Mr. Michael Ancram (Edinburgh, South)

I do not wish to delay the House, but I feel constrained to speak in view of one or two things said by Labour Members, particularly the synthetic hostility of the hon. Member for Glasgow, Maryhill (Mr. Craigen). The Opposition's only attack is that the Secretary of State is being cruel and hard-nosed by cutting local government expenditure in real terms. If that accusation were correct, it could be said that the Secretary of State has singularly failed since 1979, because it is my understanding—I hope that my hon.

Friend the Under-Secretary will confirm this in his reply—that in each year since the Conservative Government came to office local government expenditure in Scotland has increased in real terms. That is an important point, and I hope that Labour Members will understand it.

My right hon. Friend the Secretary of State has said all along that he seeks to reduce local government expenditure in Scotland to the level that it was in 1978. At the meeting today CoSLA was challenged to say whether it agreed with the Secretary of State that the current level proposed was still above the level in 1978. It could give no answer. When asked about the manning level comparisons between 1978 and now, CoSLA told us that it needed notice of that question. That is absolutely staggering, because my right hon. Friend the Secretary of State has given CoSLA notice of it day after day, week after week, and month after month for the past year.

My second point relates to my own region of Lothian. Thanks to the Government's action last year, expenditure in Lothian has been reduced. We are carrying into the next year the level of rate that was set in order to meet a higher level of expenditure last year. On that basis, if the Lothian region goes for a no-growth budget, it is possible for the rate to be reduced. That does not take into account the other areas in which reductions can be made. Those may be small areas, but they all add up.

I offer Lothian one candidate. It should not open the schools and spend a great deal of ratepayers' money on entertaining CND demonstrations in Edinburgh. Before the Labour council in Lothian is defeated at the regional elections in May, it might be a final gesture if it reduced the rates and conceded to the ratepayers of Lothian and Edinburgh that they had been treated badly.

6.33 pm

Mr. George Foulkes (South Ayrshire)

Perhaps it is appropriate for me to follow the hon. Member for Edinburgh, South (Mr. Ancram) who is probably a ratepayer in more regions than anyone else in the House.

Earlier in the debate we saw the appalling spectacle of the Secretary of State trying to tell the House and the people of Scotland that there have been no cuts in local authority services. However much he twists the facts—I must not use the word "twister"—or however much he wriggles, he will never convince anyone with an open mind, either in the House or in Scotland, that there are no cuts in services.

The Secretary of State and the Under-Secretary have only to travel around Scotland to see the cuts, the empty old people's homes, and the old people who are no longer getting home helps. They will see that there are clear cuts in local authority services. Indeed, it is the essence of monetarist policy that there ought to be cuts. We hear of the Prime Minister and the Chancellor of the Exchequer going along and receiving accolades at business men's lunches. Business men never look too badly off at those lunches—the rates do not seem to be harming them. The right hon. Lady and the right hon. and learned Gentleman cannot say on the one hand "We are making these massive cuts because they are necessary as part of our monetarist policy", and on the other "There are no cuts". It is impossible to be the mad axeman at lunchtime and try to be Lady Bountiful in the afternoon.

This year, the Secretary of State is imposing a threefold cut on Scottish local authorities. The first is the clawback because of so-called overspending. Let us give the lie once and for all to this ridiculous idea that these authorities are overspending. They are not. They are spending what they think is necessary—many would like to spend much more—to provide decent services for the people in their areas. It is alleged that they are overspending in the context of the totally, arbitrary guidelines produced by the Secretary of State for Scotland, but those guidelines bear no relation to the needs of the people in those areas.

Secondly, there is the cut in rate support grant—2½ per cent. There has been a clear switch from central support for services to the ratepayer. The hon. Member for Dumfries (Sir H. Munro) seemed genuinely surprised that the rates in Dumfries and Galloway would have to increase. I almost felt sorry for him. As I tried to point out, the main reason why ratepayers in Dumfries and Galloway will have to pay more is that the Secretary of State is cutting the rate support grant to that and every other region.

The third cut also helps to explain why Dumfries and Galloway are not doing particularly well. I understand that the change in calculation from the historic method to the client method will disadvantage the regions.

Mr. Rifkind

>indicated dissent.

Mr. Foulkes

Perhaps the Minister will explain the guidelines. When the all-party deputation met CoSLA, it asked that the Minister should explain the guidelines. It said that the guidelines were just as big a mystery as where Lord Lucan had gone or what will happen to Freddie Laker—

Mr. Rifkind

Or the Labour Party.

Mr. Foulkes

—or what is happening to the Tory vote in Scotland. It is imperative that we know the formula and the details about the guidelines. As my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) said, the guidelines are no longer indicative, they are mandatory, and if they are not adhered to, there is a penalty on local authorities.

The Secretary of State has presented a paper to CoSLA on client group calculations. CoSLA tells us that it is too general and totally useless. As the guidelines are so important, it has asked the right hon. Gentleman to amplify that report.

I do not know what transformation came over Councillor Proudfoot at lunchtime, but he told us that Perth and Kinross, which the Secretary of State described as a good authority, faced a 20 per cent. increase in rates on a stand-still budget just because of the Government cutbacks. The good people of Perth and Kinross, including my father-in-law, will have to pay an extra 20 per cent. just because of the cuts that the Secretary of State is imposing.

It has already been said that the local authorities are becoming fed up with what they describe as "negotiation by ministerial pronouncement". That is because of the arrogance of the Secretary of State and the Under-Secretary. I know the Under-Secretary well and he is getting more arrogant—I do not know whether it is power going to his head. The Government are losing the confidence of local authorities because they are not involving them in the discussions.

For example, a pronouncement was made by the Secretary of State about the rate support grant without any consultation about, for example, the Strathclyde passenger transport executive payments, and other arguments that CoSLA subsequently put forward, far too late to be taken account of.

The Secretary of State, as do all of us, falls into the trap of talking about figures and percentages and other calculations in an abstract way. We must relate them to the services that are being provided. The Secretary of State spoke in glowing terms about the cuts that have been made in the number of officials in St. Andrew's House. I regret that there are more people unemployed because of the cuts that the Secretary of State has made. However, to compare the bureaucrats of St. Andrew's House with the people providing services at ground level in local authorities is a false comparison.

We see the bureaucrats arriving in bunches, like Fyffes bananas, in Glasgow corporation buses at these debates. They are not providing the services at the grassroots that the local authorities provide. When talking about local authority cutbacks, we mean cutbacks in education, among other things. The Secretary of State is ensuring that there are fewer teachers in schools, fewer people looking after the elderly, and fewer home help services, and that roads are not maintained and water and drainage services are put at risk.

If we are trying to attract industry and providing the infrastructure for industry that will build up the Scotland of the future then we need such things as water and drainage services. We are also talking about cleansing and the collection of refuse and about leisure and recreation services for people who have more and more free time and who need opportunities for-leisure and recreation. These are the direct services—they are not the abstract percentage, not the bureacrats in town halls but the people who deliver services to those in need, and other ratepayers.

We seldom hear the Secretary of State and the Under-Secretary talking about these important services. They give gratuitous thanks when we have a bad winter and the local authority employees pull out all the stops. They pull out all the stops not just when we have a bad winter but day in and day out, week in and week out to look after the sick, the elderly, those in need and the children in care.

Because of the cutbacks that the Secretary of State is imposing on local authorities, a number of serious things have happened. I have already drawn the attention of the Secretary of State for Scotland and the Secretary of State for Social Services to the subject of child care in Tayside. I pay tribute to the Under-Secretary of State because know that he has rightly put a bombshell under Tayside social workers. Because of public expenditure cuts and because there was no money for in-service training or for the kind of support that the social workers need, there have been professional reports, produced within Tayside to show that children under the care of Tayside regional council are not receiving the kind of support and care that we should expect from authorities that take children into care.

I have given another example in the education service. We were recently told that the number of teachers has been. reduced by a greater amount than the number of pupils. When there are reducing rolls the difficulty of providing specialist teaching, particularly for senior pupils in secondary schools, becomes great. I raised the question in relation to the teaching of Russian in schools, which in Scottish schools has almost collapsed. After that was in the papers, I received letters from teachers of other languages, which said that the teaching of almost every minority language in Scottish schools has collapsed and that this is the result of the cutbacks that the Secretary of State is imposing.

I could go on, although I do not have time to do so, —

Mr. Donald Dewar (Glasgow, Garscadden)

One minute.

Mr. Foulkes

I have one minute, my hon. Friend points out to me.

I could go on outlining the real effects of the cuts in the schools, the old people's homes and on individual people in local authorities.

Rather than harassing the local authorities that are providing decent services, and causing them problems by asking them to reduce the services they are providing, the Secretary of State, and the officials that he still has left in St. Andrew's House would be far better occupied making sure that local authorities such as Grampian, Tayside and Dumfries and Galloway could put their services up to a decent standard. That is what the Secretary of State should be doing, not harassing the good authorities in Scotland.

6.46 pm

Mr. Donald Dewar (Glasgow, Garscadden)

The speech of the Secretary of State for Scotland was insufferably complacent. He seemed to be remarkably pleased with himself, considering the difficulties that he is creating for local government in Scotland. Perhaps it was due to the nature of his brief but probably his speech reflected his attitudes as well. At one time, almost unbelievably, I heard him giving thanks for the Local Government (Miscellaneous Provisions) Bill, as if that piece of oppressive legislation were a blessing in disguise for local democracy.

This attitude can be justified only if misery is to be the norm and if we are to have the state of constant crisis which amounts to "business as usual" under this Administration. The Secretary of State should be ashamed of what he is doing and of its effects. His was a lamentable speech when measured against the crisis which is affecting local government. At one time, he even managed to refer to the increase in public sector unemployment, both in his own office and in local government, as heartening. If we have a Secretary of State who finds an increase in unemployment heartening, we have come to a sad pass.

What is more, there was a total absence of argument in the Secretary of State's defence of his policy. So complete was the absence of argument that it is necessary to make the right hon. Gentleman's case for him, since he failed to do so, in order to examine what is happening.

The Government claim that the relevant expenditure in the rate support grant for this year is an increase and they are setting what they describe as realistic targets for local authorities. To some extent, the Government rely on confusion and they are aided and abetted in their fraud by the switch from volume terms to cash terms in the figures.

However, CoSLA has calculated—and, although it is a vested interest in that it represents local government, the calculation has been done fairly—that on a standstill budget, taking the 1980-81 figures and revaluing only for inflation, there is a cut of 6.4 per cent. That will have a serious impact because that is the true comparison between what was budgeted for by local authorities and the expenditure for 1982–83 which has been set by the Government. That would be bad enough, but on top of that there is a cut in the RSG of 2.5 per cent.

Dr. M. S. Miller

Does my hon. Friend agree that there is a 6.4 per cent. average but that within that there will be areas which require more services and which will thus suffer a much bigger cut?

Mr. Dewar

I agree. The matter bristles with inequalities and anomalies, one or two or which I shall come to in a minute. Let us stay with the 2½ per cent. cut in the grant rate.

The Secretary of State put up his usual diversionary exercise by his selective use of history. He tried to create a bogy man—Mr. Four Per Cent., as he would no doubt have us call my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan). No matter how much the Secretary of State twists and turns or ducks and runs, what we are interested in is what is happening now, which is a substantial transfer from the taxpayer to the ratepayer.

The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) waxes eloquent and at great length about his splendid record as the defender of the ratepayer. The hon. Member might contemplate the effect on the ratepayer of that kind of transfer. It will be devastating and serious. We have the 6.4 per cent. cut. We have the rate support grant coming down by 2.5 per cent. Then we have the clawbacks—in some ways, the most unfair of all. There is a clawback that relates to 1980–81. It is no good the Minister saying that he relied on CoSLA advice. At the end of the day, he took a decision. He allowed the money to be spent and the books to be closed. Then, in an arbitrary, unfair and indefensible way, he says that he wants to claw back no less that £50 million, which will fall in the coming year.

The hon. Gentleman acts on the basis of the most suspect possible figures. He says that there was an overspend of £70 million. There is, however, a respectable argument to which the hon. Gentleman did not even listen before coming to his arbitrary decision which says that the £70 million is a vast over-estimate of the real situation. It includes a number of major items such as the writing off by Strathclyde region of the passenger transport authority deficit, the expected revenue from school transport, where the Government have had to retreat in the face of the House of Lords, and a number of major items that do not fall within the support grant calculation.

The whole basis on which the £70 million was calculated is almost certainly fraudulent. The clawback cannot be justified in any reasonable manner. On top of this—it is injustice piled upon injustice—there is to be a clawback for 1981–82 of £27 million. The impact on services and rates will inevitably be serious. If that were not bad enough, there is also the farce and the open flouting of experience of the likely outcome to be found in the Government's approach to cash limits and particularly the inflation factor.

In 1981–82, the Government revalued on the November 1980 base by 7.3 per cent. CoSLA feels that the real figure—no one, not even the Secretary of State, who does not believe in dealing with real arguments, has denied it—should have been 10.9 per cent. If my arithmetic is correct, this means that there has been a loss in grant of about £50 million. In 1982–83, we are expected to live with 4 per cent. on wages and 9 per cent. on other local authority costs. If this proves wrong, we are told that there will be no increase order; there will be only compensation for variations in interest rates. If the inflation rate, a byproduct of Government economic policy, goes significantly above these arbitrary and unrealistic figures, the unfortunate local authorities will have to live with the consequences.

The settlement we are discussing is quite inadequate. The way in which it was arrived at is objectionable. I take as an example a comparatively small matter but one of considerable significance. I refer to the repayment to the handful of authorities, the six authorities, which managed to keep within the Government's guidelines. It is an eloquent comment on the ludicrous guidelines that were set that only six authorities managed to stay within them. They have been given a backhander, a sort of tip, of about £0.7 million for being good boys. The methodology is suspect. The money is being disbursed on the basis of estimated expenditure. It may be found, when the outturn figures are seen, that a number of these authorities will not be within the guidelines. I can think of one or two where, I understand, that will almost certainly be the case. I am not sure whether there will be a mini-clawback to snatch back from them the money that has been handed out.

The significance of this state of affairs is that it finally gives the lie to the position that Ministers have blandly maintained in the face of a great deal of evidence, that the guidelines are only indicative, not binding. Ministers have repeatedly given this assurance. The handout to the six authorities makes it clear that at the end of the day the ability to live within the guidelines has been built into the distribution formula. It has been given by the Government a set place in the distribution formula.

The guidelines are now clearly becoming mandatory and not indicative. This represents another broken pledge by the Government. We are reaching a situation where the Government's word—I say this frankly to the Minister—is no longer trusted, not only among Labour authorities but among Tory authorities. This was made abundantly clear to hon. Members who today met representatives of CoSLA. If the Minister wishes to see to what extent the Government have departed from their pledges, I remind him of what was said by a witness, Mr. T. Winwick, principal of the local government finance branch of the Foreign Office, before the Joint Committee on Statutory Instruments that investigated the Rate Support Grant Reduction (Dundee and Stirling Districts) 1981–82 report on 14 July 1981. On the issue of the guidelines, he said: The Secretary of State has made it clear repeatedly that the guidelines are indicative, not definitive, and in no way mandatory. Just as he would expect that there could be some authorities who would exceed the guidelines, so it is also expected that there would be some authorities who would come below". That is no longer a tenable position. The Secretary of State now says clearly that the guidelines are not issued merely as a guide. It is not accepted that whether some are above or below is within the discretion of the authorities. The right hon. Gentleman is saying that the authorities must stay below the guidelines and that they will be penalised if they go above them. There will also be handouts and little bribes if they manage to keep within them.

The cover has ultimately been blown. The rate support grant settlement for 1982–83 will have a horrific impact in a number of respects. It will have an impact on jobs. I have already mentioned the remark of the Secretary of State that he was heartened by the increasing dole queues that result from public sector job losses. What makes this attack on public sector employees particularly unpleasant is that many of the jobs have been created by the diktat, fiat and legislation of successive Governments.

Even now in the House hon. Members are enacting a unified housing benefit system that will inevitably lead to a considerable increase in local government manpower. This will be criticised no doubt by the Secretary of Slate as profligate and unnecessary. New services are constantly imposed on local government. On checking today with Strathclyde council, I find that the discretionary grants for -children's clothing that used to be made by the Department of Health and Social Security have been pushed on to local government by the Secretary of State and his colleagues. In 1980–81, Strathclyde disbursed—it was only part of a year—about £50,000. In 1981–82 it was £500,000. For 1982–83, it is budgeting for over £750,000 which undoubtedly, given rising unemployment figures, is a conservative estimate. That As an example of an impost that has been shifted from central to local government: in a cynical manner. No provision has been made for it, so far as I know, in terms of the rate support grant.

I could mention many more casualties. One of them, as I have already remarked, is the trust and confidence between local government and the Secretary of State. Hon. Members have heard Conservative councillors who have been appalled by a history of confusion and muddle compounded by shameful lack of consultation that has marked the birth of this rate support grant settlement over the last few months.

The final victim is the ratepayer. Here, the cant and hypocrisy of the Minister reach new heights. That is illustrated by what has happened to the ratepayer over the past two or three years under this Government and the prospect for the next year under this rate support grant order.

The speech of the hon. Member for Dumfries (Sir H. Monro) was, in many ways, the best speech of the debate. It was a splendid speech, a veritable cri de Coeur, pathetic almost to hear. The hon. Gentleman was saying "What has gone wrong with the formula? Why is Dumfries, this splendid body of Conservatives who have done everything right, to be faced with 35 per cent. on the rates in the coming year?" The reason, of course, is that the formula is unfair, that it is fundamentally misconceived and that it is the work of his hon. Friends whom he will, sadly no doubt, despite his words, support in the Lobby.

I would say to the hon. Member for Perth and East Perthshire (Mr. Walker) that I, too, attended the CoSLA meeting and heard the representative from that district council saying openly that he was dismayed about what was happening. His authority had received a "divi" and got money back from the £700,000. It had struggled manfully to do what the Government wanted but would be faced with a standstill budget and a rate increase of about 20 per cent.

Even in Grampian region, which the Minister tells us so often is his ideal local authority, we find Councillor Sandy Mutch complaining. I remember from my days in South Aberdeen that he was the personification of the Conservative Party in north-east Scotland. The Press and Journal of 5 February 1982 said that he complained bitterly about Mr. Younger's attitude towards Grampian's share of the Rate Support Grant settlement. The region, he said, had always run 'a tight ship' and yet despite their efforts, which had attracted Scottish Office commendation for efficient budgeting and good housekeeping, they were penalised as harshly as any of the defaulting local authorities. Said Councillor Mutch: 'I don't want anything extra, but …we don't want to be clobbered.' Councillor Mutch, after all the years of ploughing through the political wilderness, is now being clobbered by a Conservative Government.

I resent what the Minister said yesterday in the Local Government and Planning (Scotland) Bill Committee when he represented that there was widespread Conservative support for his local government policy. It is universally condemned by both Labour and Conservative councils. The strategy that is embodied in the order is unsound in concept, arbitrary in execution and inequitable in effect. It is not just rough justice, as the Secretary of State claimed it occasionally is: it is no justice at all. Because we feel that so strongly, and because we know that we are backed by Scottish public opinion, we shall vote against the order and make our protests in the Lobby tonight.

7.1 pm

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

I thank those hon. Members on both sides of the House who have welcomed the fact that, for the first time, this debate is taking place at a reasonable time. It demonstrates the importance that the Government attach to the subject that, unlike previous Administrations, we have felt able to provide time for the debate now.

Opposition Members have made many references to critical remarks that Conservative councillors may or may not have made today to the Members of Parliament whom they met. A constant feature of almost every meeting that I and my right hon. Friend have had with the Convention of Scottish Local Authorities has been the convener of Strathclyde region, a senior Labour councillor, assuring us that he was not just being rude to us but that he would have been equally rude to previous Labour Governments. He emphasised that we had heard nothing compared with some of the remarks that he made to the right hon. Member for Glasgow, Craigton (Mr. Millan) when he was on the receiving end of the right hon. Gentleman's largesse a few years ago.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) and the right hon. Member for Craigton tried to conceal the fact that, in 1976, the Labour Government imposed not a 2½ per cent. reduction in grants but a 4 per cent. reduction purely to force down local authority spending. So critical were Opposition Members on that occasion and so unwilling were they to accept the bogus explanation that was given then and today that the hon. Member for Central Ayrshire (Mr. Lambie) and some of his hon. Friends voted against that rate support grant, thereby showing their view of the Labour Government's policies.

The right hon.Member for Craigton is the last person who can make a convincing case that Labour Governments and Oppositions speak with a single voice. We know that, whatever the right hon. Gentleman and the hon. Member for Garscadden say today, the brave words that came from the Opposition Front Bench were not matched by the puny efforts of the Labour Government. The right hon. Member for Western Isles (Mr. Stewart) was correct to point out that the Labour Government's policy resulted in serious and deep criticism from the Labour councillors. Opposition Members should not suggest today that the position was different. I give a wreath of integrity to the hon. Member for Central Ayrshire that is not shared by his right hon. and hon. Friends on the Opposition Front Bench.

Some of my hon. Friends have referred to the undoubted fact that when a general abatement is introduced it has very wide effects. I say to my hon. Friend the Member for Dumfries (Sir H. Monro) and my hon. Friend the Member for Perth and East Perthshire (Mr. Walker) that in the case of both Dumfries and Galloway regional council and Perth and Kinross district council they have seen in two separate ways how the Government have tried to protect authorities from the consequences of a high degree of irresponsibility in other local authorities.

Under the 1981 Act, £34 million in penalty was extracted from the authorities primarily responsible for excessive and unreasonable expenditure, a penalty which, if it had not been extracted in that way, would have been shared by all authorities, including Dumfries and Galloway and Perth and Kinross. Those two authorities suffered not one penny of abatement in 1981–82. Although we can now apply much greater selectivity than was available to the Labour Government or to past Administrations, there are still no means available whereby we can match the penalty that might be suffered by a local authority to its overspending compared with the guidelines. The right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) was correct to point out the implications for an area such as the Borders.

However, the remedy is essentially in the hands of the local authorities. If they wish to see a system whereby the effects of a general abatement are distributed according to the overspending of each authority, my right hon. Friend and the Government would be only too happy to respond to such a proposal from CoSLA. However, CoSLA and the individual authorities cannot have it both ways. If they say that they object to being singled out or to the guidelines being given significant consideration by the Government, and that they wish all local authorities to be treated as a single unit, they cannot then object when the general abatement has a random effect irrespective of the overspending of individual authorities.

If the bulk of the authorities in CoSLA believe themselves to be responsible, they should discuss whether the Government, before introducing a general abatement, should ensure that the effects of that abatement are applied according to the overspending of each authority. If that is what the majority of responsible authorities wish, they should say so in public and not just in private and they will not find the Government slow to respond. However, if they are not willing to bring forward that proposal, they must accept that the consequences of a general abatement will, to some extent, be erratic and random, although under the Government it is much less so than under any previous Administration.

I turn now to the other basic claim that has been made by the local authorities and by Opposition Members who wish to promote their cause.

Mr. David Steel

Surely the Under-Secretary of State will consider my other point, which is that the Government, in issuing their guidelines, should take into account the different standards of services already prevailing in the local authorities.

Mr. Rifkind

The Government are already trying to do that. The new client group approach is a more sophisticated method of determining guidelines. We have invited CoSLA to join the Scottish Office in discussing the methodology of guidelines, but up to today it has declined to do so. I say again that if it wishes to influence the way in which the guidelines are determined or the methodology that is applied, it will find the Government only too willing to enter into serious discussions about ways of improving them. I hope that that covers the right hon. Gentleman's point.

Mr. Lambie

The chief executive of Cunningham district council wrote to the Scottish Office at St. Andrew's House and asked those questions, but he has not yet received an answer to his letter.

Mr. Rifkind

The Scottish Office must work through CoSLA. If it wishes to enter into discussions on methodology, we shall be only too happy to respond.

The basic case of the Scottish local authorities is that during the past three years, in response to Government pressure, they have cut their expenditure to the bone and they have tried to respond to what the Government have sought. They claim that they have made swingeing cuts in all areas of expenditure, but despite their enormous efforts, and the unprecendented reductions in spending, the Government harshly demand more from them and greater sacrifices. If that was the position, whatever the Government's policy might be, one could not but have some sympathy for local authorities. I have no doubt that some local authorities will have done just that.

However, if we consider the aggregate of Scottish local authority expenditure since the Government came to office, I must tell the hon. Member for South Ayrshire (Mr. Foulkes) that, while it may be true that reductions have been made in some areas of expenditure, they have been more than matched by increases elsewhere. I shall give the hon. Gentleman the harsh and unpalatable facts, On a constant price basis, applying November 1980 prices, in 1979–80 local authority current expenditure was £2,163 million. The following year, it rose to £2,197 million. In the current year, it went up again to £2,236 million. Whatever else that might be, in each year that is an increase in real terms of growth in local authority current expenditure.

Mr. Foulkes

Does no the Minister agree that a great deal of that growth is caused by increases in loan charges because of high interest rates, increases in the cost of heating and other increases caused directly as a result of the Government's action?

Mr. Rifkind

That argument is incorrect. The simple fact is that local authorities that have sought to maintain that they have cut their spending to the bone and have made major sacrifices have moved in the opposite direction. If the Government can be criticised for anything, it is for not succeeding in reducing local authority current expenditure. My hon. Friend the Member for Edinburgh, South (Mr. Ancram) was correct to make that point. Goodness knows what would have happened to local authority expenditure if we had not applied our attempts to reduce and restrain it.

Over the past three years there has been growth. Also, if we look at local authority manpower, we find that in Scotland—not in England and Wales, where local authority manpower has been reduced by 90,000 in the last few years—loal authority staffs number 2,000 more than when the Government came to office.

Mr. Dewar

I recognise the familiar tune that the Minister is playing, but we are interested in what will happen in the coming year. The Minister has seen CoSLA's figures, which suggest that on a standstill budget there is a 6 per cent. reduction in relevant expenditure. Is that an accurate picture of what will happen?

Mr. Rifkind

The right hon. Member for Craigton compared that figure with a 4 per cent. figure in England and Wales. If there is a discrepancy, that difference is explained by the simple fact that the level of overspending that we start off with in Scotland is, I regret, significantly higher than it is in England and Wales. Therefore, the figure given by the hon. Gentleman may be correct. However, the effect on any individual authority depends on the extent to which it is overspending. Many authorities will have to make fewer cuts to meet the guidelines compared with other local authorities.

The basic case of local authorities would have more substance and would carry more weight if those authorities could say that, over the last three years, their overall current expenditure in real terms had reduced. It has not, however. It has been increased in real terms. Their staffing has gone up in real terms. [Interruption.] That is not just because of the increase in numbers of police. That is a minor fraction of the changes in staffing numbers over the period concerned.

Mr. Dewar

The Minister will know that, in the Rate Support Grant (Scotland) Order 1982, it is stated: The Government proposed to allow an increase in the programme for local authority current expenditure in order to sct local authorities a realistic expenditure target. If the CoSLA figures are correct, is the Minister allowing them an increase in their expenditure? Is he not playing with words?

Mr. Rifkind

I am not playing with words. I fully accept that the statement becomes of relatively little significance, given the desire of local authorities as a whole to increase their expenditure. We know that, when the right hon. Member for Craigton faced that problem in 1976, he put such pressure on local authorities that they reduced their staffing by about 14,000. He reduced the grant percentage by 4 per cent. Forced by the IMF, he achieved major reductions in local authority spending.

The local authorities have argued that there must be give and take and compromise between them and the Secretary of State. The Government's attitude is that compromise requires give on both sides. It requires local authorities to show their willingness to reduce their expenditure in the national interest. While I give credit to local authorities that have reduced their expenditure, the simple fact is that the bulk of local authorities have failed to do so. I hope that they will now recognise where the national interest lies and what is required.

Sir Hector Monro

As my hon. Friend knows, I am entirely in agreement with his overall policy of restricting expenditure. Will he look at the formula in detail to see whether it is unfairly affecting rural areas?

Mr. Rifkind

We are always willing to look at representations from local authorities, either with CoSLA or individually, when they have grievances about. distribution.

The fundamental question remains one of the totality of local authority expenditure. If local authorities wish the Secretary of State and the Government to recognise their problems and to reach agreement with them, I hope that they will agree to reverse the trend of the last few years and to begin to make real reductions in their overall expenditure.

It is on the basis that local authority expenditure has unfortunately increased over the past three years that the order is put before the House. Local authorities' staffing has increased. On that basis, we have adopted the recommendation of the right hon. Member for Craigton that, by a grant percentage reduction and other means, we hope to bring home to local authorities that the national interest requires them to reduce their spending. I commend the order to the House.

Question put:—

The House divided:: Ayes 304, Noes 231.

Division No. 64]	[7.15 pm
AYES
Adley,Robert	Clark, Sir W.(Croydon S)
Aitken,Jonathan	Clarke,Kenneth (Rushcliffe)
Alexander,Richard	Clegg, SirWalter
Alison, Rt Hon Michael	Cockeram,Eric
Amery, Rt Hon Julian	Colvin, Michael
Ancram, Michael	Cope, John
Arnold, Tom	Cormack, Patrick
Aspinwall, Jack	Corrie, John
Atkins, Rt Hon H.(S'thorne)	Costain, SirAlbert
Atkins, Robert(Preston N)	Cranborne, Viscount
Atkinson, David(B'm'th',E)	Critchley, Julian
Baker, Kenneth(St.M'bone)	Crouch, David
Baker, Nicholas(NDorset)	Dean, Paul(North Somerset)
Beaumont-Dark,Anthony	Dickens, Geoffrey
Bell, SirRonald	Dorrell, Stephen
Bendall,Vivian	Douglas-Hamilton, LordJ.
Bennett, SirFrederic(T'bay)	Dover, Denshore
Benyon, Thomas (A'don)	du Cann, Rt Hon Edward
Benyon, W.(Buckingham)	Dunn, Robert(Dartford)
Best, Keith	Durant, Tony
Bevan, David Gilroy	Dykes, Hugh
Biffen, RtHon John	Eden, RtHon Sir John
Biggs-Davison,SirJohn	Edwards, Rt Hon N.(P'broke)
Blackburn, John	Eggar, Tim
Blaker, Peter	Emery, Sir Peter
Body, Richard	Eyre, Reginald
Bonsor, SirNicholas	Fairgrieve, SirRussell
Boscawen, Hon Robert	Faith, MrsSheila
Bottomley, Peter(W'wich W)	Farr, John
Bowden, Andrew	Fell, Sir Anthony
Boyson, Dr Rhodes	Fenner, Mrs Peggy
Braine, SirBernard	Finsberg, Geoffrey
Bright, Graham	Fisher, Sir Nigel
Brinton, Tim	Fletcher, A.(Ed'nb'ghN)
Brittan, Rt. Hon. Leon	Fletcher-Cooke.SirCharles
Brooke, Hon Peter	Fookes, Miss Janet
Brotherton, Michael	Forman, Nigel
Brown, Michael(Brigg&Sc'n)	Fowler, Rt Hon Norman
Browne,John (Winchester)	Fox, Marcus
Bruce-Gardyne,John	Fraser, Peter (South Angus)
Buck, Antony	Fry, Peter
Budgen, Nick	Gardiner, George(Reigate)
Bulmer, Esmond	Gardner, Edward (S Fylde)
Burden, SirFrederick	Garel-Jones, Tristan
Butcher, John	Gilmour, RtHon Sir Ian
Cadbury, Jocelyn	Glyn, Dr Alan
Carlisle, John (Luton West)	Goodhart, SirPhilip
Carlisle, Kenneth (Lincoln)	Goodhew, SirVictor
Carlisle, Rt Hon M.((R'c'n)	Goodlad, Alastair
Chalker, Mrs. Lynda	Gorst, John
Channon, Rt. Hon. Paul	Gow, Ian
Chapman, Sydney	Grant, Anthony (Harrow C)
Clark, Hon A.(Plym'th, S'n)	Greenway, Harry

Grieve, Percy	Mills, Peter (West Devon)
Griffiths, E.(B'ySt.Edm'ds)	Miscampbell, Norman
Grffitths,Peter Portsm'thN)	Moate, Roger
Grist, Ian	Monro,SirHector
Grylls,Michael	Moore,John
Gummer,John Selwyn	Morgan, Geraint
Hamilton, Hon A.	Morris, M.(N'hampton S)
Hamilton,Michael(Salisbury)	Morrison, Hon C.(Devizes)
Hampson.Dr Keith	Morrison, Hon P.(Chester)
Hannam,John	Mudd, David
Haselhurst,Alan	Murphy,Christopher
Hastings,Stephen	Myles, David
Havers, Rt Hon Sir Michael	Neale.Gerrard
Hawkins,Paul	Needham,Richard
Hawksley,Warren	Nelson,Anthony
Hayhoe, Barney	Neubert, Michael
Heath, Rt Hon Edward	Newton, Tony
Heddle, John	Normanton, Tom
Henderson, Barry	Nott, Rt Hon John
Heseltine, Rt Hon Michael	Onslow,Cranley
Hicks,Robert	Oppenheim, Rt Hon Mrs S.
Higgins, Rt Hon Terence L.	Osborn,John
Hogg.HonDouglas(Gr'th'm)	Page, John (Harrow, West)
Holland,Philip(Carlton)	Page, Richard (SW Herts)
Hooson,Tom	Parkinson, Rt Hon Cecil
Hordern,Peter	Parris,Matthew
Howe, Rt Hon Sir Geoffrey	Patten,Christopher(Bath)
Howell, Rt Hon D.(G'ldf'd)	Patten, John(Oxford)
Howell, Ralph (N Norfolk)	Pattie,Geoffrey
Hunt, David (Wirral)	Pawsey, James
Hunt,John(Ravensbourne)	Percival, Sir lan
Hurd, Hon Douglas	Pink, R. Bonner
Jenkin, Rt Hon Patrick	Pollock,Alexander
Jessel, Toby	Porter,Barry
JohnsonSmith, Geoffrey	Prentice, Rt Hon Reg
Jopling, Rt Hon Michael	Price, Sir David (Eastleigh)
Joseph, Rt Hon Sir Keith	Prior, Rt Hon James
Kellett-Bowman, MrsElaine	Proctor, K. Harvey
Kershaw, Sir Anthony	Pym, Rt Hon Francis
Kimball, Sir Marcus	Raison, Timothy
King, Rt Hon Tom	Rathbone, Tim
Kitson, SirTimothy	Rees, Peter (Dover and Deal)
Knight, MrsJill	Rees-Davies, W. R.
Knox, David	Renton, Tim
Lamont, Norman	Rhodes James, Robert
Lang, Ian	Rhys Williams, SirBrandon
Langford-Holt, Sir John	Ridley, Hon Nicholas
Latham, Michael	Ridsdale, Sir Julian
Lawrence, Ivan	Rifkind, Malcolm
Lee, John	Rippon, Rt Hon Geoffrey
LeMarchant, Spencer	Roberts, M.(Cardiff NW)
Lester, Jim (Beeston)	Roberts, Wyn (Conway)
Lewis, Kenneth (Rutland)	Rossi, Hugh
Lloyd, Ian (Havant& W'loo)	Rost, Peter
Lloyd, Peter (Fareham)	Royle, Sir Anthony
Loveridge, John	Sainsbury, Hon Timothy
Luce, Richard	Shaw, Michael(Scarborough)
Lyell, Nicholas	Shelton, William(Streatham)
McCrindle, Robert	Shepherd, Colin(Hereford)
Macfarlane, Neil	Shepherd, Richard
MacKay, John (Argyll)	Shersby, Michael
Macmillan, Rt Hon M.	Silvester, Fred
McNair-Wilson,M.(N'bury)	Sims, Roger
McNair-Wilson, P. (NewF'st)	Smith, Dudley
McQuarrie,Albert	Speed, Keith
Madel, David	Speller, Tony
Major john	Spence, John
Marland, Paul	Spicer, Jim (West Dorset)
Marlow,Antony	Spicer, Michael (S Worcs)
Marshall, Michael (Arundel)	Sproat, Iain
Marten, Rt Hon Neil	Squire, Robin
Mates, Michael	Stainton, Keith
Maude, Rt Hon Sir Angus	Stanbrook, Ivor
Mawby, Ray	Stanley, John
Maxwell-Hyslop, Robin	Steen, Anthony
Mayhew,Patrick	Stevens, Martin
Mellor, David	Stewart, A. (ERenfrewshire)
Meyer, Sir Anthony	Stewart, Ian (Hitchin)
Miller, Hal (B'grove)	Stokes, John
Mills, Iain (Meriden)	Stradling Thomas.J.

Tapsell, Peter	Walters, Dennis
Tebbit, Rt Hon Norman	Ward,John
Temple-Morris, Peter	Warren, Kenneth
Thomas, Rt Hon Peter	Watson, john
Thompson,Donald	Wells, Bowen
Thorne, Neil(Ilford South)	Wells,John(Maidstone)
Thornton, Malcolm	Wheeler, John
Townend, John (Bridlington)	Whitelaw, Rt Hon William
Townsend, CyrilD,(B'heath)	Whitney, Raymond
Trippier, David	Wickenden, Keith
Trotter, Neville	Wiggin, Jerry
van Straubenzee, Sir W.	Wilkinson, John
Vaughan, DrGerard	Williams, D.(Montgomery)
Viggers, Peter	Winterton, Nicholas
Waddington, David	Wolfson, Mark
Wakeham, John	Young, Sir George(Acton)
Waldegrave, Hon William	Younger, Rt Hon George
Walker, Rt Hon P.(W'cester)
Walker, B.(Perth)	Tellers for the Ayes:
Walker-Smith, Rt Hon Sir D.	Mr. Anthony Berry and
Wall, Sir Patrick	Mr. Carol Mather.
NOES
Abse, Leo	Dewar, Donald
Adams, Allen	Dixon, Donald
Allaun, Frank	Dobson, Frank
Alton, David	Dormand, Jack
Anderson, Donald	Dubs, Alfred
Archer, Rt Hon Peter	Dunnett, Jack
Ashley, Rt Hon Jack	Dunwoody, Hon Mrs G.
Ashton, Joe	Eadie, Alex
Atkinson, N.(H'gey,)	Eastham, Ken
Bagier, GordonA.T.	Edwards, R.(W'hampt'n S E)
Barnett.Guy (Greenwich)	Ellis, R.(NED'bysh're))
Barnett, Rt Hon Joel(H'wd)	English, Michael
Beith, A. J.	Ennals, Rt Hon David
Bennett, Andrew(St'kp'tN)	Evans, loan (Aberdare)
Bidwell, Sydney	Evans, John (Newton)
Booth, Rt Hon Albert	Ewing, Harry
Bottomley, Rt Hon A. (M'b'ro)	Faulds,Andrew
Bray, Dr Jeremy	Field, Frank
Brown, Hugh D.(Provan)	Fitch, Alan
Brown, R. C. (N'castle W)	Fitt, Gerard
Brown, Ronald W. (H'ckn'yS)	Flannery, Martin
Brown, Ron(E'burgh, Leith)	Fletcher, Ted (Darlington)
Buchan, Norman	Ford, Ben
Callaghan, Rt Hon J.	Forrester, John
Callaghan, Jim (Midd't'n&P)	Foster, Derek
Campbell, Ian	Foulkes, George
Campbell Savours, Dale	Fraser, J. (Lamb'th, N'w'd)
Canavan, Dennis	Freeson, Rt Hon Reginald
Carmichael, Neil	Freud, Clement
Carter-Jones, Lewis	Garrett, John (Norwich S)
Cartwright, John	Garrett, W. E. (Wallsend)
Clark, Dr David (S Shields)	George,Bruce
Cocks, Rt Hon M. (B'stol S)	Gilbert, Rt Hon Dr John
Cohen, Stanley	Ginsburg, David
Coleman, Donald	Golding, John
Concannon, Rt Hon J. D.	Graham, Ted
Cook, Robin F.	G rant, George (Morpeth)
Cowans, Harry	Grant, John (Islington C)
Craigen, J. M. (G'gow, M'hill)	Grimond, Rt Hon J.
Crowther,Stan	Hamilton,James(Bothwell)
Cryer, Bob	Hamilton, W. W. (C'tral Fife)
Cunliffe,Lawrence	Harrison, Rt Hon Walter
Cunningham, DrJ.(W'h'n)	Hart, Rt Hon Dame Judith
Dalyell, Tam	Hattersley, Rt Hon Roy
Davidson,Arthur	Haynes, Frank
Davies, Ifor (Gower)	Healey, Rt Hon Denis
Davis, Clinton (HackneyC)	Hogg, N.(EDunb't'nshire)
Davis, Terry (B'ham, Stechf'd)	HomeRobertson, John
Deakins,Eric	Homewood, William
Dean, Joseph (Leeds West)	Hooley, Frank

Howell, Rt Hon D.	Pavitt, Laurie
Howells, Geraint	Pendry, Tom
Huckfield, Les	Penhaligon,David
Hughes, Mark(Durham)	Pitt, William Henry
Hughes, Robert (Aberdeen N)	Powell, Raymond (Ogmore)
Hughes, Roy (Newport)	Price, C. (Lewisham W)
Janner, Hon Greville	Race, Reg
Jay, Rt Hon Douglas	Rees, Rt Hon M (Leeds S)
John, Brynmor	Richardson, Jo
Johnson, James (Hull West)	Roberts,Allan (Bootle)
Johnson, Walter (Derby S)	Roberts, Ernest (Hackney N)
Johnston, Russell(Inverness)	Roberts,Gwilym(Cannock)
Jones, Rt Hon Alec (Rh'dda)	Robertson, George
Jones, Barry (East Flint)	Robinson, G.(Coventry NW)
Jones, Dan (Burnley)	Rooker, J. W.
Kaufman, Rt Hon Gerald	Roper,John
Kerr, Russell	Ross, Ernest (Dundee West)
Lambie, David	Ryman, John
Lamborn, Harry	Sandelson, Neville
Lamond,James	Sever, John
Leadbitter, Ted	Sheerman, Barry
Leighton,Ronald	Sheldon, Rt Hon R.
Lestor, Miss Joan	Shore, Rt Hon Peter
Lewis, Arthur(N'ham NW)	Short, Mrs Renée
Lewis, Ron (Carlisle)	Silkin, Rt Hon J. (Deptford)
Litherland, Robert	Silkin, Rt Hon S. C.(Dulwich)
Lofthouse, Geoffrey	Silverman,Julius
Lyon, Alexander(York)	Skinner, Dennis
Lyons, Edward (Bradf'dW)	Soley, Clive
McCartney, Hugh	Spearing, Nigel
McDonald, DrOonagh	Spriggs, Leslie
McElhone, Frank	Stallard, A.W.
McGuire, Michael(Ince)	Steel, Rt Hon David
McKelvey, William	Stewart, Rt Hon D.(W Isles)
MacKenzie, Rt Hon Gregor	Stoddart,David
Maclennan, Robert	Stott, Roger
McNally,Thomas	Strang, Gavin
McNamara, Kevin	Summerskill, Hon Dr Shirley
McTaggart, Robert	Taylor, Mrs Ann(Bolton W)
McWilliam, John	Thomas, Jeffrey(Abertillrey)
Marks, Kenneth	Thomas, DrR.(Carmarthen)
Marshall, D(G'gowS'ton)	Tilley, John
Marshall, DrEdmund (Goole)	Torney, Tom
Marshall, Jim (Leicester S)	Urwin, Rt Hon Tom
Maxton, John	Varley, Rt Hon Eric G.
Maynard, Miss Joan	Wainwright,E.(DearneV)
Meacher, Michael	Wainwright,R.(ColneV)
Mellish, RtHon Robert	Watkins, David
Mikardo Ian	Weetch, Ken
Millan, Rt Hon Bruce	Welsh, Michael
Miller, DrM.S. (EKilbride)	White, Frank R.
Mitchell, Austin(Grimsby)	White, J. (G'gow Pollok)
Mitchell, R. C. (Soton Itchen)	Whitlock, William
Morris, Rt Hon A.(W'shawe)	Wigley, Dafydd
Morris, Rt Hon C.(O'shaw)	Willey, Rt Hon Frederick
Morton, George	Williams, Rt Hon A.(S'sea W)
Moyle, Rt Hon Roland	Wilson, Gordon (DundeeE)
Mulley, Rt Hon Frederick	Wilson, William (C'try SE)
Newens, Stanley	Winnick, David
Oakes, Rt Hon Gordon	Woodall, Alec
O'Halloran, Michael	Woolmer, Kenneth
O'Neill, Martin	Wright, Sheila
Orme, Rt Hon Stanley	Young, David (Bolton E)
Owen, Rt Hon Dr David
Palmer, Arthur	Tellers for the Noes:
Park, George	Mr. James Tinn and
Parker,John	Mr. Allen McKay.
Parry, Robert

Resolved,

That the Rate Support Grant (Scotland) Order 1982, a copy of which was laid before this House on 22 January, be approved.