HC Deb 28 July 1982 vol 28 cc1074-80 4.23 pm
The Secretary of State for Scotland (Mr. George Younger)

With permission, Mr. Speaker, I shall make an announcement about the rate support grant settlement for Scotland for 1983–84. I shall also refer briefly to 1982–83.

Local authorities' budget estimates for 1982–83 are more than £200 million higher than was proposed in the rate support grant settlement, and I have already indicated to the Convention of Scottish Local Authorities that authorities will have to restrict their expenditure to something nearer to what the country and their ratepayers can afford.

I have initiated selective action against Lothian regional council and Stirling district council. Lothian has proposed an expenditure reduction of £30.7 million commensurate with the very welcome cut of 16p in the rate poundage already implemented by it. In the light of this proposal, I do not propose to proceed with selective reduction in grant payable to Lothian. On 22 July the House approved my proposal to reduce grant payable to Stirling district council by £1.2 million.

As I do not propose to set in hand further selective action, this still leaves about £170 million of excessive spending which cannot simply be ignored and I therefore have no option but to make a general abatement to cover at least a part of this overspending. I have, however, decided to limit this to £27 million, which amounts to only about 16 per cent. of the total overspend, and is no greater than the general abatement that I had to impose last year.

I shall bring an order before the House about Christmas with proposals for the rate support grant settlement for 1983–84. The proposals will take into account the need for reductions in the present level of current expenditure by local authorities. To enable authorities to plan expenditure accordingly in good time I am making this statement now. The Minister with responsibility for home affairs and the environment will be meeting the Convention of Scottish Local Authorities on 29 July.

The figure which I propose provisionally as the public expenditure provision for local authority current expenditure in 1983–84 is £2,635 million. That is £120 million more than provision in the public expenditure White Paper (Cmnd. 8494). After considering the views of the convention as expressed to me in preliminary consultations, I have concluded that this increase should be made. It will not be fully allocated to provision for individual services: £100 million will be treated as an undifferentiated addition made solely because authorities need more time to bring spending into line with the Government's plans, and I shall take this into account before deciding the basis of current expenditure guidelines for 1983–84.

The total of relevant expenditure for the rate support grant settlement will be derived from the figure of £2,635 million in the normal way by the addition of non-current expenditure, including loan charges and capital financed from revenue.

I propose aggregate Exchequer grant of £1,925 million, giving a rate of grant of some 61½ per cent. But I must make it clear that this will be liable to reduction if authorities budget for expenditure significantly above the Government's planning figure. This figure of £1,925 million represents a cash increase of 3.5 per cent. over the 1982–83 grant figure. If authorities budget for expenditure in line with the Government's planning figure, it should be possible to keep rate increases next year very low. I shall be consulting the convention on these proposals in more detail before presenting the rate support grant order to Parliament in the usual way.

Mr. Bruce Millian (Glasgow, Craigton)

Is the right hon. Gentleman aware that this is another sad and depressing statement about local government, and that it is not inappropriate that it should be made on the same day that another extremely depressing statement has been presented to the House? For 1982–83 we have reached the absurd position that the Government's so-called guidelines have been offended by 56 of the 65 local authorities in Scotland. Action, however, is being taken only against Stirling while a general penalty is being imposed on the other authorities.

It is even more absurd that Lothian region's expenditure, which has been reduced by £30 million, will still be more than 12 per cent. above the Government's guidelines, although we have been told by Lothian Tories and the Secretary of State that the guidelines are perfectly easy for any local authority with good will to meet. I repeat that Lothian will still be 12 per cent. above the guidelines while the Scottish average is about 8 per cent. above them. The business of guidelines is an utter farce and the sooner the right hon. Gentleman abandons attempts to dragoon local authorities in Scotland the better.

Consultations have been non-existent. It is farcical to meet the local authorities tomorrow at extremely short notice. I inquired of COSLA yesterday and apparently it was only yesterday that the meeting was arranged. All the major decisions about expenditure and grant have been taken. What is the purpose of the negotiations tomorrow? Is it intended merely to convey the bad news to local authorities and not to enter into any genuine discussions with them?

Is the right hon. Gentleman aware that the usual presentation for 1983–84, with cash figures confused with real figures, does not obscure the fact that the new figure of relevant expenditure for 1983–84 of £2,635 million is only about £15 million more than the adjusted budgets for the current year 1982–83? As the 1983–84 figure is in cash terms, there will have to be a reduction in real expenditure by Scottish local authorities of between 6 and 7 per cent. in 1983–84 to reach the relevant expenditure figures. The Secretary of State knows that he has no hope of getting that sort of reduction, and that even if it took place it would be at the expense of a drastic curtailment of basic local authority services.

Is the Secretary of State also aware that he has added insult to injury by a further 2.7 per cent. reduction in the rate of Exchequer grant, so that during the past three years the rate of grant will have fallen from 68½ per cent.—the figure that he inherited—to only 61½ per cent? The burden of that falls on the ratepayers, for whom the Secretary of State always expresses such deep and artificial concern. The net result of the settlement—that is what it is, because there are no real negotiations—will be to add to the difficulties and burdens of local authorities and ratepayers in Scotland and to add to the already appallingly high unemployment as local authorities are forced to reduce staff.

Mr. Younger

There is some misunderstanding, because the meeting to be held tomorrow is only a preliminary and courtesy meeting to tell the president of COSLA what was said to the House today. The right hon. Gentleman should have known that this is a genuine negotiation and consultation. None of the figures are firm and final until they are announced, I hope in November. If the right hon. Gentleman believes that it is not genuine consultation, I hope that he will disabuse himself and others of that belief. I have taken note of what COSLA has said to me many times during the past few years and made changes as a result.

The right hon. Gentleman said that he was depressed about the statement. It is depressing that, after three years, we are still trying to attain a reduction in local government spending. Each year more has been spent than the year before.

The right hon. Gentleman's comments about Lothian were most revealing. He supported the previous administration in that region lock, stock and barrel in its deliberate policy of overspending beyond even what he could have stomached had he been Secretary of State. He is now criticising the new administration, which does not even have a majority, for not having reduced the region's spending to the Government's guidelines in about four months. The right hon. Gentleman is becoming difficult to believe.

Mr. David Steel (Roxburgh, Selkirk and Peebles)

The Secretary of State talks about his expectation of low rate increases next year. What target does he have in mind, given that his expectation for this year was wildly inaccurate? Does he accept that the sledgehammer that he is now using will hit the local authorities that have been prudent in their spending just as badly as those that have been extravagant? When will he implement the Government's election promise about reforming the rating system?

Mr. Younger

I do not agree with the right hon. Gentleman's first point. The person who was completely inaccurate in predictions of rate increases this year was the right hon. Member for Glasgow, Craigton (Mr. Millan), who was wildly wrong. I appreciate the right hon. Gentleman's point about prudent authorities, and I hope that when we discuss the details of the general abatement we can ensure that no authority that has spent under the guidelines will suffer a penalty as a result. The Government are considering the alternatives for the reform of the rating system. They liked the Green Paper and hope to produce policy decisions before long.

Several Hon. Members

rose—

Mr. Speaker

Order. I propose to call those hon. Members who have already risen and then to move on.

Mr. Barry Henderson (Fife, East)

Will my right hon. Friend tell us something about the impact of party control on local authorities and their expenditure? Can he not do more to protect from the rapacious demands of high-spending local authorities the authorities that have been consistently careful? Is local authority staffing still higher than it was in 1979?

Mr. Younger

I do not have the detailed figures, but, as I recall it, two or three months ago it was apparent that anyone who lived in a Labour-controlled authority in Scotland could expect to spend 10p in the pound more in rates than someone who lived in a non-Labour-controlled authority. I shall check to ensure that my statement is correct.

I agree with what my hon. Friend said about high spenders. It is a misfortune that the general abatement procedure must be distributed between authorities according to the formula. It means that some authorities that have not been major contributors to overspending must pay penalties, but I hope to ensure that no authority needs to pay a penalty that is larger than its overspending.

Mr. James Hamilton (Bothwell)

Will the right hon. Gentleman resist stating that the rate poundage is a contributory factor to unemployment in Scotland? Is he aware that Strathclyde regional council and my district council of Motherwell made it clear that if the further guidelines are imposed it will mean cuts in services? Old folk will suffer, education will suffer drastically, and many children who now go to school barefoot will continue to do so. [HON. MEMBERS: "Oh."] And that is a fact of life, whether hon. Members like it or not.

Mr. Younger

If the hon. Gentleman really believes that the rate poundage has no effect on unemployment, he will find few people who run small businesses in Scotland to agree with him. As to children going to school without shoes, which I greatly regret—I presume that the hon. Gentleman is talking about Strathclyde—I noticed on Scottish television last week that Strathclyde has just bought a £70,000 yacht on the rates. It might have spent some of that on shoes for children.

Mr. Robert Maclennan (Caithness and Sutherland)

Why did not the Secretary of State follow the example of the Secretary of State for Wales, who made an earlier statement, by sugaring the pill and announcing an increase in much-needed capital expenditure by local authorities? He must be aware of the decline in the condition of our sewers and housing stock, and his statement would have been more complete had he referred to that.

The aggregate Exchequer grant for 1983–84 is clearly an increase well below any projected reduction in inflation. The consequence of that must be a further financial squeeze in Scotland. What is the Secretary of State's justification for that?

Mr. Younger

I do not normally try to sugar pills. I try to be realistic and straightforward with everyone if I possibly can. I appreciate the hon. Gentleman's point about capital spending, and the Scottish Office will do all that it can to obtain as much money as possible for capital spending, because we wish to protect it. The hon. Gentleman is right about inflation. If the amounts allowed are not sufficient to compensate for inflation, it means that difficult decisions must be taken. But local authorities in that position will be similar to almost everyone else in Britain, especially those who run businesses. Perhaps businessmen believe that it is about time that local authorities were in a similar position.

Sir Hector Monro (Dumfries)

Will my right hon. Friend re-examine the distribution formula? Does he agree that at present it is weighted against rural areas, where local authorities are having great difficulty in providing schools, buses and other community services that are desperately important in the countryside?

Mr. Younger

I appreciate my hon. Friend's points. It is always difficult to compensate fully for the extra costs of rural areas. Together with COSLA, I shall examine the formula to see whether it is fair.

Mr. Norman Hogg (Dunbartonshire, East)

If the Government's ludicrous guidelines were to be met by the local authorities, what would be the reduction in manpower in Scottish local government, and which services would the Secretary of State expect to carry the burden of manpower reductions?

Mr. Younger

There are two answers to that. The first is that a reduction in manpower is extremely desirable because the cost of the staff employed in local government falls either on the ratepayers or on the taxpayers, for both of whom it is difficult to find the money. As to what would happen if the guidelines were met, the hon. Gentleman might wish to examine what happens in the authorities that keep within the guidelines. There are some and they seem to manage. Why cannot the rest?

Mr. David Myles (Banff)

Does my right hon. Friend believe it significant that the cost per head of providing services in rural areas such as Banff, Buchan or Moray districts is about £65, but that in more concentrated areas, where one would expect the cost of providing the services to be much less—areas such as Dumbarton or Stirling—the figure is more than £130 per head?

Mr. Younger

I agree with my hon. Friend, although it has to be recognised that inner city areas especially have difficult problems of their own. It never ceased to amaze me that costs per head of the old Lothian regional council before the last election were vastly greater in respect of practically every item than anywhere else, even country areas with their greater distances and problems.

Mr. John Home Robertson (Berwick and East Lothian)

Is the Secretary of State aware that many hon. Members are becoming heartily sick of his efforts to pose as the ratepayers' friend? In the interests of accuracy, will he explain what has been the impact in real, net terms of his cuts in rate support grant on rate levels throughout Scotland? I am not interested in playing off one area against another. Hon. Members do not want to hear about phoney guidelines. They want real figures.

Mr. Younger

The hon. Gentleman can see for himself if he compares the rate levels in various authorities with the political control in those areas. It should prove an interesting exercise for him. I would have thought that the hon. Gentleman, to a greater extent than other hon. Members, would have received more correspondence to prove that the ratepayers in many parts of Scotland, and especially the part that he represents, are desperately concerned about local government overspending and wish it to stop.

Mr. Albert McQuarrie (Aberdeenshire, East)

My right hon. Friend will be aware that there was some criticism last year of the timing of the guidelines to local authorties such as Grampian, Banff, Buchan and Gordon with which I am connected. Will my right hon. Friend make a special effort to ensure that the guidelines are issued earlier to assist committees in areas such as I have mentioned, which invariably meet the guidelines and, in fact, underspend?

Mr. Younger

I am glad to give my hon. Friend that assurance. I am trying hard to get decisions made as early as possible. I hope that they can be taken much earlier than last year when they were reached much later than they should have been. I join in his tribute to the local authorities that he has mentioned. If all local authorities operated in the same manner there would be no problem and I would not have had to make this statement.

Mr. Jim Craigen (Glasgow, Maryhill)

As the Secretary of State has now put all Scottish local authorities on his hit list, will he say what he expects will be the reduced figure in order to comply with his proposals? Is a 6 per cent. reduction in local authority spending in real terms to be expected next year?

Mr. Younger

I hope very much that we shall see, at last, this year, a reduction in spending by local authorities. We have not yet seen any reduction in aggregate. Every year, more has been spent than the previous year. I doubt if that has happened in many businesses. There is a long way to go before we have local authority spending under control.

Mr. Tom Clarke (Coatbridge and Airdrie)

Is the Secretary of State aware that local authorities have a far better record than central Government in containing expenditure and adhering to their budgets over the last decade? Is he aware that genuine concern will be expressed at his meeting with COSLA tomorrow that he should, for the first time, engage in discussions on the guidelines to reflect the real problems that local authorities have to face? Is he aware that the local authorities have never accepted the guidelines as being reasonable and that, until they are fully involved in discussions, they never will do so? Does the right hon. Gentleman really feel that the allowance of 3.5 per cent. contained in his figures bears any relation to the real anticipated level of inflation or wage settlements with which local councils, whatever their political complexion, inevitably have to deal?

Mr. Younger

I am grateful to the hon. Gentleman, who has specialist knowledge on these matters. The hon. Gentleman referred to discussions on the guidelines. I agree that it is desirable for the maximum possible discussion to take place on the guidelines to try at least to get agreement on what the guidelines should be, irrespective of whether they are reached. There was a time, which the hon. Gentleman, I think, will remember, when there was a refusal to discuss. I am glad to say that this attitude is now in the past. I am only too willing to discuss any complaints or problems of local authorities or differences that they would like to see in the guidelines.

On the 3.5 per cent., we have taken into account everything possible, including future trends and medium-term financial strategy. The total figure represents the maximum that the Government believe the country and the ratepayers can afford to provide for local government services. It is not unfair that local authorities should have to work on the same basis that applies to every business. The hon. Gentleman claimed that local authorities have a better record than the Government in saving money over the last few years. With great respect, I do not think that that represents a fair picture.

Among their items of expenditure, local authorities have education. The number of pupils is falling sharply. It would be extraordinary, against that background, if they did not manage to achieve reductions in expenditure. In spite of all exhortations, there has yet to be an actual reduction in aggregate local government spending for one year against the previous year. It is time that this was achieved to try to compensate for the fall in national income.

Mr. Gavin Strang (Edinburgh, East)

Is the right hon. Gentleman aware that we can bandy about as many figures as we like but the reality in Lothian is that savage cuts are being made in the level of services? More important, these local government cuts, both regional and district, the university cuts, the Scottish Office cuts and the removal of Edinburgh's eligibility for industrial development assistance, have combined to create a remarkable situation in that unemployment in the Edinburgh area in the last year has increased twice as fast as in Scotland as a whole?

When will the Secretary of State do something about the plight of Edinburgh? Is he determined that unemployment there should be forced up to the deplorable level that exists in Glasgow and Dundee?

Mr. Younger

I sympathise with the hon. Gentleman in his concern about unemployment in the Edinburgh area. One of the major factors, openly stated by people in Edinburgh, frequently in the press and elsewhere, has been the excessive rates imposed by the old regime in Lothian region. As the hon. Gentleman will remember, the Edinburgh chamber of commerce produced chapter and verse showing what had happened. It is time that the hon. Gentleman recognised it.

Mr. Millan

Will the right hon. Gentleman now answer a specific question which he has been asked twice but which he has failed to answer? What reduction in real terms would local authorities have to make in 1983–84 compared with their 1982–83 budgets to attain his figures for 1983–84? Is the amount, as I have calculated, between 6 and 7 per cent. in real terms, or is it something different? The right hon. Gentleman must know the figure. What is it?

Mr. Younger

I could probably make a calculation that would help the right hon. Gentleman. I shall try to send him such a calculation. The right hon. Gentleman will know from my statement what are the main figures on which local authorities can operate.

Mr. Millan

The Secretary of State has made an extraordinary statement. Does he not know what sacrifices he is asking local authorities to make next year? Is it 6 to 7 per cent. in real terms or something else? Does he not know? Will he not tell us?

Mr. Norman Hogg

He cannot understand the figures.

Mr. Younger

The right hon. Gentleman has cooked up one particular comparison, as he is entitled to do. I have given him a mass of figures. All he has done is to make out that none of those will do and that he wants his private set of figures. If he wants a private set of figures, he can put down a question and I shall answer it.