HC Deb 15 December 1983 vol 50 cc1181-90
Mr. Speaker

I call the Secretary of State for Scotland to make a statement.

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


Mr. Dennis Canavan (Falkirk, West)

On a point of order, Mr. Speaker. On what authority is the Secretary of State making this statement, bearing in mind the fact that earlier this week he was twice decisively rejected by the majority of the elected representatives in Scotland and earlier this year was similarly rejected by over 70 per cent. of the people of Scotland? It is a scandal. He ought to resign.

Mr. Barry Henderson (Fife, North-East)


Mr. Speaker

I hope this will not delay the proceedings.

Mr. Henderson

The only rejection to which the hon. Member for Falkirk, West (Mr. Canavan) referred was of his own Front Bench by himself and his hon. Friends.

4.30 pm
Mr. Younger

With permission, Mr. Speaker, I should like to make a statement about the rate support grant settlement for Scotland for 1984–85. This amplifies the information given to the House on 12 December in answer to a question by my hon. Friend, the Member for Fife, North-East (Mr. Henderson).

I have completed my consultations with the Convention of Scottish Local Authorities about the rate support grant settlement and I shall lay before the House in due course the rate support grant order and report for the financial year 1984–85. This provides for a total relevant expenditure figure of £3,205.9 million and aggregate grants of £1,930 million. The provision for current expenditure within the total is £2,736.6 million, slightly above the provisional figure which I announced on 27 July, reflecting mainly technical adjustments. The rate of grant derived from these figures is 60.2 per cent. compared with 61.7 per cent. in the present year. [HON. MEMBERS: "Shame."]

The provision for relevant expenditure represents a cash increase of 3.8 per cent. over the provision for 1983–84 once account is taken of the reduction in the national insurance surcharge. It is also some £60 million above the provision for 1984–85 indicated in the public expenditure White Paper, Cmnd. 8789. For 1984–85 £75 million will not be allocated to services in recognition that authorities are likely to spend more than the Government consider desirable. Current expenditure guidelines were issued to all authorities on 18 November 1983 in finance circular 13/1983, a copy of which is in the Library of the House. Guidelines for 1984–85 include the provision not allocated to services and have been constructed to take account of the relative spending needs of authorities.

In 1984–85 the needs element, which accounts for 87 per cent. of rate support grant, will be distributed on the same basis as that on which guidelines are constructed, namely the client group. Although COSLA officially asked that this change should be deferred until 1985–86, there is a wide measure of agreement that this method offers a much more systematic approach to distribution, and I did not wish to make the change coincide with the general property revaluation of April 1985. It will mean changes in the amount of grant paid to a number of authorities. In order to dampen the effects, I propose transitional arrangements which will limit the grant loss to authorities to the equivalent of a 2½p rate at regional level and a 1p rate at district level. All authorities have been told in finance circular 14/1983 issued on 14 December of the amounts of grant they will receive in 1984–85 if the House approves the rate support grant order. A copy of this circular has been placed in the Library of the House.

The rating effects of the settlement will depend mainly on the expenditure decisions of authorities. I urge them to get their spending into line with expenditure provision. if they do, there could be, on average, a decrease in rates, although I accept that the individual circumstances of authorities will produce variations round the average.

I consider this to be a very fair settlement. There is no need for rates to go up if authorities reduce their expenditure, as I have been urging them to do since 1979. If authorities overspend, I will take appropriate action, but I very much hope that authorities will make that unnecessary.

Mr. Donald Dewar (Glasgow, Garscadden)

The statement confirms that the Government are determined to pursue their wrong-headed vendetta against local services and those who use them. The cut of 1.2 per cent. in the RSG percentage to 60.2 per cent. means that there has been a cut of over 8 per cent. in that figure since the right hon. Gentleman entered the Scottish Office. On top of that, relevant expenditure has been increased, I believe, by approximately 3 per cent. only and not 3.8 per cent., as the Minister claims, and certainly COSLA is of that opinion. Will the Minister accept that on either basis it means a very severe reduction in real terms in local government spending, and will he not accept that this cruel combination of circumstances and decisions adds up to a damaging blow to the level of services provided or to an increase in rates that so often in the past has been the consequence of the right hon. Gentleman's policies?

Will he accept that the statement means that the Strathclyde regional council will have about £32 million less to spend this year as against last year and that that justifies the suggestion of the leader of the council that the right hon. Gentleman is, indeed, the Dracula of local government?

Has he seen the statement in the press today by the Tory convenor of the Lothian regional council that this announcement means that his authority is starting with an additional rate bill of 7p in the pound, and is that an accurate figure?

Taking Scotland as a whole, does he accept that if a 5 per cent. inflation rate, which is something more than the realistic figure, had been applied to last year's aggregate Exchequer assistance and the cut of 1.5 per cent. in the rate of grant had not been imposed, there would be approximately £80 million or more available for use to relieve ratepayers or to help the hard-pressed services such as transport, social work and education?

Finally, I make it plain to the right hon. Gentleman that we regard the statement as a wretched Christmas present for the ratepayers and those dependent on local government services. As the right hon. Gentleman has already well established over the years his reputation as Scrooge, is it not high time that he repented and reversed these unreasonable policies?

Mr. Younger

I congratulate the hon. Gentleman on his rhetoric, but not on his assessment of the statement. To hear him talk one would think that local government spending in Scotland had in real terms been reduced virtually every year and that every service one can think of had been decimated beyond recognition. I should have thought the hon. Gentleman would know that we have so far not even succeeded in getting any cut in real terms since 1979. That is the fact that the hon. Gentleman ought to know. The record for the period is that since 1978–79 current expenditure by Scottish local authorities has increased by 97 per cent. compared with only 85 per cent. in England and 73 per cent. for prices. In the period rates have gone up by 128 per cent. and Scottish grant has gone up just about in line with prices. The generosity that I have shown in giving grant has been reflected merely in increased expenditure that has fallen on the ratepayers instead of reductions in expenditure which is what they all want to see.

Several Hon. Members


Mr. Speaker

Order. I hope to be able to call all hon. Members who are rising, but I have an equal duty to protect the business of the House. I propose to permit questions on this matter to continue until 5 o'clock. If questions are brief, I shall be able to call all hon. Members who wish to speak.

Mr. Donald Stewart (Western Isles)

Is the right hon. Gentleman aware that comparison with the English figures is irrelevant as the conditions in the two countries are quite different? Is he also aware that he can talk until he is blue in the face about "real terms" and the rest of it, but all hon. Members who represent Scottish constituencies are aware of the cutbacks that are taking place in their authorities? Does he appreciate that, in addition to the disastrous cuts that are being made, the Government are being dishonest in boasting about reducing the numbers of civil servants, when work in the DHSS has been shelved to local authorities at the very time when they will receive less finance to carry out that sort of work?

Mr. Younger

I note what the right hon. Gentleman says, and of course he is right to say that one must be careful when making comparisons because of differences in conditions north and south of the border. That is perhaps why the differential between the rate of grant in Scotland and the rate in England is still the second highest it has ever been.

To answer the right hon. Gentleman's point about services, the figure of local authority expenditure, corrected for inflation, was £2,517 million in 1978–79, whereas in the current year it is £2,661 million, and that is in real terms. Thus, what the right hon. Gentleman says about cuts in services is not borne out by the facts.

Mrs. Anna McCurley (Renfrew, West and Inverclyde)

Does my right hon. Friend agree that while local authorities in Scotland may complain about his measures, the hard-pressed ratepayers will welcome them?

Mr. Younger

I wholly agree with my hon. Friend. It has been impressed on me time and again in recent months that the ratepayers are looking, so far in vain, for real reductions in expenditure from local authorities.

Mr. Bruce Millan (Glasgow, Govan)

The Secretary of State is urging local authorities to get their expenditure down to the guidelines. Is he aware that, once again, the guidelines are completely unrealistic and that COSLA estimates that if they were to be met there would need to be a 5 per cent. reduction in services in real terms next year and that would mean savage cuts in essential services? The Secretary of State presumably knows what he is asking local authorities to do. Is it 5 per cent.? Will he confirm that figure? If he denies it, will he give his own figures?

Mr. Younger

I understand that that is the figure that COSLA has worked out and I do not dispute it. I have been warning local authorities for nearly five years that unless they get their spending into line they will begin to find it progressively more difficult to get down to the figures that I have given. I am glad to say that well over 20 authorities have been hitting the Government's targets quite easily, and they will find it much less difficult to meet this settlement.

Sir Hector Monro (Dumfries)

Will my right hon. Friend continue to divert the maximum resources to those local authorities that keep within the guidelines? Is he aware that, despite the annual ritual cries of COSLA, some local authorities, such as Dumfries and Galloway, were actually able to reduce rates this year to the benefit of ratepayers and industry, both of which are doing their best to help provide more jobs?

Mr. Younger

I agree with my hon. Friend, and I pay tribute to the extremely effective efforts that Dumfries and Galloway have made, with, I believe, completely acceptable results to those who benefit from the services that they provide.

To answer my hon. Friend's question about helping the good authorities, the new guidelines give recognition in many cases to those authorities that have been successful in keeping their expenditure to reasonable levels.

Mr. Malcolm Bruce (Gordon)

Will the Secretary of State acknowledge that what he is actually doing is extending his pincer movement on local authorities by cutting the rate support grant and at the same time taking powers to cap rates, and in the process of doing that he is making it increasingly difficult for them to operate any kind of efficient service? Will he therefore accept that he is effectively forcing up the rates in many areas, and that will not help local businesses? Will he acknowledge that the client group method is causing considerable concern to many authorities in Scotland because it will put them in a situation in which they will have no choice other than to put up rates? My district council of Gordon has made representations to him about that.

Mr. Younger

The hon. Gentleman is not correct because for three years running I kept the rate of grant the same and all that happened was that local authorities took the opportunity to increase their expenditure. It is clear that they need some encouragement if they are to reduce expenditure to anything like the levels that we have suggested.

Mr. Michael Forsyth (Stirling)

Will my right hon. Friend invite local authorities in Scotland which follow the Opposition's line that the statement will mean a cut in services to follow the example of Stirling, and recognise that we have in power a Government who mean what they say? Will he urge them to reorganise their direct labour organisations and root out overmanning throughout their departments, and thus be able to achieve savings without having to cut services? It is ridiculous to see the crocodile tears of Labour Members—[Inrerruption.]—because it is nonsense for the Opposition to claim that it will mean cuts in services when hardly any local authorities in Scotland have bothered to test the efficiency of their services by inviting competition.

Mr. Younger

I agree with my hon. Friend that there is no doubt that in many cases efficiency can have a helpful effect on the needs of local government to draw on ratepayers' money. The answer to his second point is that, unless this sort of step is taken, local authorities will find it extraordinarily difficult to get their spending into line.

Mr. David Lambie (Cunninghame, South)

The right hon. Gentleman said that he had completed his consultations with COSLA before making today's statement. Does COSLA agree with his assessment that it is a fair settlement? Or does COSLA believe that it is a further attack on local councils and represents another nail in the coffin of local democracy?

Mr. Younger

I do not understand how it could be such a thing when, in general, the amount being spent on local authorities is still more in real terms than it was five years ago. Possibly my predecessor and I will agree on one thing, and that is that there has not been a settlement for seven or eight years on which COSLA has agreed with the Government of the day.

Mr. Barry Henderson (Fife, North-East)

Will my right hon. Friend pay particular regard to the position of those local authorities that have been particularly careful in their expenditure but which may be adversely affected by changes in formulae? Will he see whether in the transitional phase some help can be given to them? Will he also recognise the part that they have played and continue his efforts on behalf of ratepayers and taxpayers to curb the excesses of the very high spending Labour local authorities?

Mr. Younger

I am grateful to my hon. Friend for those remarks. I have, in adjusting the distribution of grant to the new client group method, deliberately introduced transitional arrangements that will be somewhat less onerous on those local authorities that would have suffered from the charges, and I hope that that will be regarded as helpful.

Mr. Tom Clarke (Monklands, West)

Is the Secretary of State aware that the projected figure for inflation in the statement—I should be grateful if, for the record, he would repeat it — is already obsolete in view of a Cabinet decision this morning about electricity charges? Is he further aware that the cuts in the Health Service mean that a greater burden is placed on social works departments in local government and that that is not reflected in the settlement? Does the right hon. Gentleman agree with his hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) that statements of this kind are a body blow to local government and, therefore, to democracy?

Mr. Younger

The hon. Gentleman asked for the figure. The cash increase in the provision is 3.8 per cent. He will be able to compare that with his assessment of whatever the rate of inflation is likely to be during the year in question. Local government's position is no different from that of everybody else in the country.

To answer his point about cuts in the Health Service, I remind him that we have been discussing this matter usefully for two mornings—I hope that we shall have a third morning—and it has clearly been shown that the Government are still providing considerably more money in real terms for the NHS than was provided by the last Labour Government.

Mr. Michael Hirst (Strathkelvin and Bearsden)

Does my right hon. Friend recognise that many local authorities in Scotland have still failed to identify proper spending priorities, as evidenced by the fact that last year 27 local authorities had to forgo £13.5 million on capital expenditure on housing projects because they made excessive and wasteful rate fund contributions? Does he accept that the modest decrease in the rate support grant that he has announced today compares most favourably with the enormous cuts that we saw in Scotland when Labour was last in Government? Does my right hon. Friend realise that the business community in Scotland will be delighted that the Government are sticking to their plans on public expenditure?

Mr. Younger

I am grateful to my hon. Friend for that observation, and representatives of the business cornmunity have already made that point to me. It amazes me that local authorities in Scotland, which are alleged to be desperately short of money, should have deliberately forgone £13.5 million that they could have spent on housing capital had they wished to do so. I pay handsome tribute to the Labour party which, when in Government, held, and still holds, the record for the largest ever cut in the rate support grant when they cut it by four percentage points in one year. I give them full marks for that.

Mr. James Hamilton (Motherwell, North)

Having had his meeting with COSLA, did the right hon. Gentleman, in arriving al his rate support grant conclusions, take into consideration the many local authorities which are saddled with houses that are unfit for human habitation because of dampness? With winter now very much upon us, did he take that into consideration? If he did, at what conclusion did he arrive and what will he do about this problem?

Mr. Younger

I appreciate the hon. Gentleman's concern about dampness. He will no doubt readily appreciate that we have, by a long way, the largest ever programme of house improvement. This is a rate support grant measure. In due course there will be a housing support grant order.

Mr. Albert McQuarrie (Banff and Buchan)

Is my right hon. Friend aware that rural authorities in Scotland, especially those that keep within spending limits, will welcome his statement? Despite the comments of the hon. Member for Gordon (Mr. Bruce), constituencies such as Banff and Buchan that have kept within the guidelines and support the new system adopted by my right hon. Friend will welcome this measure. I hope that my right hon. Friend will ensure that the small authorities that keep within the guidelines will not be penalised by the activities of overspending Labour authorities in the west of Scotland.

Mr. Younger

A remarkable feature is that authorities, such as Banff and Buchan, which have managed to get their expenditure well in line are also producing services that are acceptable and satisfactory. Other authorities that apparently find that difficult could well take a lesson from them.

Mr. Dick Douglas (Dunfermline, West)

Does the Secretary of State accept that casting himself in the role of the Christmas good fairy is a gross piece of miscasting? Which authorities have told him that they might reduce their rates? What will be the effect of his policies on the fabric of local democracy? I accept that there must be constraints on public expenditure, but there is a partnership between central and local government. He is dictating to local authorities how they will serve their citizens. Does he not accept that this is putting an unsavoury strain on local democracy?

Mr. Younger

I am not certain how the roles of Dracula and the good fairy can be combined, but I will see what I can do.

Any authority that received this news a few days ago and was already sufficiently efficient in fixing its rates would be remarkable. If local authorities were to meet the expenditure figures that I have put down—more than 20 are already doing so in the current year—they could, on average, reduce rates by between 5 and 6 per cent.

The hon. Gentleman's statement about local democracy was exceedingly overblown. Local democracy is unimpaired by the fact that, as the previous Labour Government and this Government have always insisted, the national economy must have some assurance that local authorities will not deduct too much of the public expenditure available. We have managed to protect, for example, the National Health Service and to increase its expenditure by getting other services to become more economical.

Mr. Bill Walker (Tayside, North)

Does my right hon. Friend agree that the real problem for many years has been that authorities with similar responsibilities and services have wide differences in their expenditure programmes? If there are any Draculas among local authorities, they are those local authorities that suck the lifeblood of others for their sustenance. That includes authorities that are depriving the health boards of much needed funds, as the Dundee district council has done for many years.

Mr. Younger

I appreciate my hon. Friend's comment about the differences between authorities. One of the most remarkable features — despite what has been said by Opposition Members — is that, in spite of the many difficulties, a large number of authorities are managing apparently to reach easily the Government's targets.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

Will the Secretary of State at least bear in mind, when he claims that there is a wide measure of agreement about the client group approach, that that agreement does not extend to the Highland regional council which is a large section of the country at least geographically, if not politically? The hollow nature of the Government's economic policies on local government in Scotland was exemplified by that regional council which pointed out that, but for the clawback of £1.6 million a few months ago, it would have been able to do exactly what the Secretary of State asked —to cut rates in the Highland region by 3½p in the pound.

Mr. Younger

I know that the Highland region has special difficulties. That is why the rate support grant settlement makes extra provision for that area. I am sure that the region very much appreciates that.

Mr. John Home Robertson (East Lothian)

How can the Secretary of State sustain the image that he is trying to create of being the ratepayers' friend when the rate support grant settlement is likely to increase the rates for my constituents in the Lothian region by 7p in the pound? If he does not like to take that figure from me, will he accept it from Mr. Brian Meek, the Tory convenor of the Lothian regional council?

Mr. Younger

The hon. Gentleman must know that whether or not rate increases occur in a particular authority will depend very much on whether it increases its expenditure. In general, if local authorities meet the Government's targets, there will be rate reductions.

Mr. Dennis Canavan (Falkirk, West)

Why is the Secretary of State pushing councillors on to the horns of a dilemma whereby they must choose between further rate increases or cuts in essential services, such as education and social work? If they choose rate increases, they are not given the freedom to carry them out. Is this not threatening what little local democracy is still left to local government in Scotland? Is it not a disgrace that we have this measure, bearing in mind that many of those councillors have a better mandate to represent the people of Scotland than a discredited Secretary of State who has no mandate from the Scottish people and who has twice been defeated in the Scottish Grand Committee?

Mr. Younger

It is clear that the Labour party has no mandate either, and the hon. Member ought to remember that. I understand that this week the hon. Member managed to. spend approximately two and a half hours on two mornings in the Scottish Grand Committee discussing the National Health Service and then passed a resolution saying that he had not.

Mr. George Robertson (Hamilton)

Does the Secretary of State care that if local councils do the dirty work on behalf of the Government that will lead only to one of two things: the deliberate calculated destruction of jobs when hundreds of thousands of Scottish people are already out of work, or the reduction in common services that are designed to help the weakest, sickest, oldest and poorest in the community? Is he not ashamed of such an objective?

Mr. Younger

I do not know how the hon. Gentleman works out that I am cutting services for the weakest, sickest, oldest and poorest if the amount expended in real terms is higher than it was under the Labour Government. That makes no sense. The hon. Gentleman ought to know that increasing rates to unacceptably high levels destroys jobs more quickly than anything else.

Mr. James Wallace (Orkney and Shetland)

The Secretary of State will, no doubt, be aware that in the present financial year the Orkney Islands council received £1 million, in addition to the rate support grant, as partial compensation for loss of revenue due to the de-rating of external plant. As that loss of revenue must be continuing, will £1 million be made available to the council in the forthcoming year?

Mr. Younger

I made it clear to COSLA last week that the special help that was given last year would not be continued next year. The hon. Gentleman will probably agree that the finances of the Orkney Islands council are very healthy.

Mr. Ernie Ross (Dundee, West)

I am conscious of the Secretary of State's concern for law and order. If the cuts that he is forcing on local authorities cause them to break their statutory obligations to children in care and to the elderly and disabled, will he indemnify them against any consequences if legal action is taken against them?

Mr. Younger

If a local authority decided to concentrate any cuts on those services, that would be its decision and priority. The expenditure allowed overall for Scottish local authorities does not suggest that any such action would be necessary.

Mr. John Maxton (Glasgow, Cathcart)

Is the Secretary of State aware that this statement is even meaner than that made yesterday by the Secretary of State for the Environment? At least his right hon. Friend made it clear that he would disregard extra expenditure on community schemes jointly funded with health authorities. Is the Secretary of State prepared to do the same, especially as the Scottish record on the joint finance schemes is far worse than that in England and Wales?

Mr. Younger

It is true that there have been more difficulties in getting both parties to the joint financing arrangement to come together in Scotland to put the schemes under way. I regret that as much as the hon. Gentleman. We are doing all that we can to encourage both parties to come together.

Mr. Gerald Malone (Aberdeen, South)

Does my right hon. Friend agree that part of the problem is that cuts in services are necessitated not by central Government reductions in spending but by politically motivated local authorities which go out of their way to cut sensitive services so as to grab cheap political headlines?

Mr. Younger

I agree with my hon. Friend. If one thing is absolutely contemptable, it is to try to make out that the only way to save money is to hit the most vulnerable. If the Opposition really wish to support that type of policy, I shall be very surprised.

Mr. William McKelvey (Kilmarnock and Loudoun)

Will the Secretary of State take part in an age old Scottish custom and make some genuine new year resolutions—to purge his soul, to throw off the shackles of the mad monetarist Prime Minister under whom he operates, and to hand back to the local authorities the democratic right, which they were elected to exercise, to make up their own minds, to set the rates as they see fit and to give the people the service that they promised in their manifestos?

Mr. Younger

I am not sure that it is physically possible to purge one's soul and to cast off shackles at the same time, but I will have a shot at it.

Mr. Dewar

May I take the Secretary of State back to Lothian council as a specific example of the general position? Does he accept the calculation made by Mr. Brian Meek, leader of the Conservative group, that the settlement is equivalent to a reduction of about 7p in the pound and that the only way to avoid that additional burden on the ratepayer is to reduce the services offered by that Conservative controlled council?

Mr. Younger

I agree with neither point. The only person who can tell at this stage what the figure is in pence per pound for any given local authority is the administration of that authority. If the figure that the hon. Gentleman mentioned is that worked out by the council, I am prepared to accept it. I am sure that the hon. Gentleman will agree, however, that if all authorities—not just Lothian—brought their expenditure down to the levels suggested by the Government, reductions in rates would be possible. That is the message for which ratepayers in Scotland are waiting, but they have not heard it from the hon. Gentleman.