HC Deb 27 July 1983 vol 46 cc1186-93 3.33 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 and for 1984–85.

Scottish local authorities' planned expenditure for 1983–84 is £121 million, or 4.5 per cent. higher than was proposed in the rate support grant settlement, despite enhancement of the figures which had originally been contained in the public expenditure White Paper, Cmnd. 8494. When I met the Convention of Scottish Local Authorities on 17 June I said that in light of this planned overspend it was my view that there would have to be an abatement in the rate support grant payable in 1983–84. I could not indicate at what level that might be until I knew the outcome of the selective action which I had initiated against certain local authorities on grounds of excessive and unreasonable expenditure.

On 21 July the House approved reports proposing reductions in the rates of four local authorities equivalent to expenditure reductions of £18.8 million. As local authorities have still not brought their expenditure into line with the Government's plans, I have no alternative but to make a general abatement of grant to bring pressure on authorities to make commensurate savings in their expenditure. I will lay this week a variation order reducing the rate support grant payable in 1983–84 to Scottish local authorities by £45 million. As with the abatement in 1982–83, I shall make arrangements to ensure that no authority will suffer a loss of grant greater than its excess at outturn over current expenditure guidelines and this will be by means of an adjustment in the rate support grant settlement for 1984–85.

I now turn to 1984–85. Last year on 28 July I announced, on a provisional basis, the public expenditure provision for Scottish local authority current expenditure in the following year. To assist local authorities in their forward planning, I will now provide similar information for next year. The provisional figure for local authority current expenditure will be some £2,730 million—that is, about £60 million more than the provision in the public expenditure White Paper, Cmnd. 8789. In announcing this cash increase I have taken into account the views expressed to me in consultations by the Convention of Scottish Local Authorities.

I will in due course issue current expenditure guidelines to authorities for 1984–85. I have taken into account the views expressed by the convention regarding the treatment of the unallocated margin this year and I can say now that the total provision in 1984–85 will be included in the guidelines. I hope that all authorities will be prepared to make a real effort to bring their expenditure into line with those guidelines in 1984–85.

Mr. Bruce Millan (Glasgow, Govan)

That was a disgraceful statement and the penalties being imposed against Scottish local authorities are even harsher than those imposed in the statement made by the right hon. Gentleman last year. It makes an absurdity of the debate that we had last week dealing with specific penalties amounting to £19 million when, as I forecast last week, an even greater penalty of £45 million is announced a week after the debate.

Last year the so-called excess expenditure, net of specific penalties, was £170 million, on which a penalty of £27 million was imposed. This year, the net so-called excess expenditure is considerably less, at £102 million, and yet the penalty is considerably higher, at £45 million, which represents 45 per cent. of the so-called excess. From what the Secretary of State has just said, will not every local authority except three out of the 65 suffer from the penalties being announced today? I hope that Tory Members who voted for the penalties last week will remember that I said to them then that this is precisely what would happen to their authorities this week. A responsible authority such as Strathclyde will suffer a penalty of no less than £20 million as a result of this statement.

As to the 1984–85 expenditure, as usual the Secretary of State has dressed up the figures to make them look as if they are a concession to the local authorities, but the figure of £2,730 million that he announced is not even sufficient to provide for a reasonable rate of inflation compared with the equivalent figure announced last year. The figure is only 3 per cent. higher than that which he announced last year and will not cover any reasonable expectation of inflation in 1984–85. It is less than the figures that the local authorities have already budgeted for in their cash terms for the current year.

On any reasonable estimate, to reach the figures that the Secretary of State has announced, local authorities in Scotland would have to reduce their budgeted expenditure next year by about 6 per cent. in real terms. There is no hope of the Secretary of State obtaining such a reduction in 1984–85. If he were to obtain it, it would mean slashing thousands of jobs, such as teaching jobs, and local authority services. The Secretary of State will not get such a reduction and we shall go through the same farce in 1984–85 of unrealistic guidelines and the vast majority of authorities going above the guidelines.

May I ask the right hon. Gentleman about an omission from his statement? In July last year, he announced the rate support grant for the following year. He has not made such an announcement today. Will he give an assurance that the rate support grant for 1984–85 will be at least the 61.5 per cent. that applied for 1983–84? Unless he can give that assurance, he is, typically, giving the House only part of the story. We shall see a further tightening of the screw on local authorities in Scotland if, as I believe is likely, the rate of grant is further reduced later in the year.

The right hon. Gentleman spoke about consultation and taking account of the views of COSLA, but his Under-Secretary refused to give COSLA representatives the expenditure figures for 1984–85 when he met them this morning. Now that we have seen the figures, we know that they represent a tightening of the screw on Scottish local government. They will mean poorer services and more unemployment among local authority personnel. The cuts announced today are serving no useful economic or social purpose.

Mr. Younger

The right hon. Gentleman must see my statement against the background of our efforts over many years to persuade local authorities in Scotland to trim their spending into line with the Government's general economic policy. The right hon. Gentleman has always accepted that the Government have an interest in determining what that general level should be. His position seems to be that he accepts that principle but is against selective action—he made that clear last week—and a general abatement. We are in a full circle. The right hon. Gentleman has not made his view clear. Either he favours local government spending whatever it likes or he favours some method of Government influence. I hope that he will make his position clear.

I have made no secret of the fact that, having been generous in the past two years—last year I even made savings in my own programmes to make matters easier for local authorities—I have had to make it clear that the Government are in earnest this year and that local government will have to bring its expenditure into line with the Government's general economic policy. That is what the figure that I have announced is intended to do, and I hope that that is what it will do.

Of course, because of the overspending of previous years, it will be difficult for local authorities to achieve the figure that I have announced, but I hope that my statement gives them the clear signal that, however difficult it may be, it is essential in the national interest that expenditure should be brought within the reasonable rates that we have suggested.

My hon. Friend the Under-Secretary was naturally not able to tell the COSLA representatives this morning the figure for the enhancement for next year. If he had done' so, the right hon. Member for Glasgow, Govan (Mr. Millan) would justifiably have complained that the figure should be announced to Parliament before being announced anywhere else. That is the main reason why I announced the figure to Parliament, and I hope that the House agrees that I was right to do so.

Several Hon. Members

rose—

Mr. Speaker

Order. I have a duty to protect the business of the House, and a number of other important statements are to be made. I propose to allow questions on this statement to run until 4 o'clock and I ask for crisper questions and answers please.

Mr. Bill Walker (Tayside, North)

My right hon. Friend will not be surprised to hear that Conservative authorities were expecting his announcement. They, too, are concerned that the expenditure over a long period of some of the high-spending authorities appears to give them an advantage over authorities such as Tayside, Perth and Kinross and Angus which have been prudent spenders for many years. Will my right hon. Friend bear that fact in mind when considering future figures?

Mr. Younger

I greatly appreciate what my hon. Friend has said. I am considering carefully whether we can do anything to make the general abatement operate more fairly.

Mr. Norman Hogg (Cumbernauld and Kilsyth)

Given that local government is labour intensive and that there is a direct correlation between cuts in expenditure and lost jobs, can the Secretary of State say how many Scottish local government employees may expect to join the dole queue as a consequence of his disgraceful statement?

Mr. Younger

Like the hon. Gentleman, I hope that decisions can be implemented quickly enough to ensure that there is no need for redundancies. He knows that Lothian regional council decided some time ago not to take on extra staff in case this sort of thing happened. If expenditure is to be brought down, it is better that it is done quickly, so that there is no need for redundancies.

Mr. Albert McQuarrie (Banff and Buchan)

Does my right hon. Friend agree that the majority of local authorities that will be affected by his statement are the overspenders which have consistently ignored his representations to trim their expenditure? They have increased the number of their employees beyond my right hon. Friend's guidelines. Authorities such as Grampian, Gordon and Banff and Buchan have shown that the Government's guidelines are effective and can be carried out satisfactorily without causing the problems that confront overspending authorities.

Mr. Younger

My hon. Friend makes an extremely good point. If the figures were as unreasonable as the Opposition make out, no local authorities in Scotland could work within the guidelines. But some have done so, and all credit to them.

The principal fact, to which my hon. Friend is right to draw attention, is that it is easy to run a local authority if one can spend whatever one likes. It requires good and effective management to ensure that one spends within what the nation can afford, and that is what I am asking local authorities to do.

Mr. Gordon Wilson (Dundee, East)

As local government expenditure is more than 50 per cent. of the right hon. Gentleman's own budget, will he explain what impact the changes will have on the pattern of public expenditure in Scotland, bearing in mind that such expenditure is declining in real terms, compared with that in the whole of the United Kingdom? What role is the right hon. Gentleman playing in Cabinet? Time and again, he comes up with poor results, leading to reduced public expenditure in Scotland, more unemployment and more misery.

Mr. Younger

The hon. Gentleman makes a good point when he says that more than 50 per cent. of the budget for which I am responsible is spent not by me but by local authorities. That is why it is impossible for me to ignore what they spend. The hon. Gentleman must accept that any Secretary of State must have some influence on what local authorities spend. If they spend more than they should, I have to make cuts in my programmes or in other spheres, and no hon. Member on either side of the House would be pleased to see that.

Mr. Michael Forsyth (Stirling)

Will my right hon. Friend confirm that, bearing in mind the many representations made by leading national firms, such as Marks and Spencer, that rates in Scotland are more than twice what they have to pay south of the border, his statement, far from being a threat to jobs, is the greatest possible boost to employment prospects in Scotland?

Mr. Younger

I agree with my hon. Friend. All of us who are involved in these matters should bear in mind that a large proportion of the rates raised in Scotland are spent without those who pay them having any influence on the democratic process.

Mr. Gregor MacKenzie (Glasgow, Rutherglen)

Will the Secretary of State answer the question asked earlier: how many people doing essential jobs—home helps and the like — will lose their jobs as a result of his statement?

Mr. Younger

I do not agree with the right hon. Gentleman. If I were on a local authority and had to make expenditure choices, I cannot imagine that the first service on which I should look to save money would be the home help service.

Mr. Hugh Brown (Glasgow, Provan)

Does the right hon. Gentleman recognise that there has been a deplorable deterioration in the relationship between central and local government? Is it not like a marriage breakdown, where there are usually faults on both sides? Can the right hon. Gentleman offer any hope of conciliation to help to produce the better relationship that is desperately required?

Mr. Younger

I appreciate the spirit of the hon. Gentleman's question and respond to it sympathetically. I could end the controversy for good by agreeing that local authorities should spend whatever they like. It would be easy for me to do that, but that would be to condemn the rest of the Government's expenditure programmes to substantial cuts, and I am sure that the hon. Gentleman would be the first to oppose that.

Mr. Malcolm Bruce (Gordon)

Will the Secretary explain how this statement will affect rural areas, as they have received less assistance from the Government than rural areas south of the border have received, and bearing in mind the fact that that is where services are most marginal? Does he acknowledge that rural areas are in the front line in cuts of this nature? Will he further explain whether councils such as Grampian, which has a surplus of £5 million, will be allowed to carry that forward or will have to give it back to the ratepayer, or will he cut it from next year's allocation?

Mr. Younger

I much appreciate what the hon. Gentleman says about rural areas. I can give him this comfort, that in general—there may be some exceptions —it is clear that authorities in rural areas have taken great care to keep their expenditure within reasonable bounds. I think I am correct in saying that the hon. Gentleman's own district authority is one that should not suffer at all from this abatement.

Mr. John Home Robertson (East Lothian)

Who does the right hon. Gentleman think he is? This is the second week running that he has come to the House to interfere with the budgeting of Scottish local councils. Would it not be more appropriate to let those councils get on with their own jobs? Would it not be even more appropriate, instead of having a Secretary of State who seeks to represent the Treasury in Scotland, to have a Secretary of State who represents Scotland in the Cabinet.

Mr. Younger

The implication of what the hon. Gentleman says is that I should step back and allow local authorities to spend whatever they like. With respect, that is nor my view, not is it the view of his right hon. Friend the Member for Glasgow, Govan (Mr. Millan).

Mr. Jim Craigen (Glasgow, Maryhill)

As only three of the 65 local authorities thought that the guidelines were realistic, are we to take it from today's statement that, in the view of the Secretary of State, there is no distinction to be drawn between selective action against local authorities and this indiscriminate assault on all our communities? Does he go to COSLA meetings with his ear muffs on because he does not seem to listen to its representations?

Mr. Younger

The facts do not bear that out. I said in my statement today that in the coming year the guidelines will include what in the previous year was an unallocated margin, which COSLA strongly stressed should not be repeated. I have responded to that representation. On the general point, again the implication of the hon. Gentleman's question is that I should step back and allow authorities to spend whatever they like. Is that his view? It is certainly not the view of his Front Bench.

Mr. Robert Maclennan (Caithness and Sutherland)

Does not the Secretary of State realise that to announce special penalties one week and then to announce the next week a general abatement makes it plain that the Government are not prepared to allow local authorities proper control over their own expenditure, and that by announcing a general abatement lie is penalising authorities that are well within margins of expenditure that even he would acknowledge, and that by a subsequent rebate in the next financial year he does not ease the position of local authorities which are already in difficulties in this current year?

Mr. Younger

The hon. Gentleman used the words "proper control over their own expenditure". His question does not make much sense unless we know what that means. If it means that local authorities can spend whatever they like, irrespective of the Government's economic policy, I do not agree with him—nor, with respect, do the official Opposition—and I doubt very much whether even the SDP agrees with him.

Mr. Michael Hirst (Strathkelvin and Bearsden)

Does my right hon. Friend agree that today's statement increases the obligations on Scottish local authorities to look at ways of making meaningful reductions in operating the various departments under their control? Does he further agree that councils could realise substantial savings by putting out services to tender, and will he encourage them to do so?

Mr. Younger

I am grateful to my hon. Friend for that suggestion. I should have thought that that was generally desirable wherever it produced acceptable services for the public at a lower cost. On general local authority expenditure, it is in the interest of the general public to have effective local authority services provided at the lowest possible cost. I hope that all local authorities will seek to do that as quickly as possible.

Mr. John Maxton (Glasgow, Cathcart)

Is the Secretary of State aware that this extra cut in the expenditure of Glasgow district council must make it extremely unlikely that the Burrell gallery will be opened in October? Does not that more than anything else typify the Government's economic policy, in that enormous capital expenditure will have been undertaken although the revenue expenditure will not be available for the gallery to be kept open?

Mr. Younger

It depends on the priority that one gives to certain matters. I am bound to say that if I were on Glasgow corporation the Burrell collection would not be the first item that I would consider in making economies. I should add that I have contributed from my budget, pound for pound, what Glasgow corporation has produced. It was not easy for me to find my share, but I made savings elsewhere in my programme.

Mr. William McKelvey (Kilmarnock and Loudoun)

Will the Secretary of State say how long and how often he will perpetrate this series of gross injustices against the democratically elected Scottish councils? If he believes that to be kind he should be clinical, why does he not apply the coup de grace? Why not chop off their heads? Why not send in the Army, take over the councils and administer them himself?

Mr. Younger

If the hon. Gentleman's policy is to send in the Army to run local authorities, I cannot agree with him.

Mr. Tom Clarke (Monklands, West)

Is the right hon. Gentleman aware that this may be the last question, but that it will be by no means the last word on the matter? Is he aware that it is demoralising in the extreme for local authorities to be given a lecture of this kind when their record on budgeting is far better than that of central Government, particularly that of this Government? Did the Secretary of State take into account the Chancellor's announcement about the reduction in health expenditure, which means an increasing burden on the social services of local authorities? Did he not therefore consider increasing the allocation rather than decreasing it in that respect?

Mr. Younger

I appreciate what the hon. Gentleman says, particularly in view of his experience in local government. He will understand that it would be very easy to run local government if one did not have to pay attention to whether expenditure was going up. He made a comparison between central and local government. The Scottish Office has achieved a reduction of about 14 per cent. in manpower, whereas local authorities are not remotely near that achievement. I hope that the hon. Gentleman will recognise that.

Mr. Norman Buchan (Paisley, South)

Is it not an added impertinence for the Minister not only to take it unto himself to determine the level of services that should be provided in general terms but to offer gratuitous advice —rather impertinent advice—from the Dispatch Box? Does he recall that on an earlier occasion an attempt was made to bring in museum charges? That was done when the present Prime Minister was Secretary of State for Education and Science, and she was beaten largely by members of her own party, which, I confess, was a rather more civilised and less philistine party than it is now.

Mr. Younger

It would, of course, be much easier for me and my Department to sit back and ignore the whole question of local government spending. The reason why we cannot do so—it is a common view on both sides, at any rate between the Front Benches — is that local government expenditure is an indissoluble part of public expenditure as a whole. It is agreed between both sides of the House that the Government of the day must have some say in local government spending. The hon. Gentleman cannot get out of that commitment, and I hope that he will not try to do so.

Mr. Millan

Will the right hon. Gentleman answer one question that he has not yet answered? I said that, or my calculation, for local authorities to reach his figures they would have to reduce expenditure next year by 6 per cent. in real terms. Is that the figure? If not, what is the Secretary of State's figure?

Mr. Younger

That depends on the figure that the right hon. Gentleman is reducing from. If he is reducing from local authorities' actual expenditure, which is very much above the figure that the Government suggested, that gray well be the figure. I do not know precisely what it is. The right hon. Gentleman has still not answered the question. If he agrees, as I understand he does, that the Government, of whatever party, must have some say in local government spending, if he is against selective action, and he is now against general action, what on earth is he in favour of? The answer is that he will not face these issues.

Mr. Speaker

I thank Scottish Members for their cooperation on the statement and wish them all a happy holiday.