HC Deb 13 December 1984 vol 69 cc1220-35

4.5 pm

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

With permission, Mr. Speaker. I should like to make a statement about public expenditure allocations and the rate support grant settlement for Scotland for 1985–86.

Total expenditure on the programmes within my responsibility for 1985–86 will be £7,158 million. The figure is broadly the same as that published in the 1984 public expenditure White Paper earlier this year and shows that the Government remain determined to keep public expenditure within planned limits. An annotated table giving the allocations for each service is available in the Vote Office and I am arranging for it to be published in the Official Report.

In allocating my total sum I have continued to give priority to spending on the Health Service. I plan to increase cash provision for the NHS in Scotland by £94 million more than the expected level of expenditure on the service this year. Of this, some £75 million will go to the health boards' hospital and community health services programme and associated centrally managed services, where cash provision will be increased by 5.5 per cent. more than expected expenditure this year and 1 per cent. more than the forecast level of inflation. That should enable boards to find the resources that they need for pay and price increases and for the expansion of services to meet demand from demographic change.

Law and order provision will be sufficient to meet the cost of the police service with a modest increase in manpower to meet priority requirements and to allow for a further 150 prison officers by 1 April 1986.

For housing I have increased total net provision by £5 million over the White Paper level to £598 million. This allows for gross capital spending of £568 million when estimated capital receipts are added to net capital provision of £392 million. To ensure that new investment is not, as this year, sacrificed to subsidise current expenditure, I am proposing to use my new power to limit rate fund contributions to require local authorities to reduce these contributions to £90 million. This enables me to increase capital spending on authorities' own stock to facilitate action on problems such as dampness, condensation and defective housing. I am also making additional resources available for tackling those problems. The combined increase in local authorities' HRA block allocations is £43 million.

The provision which I have made for education takes account of the changes I announced last week on student awards and includes £2.1 million as the first element of the recently announced increased expenditure on the central institutions. Improved academic staffing and a reinforcement of non-academic staffing and equipment resources should result in a significant increase in the output by the central institutions sector of engineering and technology graduates.

I can also announce that 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 relevant rate support grant order. This will provide for a total relevant expenditure figure of £3,399.3 million and aggregate Exchequer grant of £1,924 million. Taking into account adjustments consequent upon the transfer of colleges, this is an increase of £19 million on the figure I announced in August.

The provision for relevent expenditure is, excluding loans charges and interest receipts, 5 per cent. above the figure for 1984–85 and £98 million above the provision in the White Paper, Cmnd. 9143.

In 1985–86 the needs element which accounts for 87 per cent. of rate support grant, will, as in 1984–85, be distributed on the basis of client group assessments. Grant changes between one year and another will again be limited, but good progress will be made towards the full implementation on the client group method.

As a result of the revaluation of property which takes effect from 1 April 1985, the share of the rating burden borne by industry will be reduced. I have therefore decided to reduce from 1 April 1985 the level of industrial derating from its present 50 per cent. to 40 per cent. This will still leave industry as the sector which gains most from revaluation. The revaluation will increase considerably the domestic ratepayer's share of the rate burden. I have therefore increased the domestic element of rate support grant from 1p to 5p in post-revaluation terms. This will reduce by half the effect of revaluation on the domestic ratepayer. I now look to local authorities to bring their expenditure down to the realistic guidelines which they have been given.

The decisions which I have announced today reflect the priority which the Government attach to keeping public expenditure on course, while recognising the need to make adequate resources available for important services. The flexibility in the Scottish block arrangements has again enabled me to ensure that Scotland's needs and circumstances are taken properly into account.

Following is the table:

1984–85 1985–86 1985–86
Programmes (details as appropriate in notes below) White Paper (Cmnd. 9143) with Budget and other pre-Survey changes White Paper (Cmnd. 9143) with Budget and other pre-Survey changes Revised* £ million
Agriculture,
fisheries and food 188 195 176
Industry, energy,
trade and employment 169 171 †275
Tourism 11 12 12
Transport 492 514 530
Housing 650 593 598
Other
environmental services 541 554 556
Law, order and
protective services 489 506 511
Education 1,612 1,657 1,695
Arts and Libraries 59 62 67
Health and social work 2,164 2,280 2,307
Other public services 101 104 104
Nationalised Industries‡ 309 251 246
1984–85 1985–86 1985–86
Programmes (details as appropriate in notes below) White Paper (Cmnd. 9143) with Budget and other pre-Survey changes White Paper (Cmnd. 9143) with Budget and other pre-Survey changes Revised* £ million
Local authority
current expenditure not allocated 75 52 81
6,860 6,950 7,158
* Some figures may be subject to detailed technical amendment before publication of the 1985 Public Expenditure White Paper.
† Includes Regional Development Grants.
‡Treated on GB basis in Autumn Statement.

Note:

Owing to rounding individual figures may not sum to totals.

Agriculture: Changes in capital grants announced on 11 December will lead to a reduction of some £5 million in grant payments in Scotland in 1985–86. Support for hill farmers will be maintained through hill livestock compensatory allowances and in some cases improved.

Industry: Changes in regional industrial policy (including transfer of responsibility for regional development grants in Scotland) were announced on 28 November. Provision for selective financial assistance has been increased by £10 million to reflect its increased importance. Cash provision for grant-in-aid to the Scottish Development Agency and the Highlands and Islands Development Board has been increased over the underlying 1984–85 level.

Roads and Transport: Provision will be about £37 million more than was planned for the current year. This will maintain the momentum of the motorway and trunk roads programme enabling further significant progress with important bypasses, dual carriageways and other improvements. The Government will continue to honour its commitment to subsidise certain shipping and civil aviation services. Local authority investment in roads and public transport will also be maintained.

Housing: The reduction in housing provision mainly reflects lower capital expenditure on private sector improvement and repair grants following termination of higher rates of grant at March 1984.

Other Environmental Services: The urban programme will receive over £30 million compared with £26 million in the current year. Capital provision for water and sewerage will remain a priority with provision of £95 million compared to £92 million in 1984–85.

Law, Order and Protective Services: Provision should meet police service costs including some increased manpower; allow for a further 150 prison officers; support continued improvement in upgrading of prison buildings including work on two major projects at Greenock and Shotts; enable fire cover to be provided at minimum standards; carry forward civil defence planning and meet the cost of expected growth in demand for legal aid services.

Education: Provision reflects decisions already announced on student awards and central institutions expenditure. It takes account of the transfer to the central institutions sector of Napier college and Glasgow college of technology in September 1985. Increased local authority capital expenditure should enable faster progress on building improvement and rationalisation of schools.

Arts and Libraries: Provision has been increased to allow improvements in the staffing of national institutions and an expanded programme of repairs and maintenance. A modest increase in grants to the Scottish Museums Council and Scottish Film Council should also be possible.

Health and Social Work: The provision made for this programme allows for a cash increase for the hospitals and community health services programme of about 5.5 per cent. to enable health boards to meet the pay and price rises and also new demands for health care arising from demographic change. There are also sufficient additional resources to enable expenditure on the family practitioner services programme to match rising public demand, after account is taken of the effects of measures introduced or planned to control the cost of drug supplies and to contain the cost to the NHS of prescriptions. Government assistance to voluntary social work bodies, including community care and projects related to drug abuse, will also be increased.

Mr. Donald Dewar (Glasgow, Garscadden)

I start with the public expenditure figures. Does the Secretary of State accept that it is clear that today's announcement means a cut in real terms as against the 1984–85 figures, even though the cash figures have been increased by the inclusion, for the first time, of regional development grant? If the Secretary of State had not had the benefit of comparing unlike with like, we would almost certainly have had a cut in real terms of nearly 3 per cent. Is it not true that his complacency is staggering, given the mean and inadequate provisions that existed in 1984–85 and the fact that only a blinkered loyalty to the Treasury makes the right hon. Gentleman look for further cuts on top of last year's cut of almost £200 million in real terms?

The right hon. Gentleman gave a remarkable performance, particularly in dealing with housing. He gave the impression that his statement was full of good news and festive cheer. In fact, housing has been sandbagged again. I estimate that the cut in real terms this year compared with last year is about 14 per cent. Housing support grant will be cut to £48 million. Towards the beginning of the Conervative party's period in power the housing support grant was more than £220 million. The right hon. Gentleman boasts of increases in the HRA capital allowance, but he fails to say that that increase has been more than offset by massive cuts in the non-HRA programme and that there has been an overall reduction. The right hon. Gentleman's gift for citing a nice selection of statistics calculated to give an impression which bears no relationship to reality is becoming tiresome.

Will the NHS allocation fully cover demographic changes and improved techniques? The right hon. Gentleman referred to an increase of 1 per cent. above the inflation rate, but, as I understand it, that is not sufficient to cover the agreed figure, which requires an increase of about 1.2 per cent. to stand still. Would there still be a sufficient increase to cover those improvements and demographic changes if the NHS pay and price deflator were applied to the figures?

The right hon. Gentleman gave the impression that the £3 million that he has to find for his budget because of the student grant debacle is coming from the education budget and not from some other part of the Scottish Office budget. Will the right hon. Gentleman make clear to the House what has gone to make room for this additional cut?

The House will note with dismay that the rate support grant has fallen from 62.2 to 56.5 per cent. I believe that it has been cut every year since the Conservative party came to power. It is extraordinary that the right hon. Gentleman did not see fit to mention the grant rate. I accept that the relevant expenditure has increased by 4.9 per cent., but will the right hon. Gentleman confirm that the combined effect is a £6 million reduction in the grant payable? That is a significant reduction in real terms.

I ask the Secretary of State to deal more fully with the effect of revaluation. Is it not a disgrace that the £50 million which must be found to meet partially the impact of revaluation on the domestic ratepayer is to come from the needs element, particularly the needs element of district councils, to which the Secretary of State has contributed only £19 million?

There was a deafening silence about the likely rate increase as a result of the right hon. Gentleman's decision. I suggest that the inevitable victim will be the ratepayer. Does the right hon. Gentleman accept that, on a standstill budget for local authorities in 1985–86, the ratepayer will have to find another £194 million for the increase in relevant expenditure, that the local authorities will receive £6 million less in grant and that the £50 million will have to come from the needs element and, therfore, at the expense of services? That money will have to be found by the ratepayer. It looks like an increase of about 16 per cent. on a standstill budget.

Even if local authorities lowered their figures, cutting services by £100 million to meet the guidelines, the increase would still be almost 10 per cent. across the board, before taking into acount the impact of revaluation on the domestic ratepayer, which I would put:—I understand that the Convention of Scottish Local Authorities agrees—at about 8 per cent. Depending on whether it is a standstill budget, with no question of growth, or whether it is a budget for local authorities which come down to guidelines, the range of rate increases will be between 17 and 25 per cent. I ask the Secretary of State to comment on that aspect of the matter.

What will be the position—this will be of particular interest to Conservative Back Benchers — of those authorities which are below or at the guidelines? If they remain at the guidelines set by the Government, they will have to bear, through their rates, the entire burden of increases in relevant expenditure, the entire cut in the grant allocated to them and the entire strain on services of the switch from the needs to the domestic element. Those local authorities will be looking at 24 or 25 per cent rate increases, with not even the option of cutting to come down to the guidelines, because they are already at those guidelines. The local authorities will be able to mitigate the impact only by spending well below the guidelines set by the Secretary of State. Will the right hon. Gentleman confirm that that is a fair analysis? If so, is that the reward for the loyalty that he has demanded from those local authorities?

Is it not typical of the whole fraudulent approach that — [Interruption.] I am coming to the end. This is an important statement. Normally, we would have had two separate statements. We are considering the whole rate support grant and the whole of the public expenditure figures rolled into one, and that explains why so many points must be raised. It is typical of this fraudulent approach that the industrial ratepayer, who might have been expected to benefit from the revaluation, has largely had the benefit promptly taken away from him with a reduction in industrial de-rating from 50 to 40 per cent. The gain has been offset, and the Secretary of State has taken with one hand what the assessor has given at the other end of the equation. This is a miserable outlook. It will cost jobs and will mean deteriorating services in the public sector. That is exactly what we would expect from the wretched but predictable petty prejudices which now dominate the Scottish Office.

Mr. Younger

I know that it was a long and difficult statement, but I am flabbergasted at how much the hon. Member for Glasgow, Garscadden (Mr. Dewar) managed to get wrong. He said that we should have had two separate statements. He has a cheek to say that. No Labour Secretary of State has ever made a statement in the House on this part of the rate support grant. No Labour Secretary of State has ever made a statement in the House on the Scottish block. The hon. Gentleman should have the grace to admit that since taking office I have adopted the practice of making these statements, and I should have thought that the hon. Gentleman would be grateful for that.

The hon. Member for Garscadden described the cut in overall expenditure as a cut of 3 per cent. in real terms. He made a completely misleading comparison, because the programme includes the electricity board's external financing limits, which, as he well knows, are declining because the construction work at Torness, which took a large proportion of the finance, is tailing off. If we exclude the EFLs and the change in regional development grant, which is an exceptional item, the cash increase is about 4 per cent. of the total figures that I mentioned. In real terms, this is a decrease of about £30 million on a total budget of more than £6 billion. The year-on-year increase in the Scottish block is close to the forecast rate of inflation.

The hon. Gentleman said that the housing measures involved a cut of 14 per cent. The housing cut, such as it is—today's announcement showed an increase over the White Paper figure to which we are referring — is accounted for almost entirely by the change in improvement grant from 90 to 50 per cent. The hon. Gentleman was trying to cut out completely from his consideration the extra money that I have allocated towards the alleviation of dampness and condensation, which the hon. Gentleman has always made out he is tremendously keen to mitigate.

With regard to the National Health Service, we calculated that the demographic changes would require an increase of just under 1 per cent. for them to be covered fully. As the hon. Gentleman is aware, the amount is well over the increase in inflation—without allowing for any savings that health boards can make—and will allow for those changes and other matters.

On the question of student grants, with respect to the hon. Gentleman, I did not say or imply—it is not the case—that any of these measures had resulted from the announcement that my hon. Friend the Parliamentary Under-Secretary of State made 10 days ago about extra money for science and technology. As I told the hon. Gentleman the other day, the figures for the Scottish block were not worked out when that happened. We have, therefore, been able to incorporate our calculations within the normal considerations of the Scottish block, which, at over £6 billion, has not had great difficulty in absorbing £3 million of extra expenditure resulting from the changes in student grants. The announcement that my hon. Friend made about extra money is unchanged. It will still amount in total to £14 million and there will be a first component of it, as I mentioned today.

Understandably, the hon. Gentleman made a small error when he talked about the rate support grant. It is not a £6 million cut, because he has failed to take into account the transfer of two colleges—two central institutions—from local authorities. That is a £10 million difference. If hon. Members wish to make a comparison, that is a £4 million increase rather than a £6 million decrease.

I made it clear that I have provided from Government sources £19 million extra to help local authorities to bridge the gap resulting from revaluation. I agree with the hon. Gentleman that this is making history. I agree with one of his figures. The effect of revaluation changes on the domestic ratepayers, without taking anything else into account, is about 8 per cent. In the figures that I have announced, it is calculated that if local authorities were to spend in line with the provision that I have suggested there would probably be an increase in rates of no more than the rate of inflation above the 8 per cent. resulting from the revaluation. The effect on domestic ratepayers will be only 8 per cent. because I have provided extra money to reduce by approximately half the effect that the revaluation would otherwise have had.

The hon. Gentleman was remarkably churlish about industrial ratepayers. Opposition Members are supposed to be interested in and keen and worried about jobs. Industrial ratepayers will have an average rate reduction of about 7 per cent. I can imagine the fuss that there would be if they had to face a 7 per cent. increase. I should have thought that the hon. Gentleman would be decent enough to welcome what has been done.

The hon. Gentleman raised a point about those local authorities which are below the guidelines. When they are on the guidelines they will have a problem with the effect of their expenditure on rates from now on, but ratepayers in those authorities already have the greatest and most coveted advantage, because they have had prudent authorities which have kept within spending limits for many years. On the whole, their rate levels are much lower than those of the mostly Labour-dominated authorities which have been extravagantly overspending for years. I hope that on reflection the hon. Gentleman will give a much warmer welcome to the statement than he did.

Sir Hector Monro (Dumfries)

Is my right hon. Friend aware that I welcome the fact that authorities such as Dumfries and Galloway, which keep within guidelines, will receive an increase in their budgets? Will he accept that I welcome also the fact that he is increasing expenditure on the Health Service? Can he confirm that, in real terms, overall local government expenditure is far above the levels of 1979?

Mr. Younger

I am grateful to my hon. Friend for his comments. I, too, greatly appreciate the splendid efforts that various local authorities, including Dumfries and Galloway, have made to keep expenditure down to the levels of the provision. I am sure that that is much welcomed by their ratepayers. I can confirm that, despite all that has happened in recent years, local authorities are still spending over 2 per cent. more than they were in 1979. That gives the lie to all the cries abou the terrible slashing of services. That has not happened yet.

Mr. Donald Stewart (Western Isles)

In view of the rigt hon. Gentleman's remarkable statement about looking to local authorities to bring their expenditure down to realistic levels, may I ask whether he has taken into account anything inside or outside the confines of the statement that could be done to ease the problem of the Western Isles islands council, which, with the highest domestic rate in Scotland, cannot spend up to its own mean guidelines? What is the reason for the delay in implementing the client-group method, which was expected to be introduced during 1985–86?

Mr. Younger

I appreciate the right hon. Gentleman's anxiety about the Western Isles. He and I have discussed this subject on several occasions. I have been able to give what I hope will be seen as considerable help to the Western Isles, through the distribution of the rate support grant. I hope that that will be of some help. As regards the client-group method, the settlement makes a large stride towards getting most authorities much nearer to their client-group assessments, and that will be generally welcomed.

Mr. Barry Henderson (Fife, North-East)

Can my right hon. Friend give any informtion on progress in reducing of overmanning by some local authorities? When Opposition Members and some high-spending local authorities huff and puff about his statement, will he bear in mind that some Labour-controlled local authorities seem to have no difficulty in finding unlimited funds to support the miners' strike?

It is difficult to evaluate a local authority's rate record over a run of years when a revaluation has occurred during the period. I wonder whether my right hon. Friend could do anything, such as producing a ready reckoner, to enable people more readily to establish the rate record after revaluation, because there should not be any increase in expenditure as a result?

Mr. Younger

On the latter point, I appreciate my hon. Friend's wishes. I shall consider issuing a ready reckoner or some other easy means to make comparisons. That is an interesting suggestion.

As my hon. Friend probably knows, there has unfortunately been a considerable increase in manpower since 1979. I calculate that the non-manual increase has been about 10 per cent. since then. There again, the story of vast redundancies in local authorities in Scotland does not bear analysis. I fully appreciate my hon. Friend's feelings about local authorities' donations to some of the miners on strike. Without going into the legalities of that, I find it astonishing that the authorities which dish out that sort of money can still complain that they do not have enough money for their ordinary and proper services.

Mr. Bruce Milian (Glasgow, Govan)

Why does the Secretary of State, who is a member of a Government who boast about cutting public expenditure, try to pretend that he is not cutting public expenditure when he comes to the House and makes the statement that we have just heard? His statement on housing is typical. He makes £589 million sound like an increase. This year's figure is £650 million. The real reduction next year is therefore—as my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said–14 per cent. Why does the Secretary of State not admit that? He is now trying to exclude nationalised industries in his figures for total public expenditure. He did not, of course, exclude them when the figures doubled between 1982–83 and the current year.

There is a 2 per cent. reduction in total expenditure in Scotland on a like-by-like comparison between this year and next. In real terms, this represents substantially more than £100 million. That is what is being cut from public expenditure in Scotland next year. Why does the Secretary of State not admit his responsibility for that and for the poorer services and increased unemployment that will result from his announcement?

Mr. Younger

I feel that I should sympathise with the right hon. Gentleman on his sudden attack of deafness. He accused me of trying to pretend that there was a vast increase in public spending. I remind him that in my statement I said that this shows that the Government remain determined to keep public expenditure within planned limits. I cannot be much clearer than that. I have explained that the reductions in the housing figures which he mentioned are due almost entirely to the reduction in the non-HRA portion, which is reflected in the reduction in improvement grants from 90 to 50 per cent.

I remind the right hon. Gentleman—I hope that it will not embarrass him too much— that the resulting level of improvement grants is miles ahead of anything that he ever achieved in any year, or even after adding all his years together. He mentioned a reduction in real teams. Unfortunately, it must be a question of deafness, because I explained in my first answer that that is largely accounted for by the change in the Torness EFL, which is an understandable and correct procedure.

Mr. John Corrie (Cunninghame, North)

Will my right hon. Friend confirm that he will continue to support ferry services to the islands as generously in the future as he has in the past? Is he aware of how important these ferry services are to the people in the island communities?

Mr. Younger

I confirm to my hon. Friend that I have written into the figures further provision for assisting with those services.

Mr. Willie W. Hamilton (Fife, Central)

Is it not the case that the £75 million cash increase to be allocated to the hospital boards assumes a wage increase for nurses of not more than 3 per cent? Since they would need at least 20 per cent. to get back in real terms to what they were earning 10 years ago, does it not mean that if there is any improvement at all in the Health Service it will be at the expense of people who are already grossly exploited within it?

With regard to housing, is it not the case that more than 12 months ago one district council alone, Kirkcaldy, estimated that to bring its non-traditional houses into habitable condition it would need to spend at least £50 million?

Will the Secretary of State read the recent report of the National Economic Development Council, on which the Government are represented, which says that billions of pounds will have to be spent on the infrastructure—roads, the transport system, education, hospitals and so on — and that these services are being ruined by the Government's gross neglect of them?

Mr. Younger

I hope that, on reflection, the hon. Gentleman will think that he is overstating his point very seriously. The nurses have had from this Government what they have never had from any other Government— a proper review body for their pay system. I think that they are very grateful for that. There are now far more nurses than there were under the last Labour Government, as the hon. Gentleman will be pleased to recall.

Health authorities are expected to find the cost of pay and price increases in 1985–86 from within the general increase of 5.5 per cent. made available for this programme. The Government consider that a pay increase of 3 per cent. would be reasonable, and at that level hospital and community health services would have resources to expand by about 2 per cent. It is entirely up to those concerned with negotiations to decide what level of pay settlements there should be, although it follows that if pay settlements are higher there will be less money for expansion and development.

With regard to housing, I remind the hon. Gentleman that we have found an extra £16 million to go specifically towards dealing with dampness and condensation. I should have thought that that would be welcome to the hon. Gentleman, particularly as the rest of the allocations to local authorities include money for maintaining their houses, and it can be used for helping with the dampness problem if they give it a high enough priority.

Lord James Douglas-Hamilton (Edinburgh, West)

Will my right hon. Friend confirm that £43 million extra is being provided for housing and that this will mean increased provision for the housing associations, through the Housing Corporation? Not only will there be a special allocation for housing affected by dampness and condensation; ill there not also be an allocation for defective housing, such as Orlit housing?

Mr. Younger

I confirm that there is £43 million extra on the housing revenue account.

I am glad that, taking into the account the local authority component, the housing associations will once more be able to look for a total expenditure of about £100 million this year—a figure miles higher than anything remotely achieved by previous Governments. I hope that Opposition Members will welcome that, as they are supposed to be in favour of the housing association movement.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

Is the Secretary of State aware that his statement will do nothing but exacerbate the very difficult circumstances that exist between central and local government in Scotland?

With regard to the provision of the relevant expenditure, will the Secretary of State confirm that the increase of 5 per cent. to £98 million coincides with a reduction in the grant from 60.2 to 56.6 per cent., and that that difference will have to be found by the ratepayers?

With the Secretary of State also confirm, with regard to the revaluation, that although he has made a welcome increase of £19 million, that will leave £34 million—the 8 per cent. that he talked about—to be found by the ratepayers?

How long will it take the Secretary of State to implement fully the client-group approach? Will it take two, 10, or 20 years?

Mr. Younger

With regard to the hon. Gentleman's last point, I cannot give a precise number of years, but on this occasion there has been a major step in that direction. I accept the hon. Gentleman's wish that we should get to full implementation as soon as possible.

As for exacerbating local authority and central government relations, if that were to happen anywhere, I am sure it would not be in the hon. Gentleman's part of the world, because the Borders regional council has not only done extremely well in keeping expenditure down to a reasonable level, but it has been particularly helped by this settlement, as have several other authorities. I hope the hon. Gentleman will find that that is helpful to him and his constituents.

With regard to the reduction in grant, of course it is the case that the Government have been trying to reduce the percentage of rate support grant. There is ample evidence to show that whenever that has not been done — for three years running it was not done — the local authorities have simply put up their spending in order to spend the difference that they could afford and put it on to their ratepayers.

I am grateful to the hon. Gentleman for welcoming the extra amount provided for housing. I hope that that will be generally welcomed, although the Opposition Front Bench have not felt able to say anything good about it.

Mr. Albert McQuarrie (Banff and Buchan)

I congratulate my right hon. Friend on the increase of £38 million in expenditure on education and the £27 million extra expenditure on health and social work, but I am deeply disturbed and disappointed by the £19 million cut in agricultural support. Will he bear in mind that there has been no increase in capital grant since 1981? This morning I received a telex from the Banffshire NFU, which said: Shocked by cuts in capital grant. Disastrous for the future of the hills and the uplands. As there is a £5 million reduction in the capital grant that my right hon. Friend is suggesting in his statement, I should like him to have another look at it and find a bit more money for farmers.

Mr. Younger

I am grateful to my hon. Friend for what he said about the increase in expenditure on education. It is of the greatest importance that we have found a considerable sum to increase the amount of technical education and scientific research.

I appreciate my hon. Friend's concern about agriculture, but, when he has time to look at the figures more closely, I think he will find that the decrease shown there still indicates a strong commitment to agriculture. The main reductions are in the spending on schemes which are pre-funded by the European Community. The difference amounts to £17 million. Capital grant reductions amount to about £5 million. The main increases result from the enhancement of the suckler cow premium and payments of £1 million under the milk outgoers scheme. Both schemes were announced earlier this year. We remain strongly committed to firm support for agriculture, and the increased rates of hill livestock compensatory amounts recently announced have been widely welcomed by the industry.

Mr. Norman Hogg (Cumbernauld and Kilsyth)

Does the right hon. Gentleman not understand that his statement will be met with dismay in Scotland, that he has a responsibility to reduce unemployment, and that the cuts that he has announced today, taken with the cuts in regional aid, will mean that 1985 will be a record year for unemployment in Scotland? Would he care to predict what the unemployment figure will be for 1985? Will he accept that responsibility for that tragedy lies firmly with him?

Mr. Younger

I am afraid that the hon. Gentleman is on a bad point. His right hon. Friend the Member for Glasgow, Govan (Mr. Milian) will remind him that, as Secretary of State, he did not make forecasts about unemployment. I remind the hon. Gentleman that, as a result of revaluation, if local authorities have any reasonable reduction in their spending, industry will have a reduction in rates of about 7 per cent. on average. Anyone who is worried about jobs must surely welcome that. The hon. Gentleman might also like to note that within those figures there are increased provisions for regional development grants, which have now been transferred to the Scottish Office. They, too, will help to reduce unemployment.

Mr. Bill Walker (Tayside, North)

Does my right hon. Friend agree that the changes that have been made in the rating to affect industrial users will benefit coal mines which are working, because they will be paying rates? Is there not scope here for miners to set up co-operatives in the mines that are scheduled for closure, so that they can invest in their own future and take advantage of those rates?

Will my right hon. Friend look at the way in which the support measures are produced for road networks? He will be aware that Tayside supplies the two main roads going north in Scotland. I believe that there is scope for looking at how the roads are funded, particularly with the heavy traffic that is flowing through.

Will my right hon. Friend confirm that the present manning levels in local government in Scotland are above those for 1977, which was the year before the Labour Government introduced the real cuts in manning levels in Scotland?

Mr. Younger

I agree with my hon. Friend's final point. That was the biggest reduction in manpower that the right hon. Member for Govan ever achieved, a fact of which I am sure he is extremely proud.

My hon. Friend referred to the possibility of miners wishing to make use of the grants and so on that are available. I agree that that would be useful. I should make it clear that the extra provision is for selective assistance. There is a greater emphasis on that now. The regional development grants are, of course, non-cash limited, so they will be provided at whatever level they have to come — I correct what I said previously about that. The figures announced today allow another satisfactory increase in the roads programme money in Scotland, which will enable the programme to carry on as planned, and there is also somewhat of an increase for local authority roads, which again I think will be welcomed by them.

Mr. Norman Buchan (Paisley, South)

Behind all the weasel words, is there not a real and desperate cut? Is it not the case that every piece of economic advice that the Secretary of State is getting is that tax cuts will not produce jobs, but investment will? Further, is it not the case that the right hon. Gentleman's boast about the increase in regional development grants is phoney? He referred to a transfer payment, but in reality there is a cut, which has already been announced.

Is it not the case that the right hon. Gentleman's figures on housing will again mean a cut and unemployment in the construction industry? Will he admit the fact enunciated by my hon. Friend the Member for Fife, Central (Mr. Hamilton), which is that the figures for the National Health Service mean an effective pay award of 3 per cent. for nurses, which is below the rate of inflation—yet another deplorable and appalling cut?

Mr. Younger

The hon. Gentleman's rhetoric depends entirely on there being cuts all over the shop, because that is all that he really understands. However, he has not appreciated that it is no part of my or the Government's case to try to increase public expenditure —quite the reverse. The hon. Gentleman has not appreciated that the Government's objective is to try to keep public expenditure under control, and that is perfectly clearly and openly stated. What we are trying to do, and what the figures demonstrate can be done, is to maintain a good level of services by good housekeeping and savings, while not putting extra strain on public expenditure, which would result in a mad increase in spending, which is all that the hon. Gentleman ever wants. Of course investment is important, and we do all that we can with the money available to keep investment up. The construction industry's component from the public sector in Scotland in the year ahead will broadly remain level in real terms, as it has done over the past few years. That is another example of what good housekeeping can produce, even at a time when we are trying to keep down the overall levels of public expenditure.

Mr. Gerald Malone (Aberdeen, South)

I share my right hon. Friend's justified objective to contain public expenditure, but would he care for a moment to bask in the glory of the Opposition's philosophy and bear in mind the fact that expenditure on local authorities is, in real terms, above what it was in 1979?

Mr. Younger

My hon. Friend is quite right and is helping to explain to Opposition Members the realities of the situation, which they are criticising from all the wrong angles. It is true that local authorities are still spending more in real terms than in 1979. It is against that background that the terrible doleful cries of the hon. Member for Paisley, South (Mr. Buchan) have to be seen. More manpower is being employed and more money is being spent in real terms. What the hon. Member for Paisley, South said bears no relation to reality.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

Does the Secretary of State admit that it is politically unacceptable and socially disgraceful that he has allocated only £16 million towards dealing with dampness in housing in Scotland when the Scottish Select Committee report estimated that £500 million was needed to tackle the problem?

Does the right hon. Gentleman accept that it is a disgrace, when parents throughout Scotland are becoming increasingly worried about drug abuse by young people, particularly in the central belt and elsewhere, that insufficient funds are being given to the Scottish NHS, beyond the 1 per cent. which the Treasury reckons it needs to stand still and keep pace with demographic changes, to provide specific thrust to deal with the problem?

Mr. Younger

I suggest that the hon. Gentleman has the housing figure wrong. Perhaps the way in which it has been expressed is wrong. The £16 million is not what I have allocated for dealing with dampness and condensation. It is a specific extra amount over and above the allocation that is given normally to cover that and other associated services. The hon. Gentleman may remember that when I met the Select Committee about the matter we went into it in some detail, and it was made clear that if local authorities regard it as a high priority, as I do, to deal with dampness and condensation, large sums of money are allocated to them—much more than £16 million—from which they can find quite a lot to deal with the dampness problems in their areas. The local authorities' own checklist of the amount of money needed to put those difficulties right is £190 million. That is their calculation. If one takes what is allocated generally for housing maintenance and repair and the £16 million extra, one sees that that represents a major gesture towards dealing with the problem. I hope that on reflection the hon. Gentleman will welcome that.

Mr. James Hamilton (Motherwell, North)

Will the right hon. Gentleman recognise once and for all that one of the heaviest burdens for local authorities in Scotland is the high incidence of unemployment? Does he agree that because of his statement, with the inevitable cuts in education, social services, home helps and fire services, there will be a further increase in unemployment? Does the right hon. Gentleman recognise that the 7 per cent. figure that he mentioned as being beneficial to industrialists is one that he has plucked out of a hat, and will aggravate the situation?

Mr. Younger

I do not recognise the terrible headings under which the hon. Gentleman listed cuts and so on. I do not know about cuts in the fire service. I have not announced any. With regard to unemployment, the hon. Gentleman's area is in the largest top-tier authority in Britain and has the best attractions compared with other areas in any part of Britain. I should have thought that he would be glad about that. There are several features which directly help to tackle unemployment, including the lower rates for industry and the money which is not cash limited for assistance to industry, which I mentioned.

Mr. George Robertson (Hamilton)

Is the Secretary of State aware that just over an hour ago the Prime Minister admitted that she was not an expert in accountancy and that his statement shows that he joins that select group of self-confessed illiterates in accountancy? Who does he think he is kidding when he tries to pretend to the Scottish population that he is not savagely cutting the housing budget? It is pure fiction to pretend that he is finding new money, when all that he is doing is finding it at the expense of other programmes at a time when Scottish housing need is at its greatest and when the Scottish building industry is in crisis.

Mr. Younger

I do not pretend to be an accountant, and I do not think that the hon. Gentleman does either. Whether either of us is an accountant, perhaps the hon. Gentleman is good enough at arithmetic to tell me whether an extra £43 million on housing means a cut or an increase.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

Will the Secretary of State admit that his statement confirms that he has reneged on promises given to the ratepayers of Ayr, Prestwick and Troon on revaluation, which he gave in a desperate bid for re-election? As the Secretary of State is so confident that there are no cuts, and as he is so enthusiastic about law and order, will he indemnify any local authority for legal action taken against it because it cannot fulfil its statutory and legal responsibilities in education, social work or any other service because of what are clearly cuts? I ask that because I calculate that the per capita expenditure in Scotland is less than 1 per cent. of the per capita expenditure by this Government, by our taxpayers, on the Falkland Islands.

Mr. Younger

I confirm that I have reneged on no undertakings to any ratepayers in Ayr or any other part of Scotland.

Mr. Foulkes

In the right hon. Gentleman's election address—

Mr. Speaker

Order.

Mr. Younger

As for legal responsibilities, I cannot see how local authorities spending over 2 per cent. more in real terms than they were five years ago can have difficulty in keeping up their legal obligations. I think that the hon. Gentleman has been reading too many Hans Andersen fairy tales.

Mr. John Home Robertson (East Lothian)

It has taken the right hon. Gentleman half an hour to admit that he has done a "star chamber" job on his Department. On the question of funding for the National Health Service, the right hon. Gentleman has made it clear that the Government are providing for a 3 per cent. increase in nurses' pay. Is he aware that in real terms that is a cut and that nurses' pay has fallen about 20 per cent. below where the last independent review said it should be, and that nurses are now on the breadline? What have Scotland's nurses done to deserve that?

Mr. Younger

As the hon. Gentleman knows, a pay review body has been set up to consider nurses' pay.

Dr. Norman A. Godman (Greenock and Port Glasgow)

The Secretary of State suggested that the increased cash provision for the NHS would result in expanded services. As part of that expansion, will there be increased geriatric provision and better, more comprehensive hospital facilities for the mentally ill and the mentally handicapped?

Mr. Younger

The figures that I have announced provide for an increase of 5.5 per cent. over the previous provision, which allows the NHS at least 1 per cent. more than the expected rate of inflation to cover extra demands on services, and so on. I agree that the priorities set out by the hon. Gentleman are very important, as do the health boards. Under the share arrangements, it is up to the health boards to use the money available to them within the figures that I have announced to deal with those very high priorities.

Mr. Jim Craigen (Glasgow, Maryhill)

Adding all the Secretary of State's years of office together, why is he so blindly indifferent to housing investment and unemployment in Scotland, as shown by the halving of housing investment in cost terms since he came to office in 1979? Why is he short changing Scotland's domestic ratepayers on revaluation by giving only £19 million to local authorities for domestic relief and leaving them to pick up the tab for the other £51 million? Finally, what will be the average weekly increase in rates and in rents as a result of the Government's revaluation and housing policies? Will he produce figures on those two matters?

Mr. Younger

I shall try to give the hon. Gentleman as many figures as possible. His comments about housing suggest that he prepared them before hearing my statement. Nothing that he says alters the fact that, on the housing revenue account, which he should regard as important, this year's provision is £227 million and next year's provision will be £270 million. To everyone but the hon. Member for Hamilton (Mr. Robertson), that is an increase of £43 million.

On revaluation, my calculation is that after the extra help that I have given—the £19 million and the increase from 1p to 5p domestic rate relief — the effect of revaluation alone on the domestic ratepayer will be an increase of about 8 per cent. For the industrial ratepayer it is minus 7 per cent. I have approximately halved the adverse effect on domestic ratepayers which would otherwise have occurred. A proportion rightly remains to be paid for by the domestic ratepayer, but it would have been double that amount if I had not taken my action.

As for rents, on my calculation the average rent increase in Scotland will be £1 per week. That must be set against the fact that Scottish rent levels are very substantially lower than those south of the border, while average earnings are now higher than those south of the border.