Rate Support Grant (Scotland)

HC Deb 23 October 1984 vol 65 cc574-645 4.44 pm

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

I beg to move, That the Rate Support Grant (Scotland) (No. 2) Order 1984, dated 18th July 1984, a copy of which was laid before this House on 23rd July, be approved. The order that we are debating today is a short one and it has one purpose — to reduce the amount of rate support grant payable to Scottish local authorities in 1984–85 by £90 million.

I announced my decision to make this reduction in my statement to the House on 17 July, and the order before us was laid very shortly after that. I explained the reasons for my decision in July and also pointed out the two significant improvements in the arrangements for grant reductions which remove unfairnesses which had previously existed. However, before dealing with the details of the order, I should like to consider the question of local authority expenditure more generally.

Whether we like it or not, expenditure by local authorities is part of public expenditure. Indeed, it forms over half of the budget of the Scottish Office. No Government can ignore this expenditure if they are to run the economy of the country properly. No Government so far have ignored it, or have even suggested that they should.

The last Labour Government were no exception. They made clear the levels of spending that the country could then afford, and they too faced protests from local government when this was curtailed. They also reduced the percentages of RSG in order to discourage overspending. Indeed, they hold the record on this for the largest such reduction ever—4 percentage points cut in 1977–78.

This, I hope, puts in perspective the absurd antics of a few authorities which are trying to pretend that in some new way local autonomy is being threatened. That is nonsense, and they know it. We in government have no intention of allowing these party political excesses to prevent us, who have the full responsibility for running the economy, from getting our sums right.

That brings me to the other possible new factor which faces us tonight. It would appear—and I hope that I am wrong in this—that for the first time in history we have an official Opposition who are formally pressing their supporters to break the law of the land.

No other interpretation can be put on the resolution passed at the recent Labour party conference; but I sincerely hope that we can be assured this evening that whether or not this was the view of the Labour party conference, it is emphatically not the view of the parliamentary Labour party and its leaders in Scotland. I shall return to this point later.

We start tonight from the firm base that it is the judgment of the Government that public expenditure has to be reduced for the health of the economy generally and that local government has to play its part in that undertaking.

The Government have asked local authorities, as did previous Governments, to plan their expenditure in line with overall provision for that expenditure. However, local authorities have consistently since 1979 planned to spend above provision. From 1979–80 onwards the planned excess increased to a level of over 8 per cent. in 1981–82 and 1982–83. This overspending took two forms. The first was substantial increases in expenditure by individual authorities which took them well above their current expenditure guidelines with significant effects on their ratepayers. The activities of the former administration of Lothian regional council are the best known example of that. The second form of overspending was made up of the great majority of authorities spending smaller amounts above their current expenditure guidelines and all contributing to the large general excess over the Government's plans.

The first problem we have tackled successfully through the new powers we have taken in successive Acts to enable us to reduce the rates of selected local authorities who are planning excessive and unreasonable expenditure. Selective action has produced significant expenditure savings from the first time it was used in 1981–82, and subsequently produced very welcome benefits for ratepayers when the Government were able to ensure that the expenditure savings were returned to the ratepayers in the form of reduced rates. We did not feel it was necessary to use this power in the current financial year, but it remains available and is clearly an effective way of dealing with an authority which plans excessive and unreasonable increases in its expenditure and rates.

The second form of overspending we have dealt with by reducing the amount of rate support grant payable in the course of the year. This method has also had significant effects on expenditure as a comparison between budgets and outturn shows. We have taken a number of steps to make this system of grant reduction fairer to ensure that the pressure is directed to those authorities spending furthest above their guidelines and that recognition is given to those authorities that spend in line with our plans. We first exempted all authorities budgeting to spend within guidelines from any grant loss. We then recognised the efforts of those who had brought their expenditure below guideline at outturn by cancelling the penalty for such authorities. For 1984–85, as I have already made clear, we are taking this a stage further. The new power in section 1 of the Rating and Valuation (Amendment) (Scotland) Act 1984 will enable us for the first time to relate directly the loss of grant to the level of excess measured against current expenditure guidelines. A further improvement for 1984–85 is that every penalty will be adjusted in the light of outturn. An authority whose expenditure at outturn is below guidelines will, as is already the case, have its grant penalty cancelled. However, for the first time an authority which, while still above guidelines, reduces its expenditure at outturn will have that penalty reduced. Conversely, of course, an authority which increases its expenditure excess will have an increased penalty at outturn.

This review of penalties at outturn is in direct response to representations from the Convention of Scottish Local Authorities, which has made representations to me and my hon. Friend the Under-Secretary about the unfairness of the system, which did not recognise the efforts of authorities in reducing their expenditure adequately.

Overall, the combined effect of these two approaches to overspending—selective action for very high spenders and grant reductions for the other overspenders— has succeeded in bringing local authority expenditure fairly close to, but not yet below, the level that prevailed when we came into office in 1979. Local authority expenditure in 1983–84 at near final outturn was, in real—that is, volume —terms still 2.1 per cent. above its 1978–79 level.

However, this would never have happened without the action that we have taken and in particular without the grant penalties that we have been forced to impose. In 1983–84 local authorities budgeted to spend 4.6 per cent. above the Government's plans, but following selective action and general grant abatement this excess has come down to just over 2 per cent. In 1984–85, however, authorities have budgeted to spend 4.3 per cent. above the Government's provision—only a little improvement over 1983–84 and still 2.6 per cent. in real terms above what they were spending in 1978–79. Given our experience of grant abatements over past years, and the level of budgeted expenditure for 1984–85, it was clear that I had again to take action to bring local authority expenditure down. As authorities were still planning to spend at about the same level above provision as they had in the previous year, I decided that a heavier grant penalty was needed if expenditure was to be brought into line with provision. The total penalty in 1983–84 — selective action and general abatement taken together—was £64 million. I decided that it was necessary to increase this to £90 million in order to bring the necessary pressure to bear.

Authorities were all told on 17 July the amount of grant that they would lose in the light of their planned excess over guidelines. No authority spending within guidelines had any penalty and the penalties for those above guidelines ranged between 64 per cent. of the overspend for authorities spending under 1 per cent. over guidelines up to 87 per cent. of the overspend for authorities spending 14 per cent. more than their guideline.

Mr. Donald Stewart (Western Isles)

In the light of these arrangements, what adjustments, if any, will the Secretary of State make for a local authority such as mine, which has no hope of spending up to its guideline?

Mr. Younger

If the authority has no hope of spending up to its guidelines, it will not have any penalty. As far as I know, that is not the position of the Western Isles council, but it may be. I am sure that the right hon. Gentleman will be able to make his point later on.

We have emphasised to authorities the benefits to them and their ratepayers if they reduce their expenditure and thus reduce or cancel the penalty altogether. This was one of the points made in the letter that I sent to the conveners and provosts of all Scottish authorities. I drew particular attention to the cost in rate terms of failing to do anything about the grant penalty. At the regional level the equivalent in rate poundage terms of the grant penalty is up to 6.4p in the pound, and this is the kind of price which ratepayers will have to pay next year if councils take no action to reduce their expenditure now. A number of authorities have gone out of their way to say that they propose to take no action to reduce expenditure and I understand that one or two are even proposing to increase their expenditure. The effects for the ratepayers of these authorities will be very unwelcome for not only will they have no relief from the rate effect of the present grant penalty, but they will have to meet the cost of the increased grant penalties that will follow from increased expenditure.

Therefore, I take this opportunity to underline the point made in my letter. The effects on rates of failure to take action in response to the reduction in grant will be both unwelcome and unnecessary. The reductions in expenditure between budget and outturn in 1983–84 show that authorities, whether they are prepared to admit it or not, see the logic of reacting to grant reductions in a way that takes account of ratepayers' interests. This year's penalty may appear heavy at £90 million, but it can be reduced very significantly by the efforts of authorities in bringing their expenditure down. I look forward to the figure of £90 million being greatly reduced at outturn as large numbers of authorities reduce their expenditure and hence either cancel or bring down the grant penalty that was imposed on the basis of their budget.

Mr. Gavin Strang (Edinburgh, East)

Does the right hon. Gentleman recognise that the regional council with the highest percentage excess over guidelines in the Government's report is the Lothian regional council, which has already destroyed 4,500 jobs as a result of the Government's cuts? On the basis of next year's guidelines, which I recognise we are not debating today, it will have to destroy another 5,000 jobs. Where will this end? How many more teachers, nursery teachers and home helps in Lothian will lose their jobs?

Mr. Younger

Ever since the lamented days of the previous Lothian council administration, the council has been saying that vast numbers of compulsory job redundancies will occur, but that has never happened. I understand that there have been no compulsory redundancies yet in Lothian regional council, and I hope that that will continue. Overspending in that council was well known, and something had to be done to save the ratepayers from the burden that they were carrying. The Government's actions were welcome to them, as I am sure that the hon. Member for Edinburgh, East (Mr. Strang) will know from his local people.

I shall now tell the House what I propose to do about a particular problem affecting 1983–84. The reduction in rate support grant in response to planned overspending for 1983–84 was fixed in July 1983 at £45 million. This penalty figure was to be regarded as fixed and there was no commitment to adjust it later in the light of the efforts made by authorities to bring down their expenditure and the eventual level of overspending at outturn. The system was that the penalty of an authority was cancelled if it came below guidelines, and the share of the penalty for authorities remaining above guidelines went up since the total penalty was fixed. Final expenditure data for 1983–84 shows that a large number of authorities have reduced expenditure, some significantly. Some 23 of the 65 authorities, including no fewer than seven regional councils, are no longer liable to penalty or full penalty. Around two thirds of the remainder have reduced expenditure but remain outwith the protection arrangements. The result of this is to reduce the expenditure excess over provision by more than half to £59 million or 2.2 per cent. In the circumstances, I have decided to cancel the penalty of the authorities whose expenditure has come within the protection levels, to reduce the penalty of four more authorities so that it does not exceed the amount by which their expenditure exceeds the protection levels and not to increase the penalties of the remaining authorities. This decision recognises the efforts made by many authorities to reduce expenditure and will require an increase of around £17.5 million in the present level of rate support grant for 1983–84. The appropriate provision will be included in the rate support grant order to be made later this year. The fact that almost a third of authorities have managed to avoid penalties altogether in 1983–84 shows that expenditure can be brought under control if the will is there and that what we are asking authorities to do is not unreasonable. I believe that this is an equitable solution to a problem that I know has been troubling many people, including the convention. The problem will, of course, not arise again since from 1984–85 onwards the total penalty will, because of the terms of the Rating and Valuation (Amendment) (Scotland) Act 1984, come down automatically as individual authorities' penalties come down at outturn.

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

I was not very clear about the second group of authorities in the announcement. The Secretary of State mentioned four particular authorities. Will he tell us which authorities they are? I was not clear as to what kind of category he was describing.

Mr. Younger

That is a valid point. I will ask my hon. Friend to give more details about the precise authorities and about how the proposal will work.

I hope that I have made the principle clear. It is that where authorities bring down their expenditure within or near to guidelines, the resulting reduction in penalties will not be visited as an increased penalty on the rest of the authorities that are still within penalty.

Mr. Foulkes

I am grateful to the Secretary of State. I hope he will accept that for once I am not making a political point but genuinely seeking information. Some hon. Members may wish to make speeches from the Back Benches about authorities relating to the constituents whom they represent. It might save the House a good deal of time if we could be told about the authorities which are no longer to suffer a penalty. If we can have that information, some of those speeches may not be necessary.

Mr. Younger

I am greatly enjoying the luxury of a speech in which the hon. Gentleman is not making political points. A good many authorities are involved and my hon. Friend will give further details.

Every time we try to bring local authority expenditure into line with our plans, we are told that it will have a disastrous effect on services and that it will be impossible to make any further savings. One of the problems of large organisations—central Government are and ought to be fully aware of this—is that of ensuring efficiency and value for money across a large range of activities. It is much easier for pockets of inefficiency to develop in large organisations than in small ones, and also for circumstances to change without expenditure being adjusted. The elimination of such waste and inefficiency is a problem that we share with local government.

Mr. Robert Hughes (Aberdeen, North)

On a point of order, Mr. Deputy Speaker. For the proper conduct of debate, surely the Secretary of State should tell us the names of the authorities to which he is referring, otherwise hon. Members might make speeches without knowing the facts. That would allow the Minister, in replying to the debate, to ridicule those who made their speeches without being aware whether their authorities were involved.

Mr. Deputy Speaker (Mr. Harold Walker)

The hon. Gentleman's point is out of order.

Mr. Younger

I am very sorry if the hon. Member for Aberdeen, North (Mr. Hughes) feels offended. I thought that it was rather a good piece of news. I hope that I shall be acquitted of doing anything that is damaging to the hon. Gentleman.

Mr. Hughes

As it is very seldom that the Secretary of State issues good news, and as I am sure he would like to be congratulated on giving the House good news, will he share his knowledge with us and tell us the names of the authorities?

Mr. Younger

As I have said, I will get the fullest details and make them available to hon. Members.

We have made substantial efforts in central Government to reduce expenditure and to eliminate the inefficiencies which are here and there to be found. I hope that the whole House will accept it as a genuine effort to try to help. The work begun by Lord Rayner — [Interruption]—on efficiency continues—

Mr. Donald Dewar (Glasgow, Garscadden)

I am anxious to give the right hon. Gentleman the opportunity to receive the information which has evidently reached his junior Minister. Therefore, I rise on a point of information and urge the Secretary of State to let us have the information which has reached his underling. Will he now read to the House the information that is available?

Mr. Younger

I now have some advice which will perhaps help the House. The increase in rate support grant that I mentioned of about £17.5 million for 1983–84—which applies in Cunninghame, South as well as everywhere else — is to be shared among the Central, Fife, Strathclyde and Tayside regional councils, and among the district councils of Falkirk, Wigtown, Banff, Kincardine, Inverness, Lochaber, Nairn, Bearsden, Motherwell and Dundee.

The four authorities to which I referred—and about which the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) was so anxious in his non-political intervention—are Central and Strathclyde regions and Lochaber and Nairn district councils. I shall be glad to try to provide any further details that are required.

The work begun by Lord Rayner on efficiency is also important in the present context. In the Scottish Office, for example, manpower has been cut by over 14 per cent. since 1979, mainly by staff savings. The annual increase in the level of the Department's administrative costs is now well below the rate of inflation. More fundamentally, we have mounted a concerted programme—known as the financial management initiative—to relate costs to objectives and identified responsibilities, using modern information systems. That will not only lead to improvements in efficiency in the way that central Government runs, but will equip Departments to get better value for money from their programme expenditure on all the services that they exist to deliver.

I know that many local authorities have similar arrangements designed to improve efficiency. However, I cannot accept that all possible savings have been made when I read the reports of the Comptroller of Audit. Those reports refer to many areas where value for money studies in individual authorities have been able to identify useful savings and point to areas, such as budgetary control, where many authorities fall short and could get better value for money. Local authorities are not unique in that respect. It is an area to which both central and local Government have to pay close attention. I hope that local authorities will see the pursuit of efficiency as an obvious course to follow at any time, particularly now when we are anxious to reduce the burden of public expenditure.

Looking ahead, we have now issued the guidelines for 1985–86. The convention told me that, taking its 1984–85 budgets and projecting them forward in 1985–86, it considered that there would be a gap of £200 million between its expenditure figure and the Government's plans. I have responded by increasing provision by about £95 million and, in effect, halving that gap.

On present inflation assumptions, I am looking for local authorities to reduce their expenditure by 3.7 per cent. from their present budgeted level of spending. A more realistic way to look at what is being asked of local authorities is to look at their actual expenditure for the year just ended and project it forward, making the necessary allowance for inflation. On that basis we are asking authorities to reduce their expenditure by about 2 per cent. in real terms. Bearing in mind what I said about the scope for efficiency savings, I do not think that that can be said by anyone to be asking the impossible.

I should like to conclude by returning to the order. Its purpose is simple.

Dr. M. S. Miller (East Kilbride)

How did the right hon. Gentleman come to the decision to ask for a reduction of 2 per cent. overall when there is a wide variation in what is necessary between one area and another? Even if he is right in asking for a 2 per cent. reduction—which I doubt very much—he must surely allow for spending very much less in some areas and for spending more in some other areas.

Mr. Younger

The hon. Gentleman is right. That is what the guidelines and the rate support grant arrangements are designed to do.

The purpose of the order is simple. It reduces by £90 million the total of rate support grant fixed for 1984–85 in the rate support grant order that we debated in January of this year. That reduction of £90 million falls entirely on the needs element of the grant, and is allocated among authorities in direct proportion to their excess over guidelines. Annex 1 to the report on the order lists the 115 authorities whose grant as initially notified for 1984–8,5, is not affected by the order as their planned expenditure is on or within their guideline. Annex 2 to the report sets out the formula, together with all of the necessary figures, that has been used to calculate the shares of the abatement of the remaining 50 authorities. The formula takes account of both the amount in cash by which the budget of each authority exceeds its guideline and the percentage represented by that excess. The allocation of the abatement is shown in column (7) of annex 2, while schedule 2 to the order sets out the amounts of needs grant in payment to each authority where appropriate taking account of the abatement — [HON. MEMBERS: "Where?"]. That is in annex 2 in the report on the Rate Support Grant (Scotland) (No. 2) Order 1984. It is document No. 581 and annex 2 includes a table on the back page. I do not know whether Opposition Members have it, but it is available in the Vote Office.

I emphasise that the calculations that I mentioned will be reviewed in the light of actual expenditure of authorities for 1984–85, which will be known in about a year's time. If an authority brings its expenditure down to its guideline level, the grant penalty will be cancelled. If it reduces its expenditure, but not as far as its guideline, its penalty will be reduced. The new penalty will be based on the tariff established in the initial distribution of the grant penalty. Thus, if an authority reduces its overspend from 5 per cent. at budget stage to 1 per cent at outturn, its penalty will be reduced from 78 per cent. of its overspending in cash at budget stage to 65 per cent. of the lower overspending in cash at outturn stage. Any adjustments to grant will be made during the year ending 31 March 1986. That will recognise not only the lower cash overspend but the lower percentage overspend. As I have already said, if authorities make the effort to find savings, as they have done in response to previous general abatements, there is no reason why these individual penalties should not be substantially reduced and as a consequence the figure of £90 million will come down substantially.

The order sets severe penalties for overspending but it offers very real incentives to authorities to make savings and look for the most efficient way to provide services within necessarily limited resources.

Mr. James Wallace (Orkney and Shetland)

On a point of order, Mr. Deputy Speaker. I have just been to the Vote Office and asked for a copy of the order. My copy contains schedules 1 and 2, but there is not the annex referred to by the Secretary of State. The hon. Member for Falkirk, East (Mr. Ewing) and I were told that the Vote Office had no knowledge of any document with an annex.

Mr. Deputy Speaker

The House would recognise that doubtless that was a slip of the tongue on the part of the Secretary of State. The House is debating the Rate Support Grant (Scotland) (No. 2) Order 1984, which has schedules to it.

Mr. Harry Ewing (Falkirk, East)

Further to that point of order, Mr. Deputy Speaker. The point is that once documents have been referred to, they should be made available to hon. Members. When the hon. Member for Orkney and Shetland (Mr. Wallace) and I went to the Vote Office, the clerk told us that he had never heard of such a document. Whether or not it was a slip of the tongue, the Secretary of State referred to annexes 1 and 2, but no such documents are available to hon. Members. They should have been available before the debate.

Mr. Deputy Speaker

The Order Paper states that the House is debating—and the Secretary of State in my hearing moved that it be approved—the Rate Support Grant (Scotland) (No. 2) Order 1984. Is the hon. Member for Falkirk, East (Mr. Ewing) saying that that order is not available in the Vote Office?

Mr. Ewing

No. I should like to clear up the point. The Secretary of State said that there was another document as well as the order, which was a part of the order, naming the local authorities involved in the order. That other document is simply not available.

Mr. Deputy Speaker

That is different from what I heard the Secretary of State say. Perhaps the right hon. Gentleman will clarify matters.

Mr. Younger

I clearly referred to the report, to which there are two annexes. Copies are available and can be read——

Mr. William McKelvey (Kilmarnock and Loudoun)

On a point of order, Mr. Deputy Speaker. The Vote Office has said that it had only seven copies and has sent for more.

Mr. Younger

I would always do anything that I could to ensure that hon. Members had the right papers. I think that they have. I strongly suspect——

Mr. Bruce Millan (Glasgow, Govan)

On a point of order, Mr. Deputy Speaker. It is a well established convention in the House that, particularly when a basic document for a debate is referred to by a Minister, it must be available in the Vote Office. My hon. Friend the Member for Kilmarnock and Loudoun (Mr. McKelvey) said that there are seven copies of the document in the Vote Office——

Mr. McKelvey

There were.

Mr. Millan

That must be a breach of that convention. I understand that it is the responsibility of the appropriate Minister and his Department to see that documents are placed in the Vote Office.

Mr. Deputy Speaker

I understand that if a Minister refers to a public document, it should be available. The right hon. Member for Glasgow, Govan (Mr. Millan) has said that, no matter what the number of copies, such documents should be available. The number and placement of documents is a matter for Ministers and not for me.

Mr. Millan

Is it in accordance with the traditions and conventions of the House, in which there are 650 Members, for there to be seven copies of a basic document in the Vote Office? There are 72 Scottish Members. That simply cannot be good enough. We expect a bit of protection from the Chair.

Mr. Deputy Speaker

The right hon. Gentleman has been a Member of the House for a long time—longer than I have. He knows that there is no requirement in Standing Orders or in the procedures of the House that copies of every document to which Ministers refer should be available to every hon. Member. We should get on with the debate.

Mr. Albert McQuarrie (Banff and Buchan)

On a point of order, Mr. Deputy Speaker. I wonder whether I could clarify the position. I have obtained—

Mr. Deputy Speaker

Order. If the hon. Gentleman is rising on a point of order, it should be a point of order. Clarification has already been provided. We should get on.

Mr. McQuarrie

Further to that point of order, Mr. Deputy Speaker. I should like to refer to the point of order raised by the right hon. Member for Glasgow, Govan (Mr. Millan), who said that no copies were available. Further copies are being brought to the Vote Office at the moment, and I have obtained one.

Mr. Younger

I try to ensure that documents are properly provided. A report and an order are issued every year and this year 100 copies were made available to the Vote Office. It is clear from this exchange that Opposition Members were not able to go to the Vote Office earlier to obtain their copies. They might think it wise to obtain documents before taking part in a debate, but I shall make sure that there is nothing lacking in what is available.

That brings me to the point that I was making earlier about the attitude taken by some authorities towards spending policies. I feel that on that matter the hon. Member for Glasgow, Garscadden (Mr. Dewar) is on the spot. I fully appreciate that he may well disagree with the order and the spending policies that we are pursuing. He has every right to do so and no doubt he will make that clear. However, there is a further, larger issue behind this that the hon. Gentleman cannot dodge and on which the House will require a clear answer from him today.

Some authorities have been saying openly not merely that they are against cutting their expenditure but that they are prepared to break the law passed by Parliament. Both the recent Labour party conference and the Scottish executive of the Labour party have made it clear that they would support such action. The hon. Member for Garscadden is the parliamentary leader of the Opposition in Scotland and has always been an upholder of the law, even when he may not have fully agreed with it. I call upon him today to say clearly and unequivocally where he stands on the issue of breaking the law. There are two questions that he must answer. First, is he, as a democratic politician, clearly in support of compliance with the law as passed by Parliament? Secondly, will he give here a strong lead to those Scottish local authorities which resolve to break the law that they should not do so and that he will give them no support if they do?

I understand that the hon. Gentleman hopes to get into the shadow Cabinet later this week. We in the Conservative party certainly wish him well in that. But if he ever wishes to be in a Cabinet as opposed to a shadow Cabinet, he will have to be able to answer yes to both the questions that I have asked or to forfeit a great deal of his claim to be a credible parliamentary leader. I commend the order to the House.

5.20 pm

Mr. Donald Dewar (Glasgow, Garscadden)

I am overcome by emotion at the good wishes of the Secretary of State for Scotland. A touch of incompetence certainly adds interest to a speech. Almost every Labour Member was particularly pleased to see the hon. Member for Moray (Mr. Pollock) earning his corn on this occasion. We sometimes tend to forget that he is an important part of the ministerial team.

I have listened to many speeches by the Secretary of State. Some of my hon. Friends may be familiar with the memoirs of Mr. Claud Cockburn, who used to recount that in his days at the London Times there was a competition to find who could produce a headline that was most anticlimactic. One weekly succeeded with "Small earthquake in Chile: few dead". Over the years, listening to the right hon. Gentleman's speeches one notices that they have been carefully constructed on a similar principle. They tend to be featureless, undistinguished and rather prosaic in style. Occasionally they might rise to the heights of being neat, tidy and well read, but they are eminently forgettable. But if one looks behind the rather dreich presentation there are some serious messages for local government in Scotland and some depressing messages for the body politic north of the border.

The order is a pretty miserable business. It is another round in the bruising battle that has been going on for some time between local and central Government. Today we have been reminded that the situation is bad and is likely to get worse.

Because I like looking on the bright side of things I want to start with the one bit of good news that the Secretary of State was able to bring. It is more a crumb of comfort than anything else. I am glad that there will be a reduction in the 1983–84 clawback for individual authorities in line with their outturn figures at the end of the financial year. If the £45 million, which was already put in as a clawback figure and which we were told was as immutable as the laws of the Medes and the Persians, had held, the situation would have been greatly distorted and the Secretary of State has tacitly accepted that.

For example, if, as would have happened, Strathclyde had been held to its £13 million contribution to the total, Highland and Lothian would have had an enormous burden to bear. As I understand it, the district councils would have had to find almost £15 million of the total. That proportion would have been about 33 per cent. compared with the 11 per cent. which was originally anticipated. I am glad that the Secretary of State has moved on that point. He was asked to do so originally by Labour Members when the Bill was being debated because we were worried about that point. When the statement announcing the £45 million came out we pressed him again. The Confederation of Scottish Local Authorities has been hammering on the door throughout the negotiations. I am grateful that at the end of the day the right hon. Gentleman has capitulated on that point and recognised the manifest absurdity of the position in which his plans have put him. I can only express the heartfelt hope that this is something of a precedent and that he will look at some of the distortions and foolishness that will arise from other parts of his policy and, equally wisely, retreat from the brink of confrontation.

The clawback for 1984–85 was a concession for a previous year. In this order, we are being invited to agree that £90 million in general abatement shall be filched from an inadequate settlement and that it should be done well into the financial year. We have every right to be angry and upset about that. More importantly, local government has every right to be angry and upset. Let me briefly remind the House of the basis for that discontent.

First, the system is based On a flawed foundation. We know, and we hear it constantly from Ministers, that local authorities are in excess of their guidelines. That is the litany mumbled by Ministers to justify every tyranny invented by the Treasury. But that is only a valid point if we assume that the guidelines have validity, are fair and are based on some genuine agreement on the methodology and the ultimate result. No one in Scotland thinks—or almost no one because there is a gaggle of time servers behind the right hon. Gentleman who may—that the guidelines are fair and defensible. The very word "guidelines" has now become something of an abuse of the English language because they are mandatory. There is no shadow of a doubt about that. Anyone who reads the famous report, about which there was an exchange a few minutes ago, will know that when we talk about the guidance on which the machinery depends, it is clear that it means the guidelines. We are building upon the flawed foundation a penal system which is completely misconceived.

The Secretary of State has said that he believes that the 1984–85 guidelines were reasonable. In a sense, he admitted that they are not when he introduced the 1985–86 guidelines only a week or two ago. On that occasion he said; I have made a significant response to comments made by the Convention. My aim has been to provide a realistic total for 1985–86, which all local authorities should be able to meet. There might be an argument about that. Some hon. Members might well think that an increase in the 1985–86 guidelines of 4.9 per cent. which, as the Minister agreed, is a cut in real terms because inflation is likely to be above that is a rather strange definition of the word "realistic", given the increasing burdens and needs that local authorities have to face and service.

Leaving that aside, if the Minister is boasting that he has produced reasonable guidelines for 1985–86, by inference, I presume that those for 1984–85 were not reasonable. That is the basis of the local authorities' case. The basis of the whole crazy structure is wrong. Therefore there is no justification for the penalties which have been assessed and imposed on the basis of those guidelines.

The second fundamental objection that we have been given—again the House will be familiar with this—is that local government expenditure is out of control. However, I do not believe that that is so. The Secretary of State's own figures cannot justify that point. In a parliamentary answer given to me on 27 July 1984 it was shown that local government expenditure in Scotland in 1980–81 and following through to 1984–85, was down in real terms—marginally, but it is down in real terms. I agree that I am taking the figures for 1980–81. One gets a slightly different result by going back to 1978–79, as the Secretary of State did. But if the urban programme and the interest on current revenue balances are excluded by the Secretary of State from his calculations as they now have been after a long argument, that drop over the past four years would be significant. Therefore, the argument that is in many ways the basis of the Secretary of State's case that local government expenditure is a runaway train and that there is profligacy and irresponsibility—those are the terms that are often used—cannot be justified.

A parliamentary reply to me dated 30 June 1983, shows that if one takes the figures for 1979–80 through to 1983–84 the expenditure in real terms on services in my district council of Glasgow—excluding the distorting effect of interest on current revenue balances—was for 1979–80, £82.27 million and for 1983–84, £82.92 million. If that is projected to 1984–85 there will be a downturn. I do not take the view that we should be proud of that, but it is a fact that must be made clear. It gives the lie to the bunkum so often mouthed by Ministers, who suggest that local authorities have been in some way irresponsible. My case is even stronger when one considers central Government spending and the transfer of functions from central to local government.

Much of the campaigning done by Conservative apologists is conducted in a welter of hypocrisy. We are often told that all this is in the interests of the ratepayer. But, of course, the ratepayer has been put under strain, and services have inevitably deteriorated under the Government's attack because the element of central Government grant-borne expenditure within local authorities' total expenditure has dropped dramatically. For example, between 1980–81 and 1984–85 the proportion of the city of Glasgow's expenditure that is grant-borne by central Government — excluding the housing benefit that came in during that period —dropped from 41 to 29 per cent. I cannot give an exact figure, but if that was maintained it would probably be the equivalent of about 20p in the pound on the rates.

When the Government cut their contribution as they have been doing, services suffer, or if authorities try to maintain services — and there is a duty to provide a decent and humane level — the strain falls on the ratepayers. They pay more and get less. That has been the continuing slogan of this Conservative Government. This rather unpleasant and nasty squeeze has hypocritically been justified as being in the interests of the victims—the ratepayers.

Mr. Michael Forsyth (Stirling)

If the hon. Gentleman's argument is correct, why were there 30 per cent. rate increases in 1981–82 when the rate support grant remained constant?

Mr. Dewar

I am merely trying to point out that when the RSG and housing support grant element constantly drop, only two things can be done. Even the perverted logic and the ingenious minds of Conservative Members will not allow them to get out of that. Either services can be murdered or rates can be pushed up. There is no other way out. That is exactly what has been happening and that is presumably the intention behind the Government's policy. It is certainly its result, and the hon. Gentleman should accept that. The £90 million total is important, and surely the hon. Gentleman will accept that that is far too much.

If the clawback is taken as a percentage of the budget excess, the figure for England is 54 per cent. and for Wales 66 per cent. Yet in Scotland, 79 per cent. of the excess is being clawed back. Let us make a comparison with the last two years. In 1982–83, if the section 5 clawback and the general abatement are taken together it means that £57 million has been taken by the Government out of an excess of £203 million. That is 28 per cent. In 1983–84, the figures are £64 million out of £121 million, which is 53 per cent. So the figures run from 28 per cent. to 53 per cent. and, this year, to 79 per cent.

The depressing thing is that more of the same misery is promised for next year in the recent letter sent to convenors by the Secretary of State. Let us consider that £90 million clawback. The RSG payable will fall from 60.2 per cent. of relevant expenditure to 57.4 per cent. as a result of the clawback if the whole £90 million is taken at the end of the year. However, I accept that we do not know whether it will be taken. I know that Ministers will dispute my next point, but for many authorities the savings cannot be made within the fag end of this financial year without damage to the core of services.

Tories may think that I have a prejudiced view, but I refer them to the many press statements made by the leaders of the Tory majority group on Lothian region council, and particularly by Councillor Brian Meek. He has made it abundantly clear that he cannot meet that target and was not elected to cut essential services. That is a fair position to adopt even, and perhaps particularly, for a Conservative councillor. The policies being pursued have very few friends, and the Minister should accept that.

There is another aspect that I take very seriously, and judging by his closing remarks, the Secretary of State does too. There is a danger that we are set on a collision course. I shall not be so confident as to say that Ministers glory in that. However, there is an element of smugness and complacency, and a certain lack of comprehension about what is happening. I believe that local democracy is at risk, and the Secretary of State's remarks about the absurd antics of councils that put forward that point of view were unwise, and underestimated the problem. When I say that there is a risk, it should not be shrugged off as some sort of ritual exaggeration that almost always creeps into adversarial politics. There is a real danger in what is happening in this country, and if I am asked whether it is something that we should worry about, my answer is, "Yes, yes and yes again."

The order is, or course, bad enough but we know that there is a great deal more on the way. During the course of the coming financial year, we are likely to have section 5 procedures, as was made clear in the Secretary of State's letter to convenors. It will be tough and it will get tougher. If Glasgow has a standstill budget and merely allows for inflation but no increase of any kind, it will probably be 7 per cent. over its new guidelines. Is that unreasonable? Will that attract a penalty? Can we have a guarantee that only when there is a growth in real services will there be a danger, and that if there is no growth or a standstill or less, there will be safety for that local authority? [HON. MEMBERS: "Where is the Secretary of State?"] I understand that the Secretary of State has left the Chamber for a television engagement. He did have the courtesy to tell me——

Mr. Norman Buchan (Paisley, South)

On a point of order, Mr. Deputy Speaker. This debate is very serious for the whole of Scotland and for the Secretary of State, who is not only a party politician but a representative of the Government, to leave the Chamber for a television interview is an insult to the Chair as well as to hon. Members.

Mr. Deputy Speaker

The hon. Gentleman knows that that is not a matter for me.

Mr. Dewar

I was asking for some assurance from the Government that an authority with a no-growth budget next year would not be punished under the section 5 procedures. In Lothian, the cut demanded is £16 million. I understand that the Tory group hopes to save about £8 million. Press reports state that that is a figure that would hopefully avoid selective action". That may be a fond and faint hope, but perhaps the Minister can reassure his Conservative colleagues that if they reach that point, they will be safe from the sort of cuts threatened in the recent correspondence emanating from the Scottish Office.

Another very direct worry is the rate fund contribution limitation orders that are likely to come under section 1 of the Rating and Valuation (Amendment) (Scotland) Act 1984. This is the make-believe world of total unreality. The figures say that the rate fund contribution for Scotland will be cut from £99 million to £90 million. However, we know that last year it was £120 million, and thus a cut to £90 million means a drastic reduction which will bring hardship for many tenants.

Glasgow is the biggest housing authority, where there will be a reduction from £35 million to £26 million, and on the assumption of an HSG of roughly the amount that we expect, an increase in rents of about 25 per cent. I object to this machinery in principle, but more importantly, it is daft in practical terms. If the Minister holds to that course, he will be inviting—some will think that he will be demanding and almost forcing—the confrontation that none of us wants. I should make it perfectly clear to him that we do not seek such a confrontation and do not wish for it. If it comes, it will be to our deep regret, and will be the result of his obstinacy and the misconceived way in which he has pursued his policies.

The tragedy lies in the insensitivity of Ministers. In Glasgow the Minister has boasted that he no longer uses cuts in the HRA as a rent regulator. The Minister looks puzzled, but that is the system from which the Minister intends to depart under rate fund limitation directives. In Glasgow this year blackmail has been replaced by direct dictation. When an authority has had to deal with serious problems connected with asbestos or dampness and has asked for the transfer of money from the non-HRA funds to HRA funds it has run into difficulty with the Minister who says that that is possible only at the expense of increases in rents. That is unfair and dangerous.

The Under-Secretary of State for Scotland (Mr. Michael Ancram)

Earlier this year, when Glasgow district council decided, by putting its rate fund contribution above the set limits, deliberately to forfeit £5..5 million of its capital allocation, I said that that was money that could have been spent on important problems such as housing and dampness. I did not hear the hon. Gentleman at that time suggest that that capital should be spent as intended instead of subsidising rents at the expense of ratepayers. Perhaps the hon. Gentleman would like now to consider what Glasgow district council decided last February, recall that I have offered it the chance to review that decision, and advise it to do so.

Mr. Dewar

The Minister is dodging the point. There is something immoral in saying that it is necessary to spend money on essential repairs which may involve health, such as work on asbestos, but that that money cannot be spent unless the council capitulates to the Government on rent levels. There is a case for allowing a switch from an HRA ceiling of £46 million to a non-HRA ceiling of over £80 million. There is a case in terms of democratic choice because. such a switch would not increase the total spent, but merely affect the distribution of that total. There is also a case in terms of housing need. The present position is ludicrous and unacceptable and I am sure that the Minister would admit that in private.

Rate-capping is a joy to come in 1986–87. Labour Members are not starry-eyed about councils or councillors, but we feel deeply about the right of communities to run their own affairs, elect their own representatives and to call them to account at the ballot box. We do not like what might happen soon. All the statutory machinery has been enacted to allow the Scottish Office to dictate on rents, rates and the pattern of spending. Discretion, judgment and responsibility for major policy decisions are being squeezed out by Ministers and St. Andrew's house. If that continues nothing will remain but a shadow, an apology, for what local democracy used to be and should be.

The Minister may think that I am over-stating the case. I remind him of what The Scotsman said on 9 October in a leader headed "Last Rites". The Scotsman does not always back Labour and we certainly cannot count upon it for support. The leader said: Stripped of their independence, their judgment and their discretion the authorities, the councilors and their officials have little with which to challenge the Minister's ruling but their requiem for the passing of local democracy. That is a gloomy statement from a responsible newspaper. We hope that that will not happen. We shall argue the case. We shall go to the electorate and win—when we get the chance.

We had a judgment on what the Conservatives are doing at the district council elections in May. That is why in Edinburgh a Labour council is in control. Some day the Under-Secretary, who represents an Edinburgh constituency, will have to face the electorate. In the meantime, as we watch the storm clouds gathering, we are entitled to say that Ministers must listen to what Scotland is saying and not take their present inflexible, obstinate, unthrawn position. If they do not listen, they will undermine the democratic system and put it under a strain which is more damaging and more certain than the strain created by the activities of any determined rebel on the extreme Left.

I believe that we are in danger. The danger goes beyond the normal dispute and tension between local and central Government. We are watching something much more serious. I hope that the Secretary of State will think again before we reach confrontation. We shall be delighted to encourage him. We shall mark our protest against the new intolerance that has developed over the last few years by voting against the order tonight.

5.45 pm

Mr. Donald Stewart (Western Isles)

In December 1983 the Secretary of State announced that rates could be cut by 5 per cent. or 6 per cent. if the Scottish councils accepted his financial package. Simultaneously, COSLA announced that it was much more likely the rates would rise by the same amount. Indeed, by March 1984 the figures showed that rates had risen by 5.4 per cent.

Local authorities had rightly chosen to ignore the Secretary of State's diktat that they should run their financial affairs as he planned. As COSLA said, compliance with his plans would have meant 8,000 or 9,000 redundancies. Some authorities, of course, gave in under the threat of punitive action. A £90 million clawback was announced in July, which will hit all but 15 councils in Scotland because, in the Secretary of State's view, they have overspent.

The £90 million figure represents 79 per cent. of the total—£114 million—by which the Secretary of State considers that Scottish councils have overspent. In England, the relative percentage clawback is only 66 per cent. and in Wales only 54 per cent. Scotland is not only being penalised by the Government, but it has been singled out for the harshest treatment.

There is more. Any council which has been penalised by the Government through a reduction in rate support grant and which subsequently tries to make up for lost revenue by raising the domestic rate is liable to be clobbered again by the Secretary of State wielding his rate-capping powers.

Scotland's local authorities have been hamstrung. They have nowhere to turn and no means left by which to assert financial autonomy. If the Government do not approve of a council's spending plans or its political outlook it had better watch out.

Not only have this Government attacked local authorities. In 1975–76, under Labour, rate support grant accounted for 75 per cent. of all council spending in Scotland. By 1977–78 that had been reduced — by Labour—to only 68.5 per cent. By 1983–84—under the Tories—it was down to 61.7 per cent. and this year it is barely over 60 per cent.

It is a pity that the Tories have not kept their election pledge to reform local government finance. In the short term that would have been the only way in which Scottish councils could have looked forward to a system which allowed them financial autonomy after a decade of seeing that autonomy whittled away by successive Labour and Tory Governments.

In the longer term the solution is more fundamentally political. It is for Scotland to sever links with Whitehall and Westminster. With Scottish independence there would be no need for the kind of treatment that a bankrupt British Government are inflicting on our local authorities. With Scottish oil there would be no need for that at all. [Interruption.] Government Members should not make too much of that in view of how thinly populated their Benches are tonight.

The Western Isles council has its own particular problems. It is unique. It is the only wholly new authority created by local government reorganisation. It inherited a legacy of deprivation, especially in those islands previously administered from Inverness-shire. In no single area did housing stock reach 30 per cent. of tolerable standards. Children from Uist and Barra who passed the 11-plus examination were transferred to one of 23 secondary schools on the mainland. Some primary schools had neither toilets nor running water. The highways network of 700 miles was almost completely single track. There was only one sheltered housing complex and there was no provision for the mentally handicapped.

That was the base from which my local authority had to work. There was a long history of neglect, and the mark of the council's achievements is that the population decline, which had continued since the 19th century, has ended.

However, the council, far from being able to continue with improvements, cannot even meet the costs of maintaining existing services. It has the lowest rating base in Scotland, which means that most of its income comes from central Government in rate support grant. Thus, the council receives proportionally more grant than any other local authority in Scotland, but the reverse of that is that the council is therefore the most vulnerable to cuts in rate support grant and is the area which can least stand such cuts.

Because of loss of grant, the council has had to lop £2.25 million from its budget so that it can contain rate increases. The results of those cuts are that it is the only council in Scotland with no nursery schools and it is the lowest spender in Scotland on supplies and services for schools and on leisure, recreation and libraries. It has the highest rate in Scotland, the second highest council rents and the highest rate fund contribution towards housing expenditure. Average rates in the Western Isles have increased since 1977 by 262 per cent., against an average for Scotland as a whole of exactly half that.

The problem facing the council for 1985–86 is that it cannot afford even to spend anywhere near the guidelines laid down by the Secretary of State. It cannot afford to spend what even this Government think is necessary to maintain services.

The only solution is more Government grant, and there are two ways to achieve that. The first is to speed up the introduction of a new method of rate support grant distribution. Secondly, the council is looking for recognition from other local authorities and from the Government that it is a special case and that, accordingly, it needs special treatment.

5.52 pm

Mr. Tom Clarke (Monklands, West)

I assure the right hon. Member for Western Isles (Mr. Stewart) that I listened carefully to his speech and I am sure that he will not accuse me of being personally offensive if I say that I should prefer to concentrate on the general approach that the Government are asking the House to endorse. I wish to relate that approach to the severe headaches that are being caused to local authorities throughout Scotland. Like other hon. Members, I served in local government for some time. It seems to me that the major problem facing local authorities is that the Government are changing the rules so often that it is difficult for councils to anticipate what the Government expect them to do when they draw up their budgets.

Local authorities want to provide a service for their communities which rightly expect the best. Councils do their utmost to keep their services, including education, roads, housing, leisure and recreation, at a standard that they regard as reasonable, but they get bogged down because of the unreasonable demands that are placed on them when the Government change the rules so frequently.

The problem confronting local authorities was predicted when the House debated the previous rate support grant order. Councils cannot be regarded as islands in the national economy. They have to deal with the rate of inflation, cost increases, wage settlements and so on. The rate support grant order does not reflect the realities of life.

There has been a dramatic reduction in the real level of the Government's contribution. Conservative Members deny that, but we must face facts. Like other hon. Members, I have received correspondence virtually daily from local authorities and other interested parties about the decline in services and the overwhelming demands that local authorities have to meet.

I do not apologise for mentioning the two district councils in my constituency — Monklands and Strathkelvin. I expect support from the hon. Member for Strathkelvin and Bearsden (Mr. Hirst).

Mr. John Home Robertson (East Lothian)

Where is he?

Mr. Clarke

I am sure that the district council has ensured that the hon. Member for Strathkelvin and Bearsden is as familiar with its problems as I am.

Strathkelvin district council faces increasing rates, demands to raise its rents and increasing unemployment. The director of finance wrote to me recently: Rating Review published by C.I.P.F.A.… shows that our rents for the current year at £553.58 are higher than the national average of £547.26 and that our expenditure per house is less than the national average at £770.65 compared with £778.55. We do not receive Rate Support Grant and although quite clearly other income comes into the calculations, it is an inequitable situation which we appear to be in if the figures of rent above are correct. If the situation had occurred in the current financial year on a 52 week cycle we would have been talking about £1.76 of a rent increase in addition to the rent increase already applied. One wonders how this compares with the Secretary of State's average figure of rent increase of £1 … it does seem ridiculous that we are consulting with non domestic ratepayers prior to receiving figures for Rate Support Grant which will not be available until some considerable time. I have quoted that letter at length because I believe that the district council, in common with others of all political persuasions, is experiencing a most traumatic time. I invite sympathy and support from the Secretary of State and his ministerial team. So far, such sympathy and support have not been evident.

My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) and I led a delegation that met the Under-Secretary. We felt that we were entitled to take the view that our area suffered from many grave problems. Youngsters leaving school have no prospect of employment and jobs in the construction industry are few and far between, yet grave problems, such as dampness, affect the housing stock. Surely there is a case for capital investment in my constituency and other constituencies with similar problems.

Would it not be better to give local authorities the money that they need to carry out their plans for improving the environment than to hand out money to people on the dole queue, especially when those people do not want to be on the dole queue? The Minister gave us a charming reception, and no one could complain about his manner — [Interruption.] The people of my constituency are understanding —perhaps more understanding than they should be. We did not get our reward. We did not get the money that we need to provide the services.

Only a few weeks later, in reply to a question from an hon. Member representing an English constituency, the Minister rebuked my authority for not selling council houses at the speed that he was demanding. As hon. Members can ask only supplementary questions on such occasions, I was unable to respond to the Minister. The Government recognise that the administration of the sale of council houses is a matter for the local councils. My district council, although opposed to the policy, is attempting to implement it. If a council does not have the manpower to give priority to the sale of council houses, and with the Government already saying that too many people are employed, it is unforgivable for the Minister to say that we cannot solve the problems of dampness, bad housing and the need to build houses for the elderly because he believes the council to be slow in its sale of council houses.

Mr. Ancram

I have listened carefully to the hon. Gentleman's remarks about the need for capital expenditure, especially in public sector housing in his constituency. No doubt he will confirm that he will encourage his district council to sell as many council houses as possible so that it can use the receipts to deal with the problems to which he referred.

Mr. Clarke

The Minister well knows that even if Monklands district council disregarded all the other demands from the Government about its statutory duties towards the environment, health and so on, and decided that the most important issue was the sale of council houses, that would represent only a fleabite in solving the district's housing problems.

Other services dealt with in the order are also of great concern to local authorities. Some hon. Members met briefly today representatives of the teaching profession. The Government's attitude to industrial relations has been made clear in many areas. I have received representations from many parents and teachers and, having heard their arguments, can say quite candidly that the problem has been caused because the Government are not prepared to provide the necessary resources. The conflict in the teaching profession — almost between teachers and parents—will be reflected elsewhere. I regret that it is indicative of the Government's appalling approach to industrial relations in all aspects of local government.

The Government should have presented an order which fully recognised the real needs of local authorities and the services that people want. Yet again this evening we see a mean-minded and unacceptable approach. Ministers and Conservative Members spent many weeks in the summer appealing for people to respond to the problems caused by the drought, yet regional councils have time and again pointed out the problems of the out-of-date Victorian sewerage system and said that more capital is needed for reservoirs. It is appalling that a limited period of drought should lead to such appeals from the Government. I hope that there will be no such crocodile tears next year or in the following years when local authorities have said that they cannot cope with the problem unless the resources are provided.

I make no apology for saying that whereas the Government view the problem of unemployment as being quite detached from their other objectives, such as their economic policy and their controls on local government, I view it as absolutely central to what I hope will be the approach of Parliament and other elected institutions—that they will do their utmost to remove the blight of unemployment. I hope that when my hon. Friends assume Government and sit on the Treasury Bench, rather than apologising for the local authorities that are trying to provide employment, they will ensure adequate education facilities, deal with urban deprivation, ensure that there are sufficient home helps and cope with the problems of the elderly and the young. I hope that they will reassert the democratic role of local government in Scotland and that there will be a major drive to achieve full employment. That will be a real achievement for Scottish local government.

6.8 pm

Sir Hector Monro (Dumfries)

I apologise to the hon. Member for Glasgow, Garscadden (Mr. Dewar) for having missed his speech. I welcome the order——

Mr. Buchan

Why?

Sir Hector Monro

The hon. Gentleman should wait and see. It is important to recognise that this order is a variation of the original order and makes a substantial change in favour of local authorities, which should be thankful that the consultations were constructive and led to a £90 million change. Indeed, the value of COSLA in the discussions with the Secretary of State has clearly been demonstrated. My right hon. Friend has made a substantial change that will benefit local authorities, and that should be welcomed by Opposition Members.

I understand that the hon. Member for Garscadden did not make it clear whether he is recommending that local authorities disobey the law. Will the hon. Gentleman be advising and encouraging local authorities to defy the law? One local authority in my area—Nithsdale—is hell-bent on doing so. That cannot be welcomed by any form of democracy in this country. A Left-wing Socialist councillor who was heavily defeated in a national election last year is steamrollering that council into defying the law. That is a disgrace to local government.

Mr. Ewing

The hon. Gentleman says that Nithsdale district council is hell-bent on defying the Government, but it is not included in the penalties laid down under the order.

Sir Hector Monro

The hon. Gentleman is always so impatient. He should wait to hear what I have to say. If he reads such distinguished newspapers as the Dumfries and Galloway Standard and the Dumfries Courier he will appreciate that Nithsdale council is prepared to spend substantially beyond the guidelines, irrespective of what the Secretary of State has to say. The order shows what it should be spending, not what it actually will spend, and I am surprised that the SNP and Socialist councillors there should gang up to defy the very reasonable guidelines set by the Secretary of State.

Mr. Dewar

As a distinguished and experienced Member, the hon. Gentleman will recognise that we are dealing with a general clawback for 1984–85. If he looks at the guidelines and the budget of Nithsdale district council he will see that that council is in credit. It will, thus, not be subject to any penalty in 1984–85 and is therefore not included in the penalties under consideration in this debate.

Sir Hector Monro

The hon. Member for Garscadden is talking about the 1984–85 order. I am forecasting what that council has already decided to do in the forthcoming year. That is extremely important for the future. Councils now preparing their budgets for the forthcoming year cannot be allowed to defy the law in the future. Ratepayers find it astonishing that district councils can do that and even vote substantial sums to the miners.

Since the war there has never been an easy period for local authority expenditure. No authority has ever had carte blanche to spend what it likes. Local authority expenditure has always been subject to public expenditure guidelines laid down by the Government. For 30 years or more, all councils have had to accept the principles of good housekeeping and the reduction of expenditure, which frequently means setting aside schemes on which they have been wishing to spend money for some time. The same applies today. The only difference is that, instead of the vast cuts referred to by the press and the Opposition, local authorities are spending 2.5 per cent. more in real terms than they were in 1978–79. It is thus quite wrong to suggest that there are substantial cuts in local authority spending.

It is essential that we try to keep local authority expenditure within bounds because upon that depends the level of rates, which has an important impact on employment and inflation. We should therefore support my right hon. Friend's genuine, practical and fair efforts to contain public expenditure. In my view, the attitude of the Opposition is indefensible, irrelevant and incomprehensible.

One is entitled, however, to consider the small print of any order and to raise matters of detail. I wish to raise a subject that I have raised many times in the past. Is the Minister absolutely confident that the very complicated formula is fair to both urban and rural areas? There is certainly considerable doubt in the rural areas as to whether the guidelines and grants provided for them are as generous as those provided for the more heavily populated areas.

Mr. Buchan

In the interests of his rural ratepayers, does the hon. Gentleman agree that it might be more useful for rural district councils if we re-rated agricultural land? Will the hon. Gentleman support that proposition in the interests of equity and fairness?

Sir Hector Monro

Certainly not. The hon. Gentleman knows as well as anyone that houses on agricultural land are rated in the same way as other houses in the area. It would be most unfair to introduce rating of agricultural land either now or in the future.

Mr. John Maxton (Glasgow, Cathcart)

Why?

Sir Hector Monro

The farming community pays its full share to the local authority through the rating of the farm-houses on the property.

Mr. Buchan

But not the farm buildings.

Sir Hector Monro

The rates on the houses are the same as they are throughout the area. It is therefore entirely wrong and irrelevant to the debate to bring in the red herring of re-rating farm land.

Dumfries and Galloway is the only region in Scotland to have budgeted within the guidelines every year since 1975, despite additional financial pressures arising from new legislation, new capital projects, developments in education and demands for additional services. Nevertheless, it seems inevitable that the rates will rise beyond the rate of inflation due to reductions in grant and the non-availability of balances. In recent years some authorities have used their balances to contain annual rate increases but that period is coming to an end and we may have to accept increases 2 per cent. or 3 per cent. more than expected due to the lack of balances.

Is the Minister really confident that the new client group management scheme provided for in his formula will, in the next year or two, which I appreciate will be a transitional period, provide for the rural areas the benefits that he has forecast from time to time? At the moment I do not see how, without the use of balances, rates can be kept within the inflation guideline of 4.5 per cent. or so.

My hon. Friend the Parliamentary Under-Secretary of State was most helpful in meeting Nithsdale district council and the regional council in the summer and discussing matters with them, but I wonder whether he has given further thought to the possibility of rolling over balances—I know that there may be a problem with the Treasury — or to some of the other matters that were raised, such as the difficulties over improvement grants which have been a burning topic over the past year or so.

Annandale and Eskdale district council certainly appreciated the extra £100,000 that my hon. Friend was able to grant it this autumn. However, for the district council on a lower budget compared to the more populated areas, a small percentage change in expenditure has a dramatic effect on rates. That must be borne in mind relative to the eventual rate, when all the balances have been taken into account.

The district councils are as concerned as the regions about the client group method and hope that the phasing-in will be as effective as my right hon. Friend believes. By and large, the message that the Government have to send out tonight is that unless we make a genuine effort in the direction of good housekeeping and keep public expenditure within bounds, there will be an increase in inflation with all its consequences. I believe that what the Government propose, while not entirely welcome to all local authorities, is, overall, in the best interests of us all. For that reason we must support it.

6.22 pm

Mr. Harry Ewing (Falkirk, East)

I apologise to the hon. Member for Dumfries (Sir H. Monro) for my impatience, but I suspect that that impatience may have saved him from some embarrassment in his constituency. I am sure that he was under the impression that Nithsdale would exceed the spending guidelines already determined for 1984–85. It was against that background that the hon. Gentleman attacked a council which is in fact perfectly innocent. The hon. Gentleman believed that the council would break the law not in 1984–85 but in 1985–86. He should have kept his speech until the time of the next rate support grant in a year's time. No doubt we shall hear it again then. This has been a good rehearsal.

During the summer recess I saw in the Daily Record a photograph of the hon. Gentleman driving a bridal couple to their wedding in his vintage car. I thought to myself, "There is a man who has found his station in life." Nothing that the hon. Gentleman has said tonight has convinced me otherwise.

When the Secretary of State was making his opening speech I looked round the Chamber. It was noticeable that of all hon. Members present on the Government side only the Secretary of State and the hon. Member for Dumfries had been present when the current system of local government was introduced in 1972–73. Both of them were Under-Secretaries of State in the Scottish Office at that time, and both played a prominent part in the introduction of the two-tier structure of local government. That demonstrates how young is the system of local government in Scotland. If ever an organisation was about to be strangled at birth, it is that system of local government, which is not yet 10 years old. Elections to the district and regional councils look place in 1974, but the councils themselves did not come into being until 1975. The system is therefore only nine years old and has had no opportunity——

Mr. McKelvey

A disaster.

Mr. Ewing

My hon. Friend is entitled to his own opinion. He says that it is a disaster. I do not quite take that view. Much depends on the region or district in which one lives. If the Secretary of State—then an Under-Secretary—had accepted the advice of the Opposition and the amendments proposed by my right hon. Friend the Member for Glasgow, Govan (Mr. Millan), my hon. Friend would not have to raise objections now. In Committee my right hon. Friend the Member for Govan suggested a constructive amendment on the size of Strathclyde region, which I suspect is the origin of my hon. Friend's complaint.

The system of local government in Scotland is very youthful, and the Secretary of State and the Under-Secretary are going out of their way to stop it developing. The midwife who assisted at the birth of the system should give it more encouragement to grow than the right hon. Gentleman has done since he took office in 1979.

I also criticise the Minister with responsibility for local government, who made his name and based his career on attacking local government in Scotland. That may be why he has his present job.

Let us consider what has happened to the regional and district councils. The Government have assumed the right to fix the level of expenditure. Despite what the hon. Member for Dumfries has said, it is not true to say that local authorities have always been constrained by Government. Governments have always made their contribution through the rate support grant, and certainly Governments, including Labour Governments, have reduced the level of rate support grant. But Labour Governments have never dictated to local authorities the amount of revenue that they may raise through levying rates. That has always been left to the local authorities, and the check on the authorities has always been the electorate, whether through the old town council elections or, in recent years, the district and regional elections.

The Government are not prepared to accept the verdict of the ballot box. We are not prepared to take lectures from Ministers in New St. Andrew's house about democracy and breaking the law, because the Government are not prepared to accept democracy and the will of the ballot box when these matters have to be decided. It is only six months since elections were held in the 56 districts in Scotland. Those councils are not four years old. Those elections were contested long after the general election. They were contested on manifestos, and it is an insult to the electors of Scotland to suggest that they did not know what they were voting for. They deliberately voted out of office a Conservative administration in Edinburgh, and voted a Labour administration in for the first time in many years.

Mr. Michael Forsyth

What happened to the Labour party's commitment to local democracy in 1977, when the local authorities were forced to shed 9,000 members of staff and to cut considerably capital and revenue expenditure?

Mr. Ewing

The hon. Gentleman may refuse to take the point on board, but we did not in 1977 impose on local authorities the kind of restrictions that the present Government are imposing. I am listing those restrictions as quickly as I can. On the question of rates, the Government refuse to accept that it is the electorate that should be the check on whether local authorities have raised their rates too much—or too little. We should not forget that in some cases councils have been voted out of office because they would not spend money on much-needed projects. Councils do not lose elections only because they spend too much money. That is a myth. I have known of local authorities being voted out of office because they refused to spend on much needed projects. That is right. Such a decision should be left to the electorate rather than to mysterious people in New St. Andrew's house.

If the Secretary of State today displayed the competence of New St. Andrew's house, it is clear that it is worse placed to lecture Scottish local authorities on competence and efficiency. He was not properly briefed and did not know which authorities were being discussed. I blame not the people who are responsible for briefing the Secretary of State but the Secretary of State for his lack of interest in the welfare of Scottish local authorities. We did the Secretary of State a favour by delaying long enough to allow him to discover the name of the four local authorities. He left the Chamber to appear on television. I do not object to that but just imagine the interviewer asking him, "Which are the four local authorities?" and the Secretary of State replying, "I shall send Michael Ancram along at 10 o'clock to tell you." That is disgraceful. Moreover, the documents that we needed for the debate were not in the Vote Office and had to be sent for. There were only seven copies. The Scottish Office is in no position to lecture Scottish local authorities about efficiency and competence.

Having taken the power to dictate the level of rates in Scotland, the Government have now taken the power to dictate the level of rents. I object most strongly to the balance which the Government are imposing that means that local authorities must increase rents to cure dampness and to remove asbestos. That is insulting. George Burrell of the Daily Express recently accused greater Glasgow district council of being too interested in what he called ideologies such as removing dampness and asbestos from houses. The Minister nods assent. If that is ideology, I hope that we have much more of it. The Government are confronting councils by saying that to remove asbestos and dampness they must increase rents, and that failure to do so would involve breaking the law. Labour Members are then asked whether they are prepared to tell councils that they must not break the law. If the Government set up a confrontation, they must expect a confrontation. They will get such confrontation, which is of their making, not that of local authorities.

The powers to fix rate and rent levels have been taken away and the final insult is that local authorities must now consult non-elected bodies and non-domestic ratepayers such as the Confederation of British Industry and chambers of commerce about rate levels. If such bodies do not agree with the budget or with the level of rates, the matter must be referred to the Secretary of State who will decide what services there will be. He sits in New St Andrew's house, or lives in Gargunnock. How does he know what services my constituents need? Such stripping of power and undermining of local government in Scotland will precipitate the crisis that is undoubtedly coming nearer with each act of the Secretary of State and the Under-Secretary of State.

Under this order, Central region will lose £3 million and Falkirk district will lose £500,000—its share of the £90 million—because, the Secretary of State says, they are spending outside their guidelines, as if he had nothing to do with the matter and it was not his fault. We warned the Secretary of State and the Minister's predecessor—the hon. Member for Eastwood (Mr. Stewart), who now has responsibility for industry and education in Scotland—what would result from removing £8.5 million worth of rateable value from Central region and Falkirk district and rate income through the derating of outside plant and machinery, thereby cutting their income. As a result, rates in Falkirk increased by 4p in the pound. The increase was similar in Central region.

With Central region's director of finance, John Broadfoot, Falkirk's director of finance, Bill Ramsay, the provost, John Docherty, and Charlie Sneddon, the vice-convenor of Central region, I went to see the Minister. He told us that the Government would not make good the £8.5 million shortfall because the level of rates per head of population in Central region and Falkirk district was higher than in any other part of Scotland and that if he did not give that £8.5 million the rates would be reduced to the same level as elsewhere. Far from being rewarded for good management, Central region and Falkirk district are being punished. Their problems are entirely the result of legislation that the Secretary of State put through at the request of British Petroleum and other industries that would benefit to the tune of £8.5 million. The Secretary of State is fully aware that he did not make good one penny piece of the shortfall.

I read in the Stirling Observer and the Falkirk Herald that the chief constable of Central region, Ian Oliver, went to the protective services committee where he learnt that, because of an obscure EEC directive, there must be major modifications in the communications system that Central Scotland police use. That will cost £3 million. On the basis of the Government contributing only 50 per cent. of the cost, are they saying that Central region ratepayers must provide the other £1.5 million? If not, I hope that they are saying that the Government will meet the full cost. Ratepayers in Central region and Falkirk district are becoming sick and tired of the Government introducing legislation and not compensating them accordingly.

My hon. Friend the Member for Monklands, West (Mr. Clarke) mentioned teachers. The present crisis in education arises from the Government refusing to inject money to take account of changes in the curriculum. I cannot understand why the Government pretend otherwise. They should be honest enough to tell the people of Scotland that they are not prepared to inject that money and that if they want the new system the new curriculum or changes in police communications systems they must pay. The Government's double standards are unacceptable.

The system of local government in Scotland is only nine years old. It is not good enough for the Minister to snigger at it. It is all right for him in his protected household, with the luxury of where he lives and his ability to buy the protection that he needs. I do not represent people such as him. I represent people who suffer unemployment, old folk who need home helps and children who need clothing to go to school. I represent not privileged people but those who need help. That help can come only from local government because the Government are not prepared to give it. I plead with the Government to leave Scottish local government alone and let it get on with the job that it was elected to do.

6.40 pm

Mr. Michael Forsyth (Stirling)

I hesitate to continue the analogy of the hon. Member for Falkirk, East (Mr. Ewing) of local government being a promising youth, because in some areas it has certainly turned delinquent. The issue in the debate is of fundamental importance. The notion of some Labour Members is that local government is a series of local fiefdoms which can ignore the fact that the bulk of their money comes from central Government and most of the remainder from the business community which has no vote. [Interruption.] They do not have a vote for the expenditure that they contribute as commercial ratepayers.

The Government have a duty to protect the National Health Service and other essential services. I am sure that the hon. Member for Falkirk, East would be anxious about that when defending the intersts of his constituents from the ravages of unreasonable local authorities. The Government also have a duty to look after the needs of the business community because of the consequences for employment.

Some local authorities are spending far more than necessary, and we all know which they are. The hon. Member for Falkirk, East must know, as I know, that there are some such authorities, such as Stirling, which spent £30,000 on a lunch at which it explained what could be done if it could get money for the top of the town. It is embarking on a £100,000 PR project. Every £1 costs it an extra 85p. It has also voted £50,000 for Christmas lights. Those are not actions of authorities which are pared to the bone, or worried about the weak and vulnerable in the community.

During the recess I attended a meeting of Stirling district council, at which it voted £10,000 to set up a women's committee and at the same time complained about the shortage of resources. It also voted to limit competition in the provision of services by blacking those firms that had crossed miners' picket lines and all firms and organisations which were customers or associated with them. By doing so, it ensured that it would not get value for money in the placing of contracts. It is hell-bent on spending, regardless of the consequences. It is not the sort of authority that Labour Members are inclined to present.

I was grateful to receive the excellent briefing for the debate from COSLA. Its figures, which are no doubt in the annexe, are illuminating. They show clearly that COSLA has resorted to hiding behind the average. According to the figures, the best authority is underspent by 7.5 per cent., whereas the worst is overspent by 14 per cent. The prudent authorities are masking the irresponsibility of the less responsible authorities. That is according to overspending on the Government's guidelines.

I believe that the guidelines are unfair, because they are not based on need but are weighted in favour of the overspenders and against the underspenders. I find it increasingly difficult to justify the expenditure guidelines, not for the reasons given by Labour Members but because the client group method is biased towards increasing the guidelines for profligate authorities and penalising prudent authorities. Labour Members would do well to recognise that, instead of whining about the guidelines. Too many resources are given to profligate authorities. Tonight we should ask ourselves why the clawback is only £90 million and not £114 million.

Mr. Buchan

I should like the hon. Gentleman to get his semantics right. When he talks about prudent authorities, he seems to be considering their previous expenditure and not the needs of the district. Will he confirm that by prudent he means lower-spending and riot authorities which spend only according to their needs?

Mr. Forsyth

By prudent I mean those authorities which get value for money for their ratepayers. The hon. Gentleman should not make the mistake of assuming that those authorities which spend most are providing the best services for the community. In Stirling, Falkirk and Perth the position is exactly the reverse. Some of the lowest-spending authorities provide the best value for money and the best standard of services. They concentrate on the provision of services, rather than on placating their trade union friends by ensuring the continuance of restrictive practices and overmanning.

Some Labour Members may feel that it is unreasonable to suggest that the Secretary of State should have clawed back the entire £114 million. I put that forward as a proposition because the clawback seems to be having precious little effect. We have listened to the usual barrage of extravagant scare stories. We have heard speeches, such as that of the hon. Member for Falkirk, East, which told of the dire consequences that would follow and which claimed a commitment to the more vulnerable in the community. All Conservative Members share that commitment. However, there has been a remarkable absence of specific examples and problems arising from the clawback. Quite the opposite has been the case. We have heard that local authority after local authority which is subject to clawback has a policy of spend, spend, spend. Money is still available to finance demonstrators on right-to-work marches and protests, for Left-wing theatre groups, Campaign for Nuclear Disarmament protests, and to send councillors on visits to eastern Europe. Despite the eloquence of the hon. Member for Glasgow, Garscadden (Mr. Dewar), money is still available for Glasgow to vote £20,000 to the miners and to say that more will be available when it is needed. Central region has done the same, to the tune of about £50,000.

The touching suggestion that Labour Members want to avoid confrontation and that confrontation is entirely of the Government's making is difficult to believe when one considers the position in Glasgow. The hon. Member for Garscadden asked us to consider Glasgow's case. Glasgow authority seems to be going out of its way to harm its tenants and to ensure that it does not have enough money to maintain its housing stock. Labour Members did not mention Hutcheson E or the deliberate tactics to obstruct the sale of council houses. The claim of the hon. Member for Monklands, West (Mr. Clarke) that the authority cannot sell council houses because it does not have enough staff is not borne out by the number of staff in that authority. If, however, that is the case it should get estate agents to conduct the sales for it.

Mr. Tom Clarke

I concede the right of the hon. Gentleman to have opinions, however absurd. If he feels that he can persuade the people of Monklands to his views, he should put them to the electorate. I doubt whether he will get a good response. The hon. Gentleman missed my central point, which was that the Monklands district council could sell those houses speedily, but only at the expense of some other important service. The hon. Gentleman should get out of our hair and let us get on with the job that Parliament has asked us to do.

Mr. Forsyth

I doubt whether those members of the electorate who are waiting to buy their council houses would share the hon. Gentleman's view. However, I appreciate his point and do not wish him to feel that I am being unreasonable towards him. I respect his point of view.

If the authority has that problem, why should it not invite estate agents to carry out the work and pay them on a commission basis? That would release officers to carry out the other activities that he considers to be of priority, and it would bring in revenue. It is time that Labour Members lifted off their ideological blinkers and started thinking about the interests of their communities.

Mr. Dewar

I defer to the hon. Gentleman when he talks about ideology. His plans for the privatisation of prisons and the Women's Voluntary Service suggest that his standards of ideology are quaint and remarkable. Does the hon. Gentleman accept that his argument would be perfectly sound if his premise were correct? His premise is that the sale of council houses is good for council tenants. The option is arguably attractive to the individual tenant, but the hon. Gentleman must accept that those of us who are interested in freedom of choice and the choice of the vast majority of tenants recognise that there is a strong case against the Government's policy on this. If one takes that view, the hon. Gentleman's argument falls in ruins.

Mr. Forsyth

I am grateful to the hon. Gentleman for at last telling us where he stands on the sale of council houses to tenants. Opposition Members have always ducked the question; they are obviously now confident about their electoral prospects in Scotland. The vast majority of council tenants would take issue with the hon. Gentleman on that point. However, I do not wish to become involved in the rights and wrongs of council house sales, and I am sure that you would call me to order, Mr. Speaker, if I did. Thanks to the efforts of the Government, all council tenants have the right to buy their council houses and any local authority which disagrees with the law and obstructs it is guilty of something that is reprehensible and indefensible in a democratic society. Those Opposition Members who cry for democracy should not be selective about democracy; and those who condemn violence to achieve ends should not be selective about what sort of law-breaking and tactics they are prepared to go along with.

Glasgow has deliberately fostered an inefficient direct labour organisation at the expense of its tenants and of the available resources that it would have. It continues to spend regardless, and I must tell my right hon. Friend the Secretary of State that some Conservative Members are decidedly puzzled as to why Glasgow, with high spending in every area, has escaped serious penalties for so long and still receives the lion's share of Government support.

Mr. McKelvey

Glasgow has enormous problems.

Mr. Forsyth

Other areas of Scotland also have enormous problems. The difference is that in Glasgow many of those enormous problems have been created by local authority expenditure.

Perhaps I could leave Glasgow, because in this debate we are talking about all overspending local authorities, and return to the lack of evidence of cuts caused by the clawback. The hon. Member for Garscadden acknowledged that the expenditure in 1983–84 is more in real terms than the expenditure in 1978–79. It is extraordinary that Opposition Members will happily come to a debate such as this and argue that point, but that elsewhere they will talk about cuts in local government expenditure. Where are those cuts if expenditure has increased in real terms?

Not every council tells the Government how it fiddles its budgets, and does not admit over-budgeting and devices to give it room for manoeuvre. I wish to outline the response of one Labour-controlled authority to the Government's requirements to meet the clawback. It reduced the assumed rate of inflation to a realistic level, eliminated the expected underspend and excess income from its budget and used some expected capital underspend to capitalise repairs. It had already budgeted for reduced rate support grant, although the officers had not informed the councillors of that. With those paper changes it managed to meet the £623,000 clawback requirement. There were no cuts, no reductions in services, no redundancies and no difficulties; like magic, clawback was met and the grant will be restored next year. I should tell those hon. Members who are puzzling over the vast variety of Labour authorities to which this could apply that I am referring to Kirkcaldy.

Even the authorities that must meet the clawback are in nothing like as bad a position as Opposition Members claim, although some of them should be. No council must make a full cut to balance its budget; it need only reduce the overspending to earn a refund equal to the remaining overspend. If one takes account of the weighting factors, most authorities need only cut their overspending by little more than half. Opposition Members have either not appreciated that fact or they are deliberately misrepresenting the position. Whether or not the clawback is savage, no Government can allow the sort of free-for-all that we are seeing in local government, with the encouragement of Opposition Members.

In the past, persuasion worked. I asked the hon. Member for Falkirk, East about the position during the Labour Government. He should have said that the labour Government were not anti-democratic because they asked the local authorities to cut manpower by 9,000 and to reduce expenditure by far more than this Government have asked. The tragedy is that the only Government who have managed to make real cuts on any scale in local authority expenditure were the Labour Government. [Interruption.] Hon. Members say that this is failure. On the contrary; the Government have been extremely reasonable. The difference is that when the Labour Government asked for cuts they received a sympathetic response. There lies the truth for all to see. The notion put forward by Opposition Members that the Government are provoking confrontation by asking for savings that pale into insignificance beside what the Labour Government obtained voluntarily, shows that this is a matter of confrontation for its own sake perpetrated for political purposes by Opposition Members. Where persuasion has failed, controls have had to be substituted.

It is astonishing that COSLA is sending us briefs claiming moderation among its members, yet that moderation is a consequence of the controls introduced by the Government. Without those controls the horrifying irresponsibility that we have heard in the speeches of Labour councillors would have been carried forward into bills to the ratepayers.

The order deserves our wholehearted support and will be widely welcomed. I hope that the people of Scotland will realise that Opposition Members stand for a pattern of local government that looks after the interests of the trade unions and promotes overmanning and restrictive practices rather than the interests of the people who depend upon local government for services.

6.58 pm

Mr. Malcolm Bruce (Gordon)

With many hon. Members, I detect an air of déjà vu about the debate. Its only novel aspect was the slovenly arrogance with which the Secretary of State introduced it, which was disturbing if one considers the implications of the order. For him to come here without adequate papers or information and for him to leave immediately after his speech was not a good way to show that the cuts are incidental. However, that is typical of the way in which the Government tend to treat the House and the people of Scotland. They would prefer to issue edicts from St. Andrew's house and not waste time arguing about matters.

I challenge the Secretary of State's suggestion that the authorities which are supposedly responsible are not penalised but that those who are supposedly irresponsible are penalised. Those which are responsible—which do not exceed the guidelines — are penalised. The only difference is that they impose their own penalties rather than waiting for the Secretary of State to impose them. They are further penalised because future calculation of what they should be allowed to spend is based on historic spending, and because they have stayed within the guidelines they are penalised the following year. The cumulative effect is that they are less and less able to provide the services which people in their areas expect.

The Secretary of State should take seriously the reactions of Conservative, Labour, Liberal and Independent councillors throughout Scotland about the implications of what is now happening. Those councillors are making important and constructive points of which the right hon. Gentleman should take account.

A local authority must still operate in a businesslike manner, but it is no way to operate a business to impose budget cuts halfway through the current financial year and to expect anyone to make rational or effective cuts. One simply makes the cuts that one can make most easily. Ultimately, that may cost money, and such cuts will not necessarily be in the best interests of providing what the hon. Member for Stirling (Mr. Forsyth) described as value for money.

The recurring problem of annuality becomes even more extreme under this kind of mid-term review. It is high time that the Government found some way of allowing authorities, particularly on capital account, to carry over unspent moneys which are unspent only for technical reasons and in any event might relate to a project that runs for two or three years.

The hon. Member for Stirling said that we were only talking about generalities. It is important to speak not only for the councils included in the so-called hit list but for those which have imposed their own cuts and as a result are unable to provide the range of services that people expect. I shall be specific about the kind of cuts against which the people of Scotland are beginning to react.

The largest item of local authority expenditure is education. The Secretary of State should recognise that what is now happening to education in Scotland is causing widespread concern among parents who in a specific way are seeing a reduction in the quality of education provided for their children. In addition to the delegations that have seen me, I have a file of letters from parent-teacher associations and individual parents stating that they do not believe that they are getting anything like the quality of education for their children that they are entitled to expect as taxpayers and ratepayers.

They are concerned about the rise in the average class size, about the increasing number and size of composite classes and about the cut in the number of primary school support teachers. That means that many subjects such as art, PE and music are becoming such limited components in the timetable that they are of very little value. If the Secretary of State regards those subjects as frills, I assure him that I and many others do not.

The consequence is an increasing recognition of the frustration felt by the teaching profession, which must operate against this background. In secondary schools they are expected to implement the new curricula with no new resources and no proper review of their pay and conditions to which they are entitled. The order will hardly enable the Secretary of State or the local authorities to come to an agreement which would even allow for the principle of a pay review which I and my colleagues support as the only way out of the present impasse. That is the only way of securing a possibility of an atmosphere in our schools which will produce a positive and healthy climate and a quality of education which many people feel we are no longer getting.

The Secretary of State is free to regard that as a political point if he wishes, but I assure him that the representations I have received come from sources that he should take seriously. It cuts across a wide spectrum of opinion.

Mr. Younger

I was not regarding it as a political point but I was interested in what the hon. Gentleman said. I do not know how it ties up with the fact that in the rate support grant settlement we have not only allowed for the best pupil-teacher ratios ever but also for the highest ever expenditure per head on pupils. How does that tie up with the hon. Gentleman's catalogue of woe?

Mr. Bruce

When school rolls fall it is possible to produce the statistical results about which the right hon. Gentleman has talked. However, if he looks at what is happening in individual schools, he will see that support teaching hours are being cut, that class sizes are increasing and that the number of teachers available are falling. The net result is a reduction in ratios and standards. I assure the right hon. Gentleman that that is what is happening. Simply to use the broad overall statistic does not alter that fact. What he has said simply tries to exploit a gradual change without applying it to what is happening in individual schools, which quite definitely is a reduction in standards and a fall in the number of support teachers.

If the right hon. Gentleman is challenging what is happening to the number of hours available for music in primary schools in the Grampian region, I shall be more than happy to send him a detailed note on every school in my constituency.

Mr. McQuarrie

What is the hon. Gentleman's estimate of a large class? Is he questioning the qualifications of the teachers who may be asked to take just a few more extra pupils?

Mr. Bruce

No, I am not. However, I wonder whether the hon. Gentleman thinks it is reasonable for teachers to continue taking a few more pupils when the Government are not even prepared to review their pay and conditions. In private industry that would be regarded as a productivity deal which would be entitled to some sort of recognition in terms of pay. In those circumstances, the teachers have good reason to feel demoralised about the lack of response they have received to their reasonable approaches to the Government.

Mr. Barry Henderson (Fife, North-East)

The hon. Gentleman has mentioned a campaign run by the EIS. I have great respect for the EIS in that it deals in hard facts. That is one of the impressive things about its campaigns. Has the EIS ever denied that pupil-teacher ratios have improved or that the amount of money per pupil in our schools has significantly improved under this Government? Whatever the hon. Gentleman's feelings, surely, like the EIS, he must accept that these are the facts.

Mr. Bruce

The hon. Member for Fife, North-East (Mr. Henderson) was obviously not listening. I am not speaking about the EIS but about all teachers. The EIS acknowledges this as a trend. Cuts are taking place in individual schools and the hours available for support teaching are being reduced.

In Grampian region the director of education has admitted that £1 million has been cut from this year's primary education budget, after he attempted to suggest that it had not happened by lumping it in with the global education figure. I am sceptical about taking global statistical figures to support a general statement of case given the actuality of what is happening in individual schools. I simply challenge the hon. Gentleman and the Secretary of State to square the circle. That is what the parents will want to hear from the Government.

Education is not the only service provided by local government. There are also road and transport issues and new problems such as deteriorating water supplies, collapsing drainage and sewage systems and the introduction of new flood control systems. These are not being catered for in the context of what the Secretary of State is imposing on local Government. The net result is that councillors and officials who are trying to provide such services find their jobs increasingly negative and depressing. They are unable to assess need in a sensible way because whatever budget they come up with, the Secretary of State is liable to interfere with it half way through, and impose arbitrary changes at very short notice. They are unable to plan ahead and to meet needs in the longer term. Many people accept that they cannot have everything today, and that things need to be properly budgeted for and controlled. However, they cannot abide the fact that many necessary services are being postponed not just to next year or the year after but until 1990 or 2000.

Mr. Younger

I am still very puzzled about where the hon. Gentleman's argument is taking him. How does that tale of woe tie up with the fact that the local authorities to which he is referring are, in general, still spending in real terms about 2 per cent. more than they were spending in 1978–79?

Mr. Bruce

It ties up with the Government's failure to manage the economy in a way that does not put so much pressure on local authorities, which have to provide the housing and community services. There are nearly 4 million unemployed, which is nearly twice as many as there were when the Government came to power. The right hon. Gentleman's idea that the community services that the Government expects local authorities to provide can be provided when there is increasing demand without increasing resources shows that the Government should be looking at the logic of what they are suggesting. We view the reality of what is happening.

The convenor of Lothian has said that he is not in the business of imposing more cuts, and the convenor of Grampian has said that he is dissatisfied with the Government's approach to the guidelines and the estimate of the needs for the future. I shall make a constituency point here, because there are circumstances in Grampian that are not widely recognised. From the Government down there is a view that we in the north-east have the advantage of an oil industry and therefore particularly low unemployment, and I do not deny that. However, that does not mean that we do not have problems. In my constituency, between 1971 and 1981 there was a population growth of 56 per cent. The only other community in Scotland that had a growth rate at that level was Livingston, which is a new town with a new town development corporation. I suggest to the Secretary of State that he has not taken full account of the simple costs of operating such as a growing economy in his assessment of the guidelines.

I can be more specific than that. At the moment, 2,000 new houses are being built in my constituency and virtually every one is for the private market. That is odd, because there are 2,000 houses up for sale that nobody is buying. At the same time, housing waiting lists for council houses in Aberdeen and Gordon have gone up and up. The Under-Secretary keeps thrusting down my throat his argument that the sale of council houses releases resources, but that argument is patently not working.

The Government are playing the party political line, which squeezes the poor person from the council waiting list between the ideology of the Tory Government and the ideology of a Left-wing administration. I shall not defend the Left-wing Labour administration in Aberdeen, which has not conformed to Government guidelines and has seen the waiting list go up to 5,000. The Gordon district council has—I am beginning to believe somewhat foolishly —co-operated all the way and tried to be reasonable and constructive and follow the Government guideline. However, it has had the same sort of increase in its waiting list, although it has been selling council houses at a rate of knots.

There is nothing that I can say to the people from my constituency who come to me every week asking when they will get a council house. The only thing that I can do is to send them to the appropriate Minister and tell him to tell them, as I am sick of telling them, that they will not get a council house until the Government are prepared to put some resources into meeting such needs.

The problems in growth areas and the problems in declining areas are different, but they both need to be recognised. The Government will argue that they have applied what are jokingly called guidelines on a varying degree, according to circumstances. However, the black box calculation that comes out of St. Andrew's house is a mystery to everybody whom I have ever met or spoken to. I am beginning to realise that what happens is that the Secretary of State sits there with a list and says, "Who are they, what do they do, how did they behave last time? Come up with a figure and we will justify what we are doing." He has never been able to explain convincingly the logic of what is happening.

In all this the Secretary of State has pleased nobody. There is nobody in local government of any political persuasion with a reasonable understanding who is satisfied with the way that the Government are going about telling local authorities the way to run their affairs. That is the reality of the position and, if the Secretary of State is not prepared to take advice from the Labour party or the Liberal party, I hope that he takes it from some of the representations from some of his own party, or he will be representing an ever smaller band in this House.

I know that I have no chance of persuading the Secretary of State to remove this order. He has suggested that he has modified his views slightly, but I am not persuaded that this is a fundamental change. However, he must address himself to the problem of how local authorities, councillors and officials, can plan properly, sensible and intelligently to provide the services for the future over a reasonable timescale. They must be able to know that they have some chance of implementing their budget plans without constant menacing and interference. That would be in the best interests of both good local and good central Government.

The charade that we have witnessed this year, last year and the year before must not be the permanent method to run local authorities in Scotland. If it is, it will be a disastrous failure that will not produce the services that are needed. I urge the Secretary of State to start thinking of positive steps by which local government can be put on the right road to doing the sensible job that it should be doing.

It is all very well for the hon. Member for Stirling to say that cuts should be greater, and to go on about the things that he does not like about local authorities that are not of his persuasion. He never tells us what he thinks local authorities should be doing. He says what he thinks they should not be doing but he does not tell us what their responsibilities are and how they should be financed and operated in a constructive and operative way.

If this debate is to mean anything in the history of local government in Scotland one would like to think that it would make a start to getting out of this annual charade and into a situation in which the Government set clear objectives for local authorities to follow over a sensible period. Local authorities should not have to abort and abandon their plans and spend half their time, when they should be running their services, running backwards and forwards to the Government trying to understand what the Government want them to do. They should not have to argue about guidelines while pleading with Ministers who are unable to explain the justification for what they have done or what the long-term prospects are.

I and my colleagues shall be voting against this order.

7.17 pm

Mr. Gerald Malone (Aberdeen, South)

I was hoping that the hon. Member for Glasgow, Garscadden (Mr. Dewar) would be in his place because I shall pick up where he left off, at the risk of consistently quoting one newspaper — The Scotsman. I thought that the hon. Gentleman made a good point when he was trying to show that it is impossible to divorce local authority expenditure, from public expenditure as a whole. I reinforce that point by again quoting from The Scotsman: With further cuts in public expenditure now being forecast the Secretary of State will be unwilling to let councils off the hook regarding overspending. The Government have made it clear that they are deeply concerned about the effects of local authority budgeting. Keeping a tight grip of council spending is vital to their efforts to control the economy. That could have been said about what the Government are trying to do today. However, that report was published in The Scotsman on 9 July 1976, and the Secretary of State was the right hon. Member for Glasgow, Govan (Mr. Millan).

This example illustrates the Labour party's double standards. We have had many debates such as this in which the principle of central Government controlling local authority expenditure and directing the ways in which it should go have been discussed. The speeches of the hon. Member for Garscaden are becoming akin to a recitation of Holy Willie's prayer at a Burns supper. They have all the panache of such a poem and about as much sincerity. We hear him say that local authorities are losing their democratic rights to spend. I reinforce what my hon. Friend the Member for Stirling (Mr. Forsyth) said. If we want to learn lessons about cutting local authority expenditure, we need look no further than the Opposition Benches.

As my hon. Friend said, in 1977–78 the Labour Administration, because they were dealing in those days with crony councils, were able to cut manpower voluntarily by about 9,000. If manpower levels can be taken as a reasonable way of determining how efficiently local authorities are performing, if we look at the full time equivalents employed in 1977 and employed now, we find that there are now an extra 4,200 in Scotland as compared with 1977. So there have not been enormous cuts. If the Labour party were in power, it would be cutting on a greater scale than the Government. The truth is that my right hon. Friend has been generous in his order.

I particularly welcome the fairness which has resulted from the Government's legislation. Previously we would not have had such a finely tuned instrument as the one we now have to promote the clawback. It would have been an unfair instrument. Local authorities would not have had the chance of changing their position and going back within the guidelines set out by my right hon. Friend. They would not have been able thereby to reduce the clawback to nil.

The Government's approach is a much fairer one than has been used previously. The hon. Member for Gordon (Mr. Bruce) suggested that it is not the right approach and that it has created uncertainty. I remind him that Gordon district council, in his own constituency, finds no such problem. It is able to study the guidelines, to propose a budget within those guidelines, and to operate within them.

Mr. Foulkes

How can the hon. Member use the term "finely tuned instrument" and say that the instructions are well within time when we are already halfway through the financial year concerned?

Mr. Malone

The hon. Gentleman is missing the point. If local authorities had abided by guidelines that were intimated to them in good time, there would be no need for a measure of this kind. As compared with last year, those local authorities which overspend are the ones which are most attacked and which have the biggest clawback from their budgets, but they are also given an opportunity which they did not have before. If they come back within the guidelines, they can be restored to their previous position.

I represent part of a city which is in overspend, and I represent part of a region which has abided by the guidelines and which has budgeted for a minimal underspend in the course of the year to which we refer.

We must look at the attitude of local authorities and the way in which they approach the question of running the authority. We must see whether they are doing their best to realise the most revenue. We have again to consider two points—the level of rents and the level of council house sales. The hon. Member for Gordon suggests that waiting lists are a measure of need, but that is not so. There are many people who are already housed and who appear on a waiting list. Although there are waiting lists for council houses in the city of Aberdeen, there are many council houses which are empty and unoccupied because those on the waiting list do not need to be housed but wish to be housed in better accommodation. I understand that, and they are entitled to be on the waiting list, but it is false to regard the waiting list as a measure of need. If the city of Aberdeen wanted to improve its housing position, it could do so easily by raising rents to a reasonable level and by implementing enthusiastically the policy of council house sales.

In the city of Aberdeen there has consistently been a refusal to implement the policy of council house sales. Wherever there have been concessions they have been grudging. The majority of the complaints that I receive about local authorities relate to council house sales. In many cases the degree of maladministration is such that there may have to be reference to the Ombudsman. There is a failure to conclude missives within the time limits set by the Government, and there is a general view that those who have a right by statute to buy their council house should be thwarted in their endeavour. If Aberdeen district council is so enthusiastic about maintaining its spending above the guidelines, the solution to its problems is well within its own hands. It needs only to implement the policies set out by the Government.

I should like to use Grampian regional council as an illustration of a council which is in a difficult position for several reasons but which is none the less able to come within its spending guidelines. The hon. Member for Gordon referred to the slightly peculiar situation of Grampian region, in that growth within a region brings special needs, as does deprivation. I should like to take that point a little further and make some points to my right hon. and hon. Friends on the Government Front Bench.

The introduction of the client group approach to the calculation of needs of local authorities is basically fair, but it should not be an approach which ignores the special needs of any particular community. The movement towards the client group approach has resulted in reliance on statistics which are somewhat out of date. I understand that, prior to the implementation of the client group approach, population statistics only 12 months old were relied upon for the calculation of some figures.

But the movement on a wholesale basis to a client group approach has resulted in those statistics being two years out of date, the reason being that many local authorities prefer to get the figures early. It is possible to refer to figures that are two years old only if there is to be a specific determination of the guidelines for each council. While I understand that and take the point that in most local authorities throughout Scotland it may be a matter of marginal relevance, I ask my right hon. and hon. Friends to remember that the position in Grampian region is somewhat different from that elsewhere.

There is a steady increase in the growth of population in Grampian region, and the movement to a base of population statistics that is two years out of date is having a fairly severe effect. Albeit that Grampian regional council has been able to come within its guidelines, I understand that it has done so only with great difficulty. Taking up-to-date figures of population for the current year, it would be possible to suggest on a statistical basis that the grant for Grampian region should have been increased by about £2.4 million. It may well be suggested that that is a statistical problem that Grampian regional council will outgrow, but the truth is the opposite. Over the years the base will remain out of date, and any increase in population will always be worse off than many other regional authorities.

I suggest that there are three possible solutions to the problem. One is that the Government could introduce a special factor, based on trends available from census information, which could be applied to Grampian regional council's grant when guidelines are being fixed. Secondly, there could be a permanent weighting applied to figures which are two years old in order to take that factor into account. Trends could be established which would make the weighting a fairly easy percentage to calculate. Thirdly, the guidelines could be recalculated at a future stage when the relevant information became available, and I seriously suggest that the Government should consider that third approach.

It would seem to be unrealistic to ask the Government to apply special weighting factors which are not based on hard statistical evidence, but it would not be unreasonable to suggest to Grampian regional council that, if it made its own estimate of what the recalculation would be in the light of its detailed knowledge of its own population characteristics, it could, as it were, expand the guidelines, and overspend on a temporary basis, if necessary, on the understanding that its guidelines could be recalculated later.

As all local authority budgets are tight, I suggest that if £2.4 million were given to Grampian in excess of its guidelines, that would be a significant improvement and would go some way to mitigate its difficulties in the face of an increasing population. I shall be interested to hear from my hon. Friend the Minister whether there is some sympathy with that point of view. After all, why are we penalising regions that have kept within the guidelines? Grampian regional council has, with great difficulty, kept within its guidelines for the current year by about £37,000. The correct approach is to assess the needs of such a region, based not on an unreal population but on population changes. Thus Grampian would get not more than its due, but its fair due in a difficult situation.

Consultation with non-statutory bodies has been undertaken recently by Grampian regional council with some success, but I ask my hon. Friend the Minister to give an undertaking that the procedures that were so much vaunted when they were brought into being are being properly implemented. I hope that he will undertake to report back to the House on whether he thinks that those procedures are successful.

Occasionally I wonder whether the non-statutory bodies have the power or, in some cases, the wit to undertake negotiations with local authorities on a realistic basis. After the first period of consultation has ended, the procedure may turn out to be little more than window dressing. If that is happening, the House should hear about it. It should hear the views not only of my hon. Friend but of the local authorities that have been consulted.

That is a problem, and we shall talk about such matters into the indefinite future until some Government — I trust, this Government— tackle the problem of radical rate reform. I do not believe for a moment that it is adequate simply to put the problem on the back burner. I am not suggesting that it is the fault of either my hon. Friend the Minister or my right hon. Friend the Secretary of State.

Mr. McKelvey

It is certainly not our fault.

Mr. Malone

It is as much the fault of Opposition Members as anybody else.

I remind my hon. Friend the Minister that this problem has plagued the House since about 1928, when many proposals for radical reform of the rating system were made by Winston Churchill. I do not dare suggest that my hon. Friend will leap in where the distinguished knight failed, but the matter must continue to have great priority. While I understand his inability, or perhaps reluctance, to bring forward immediately proposals for radical reform, it would be helpful to hear from him tonight that the Government have not forgotten about that. I understand the pressure of business upon my hon. Friend, but he and the Government have a long future before them. I trust that they will at last get round to dealing with something that I assure them is a priority in the eyes of the electorate.

7.34 pm

Mr. William McKelvey (Kilmarnock and Loudoun)

It was a pleasure to hear the speech by the hon. Member for Stirling (Mr. Forsyth). Before it I might have doubted the reason for my presence in the House and wondered why we should be debating for the umpteenth time another intrusion into local democracy. However, the hon. Gentleman has made me realise why I should be here. I almost said that he spoke in "purist" terms of monetarism, but I shall change that to "extremist" terms.

It was interesting to hear the comments of the hon. Gentleman's surrogate, the hon. Member for Aberdeen, South (Mr. Malone), who began his speech almost in the same frame of mind but ultimately decided that, although every local authority should have some money extracted from it, Grampian region should be given £2.4 million. I noticed that the hon. Member for Stirling did not nod in agreement when the hon. Gentleman changed his tune.

I am sorry that the Secretary of State has had to leave the Chamber, but I hope that his absence will be only temporary. He would not have been disappointed to hear me say that I found his speech not only as anticipated but utterly boring. I have copies of all his previous speeches in similar debates. They do not vary, apart from a change in some figures. After pressure and a little assistance from the Opposition, the right hon. Gentleman gave the names of the wretched authorities over which the sword of Damocles has been hanging for the past year. We were grateful for that information. The Opposition have said from the beginning that the penalties imposed on those authorities were grossly unfair. They all stem from the mysterious guideline formula.

I have searched through the historic documents about the rate support grant, but I cannot discover what the formula is. On occasions in Committee we have got near to the formula, but some part of it has always had an air of mystery attached to it—a sort of annex that no one could describe or say what it was. It is as if there were divine inspiration. The Secretary of State sits there like a modern Svengali and beams out a figure that is manufactured from thin air as the basis of the formula. All the formulas that follow are based on that false premise.

If I asked the Secretary of State how he calculated Kilmarnock's share of the clawback, he would refer me to annex 2. Even a mathematical fool like me can read and find out how the clawback was apportioned, but these formulas, like all of them, are based on the original formula. There is no real scientific explanation of how the Secretary of State in the first instance decided what realistic expenditure was. That is why we in the Opposition can never get to grips with the matter.

The Secretary of State may be unaware of this fact. I hope that he reads my speech tomorrow and that the Under-Secretary will give him this piece of priceless information. This is a historic debate. I have an extract from a minute of an equally historic meeting that took place in Ayrshire. During the past three years, after all the Secretary of State's endeavours, with his persistent intrusion into the affairs of the democratically elected authorities, a near miracle has been brought about. In Ayrshire, all the local Labour-controlled authorities and the three Labour Members of Parliament are acting in unison. That is much more serious for Conservative Members than it sounds. The Secretary of State has managed to do what politicians have failed to do for decades. The only parallel in recent history is the fact that the Prime Minister has managed, through her attacks on the Greater London council, to reform red Ken Livingstone into a local hero. The same sort of thing has happened in Ayrshire, and we are all delighted.

At that historic meeting, we in Ayrshire united to launch a counter-offensive on the attack on the ordinary man and woman in the street. We shall not give details of how we are going to tackle the problem but we have passed a resolution that we shall meet again on Friday—I shall not say where—to draw up the plans for that counter-offensive. That Ayrshire forum, set up locally, has reached unanimous decisions. Part of the minute which I am describing says: That there be a local campaign to explain to the people of Ayrshire the attack that is being made on their services, their standard of living and their job prospects by the Secretary of State for Scotland. I hope that the right hon. Gentleman gets that information. He is the Ayrshire Member of Parliament who stands out. I do not know whether he was invited to the meetings. To be fair to him, he may not have been. If he has not been we shall do so. However, I can understand his difficulty in combining with us in actions against himself.

I have looked at the reduction of the Kilmarnock district council support grant. The actual figure is £292,954. It is impossible to discover exactly why that figure was arrived at. I have explained the fault in the original formula. We have not yet considered what that means to the local authority. Conservative Members have said that not only must there be absolute value for money but that the smallest manning figures show the authority that is run on the best lines. That is nonsense. Ultimately that would mean that an authority with no manning—assuming the work was not all put out to private enterprise—would be working the perfect system. That is probably true enough, but what about the services? That is the key to our argument. It is the services which suffer. When the Secretary of State issues his guidelines he never refers to how the shortfall in services is to be tackled. That is the problem that faces local authorities. Without the money there are only two ways to balance the budget—either to reduce drastically manpower levels or increase the means of obtaining money from other sources.

Kilmarnock and Loudoun district has trimmed its services to the bone. There is no question of it crying wolf. Any reduction in grants must mean a reduction in manpower and must mean that unemployment will be forced on people. There will not be voluntary redundancies but job losses. If such a reduction were to be accepted it would mean a loss of somewhere between 50 and 100 jobs in an area with 17 per cent. unemployment. That is completely unacceptable.

I wonder why Conservative Members raise their hands in horror when one tries to explain why it is necessary nowadays to spend more money on services because of the unemployment that we have. They must be unaware of the misery in which people live in areas of high unemployment and the kind of services that are required to assist them to overcome the worst elements. Kilmarnock has now reached the stage where decisions will have to be made whether to continue lifting refuse. Local authorities cannot be expected to take such decisions on graveyards. Are we to leave our dead unburied in order to save money? Is that a realistic proposition? Are we to cart the bodies from Kilmarnock and Loudoun to another Ayrshire district which can perhaps afford the burials? Are we to leave the refuse on the streets because there is no other means of reducing the cost of lifting it?

The only practical steps that can be taken are to cut library and museum services. Are we then arguing that we should close libraries and museums? At the end of the day somebody somewhere has to explain where cuts are to be made after services have been cut to the bone. So far such explanations are not forthcoming from Conservative Members. Cuts are always explained in purely monetarist terms—the balancing of the books and the juggling of figures. No word is ever said about the effect that such cuts will have on the lives of ordinary men and women, particularly in areas of high unemployment where the burdens are increased.

Mr. Malone

How does the hon. Gentleman explain that some local authorities are well able to supply such services within the guidelines? The House is only talking about excess. The guidelines are satisfactory. They are based on a client group approach. Other local authorities are able to provide those services within the guidelines.

Mr. McKelvey

One of the big problems about the client group approach is that districts vary. They all have different environmental conditions. We discussed earlier the problems of Glasgow. Some Conservative Members thought that Glasgow's problems were no different from the problems of Stirling. That is nonsense. Most people realise that Glasgow's problems are immense. Therefore, other areas with different problems require different solutions. It may be that an authority can operate within the guidelines because the services that it supplies are thought to be adequate. It may well be that the electors do not think that they are adequate and perhaps change the authorities as recent elections have shown.

Let me return to my original complaint about the intrusion which has persisted for three years. Next year the Secretary of State will be in a position when debates such as this will be immaterial because he will be running the whole show. He will determine rates, rents and expenditure. A wind of change is blowing through the local authorities in Scotland, thank heaven. Some will now be reflecting in their inner thoughts that when the Secretary of State went for Lothian they remained silent, when he went for Dundee they remained silent, when he went for Stirling they remained silent, but now he is coming for them. With that realisation the historic grouping of councilors, councils and Members of Parliament in Ayrshire will be extended throughout Scotland. Only then will the Conservative party realise exactly what is happening in Scotland.

This evening the Secretary of State had to make an announcement that he was to give relief to four authorities. I prophesy that within two years he will be making a similar announcement for the 50 authorities that he is penalising now.

7.48 pm

Mr. Barry Henderson (Fife, North-East)

The hon. Member for Kilmarnock and Loudoun (Mr. McKelvey) has an extremely attractive way of saying the most frightful things. The fact that Labour Members in Ayrshire and some of their local government colleagues can talk to each other is encouraging and I am sure that it has nothing whatever to do with the reselection process which I understand starts next month. He told us that they were going to explain to the people what I think he called the Government's attack on local government services. How will he explain to the same people how he can describe as an attack on services Government expenditure in support of local government which is higher in real terms than when the Labour Government were in office?

Mr. McKelvey

If Kilmarnock has its money cut by £292,954 — as will happen if it fails to meet the guidelines—there will be a reduction in the services. We are laying the blame for that fairly and squarely where it lies—in the lap of the Secretary of State for Scotland.

Mr. Henderson

I shall return later to the point about the growth in local government expenditure during the past few years that has resulted from the situation that the hon. Gentleman described. It may be that compared with last year there will be a call this year for a reduction in the amount of expenditure made by the hon. Gentleman's district council. However, that does not alter the fact that the amount that the Secretary of State now provides, in total, in support of local government services is higher in real terms than that provided by the Labour Government in 1978–79.

Perhaps the hon. Gentleman can answer a question that the hon. Member for Glasgow, Garscadden (Mr. Dewar) clearly dodged. The hon. Member for Kilmarnock and Loudoun said that the Secretary of State's speech was entirely predictable, but it clearly had not been predicted by the hon. Member for Garscadden. He must have heard the Secretary of State challenge him to say whether the parliamentary Labour party would support local authorities that acted in defiance of the law, yet he made his whole speech without referring once to that point.

Mr. Foulkes

I hope to say a few words about that later. However, perhaps the hon. Gentleman can help me by telling us precisely which law he is talking about. That is very important.

Mr. Henderson

I shall tell the hon. Gentleman precisely—I am talking about any law of the land. It is very simple for Members of Parliament. It does not matter which law one chooses. If it is the law, it should be obeyed. If it is not obeyed, it is being defied. One does not pick and choose which laws to agree with. I hope that the hon. Gentleman accepts that proposition.

Mr. Foulkes

I accept that, but the hon. Gentleman is waffling. Does he know what law the Secretary of State was talking about in this instance, in this debate and on this subject? If he cannot tell us, I shall return later to one or two laws that are being broken.

Mr. Henderson

The hon. Gentleman will not get me to digress ——[Interruption.] He has answered in a way that the hon. Member for Garscadden did not do. The hon. Member for Carrick, Cumnock and Doon Valley gave us a straight answer and said that every law must be obeyed. Noticeably, the hon. Member for Garscadden did not do that, and we look to him to do so before the debate is over.

The hon. Member for Gordon (Mr. Bruce) used a different technique in campaigning against the Government. His technique was to create a convenient image of what he thought the Government were doing and then to attack it. When my right hon. Friend the Secretary of State pointed out that his image was entirely contrary to the facts, he simply said that he preferred his own image anyway, and was not very concerned about reality. He referred to some growth in the demand for services, but he did not recognise that there has also been some reduction in the demand. The greatest reduction has come in the biggest area of local authority budgeting. Much the largest proportion of a regional council's budget—it is such councils that are the big spenders—is concerned with education. It is in that area, however, that the demand has fallen most dramatically.

Mr. Ewing

That is absolute rubbish.

Mr. Henderson

Does the hon. Gentleman wish to intervene?

Mr. Ewing

I am grateful to the hon. Gentleman for giving way, but does he appreciate that in talking about education he is talking about the whole range of it? Is it not true that in his region of Fife they are having to open an extension to the Kirkcaldy college of technology by using an older school in another part of Kirkcaldy to meet the increasing demand for education in that age group? It. is rubbish to talk as he has done.

Mr. Henderson

The hon. Gentleman should be a little calmer in his reflections on such matters. I was talking about aspects of education that fall within the responsibilities of regional councils. I am not including some aspects of tertiary education — [Interruption.] Some aspects of tertiary education fall within the region, but others do not—[Interruption.] I accept that central institutions do not. I notice that the hon. Member for Falkirk, East (Mr. Ewing) has suddenly become an expert on education in Fife——

Mr. Ewing

I am more of an expert than the hon. Gentleman and he is supposed to represent that area.

Mr. Henderson

The hon. Gentleman should be very careful about that. I do not interfere in his constituency matters and perhaps he should interfere less in mine.

It has been said that Fife has experienced some increase in the amount of education provided. That is true, but most of it is paid for by the Manpower Services Commission. I accept that there have been some welcome increases in further education. However, there has also been a very substantial reduction in secondary and, to some extent, primary education. Thus, in total, the demand in Fife region is less than it was a few years ago. Such factors have to be taken into account.

I should like to refer first to the need for this order, secondly, to the fact that we still have further to go in making the system fairer, and, thirdly, to some suggestions for my right hon. Friend the Secretary of State about the future. I shall deal first with the need for the order. The hon. Member for Garscadden referred to the somewhat bruising battle that has been going on for some years between central and local government. That was a fair description, but it needs more than one person to do battle. I suggest that the battle started before the Conservative party came to power.

My hon. Friend the Member for Aberdeen, South (Mr. Malone) has already told us about the quote from The Scotsman clearly showing how much it approved of the efforts of the right hon. Member for Glasgow, Govan (Mr. Millan) to curb local expenditure in Scotland. The right hon. Gentleman was able to reduce local government manpower by 9,000 in one year. That same newspaper is criticising this Government for seeking to contain local government expenditure at the same level, in real terms, as the right hon. Member for Govan sought when he was in office. Local authority manpower has increased by thousands since then.

When Labour was in power there was a battle when it was recognised that the totality of local government expenditure had to be controlled. The Government have continued that battle. There is only one difference. When the Conservative Government came to power Labour local authorities—partly because of the rapid shift to the Left —decided that to annoy the Conservative Government and make party political points they would take every opportunity to spend more money.

Mr. Buchan

The difference is 4 million unemployed in Britain and 360,000 unemployed in Scotland. If the hon. Gentleman does not recognise that they impose extra demands on local authorities and their expenditure, he must be lying with his head in a bucket of sand.

Mr. Henderson

I know that unemployment has increased since 1979. Unemployment doubled when the Labour Government were in power.

It is easy for a local authority suddenly to jack up expenditure, take on more staff and produce some lovely handouts, but it is more difficult to curb excesses.

Mrs. Anna McCurley (Renfrew, West and Inverclyde)

Is there not a strange logic in what the hon. Member for Paisley, South (Mr. Buchan) says about the unemployed using more resources? The fact is that these people existed before they were unemployed and used the local authority services to the same extent, with the possible exception of social work services. There is a false logic in what the hon. Gentleman says.

Mr. Henderson

My hon. Friend, who has practical experience, clearly understands the problems better than the hon. Member for Paisley, South (Mr. Buchan). I was trying to explain that, although it is easy rapidly to increase local aurthority expenditure, once increased commitments have been made it is much more difficult to curb excesses. That is a particular problem in the Lothian region.

Hon. Members have mentioned Councillor Brian Meek's anxieties and the difficulties that he faces in leading an administration which is trying to curb total expenditure. His is a massive task. His problem is not the Secretary of State for Scotland but the mess resulting from outrageously excessive spending by the previous Labour regional authority. The recovery from that authority's excesses will take years and will be extremely difficult. I sympathise with Brian Meek and his colleagues in trying to grapple each day with the problems of recovering from that excess. It will be difficult, but it does not absolve the region from the responsibility of playing its part in controlling the totality of local authority expenditure in Scotland.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

Will the hon. Gentleman give way?

Mr. Henderson

I have given way several times already and I do not wish to be accused of taking too long.

Whatever party is in power, there must be some limit to the totality of local government expenditure. It is not disputed that central Government support for local government expenditure is greater than it was when the Labour party was in power. We are therefore arguing from a responsible and reasonable position.

Reference has been made to enabling local authorities to plan further ahead. I sympathise with that. I hope that local authorities will now plan ahead clearly knowing their guidelines. We should try to make the guidelines fairer, since they are at the heart of local government finance. There is still scope for improving that formula. I accept that the significance of guidelines is greater today than it was when the guidelines were formulated. Because they are more important, we have more work to do to refine and improve the system. I hope that my hon. Friend the Under-Secretary of State will make it clear that he is willing to listen to suggestions for improving methods whenever the opportunity arises.

I have in mind in particular a matter which affects the north-east Fife council. In summer, the population of north-east Fife quadruples. But there is no recognition of that when assessing local needs for services. I hope that my hon. Friend will be as energetic as ever in seeking to make the system demonstrably fairer, to cater for all the different situations.

So to the future. I hope that local authorities will recognise the limits that are appropriate for them when it comes to support from central Government. I hope that they will recognise the limits to the demands that they should make upon the ratepayers. Often ratepayers are not the people who vote at local elections. The Government today say that they will support expenditure according to assessment and need, and that if it is responsible a local authority need not increase rates excessively.

The difference can be made up by raising or lowering the rates. The raising of rates could be open ended if those who sought local government services paid for them. But that does not happen. That is why my right hon. Friend the Secretary of State was right to introduce legislation to limit the extent to which a local authority can raise rates when its expenditure is excessive and unreasonable.

If a local authority is to be left to fix its expenditure without control by the Secretary of State of additional money raised locally, there is only one solution. The guidelines determine centrally the appropriate rate level. If a local authority wants to go over the top, the cost should be borne directly by those who elect that authority. That means a poll tax. Something along those lines should be considered. It would enable local authorities to do what Opposition Members want them to do — to be free to spend as much as they like beyond what central Government will provide for them. I think that that is all right, so long as the people who make the decisions pay for them.

8.9 pm

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

I know that it is traditionally hoped that hon. Members will follow previous contributions in a debate, but I hope that the House will forgive me if I do not pick up all the amazing points made by the hon. Member for Fife, North-East (Mr. Henderson) and follow him along the highways and byways of his constituency. I plan to be brief and to make some relevant points.

I am sorry that the hon. Member for Stirling (Mr. Forsyth) is not here because the bulk of what I have to say should be of interest to him. To demonstrate the idiocy of the guidelines, I shall use the example of Cumnock and Doon Valley district council, which the hon. Member for Stirling praised in a previous debate as a prudent and reasonable authority.

First, however, I am pleased that my hon. Friend the member for Kilmarnock and Loudoun (Mr. McKelvey) mentioned the impact of the clawback on jobs in his constituency at a time when unemployment is at a record level. Based on the generally accepted estimate that it costs about £10,000 to provide a job in the public or private sector, I calculate that a clawback of £90 million will result in a loss of about 9,000 jobs in Scotland in both sectors. There will be cuts in contracts and supplies to local authorities and that will affect the private sector as well as the public sector.

Secondly, hon. Members will have seen how the hon. Member for Fife, North-East squirmed, writhed and dodged the question when I asked him which law he was talking about when he challenged my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) in his absence. The Secretary of State also spoke about the law being broken. We often hear wild statements by Conservative Members about the breaking of the law.

Mr. Ancram

I have been looking forward to hearing the hon. Gentleman's answer to the question. The law to which my right hon. Friend the Secretary of State referred was that mentioned in the resolution passed by the Labour party conference which, after some fairly typical sloganising, ended: salutes Liverpool's stand and supports councils which are forced to break the law as a result of Tory policies. What did the hon. Gentleman understand that law to be?

Mr. Foulkes

That is amazing. The Minister is a Scots lawyer, yet when an hon. Member asks him to say which law in Scotland has been broken, the Minister quotes a resolution of the Labour party conference. We want a better text than that.

Mr. Ancram

We should like to know what was "the law" in the resolution that I assume the hon. Gentleman voted for at his party conference.

Mr. Foulkes

The Minister does not even know the constitution of the Labour party. I did not have a vote.

The Secretary of State and the hon. Member for Fife, North-East were both challenged twice and were unable to specify which law in Scotland local authorities are breaking. I have no legal experience, but I know that the Social Work (Scotland) Act 1972 requires social work authorities—the regional councils—to do certain things. For example, they have a duty to provide services for the disabled, the elderly and young people in care. People in social work would argue that, because of the cuts being forced on local authorities by the Government, local government is in danger of breaking that law— if it is not already doing so. Government actions are forcing local authorities to break that law. Does the Parliamentary Under-Secretary condone the breaking of that law? Does he condone local authorities not carrying out their statutory responsibilities?

The guidelines are arbitrary, and pseudo-science and pseudo-statistics are used by the civil servants in the Scottish Office. They end up with strange algebra such as Weight = A × (B) 0.1 and Penalty = W/S × P. A councillor in Kyle and Carrick told me about a meeting at which it was explained to him how the formula and guidelines for Kyle and Carrick were worked out. A specific figure was arrived at after using the complicated formula and was then reduced arbitrarily by 40 per cent. to get to the guideline. What is scientific about that? The Under-Secretary is not challenging my statement. He accepts that the guidelines are arbitrary. I hoped that the hon. Gentleman would claim that I had been duped by the councillor. I am disappointed that he did not intervene, because I was ready with a riposte, which I shall give anyway! The information was given to me not by a Labour councillor in Kyle and Carrick, but by a Tory councillor —indeed, by the leader of the Conservative group, who is annoyed about this strange and arbitrary exercise which suggests that the council is 4.06 per cent.—two decimal places—above the guidelines. It is manifest nonsense.

Cumnock and Doon Valley district council is allegedly 12.8 per cent. —two decimal places again — over the guideline. The hon. Member for Stirling singled out that council for praise as a prudent authority which was economic in its operations. My hon. Friends know that not many authorities are singled out for praise by the hon. Gentleman. Cumnock and Doon Valley would not normally attract praise from the hon. Member, because it has not privatised anything and all 10 councillors are Labour. We have a wise electorate in that area.

When the council met the Scottish Office, the Department's officers expressed some sympathy for the council's case. However, they said that they could not respond to the representations. They could not do so because the guidelines are arbitrary and decided not by the needs of an authority but by the straitjacket imposed on spending requirements by the Treasury.

The district council wanted to meet the Secretary of State to discuss its needs. It wrote to him but is still waiting for a reply. That is a disgraceful way to treat a local authority — especially when the hon. Member for Dumfries (Sir Hector Monro) told us that Nithsdale had a personal visit from the Under-Secretary. It is obvious that some local authorities receive special attention. However, Cumnock and Doon Valley was graced by a visit from the shadow Secretary of State.

Cumnock and Doon Valley is a modest authority. There is constant criticism from Conservative Members about authorities with over-large administrations. Apart from the chief executive, Mr. Douglas Hemmings, there are only three directors in my local authority — the director of finance, the director of technical services and the director of environmental health and cleansing. They deal with all the services. Local authorities are constantly accused of spending on buildings and lavish offices. My local authority has offices in Lugar. They are National Coal Board offices and modest by any standards. I challenge anyone to show me any authority in Scotland with more modest offices.

Cumnock and Doon Valley was commended by the hon. Member for Stirling and has a small administrative structure. We heard earlier about the need to keep down rates. Yet in 1981–82 that authority had a rate of 29p, in 1982–83 it was 31p and for the past two years it has been 33p. That is not an excessive burden on the ratepayers. Therefore, why has such an arbitrary calculation been used to impose penalties on that authority? I challenge the Minister to explain that. During Question Time I asked the Secretary of State to explain it but he could not. I asked him how that authority could meet the guidelines. I now ask the Under-Secretary to tell us how it can come down to the arbitrary guidelines if it is forced to do so. It does not intend to or want to come down to that arbitrary figure.

The authority is roughly on guidelines for refuse collection, libraries and other services. The one service on which it is allegedly overspending is burial grounds—[Interruption.] The hon. Member for Dumfries will be in need of one long before me. He represents a country area and should know the importance of burial grounds in the villages. My authority has spent £208,600 on the upkeep of its graveyards around the churches and its 14 cemeteries — one in each of the main villages. The suggested guideline—and this shows the stupidity and arbitrary nature of it—is £87,000. To reach that figure nine or 10 of the 14 cemeteries would have to be closed and people would have to be buried in other villages. That goes against the grain in our communities. Worse still, the existing graveyards could not be maintained. The House knows the anguish that that would cause relatives of the deceased.

Mr. Dennis Canavan (Falkirk, West)

The hon. Member for Stirling (Mr. Forsyth) has an ideal solution to the problem — he would privatise the graveyards. Perhaps we could begin by trying him for size.

Mr. Foulkes

I am grateful to my hon. Friend.

I am surprised by the disdain on the face of the hon. Member for Renfrew, West and Inverclyde (Mrs. McCurley). Perhaps she has not received the sort of representations that I have received from local authorities and has not experienced the feeling of local communities on this matter. I shall give one more example to try to convince even the hon. Lady. The guideline of £87,000 is almost exactly the same as the figure spent by the predecessor authority before the reorganisation of local government 10 years ago. Yet we all know how costs have risen since that time.

Mr. McQuarrie

I am following the hon. Gentleman's comments on burial grounds with some interest. In the concise details that he has managed to acquire about the number of burial grounds and their locations, did he acquire figures for the income from burying people in the cemeteries that might compensate for some of the expenses incurred?

Mr. Foulkes

I know that the hon. Gentleman has some sympathy with the needs of the elderly. He must know that the death grant has remained at £30 for more than 20 years. Therefore, it is important to keep down the cost of burial as many people are finding it difficult to meet the expense.

During the past few years Cumnock and Doon Valley has not increased its staff, has had low overheads, has kept down rates and, in the Secretary of State's terms, has been a model authority—yet it is being asked to make a massive cut. That shows that the guidelines cannot be fair and that we must vote them out tonight.

8.28 pm

Mr. Albert McQuarrie (Banff and Buchan)

The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) said that he found it difficult to follow my hon. Friend the Member for Fife, North-East (Mr. Henderson), and I find it difficult to follow his road of burial grounds, as I might not come back again. The hon. Gentleman did not answer my question about income from burials. I fully support his comments about the death grant and the need for it to be dramatically increased. However, the hon. Gentleman will admit that whether or not the death grant is £30, the cost of a funeral is far greater than that.

I wish to deal with the position of the authorities in my area and I make no apology for being parochial in this. It is a matter of considerable satisfaction to see in annex 1 to the report that Grampian regional council did not exceed its guidelines last year. That is greatly to the credit of its officials and the work that they did to ensure that the guidelines would be met. This meant that the council warranted no penalty, but that result was achieved only through the best of husbandry, not just by council officers but by the convenors of the various committees who were forced to cut their budgets dramatically, despite major infrastructure needs arising from the considerable increase in population.

I do not believe that it is possible correctly to assess a guideline for such an area and it is quite wrong that the council should be forced to observe the guideline produced by the Secretary of State. The financial convenor of that Conservative-controlled authority has given an assurance to the electors of Grampian region that every step will be taken to keep within the guidelines this year, as in past years, but on the basis of the figures in annex 1 and the amount of money to be made available to the council I fear that he will find it extremely difficult.

Like my hon. Friend the Member for Aberdeen, South (Mr. Malone), therefore, I ask the Minister seriously to consider the circumstances faced by Grampian regional council. It is not all gold up there, as some people seem to believe. The authorities there require just as much assistance as others. So far, however, Grampian regional council has done very well and has managed to avoid any penalty in rate support grant.

The council that I represent most, however, is Banff and Buchan district council. On the last occasion, the Minister informed the House that that local authority was to be penalised to the extent of £237,524 because it had exceeded the guidelines. The district council contends, however, that for various reasons the base year chosen was very low in terms of actual expenditure and the guideline for 1984–85 was thus much lower than would have been appropriate. I hope that the Minister will take particular note of that.

The guideline for 1985–86 has been substantially increased. In effect, that guideline is the budget presented by the council for 1984–85 plus 4.5 per cent. For 1984–85 that budget was regarded, to use the jargon, as "excessive and unreasonable" and it was alleged that the council had exceeded the guideline and should thus be penalised by the loss of rate support grant. Yet apparently the same budget is regarded as a sensible basis on which to calculate the guidelines for 1985–86. If the people of Banff and Buchan are as confused as I am, I hope that the Minister will be able to clarify that.

In a letter to me today my hon. Friend the Minister answered queries that I raised with him about this on 3 and 10 October. Severe problems arise because for a small rural district council, many of which are represented here, £237,000 is an immense penalty. My hon. Friend replied that in both 1984–85 and in 1985–86 a guideline had been issued which would enable the authority to maintain its present spending level. That may be his view, but it is not yet the view of the local authority, which still cannot understand why its budget for 1984–85 should be regarded as satisfactory for 1985–86 but subject to a penalty of £237,000 the previous year. My hon. Friend says that the guideline is intended to recognise the authority's expenditure record and that in 1984–85 the authority had budgeted to increase its expenditure in real terms, which would inevitably take its budgeted expenditure beyond the guideline and thus make it liable to a grant penalty. The £237,524 is the amount of penalty still in dispute.

My hon. Friend states in his letter that if the authority manages to reduce its actual expenditure for 1984–85 the penalty may be reduced or even cancelled. The district council had to report its actual expenditure by 14 September 1984. Yet it will apparently take until autumn 1985 for the Scottish Office to determine that there has been no overspending on the guidelines and thus to repay the amount of the penalty.

Mr. Canavan

Will the hon. Gentleman comment on the mathematical formula used by the Secretary of State whereby the weight factor is A multiplied by B to the power of O.1? What are A and B in the case of his authority and what is his own weight factor? [HON. MEMBERS: "Fourteen stone."]

Mr. McQuarrie

Hon. Members are clearly more concerned about my personal weight, but the weight factor of my local authority is the burden that I bear in trying to get as much rate support grant as possible for it from the Secretary of State. The formula on which I operate is that of continually writing letters to the Minister to show that I am pursuing the best interests of my authority and I shall continue to do that. I hope that that answers the hon. Gentleman's question, which I suspect was largely a frivolous one.

Once the Government have said that the cash is to be taken away from the local authority, the ratepayers in the district are the sufferers. The only encouraging thing which my hon. Friend the Under-Secretary said in his letter to me was that Banff and Buchan district council will not be liable for any grant penalty for 1982–83 or 1983–84. I ask my hon. Friend to look at the time factor, which I have mentioned, when he assesses the actual expenditure of the district council, and to make sure that if a penalty is imposed for any given year and paid, it should be repaid very quickly if it transpires that it was invalid.

Mr. Ancram

The year 1984–85 goes on to the end of the financial year, which is at the end of March next year. After that we have to wait for the returns from the local authorities to see what their actual outturn expenditure has been. Not until about the late summer do we have that information. We can get indications before that time, but before the final decision can be made as to whether a local authority has come within the guidelines by making reductions, we have to wait for all the information to be available.

Mr. McQuarrie

I am grateful for that explanation, but in that case the Government are acting like a pawnbroker, and taking the money before they hand the goods back. If an authority is assessed on the basis of its anticipated expenditure, based on the budget provided by the local authority to the Secretary of State, and that budget is in excess of the guidelines prepared by the Secretary of State, why should he collect the cash if the fiscal year has not ended or will not end for a considerable number of months, penalising the ratepayers of that local authority by taking away the money as he intends to do m this instance? To my mind, that is sheer robbery.

If my hon. Friend is to penalise the authority, he must come up with a much better system than is at present proposed. If there is to be a guideline and the local authority then produces a budget, there should be direct discussions between the local authority and the Minister's Office, and it should not be the case, as my hon. Friend told me today in his letter—my local authority of Banff and Buchan having asked for a. meeting—that: It is not possible for a meeting to be arranged". The hon. Member for Carrick, Cumnock and Doon Valley has told us that his authority has had a meeting with my hon. Friend.

Mr. Foulkes

No, I said precisely the opposite. The authority is very upset because it has not been granted a reply to its letter—let alone a meeting—even though the Under-Secretary had managed to traipse down to Nithsdale.

Mr. McQuarrie

I thank the hon. Gentleman. My hon. Friend tells me that: It is not possible for a meeting to be arranged between the Secretary of State and representatives of the Council since the questions they want to discuss are matters which the Secretary of State discusses with the Convention collectively. I accept that there are representatives on COSLA from the various local authorities but, with the greatest respect, I would suggest that the authorities are all different. A local authority such as Banff and Buchan is in a different category from the city of Glasgow. It should be entitled to present its case to the Minister. I am sure that, when COSLA meets, it is not possible for every local authority to present its individual case to the Minister. I accept that such a proceeding would take up a great deal of the time of the Ministers and officials of the Scottish Office, but it is incumbent on the Ministers to deal with local authorities fairly by meeting them and letting them put their point of view. That is particularly so in the case of local authorities such as Banff and Buchan.

I hope that the Minister will consider what I have said. I should also like to comment on the question put by my hon. Friend the Member for Aberdeen, South about the consultations with organisations apart from the local authorities' representative members. My hon. Friend seemed to suggest that it was not correct to hold such discussions. I believe that the local authorities should consult organisations outside. I am sorry to say that Moray district council and my own district council have decided not to seek consultation with organisations. I regret that, because the small businesses in particular are having to foot the high rate bills being imposed by the local authorities.

I hope that although my right hon. Friend has no legislative power to call on local authorities to hold discussions with other organisations, he will advise the local authorities—by letter, if necessary—to embark on some form of consultation.

Mr. Canavan

Support?

Mr. McQuarrie

Cautious support. I do so in the hope that the Secretary of State will take account of the problems of district councils in rural areas. Banff and Buchan district council is making every effort to reduce its expenditure in the current financial year, and I hope that the excess of expenditure over the guidelines will be less when the accounts for 1984–85 are finalised. In these circumstances, every effort should be made by my right hon. Friend to support the rural districts because of the particular problems which they face, which are many and varied. Those authorities stand in contrast to the high-spending urban authorities where the motto seems to be "spend, spend, spend," regardless of the guidelines. By all means, let my right hon. Friend clobber those high-spending authorities, but let him look with sympathy on the rural district councils which are trying to do the job that he has asked them to do.

8.46 pm

Mr. Tam Dalyell (Linlithgow)

I find it somewhat distasteful to indulge in what may seem to my colleagues on both sides of the House to be special pleading, but I should like to raise the question of the serious anomalies suffered by West Lothian district council. This is not a question of yah-boo politics. The problems arise, as the Under-Secretary may know from the time when he was a candidate in West Lothian, from the fact that Livingston is growing and has grown at an unprecedented rate, and the amounts fixed for West Lothian district council do not take that into account.

My hon. Friend the Member for Livingston (Mr. Cook) and I had a long meeting with the excellent and able district councillors of West Lothian. I hope that I may, without being invidious, mention the names of the officials. They were David Morrison and Stanley Stirton, who are extremely able people and have good relations with the Scottish Office.

West Lothian has suffered since 1979–80 from a ridiculously low revenue guideline. Repeated efforts have been made to change this. The gross unfairness is illustrated in paragraph 6.5 of "West Lothian—Villain or Victim?"—a document of which the Scottish Office has a copy. The arguments were first put to the Secretary of State in February 1983. Because of the inequitable guideline figure, the ratepayers of West Lothian suffered considerable losses on rate support grant despite the fact that the local council had reasonably drawn attention to the situation in successive years. No action has been taken. The ratepayers suffered because of an inflexible and arbitrary guideline. In 1984–85 the system moved to the client group method—based on objective factors —to determine the council's expenditure need, and there was a heavier reliance on population. West Lothian's expenditure need figure for 1984–85 is £8,692,000. However, because the Secretary of State had to find a way to transfer guideline money within the overall total to other councils with previously high guidelines, West Lothian suffered a reduction of £551,000 to bring it to its revenue guideline of £8,141,000. Other councils have a guideline above expenditure need; West Lothian's is below. The gross unfairness is that RSG penalties start at the guideline. West Lothian's budget in 1984–85 is £8,258,000 — clearly below the Secretary of State's calculation of expenditure need—yet the West Lothian ratepayers suffer a loss of £80,000, purely because of their willingness to show reasonableness in the past. That is why the council feels rather strongly. Incidentally, Dunfermline district is in exactly the same circumstances.

Despite representations, and the courteous hearing that they had from officials early in 1984, that the penalties should start only at expenditure need, the position remains basically unchanged for 1985–86. That is why I am speaking with such urgency. The council's expenditure need figure calculated by the Secretary of State is £9,376,000 and yet our guideline is again set £552,000 lower, at £8,824,000. Under the present system, penalties will start at the lower figure and he has indicated "considerably more severe" penalties next year. If the Minister would like to interrupt to say that, at a recent meeting, the problem has been resolved, I shall sit down. I do not think that he can say that.

Why should the ratepayers of West Lothian be required to suffer losses of grant when the Secretary of State is using different and higher expenditure standards for other areas? Why should the ratepayers of West Lothian suffer losses when the council — a reasonable council — is spending at a level more than £400,000 below the expenditure need figure determined by the Secretary of State? West Lothian has lost £80,000. Is that not rather unfair? Does the Secretary of State realise that West Lothian has the highest population and dwelling growth in Scotland and that there is no reflection of this in his basic calculation or his arbitrary reduction of expenditure need? This is back 15 years to the Livingston problem. Why has the Secretary of State not made any move to close the gap in 1985–86 between expenditure need and guideline? Will he accept that it is only fair and reasonable to the ratepayers of West Lothian that penalties should only start if the council exceeds expenditure need?

In the light of the important discussions taking place about the level of unemployment in Bathgate and surrounding areas, will the Secretary of State accept that it is grossly unfair to penalise a council on a guideline below expenditure need? Does he agree that West Lothian requires special help through its guideline or expenditure need to deal with the problems of the area? I am worried principally about the 1985–86 figures.

The background to housing capital expenditure is as follows. Because of the limited allocations in this year, the council made a special approach for an extra allocation to cope with these problems. No positive response has yet been received to these overtures. The position is exacerbated because the Scottish Development Department anticipated that £3.6 million of capital receipts from council house sales would be forthcoming in 1984–85 —presumably in light of higher discounts. This is not forthcoming and a shortfall of capital receipts is more than possible. I am told by John Spraggon, the housing director, that it could well be £1 million. Whatever my political views might be, the fact remains that the council has played perfectly fairly by the Government's standards. There have been no artificial inhibitions on the sale of council houses. I give the Secretary of State that undertaking.

Will the Secretary of State undertake to make good the major shortfall in his estimate of capital receipts by authorising additional allocations to the council? The implications for 1985–86 could be serious. If the allocations for 1985–86 are related to the net figure of allocations in the current year — the implications for investment in maintaining the housing stock are very serious. In West Lothian the levels in 1984–85 are as follows: gross allocation £4.8 million, less SDD estimate of receipts £3.6 million, actual allocation £1.2 million. Will the Secretary of State undertake to ensure that true levels of investment in housing stock in 1985–86 are commensurate with the need and not deflated by overoptimistic estimates of capital receipts from council house sales?

The special report on the problems of Bathgate and surrounding area to deal with the massive level of unemployment is expected soon. The ability of the district council to respond and play its part is heavily conditioned by the overall levels of capital allocations for housing services and general services and, more importantly, by the limit of the revenue guideline. Does the Secretary of State accept that the problems of Bathgate urgently require that the local council should receive special consideration and allocations to assist it to meet the problems?

This matter is all about the fact that there were anomalies in the past. Can the Minister give an undertaking that the Department will again meet West Lothian district council to sort the problem out? If I have read quickly from a brief, it should be borne in mind that it is the background to a good deal of work—I make no apology for it—and meetings that my hon. Friend the Member for Livingstone and I have had with very serious people.

8.55 pm

Mr. Charles Kennedy (Ross, Cromarty and Skye)

Like others, I wish to raise some local matters, that affect Highland regional council and local authorities throughout the Highlands. We are grateful that the Minister took the time and trouble during the summer recess to meet councillors and officials of Highland regional council in Inverness. He heard first hand about some of the problems, financial and otherwise, that they face. When that council learnt from a statement that was made earlier this year that it would have to bear £2.3 million of the £90 million that was originally envisaged, it was deeply shocked and worried about what would happen. Since then, matters have improved somewhat, although that is mostly because of money from oil-related grants. Nevertheless, there is still anxiety about the client group approach and how its financial allocations will be made.

As time is short, perhaps I might ask whether the Minister would be so good as to say in writing how the adjustments to which the Secretary of State referred today will affect Highland regional council. We accept that, subject to further budgetary revisions, there are likely to be more adjustments to the levels of penalty that have been allocated.

Several hon. Members, including the hon. Member for Banff and Buchan (Mr. McQuarrie) who accused the Minister of sheer robbery—it is interesting that a sheer robber should still qualify for Conservative support — emphasised the considerable anxiety in rural areas about the methodology of the client group approach. We have made representations previously to the Minister about the assessment formula and the way in which it is used to determine guideline expenditure. Given the specific problems of the authority of the right hon. Member for Western Isles (Mr. Stewart), and those in Highland local authorities, the areas of leisure and recreation, and of roads and communications generally are not given. sufficient support. Under its present workings, the client group approach does not appear to give sufficient consideration to those areas. I am sure that that view is shared by all hon. Members.

The current position within the Highland regional council shows a projected deficit of £500,000. That is not inconsiderable and is especially significant in such an area. I hope that the Minister will tell the House the effect that his statement today and further discussions are likely to have.

I listened to contributions from the Secretary of State, from other Conservative Members and from Opposition Members. Although their solution to the problem is different and varies in the degree of the draconian measure to be adopted, all hon. Members appear to agree that local government is too dependent on central Government for its finance and that the root of the unhealthy problem is that historic fact. Although we shall have spent five hours debating the matter I doubt whether the Government's thinking will have changed substantially. That underlines the fact that local government must be loosened from the Scottish Office, expecially in terms of its financial dependency.

Many of these issues would be better debated, not in Westminster but by a fully elected Scottish Assembly sitting in Edinburgh. As we already have many such debates a year, I hope that the Conservative party will come to realise that a more autonomous, locally accountable and financially independent local authority structure is something to be not scared of, but welcomed. It would remove the burden from Ministers and hon. Members and put the decision making and accountability, which the Government say they are so worried about, back into the hands of ratepayers.

I hope that the Minister will give me specific answers to the specific queries which affect the Highlands, and that in due course his thinking and that of the Conservative party will be liberated on local government in Scotland.

9.3 pm

Mr. Norman Buchan (Paisley, South)

Greater love hath no man than that he surrender his place to his hon. Friend in the order of speaking. I am glad to have five minutes of speaking time.

I had intended to ruminate at great length on the economic and financial heresies of the hon. Members for Fife, North-East (Mr. Henderson) and for Stirling (Mr. Forsyth). The kernel of their heresies has always been the mainspring for the propaganda slogans under which this battle is waged against local authorities. They commit almost every possible heresy.

We must consider the matter from three or four different stances. First, Government policies have expanded local authorities' needs. It is no use saying that the fact that expenditure has increased proves that there has been overspending. It does nothing of the kind. It is proof of the increasing complexity of society. An increasing level of public expenditure has been, is and will continue to be essential. The policies of the Government, with their exacerbation of almost every possible social problem, have increased needs. Whenever a local authority feels the need to expand its expenditure in real terms, let alone in cash terms, it is because Government policies have increased needs.

Secondly, there are no local authorities which are overspenders. There are underspenders, but no overspenders. When we consider the magnitude of the problems in housing, health, social work, transport and education, it is clear that no local authorities are overspending. However, there are some which are underspending.

The third theory is that, as a result of change and development since the growth of our cities, they face special problems. Therefore, when we talk about an estimated overexpenditure in Strathclyde, which covers many of the conurbations in Scotland, we must remember that we are dealing with Victorian sewers as well as Victorian highways and planning.

The next theory that is put forward by Conservative Members is that those who try to defend their communities and who recognise the truth of what I am saying are lawbreakers. I ask Ministers again: which law are they breaking? [Interruption.] Perhaps the Minister would pay some attention to what I am saying; he can deal with the timetable afterwards. I ask him again: which law are those local authorities breaking? That is another myth peddled by the Government.

If each local authority fixed the rate determined by the needs of its area, there would be no need for the Government to use such draconian policies of penalty. There would be means to deal with local authorities, if the Government believe that they are wrong, which fall short of penalising them. The truth is that the Government are forcing authorities to break the law, but curiously they will not prosecute them for doing so. They are the laws that establish statutory duties upon local authorities in relation to homelessness, social work and education. If the local authorities obeyed the Government's so-called guidelines, they would be guilty of breaking those other laws. On which law will the Government prosecute: the laws on education, social work and health, or the laws for the protection of the ratepayer? The Government know that this is yet another heresy that they have put forward.

The hon. Member for Stirling has returned to the Chamber. What has St. Andrew's done to Scotland with this new school of philistines emerging from the university, of which the hon. Gentleman is one of the least reputable examples? He is the man who believes that the Women's Rural Institute is riddled with Marxists; he has called for the privatisation of prisons, no doubt on the same premise as he wishes to sell council houses—that the sitting tenants get priority and a discount. He advocates the privatisation of the fire service and the Health Service, and at the same time his is the public relations agency for the firm of Pritchards, which is the main firm seeking contracts with the NHS when it privatises operations. I wish that he would declare his interests every time he declares his economic theories. It would be helpful to us. That is the background to the heresies.

We heard a spokesman from a rural area who told us about revolution in Nithsdale. I remember a Stanley Baxter sketch which opened with a Che Guevara-type guerrilla surrounded by jungle and a long interview taking place with a BBC interviewer, who was then led blindfold from the cave in the jungle. As he went out, he said, "And remember, this would not be so disturbing if it were not all happening in Wiltshire." The opening words of the hon. Member for Stirling were that local authorities are all becoming delinquent, but that is nonsense. Far from hearing such insults, local authorities that defend the needs of their communities against the worst of the deprivations heaped upon them by the Government deserve the badge of honour.

In my area, the Talbot works closed three years ago. Has that not added to the costs of local authorities? We are told this week that another 470 people are likely to be made redundant from the Bishopston royal ordnance factory as a prelude to the privatisation that the hon. Member for Stirling seeks. A total of 470 families will be put on the dole. Will that not increase the cost to local authorities? To say otherwise is nonsense, and the Government know it. They have declared war on community after community and on the mining villages. In the front line they are using a series of myths, peddled by some Conservative Members, to try to encourage them in their quest of destroying the nature of some of the communities which have been built up over the years. All honour to any local council which defends its community. Let us understand what such councils are about and support them.

9.10 pm

Mr. Dennis Canavan (Falkirk, West)

We have heard this debate umpteen times before, so I shall be brief.

Earlier this year we discussed the Rate Support Grant (Scotland) (No. 1) order. The majority of Scottish Members voted against it because we felt that the amount of financial assistance offered to Scottish local authorities was hopelessly inadequate. The Government maintained that local authorities were overspending.

A few months later, that was put to the test in the Scottish local authority elections, when Labour enjoyed landslide victories throughout most of central Scotland and further afield. Not only did we consolidate our position but we improved our representation at district council level. Yet now, having lost the argument in the May elections, the Secretary of State has the brass neck to come forward with a proposal to rob these local authorities of a further £90 million.

The right hon. Gentleman is doing so because apparently his guidelines have been breached, and not just by a few local authorities as was the case in relation to the selective action which the right hon. Gentleman has taken in previous years. About 75 per cent. of Scottish local authorities have put forward budgets in excess of his guidelines. I understand that on average Scottish local authorities are 4.2 per cent. above the guidelines, although that figure varies from one area to another. For example, the Central regional council is only 3.4 per cent. above the guidelines, whereas Falkirk district council is 7.7 per cent. above.

Originally these guidelines were intended as mere guidance, but now they appear to be mandatory. The Secretary of State is taking it upon himself to impose them on local authority expenditure, despite the fact that central Government cannot hold a candle to local Government in meeting expenditure guidelines or projected expenditure limits. Local government's record is far better than that of central Government, yet the Secretary of State proposes to penalise Scottish local authorities. He tries to justify this by all sorts of weird mathematical formulae, such as A times B to the power of 0.1. But when all these formulae are translated into human terms, they mean cuts in services for many people. They mean deprivation of educational opportunity for our children and for our students in the colleges of further education. They mean cuts in the standard of social work services for the elderly, sick and disabled, and an increase in council house rents.

Conservative Members may say that housing finance is not concerned so much with rate support grant as with housing support grant, but I remind them that many Scottish local authorities are getting not a penny in housing support grant. For the past two years my local authority —Falkirk district council—has received not a penny in housing support grant.

Mr. Michael Forsyth

Why?

Mr. Canavan

Because this Government are one of the meanest, dirtiest, rottenest Tory Governments in history.

The councillors elected in May, or the regional councillors who were elected in May 1982, have in all instances a far better mandate to decide the priorities of the people of Scotland than a Secretary of State whose party was rejected by over 70 per cent. of the Scottish electorate at the last general election. I and other hon. Members have frequently made that point. This order is yet another nail in the coffin of local democracy. If the Secretary of State were being absolutely honest he would, as his colleague is doing in London, bring forward a Bill to abolish local government in Scotland, or go to the limit advocated by extremists such as the hon. Member for Stirling (Mr. Forsyth) and privatise all local authority services. Instead, he is using the sneaky method of using his overall majority in the House of Commons to push through, at the dead of night, legislation that is completely contrary to the wishes of the majority of elected representatives of the people of Scotland.

If Conservative Members believe in parliamentary democracy and the continuation of the imperfect model of parliamentary democracy that we have in this country, they should remember that one of the fundamentals of representative democracy is that the people who are being governed by laws should consent, in some way, to such laws. Increasingly what happens in this place is what will happen tonight. The majority of the elected representatives of the people of Scotland will vote against legislation—whether it is primary legislation or secondary legislation such as this. Despite that, Tory Members in the bars of this place or sleeping in the Library, will come crawling out of the woodwork into the Lobby in half an hour's time to vote against the majority wishes of the elected representatives of the people of Scotland. If that is the style of parliamentary democracy in which this Government believe, woe betide them—they will not survive, and the people of Scotland will make sure of that.

Therefore, I shall encourage maximum resistance by our councillors, particularly Labour councillors in Scottish local authorities, who were elected on a far better mandate, and are far more responsive to the needs and aspirations of the people of Scotland, thatn this discredited Secretary of State and his Government. I hope that hon. Members representing Scottish constituencies will give maximum support to these councillors so that they can use every legitimate means at their disposal to resist these measures and to fight the Secretary of State all the way, in the interests of the people whom they—and we—were elected to represent.

9.18 pm

Mr. Jim Craigen (Glasgow, Maryhill)

It was inevitable that many of the arguments in today's debate had been heard earlier in the year when the House debated the original rate support grant order. Many of us maintained then—and equally do so today—that that order was inadequate for the problems with which Scottish local authorities are having to cope.

Many pertinent speeches have been made today about the effect of the Secretary of State's intended cuts. He is proposing to take back £90 million of an already inadequate rate support grant settlement. No wonder the hon. Member for Banff and Buchan (Mr. McQuarrie) was kept out of the Committee on the Rating Valuation (Amdt) (Scotland) Act this year. He brought out forcefully, as the "Bulldog of Buchan" often does, the effect of the assessment of the penalties on the original estimates. I thought that his analogy of a pawnbroker was a good one. My hon. Friend the Member for Falkirk, West (Mr. Canavan) put the point more stoutly when he talked about sheer robbery, because that is what is proposed today.

There were times when it seemed more like a parliamentary scrum than a parliamentary scrutiny of Scottish local authority affairs. This Chamber simply cannot give the detailed scrutiny of the affairs of the 65 local authorities that is required. That job should properly be done in the council chambers by the people who were elected in the first instance to serve in the regional, the district and the island authorities.

Mr. Malone

Will the hon. Member give way?

Mr. Craigen

No, I will not, because the hon. Member was quick off his mark after he made his speech earlier this afternoon. I watched that.

An essential feature of the running of local government is a measure of stability. My hon. Friend the Member for Monklands, West (Mr. Clarke) put it very well when he said that the biggest problem facing Scottish local authorities is the constant chopping and changing of grants and policies by the Government. It makes it very difficult for local authorities to plan.

The local authorities cannot be held responsible for the economic policy. That is the responsibility of the Government—and what a mess they are making of the present economic situation. The Government have the substantial say over the policies required to control inflation, interest rates and wage settlements. Central Government already have very substantial pincer powers on the local authorities by setting the rate support grant and the targets with which the local authorities have to comply.

Increasingly, local government is being pushed into the front line of Government economic policy at a time when the pound is at the lowest level ever against the dollar, when unemployment is at an all-time high, and when taxation is higher now under the Tories than the level of taxation that the Government complained about when they first came to office in 1979. The burden is being steadily moved by the Government on to local shoulders. The Government have done more than most Governments to shift the burden on to local taxation and the ratepayers, despite all the nice words that right hon. and hon. Members on the Government Front Bench say to the contrary.

What is the view of Scottish Office Ministers concerning the Audit Commission for local authorities in England and Wales? I know that it does not have a remit in Scotland but it makes some very interesting points about the way in which the Government are not achieving their declared objectives because of the way in which they are operating the distribution of the block grant system.

The Commission points out very aptly the uncertainties which the present block grant system creates. It refers to the fact that some local authorities in England have been building up reserves to meet uncertainties. It talks, as several hon. Members have talked, of the constant uncertainties over the revised percentages and targets which the Government impose on local authorities.

Above all, I thought it significant that the report, which is quite a thorough one in its way, brings out the lack of knowledge and clarity on the part of the general public about the way in which their own local government system works. It deals with local accountability. The Government, because of the way in which they are pursuing their policies vis-à-vis local authorities, will be unable to get proper accountability at local authority level.

My hon. Friend the Member for Falkirk, East (Mr. Ewing) talked about a myth pursued by the Government in relation to the fact that councillors do not feel a sense of responsibility to their local authority and their electors. Local market forces are an important feature of the present monitoring of local government commitments.

The right hon. Member for Western Isles (Mr. Stewart) highlighted the fact that we are dealing with a system that must be sensitive to the needs of local communities. It is a care-intensive service, provided, by and large, by the local authorities. They have to look after the schools, old people's homes or childrens' homes. There are many other duties that they must carry out, which involve people and family life. It is also a staff-intensive service. It is all very well for folk to talk about other people losing their jobs. As the recent manpower figures show, in the past year there has been a reduction in the number of people working for local authorities. If the hon. Member for Aberdeen, South (Mr. Malone) looked at the papers published recently by the Scottish Office, he would see that there has been a 0.5 per cent. reduction——

Mr. Malone

rose——

Mr. Craigen

If the hon. Gentleman will be patient, I shall tell him that one of the increases was in the number of staff who had to be taken on to cope with the housing benefits legislation that the Government introduced. If ever there was an unmitigated disaster, it was the imposition of the housing benefits legislation and the way in which local authorities have to deal with it.

Mr. Malone

Will the hon. Gentleman give way now?

Mr. Craigen

Against my better judgment, I shall.

Mr. Malone

Will the hon. Gentleman concede that when the Labour party was in government, it chopped local authority jobs by 9,000 in one year, and that between 1977 and 1984 there has been an increase in establishment of 4,200? How does he square that with the fact that we are cutting jobs?

Mr. Craigen

I listened to the hon. Gentleman's speech. Although he was entirely in favour of the client group approach, I notice that he had special pleading about its effects on his own area because of growth in that area. Other areas are experiencing decline. My hon. Friend the Member for Linlithgow (Mr. Dalyell) clearly brought out the differences in his area between the Livingston new town development and older areas.

The hon. Member for Aberdeen, South knows that local authorities must tailor manpower levels to the needs of the area. After all, the number of young people in school is in decline but the number of elderly people in our community is on the increase, so one must make adjustments. The hon. Gentleman should not forget that there was a changeover in the system of local government, and quite a few people took premature retirement. I believe that the manpower figures are now kept a lot better than they used to be.

The Convention of Scottish Local Authorities, the spokesman for local authorities in Scotland, made it clear in its statement that if Government support had not been reduced in 1984–85, the rates would have been kept at the 1982–83 level. There is no need to go over the ground that we discussed when the original rate support grant settlement, unfortunately, was approved by the House in January. We know that the Government did not keep pace in their settlement with the rate of inflation or the changes in interest charges. We know also, because the hon. Member for Aberdeen, South brought it out himself, that demographic changes are having their effect on the way in which the client group approach is devised. A new element should come into the settlement of the rate support grant. It should take proper account of the differences in income levels in different parts of Scotland. Inevitably, with more people unemployed the level of purchasing power in an area is depressed and the demand for support services in local authorities is increased.

The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) referred to the important area of leisure and recreation. We should not underestimate the importance of leisure and recreation at a time of rising unemployment, which Ministers tell us will not drop much. The Government should accept that, paradoxically, there is an opportunity to create jobs in the provision of leisure and recreation as well as a social imperative.

If I refer to the hon. Member for Aberdeen, South again it is not because he made the most interesting speech but because it is suitable to the argument that I now adduce. He called for rates reform. Some of us thought that he was a hard man but when he called on Ministers for rates reform I thought that he was a hit of a dreamer after all. When the Secretary of State for the Environment addressed the faithful at the Tory party conference he must have been stuck for something to say because he said that he would appoint three wise men—the Minister for Local Government, the Under-Secretary of State for the Environment, the hon. Member for Bristol, West (Mr. Waldegrave), and the Under-Secretary of State for Scotland, the hon. Member for Edinburgh, South (Mr. Ancram) — to study the reform of local government finance.

I wrote to the Secretary of State for Scotland recently asking whether valuation would be one of the factors to be taken into account in the review of local government finance. My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), I and many others spent endless hours on the rating and valuation legislation earlier this year. The Minister assured us that that Bill would iron out all the problems and disparities that existed between Scotland and England over valuation. On 22 October the Under-Secretary of State replied to me saying: Kenneth Baker, William Waldegrave and I will be looking at the system of local government finance. I note your suggestion that valuation for rating should he one of the topics we examine. Open-mindedness is always welcome but here is an admission of empty-mindedness. I suspect that the three wise men will have some difficulty in coming up with a scheme of things.

The Scotsman has been referred to so often that I must refer to it again. An interesting article today by David Mercer pointed out just how anxious industrial and commercial property owners are about impending revaluation. The disparity between English revaluation in 1973 and the more up to date position in Scotland is significant. When the Under-Secretary of State replies, may we expect, or is he ruling it out at this premature stage, that industrial subjects will he in for a reprieve? Will commercial subjects be in for some form of rating relief? What will happen to Scotland's domestic ratepayers? We look for great things from this rating review.

The hon. Member for Dumfries (Sir H. Monro)—I always listen with respect to the senior Member for Dumfries—gave all the support to the Secretary of State that only an hon. Member whose own local authority is not affected by the order could. But he warned that there was a hint of rebellion in Nithsdale next year. I therefore wonder whether that local authority's convenor has read the letter that the Secretary of State somewhat unusually sent to convenors. I have only a layman's knowledge, so I shall defer to my hon. Friend the Member for Garscadden, but I was not under the impression that convenors had any statutory significance——

Mr. Dewar

They get the CBE.

Mr. Craigen

Not the one for Lothian! In his letter of 5 October 1984, the Secretary of State said: I intend that the penalty for any excess will be a good deal more severe than penalties have been so far. That refers to 1985–86, yet we are not even out of 1984–85. The words of King Lear come to mind: 'I will do such things,— What they are yet I know not,—but they shall be The terrors of the earth. The Secretary of State may have frightened the teachers this morning when they met him, but I do not know what he will do to the local authorities. Perhaps he will show the same ambivalence towards them as those of us who have come to know the Secretary of State as well as we do are accustomed to. I have never yet known a speech by him on local government finance in which he has not alluded to the year 1976 and all that. Therefore, I keep close at hand the early-day motion on excessive burdens on ratepayers that the right hon. Gentleman signed.

Mr. Dewar

He sponsored it.

Mr. Craigen

The right hon. Gentleman did not sponsor it. The man who did not get the job sponsored it. That early-day motion acknowledged that the Government's reduction in the rate support grant for Scotland … merely transfers the burden of existing expenditure from central Government to the ratepayers". If that was good enough for 1976, why all this double-dealing and double-talk in 1984?

The fact is that the Government determine which way the coin will spin. Under this Government, it is heads the Government win and tails local government loses. But whichever way the coin spins, the ratepayers will be no better off.

We oppose the order, which will reduce an already inadequate RSG settlement for 1984–85, and because it is part of the poisonous atmosphere that the Secretary of State and his colleagues are generating in the relationship between central and local government. We oppose it, because it will not ensure value for money, but will give only more headaches, problems and misery to the people of Scotland.

9.38 pm

The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Ancram)

I listened with interest to the hon. Member for Glasgow, Maryhill (Mr. Craigen) quoting King Lear, and I hope that he will remember that, if my recollection of Shakespeare serves me aright, King Lear died a horrible death. In placing himself in King Lear's shoes and quoting him, I hope that he will take a lesson.

The hon. Gentleman referred to the piece of paper that he keeps close to his heart and the famous year of 1976. But if he had looked behind him he would have seen that the face of the right hon. Member for Glasgow, Govan (Mr. Millan) was more embarrassed than any face on the Conservative Benches. If he wishes the obviously close relationship that has existed for some time between the right hon. Gentleman and him to continue, the less he uses that piece of paper the better.

We have had a full and wide debate on the order. Before I deal with issues that have been raised, I remind the House of the essential purpose of the order. Its purpose is to reduce by £90 million the rate support grant payable to Scottish local authorities in 1984–85 to put pressure on them to reduce their expenditure. The reduction in grant is shared among authorities in a way which differs significantly from what happened in previous years and provides a real incentive to authorities paying penalty to reduce their expenditure.

The penalty on budgets reflects individual levels of over-spending and is at a higher rate for authorities spending furthest above guidelines. But outturn penalties will be reduced if expenditure is reduced. I emphasise the double financial benefits of reducing expenditure. Not only will the grant penalty at outturn be recalculated on the basis of a lower figure overspending, but it will be recalculated at a lower percentage of that overspending. The hon. Member for Falkirk, East (Mr. Ewing) will be interested in the effects of that on the formula. The closer authorities come to guidelines, the lower the penalty tariff. If authorities come down to guidelines, as I hope they will, the penalty will be cancelled altogether.

The end result of the improvements should be a marked reduction in overspending in 1984–85 which the Government can recognise by reducing penalties. There is no reason why the penalty of £90 million should not be substantially less when it comes to the review of the penalties at outturn.

Mr. Wallace

I notice that the report to which reference has been made says that the review may take account of changes in interest rates which will affect repayments by local authorities. I am sure that the Minister realises that a large part of the Shetland council expenditure is on repayment. What are the Government's proposals if an increase in interest rates takes place between now and the beginning of the next financial year?

Mr. Ancram

As the report says, interest rates will be taken into account. It is important not to speculate on what interest rates might be. In relation to the hon. Gentleman's constituency, the part of the report to which he refers holds good.

I shall now deal with the speech made by the hon. Member for Glasgow, Garscadden (Mr. Dewar).

Mr. Ewing

Will the hon. Gentleman give way?

Mr. Ancram

I do not have much time, but I shall give way later.

The hon. Member for Garscadden effectively summed up the Opposition's view and I shall deal with what he said in detail.

Mr. Ewing

Will the hon. Gentleman give way?

Mr. Ancram

I shall give way, but the hon. Gentleman's comments are rarely important.

Mr. Ewing

I can assure the Minister that my comments are always more important than his answers. The Minister said that the penalty will depend on outturn figures. Does that mean that no penalty will be imposed upon any local authority in Scotland until the outturn figures are known, possibly a year from now? Am I right in thinking that the £90 million will not be affected until the outturn figures are known?

Mr. Ancram

I am sorry that I gave way because the hon. Gentleman has merely confirmed that he does not understand the system. The penalty has already been taken from local authorities in the rate support grant payments made to them on a monthly basis. If an authority were not penalised until a year after the offence, the anomalies would be more serious than those which are said to exist now. The hon. Gentleman's suggestion is utter nonsense.

Listening to the hon. Member for Garscadden, I am led to believe that years in opposition inevitably lead to exaggeration. One would have believed, listening to the hon. Gentleman, that never has local government in Scotland been so financially pressed, so cut to the bone and so near to expiry.

As my hon. Friend the Member for Dumfries (Sir H. Monro) and others have said, who would have believed that the level of expenditure, even on the most conservative view of real terms and taking into account inflation, actually remains ahead of the level in existence when the last Labour Government left office? It is 2.6 per cent. ahead in terms of local authority services and, compared with the normal rate of inflation, 12 per cent. ahead of the 1978–79 level.

Where were the Labour voices raised in protest at the despicable way in which their Government were destroying local government in Scotland? Where were the guilty admissions from the then Government Front Bench — I seem to remember that the hon. Member for Falkirk, East was a member of that Government—that they were grinding Scottish local government into the dust? Far from making any such admissions, they were proudly proclaiming their support for the role that local authorities were playing. Yet, on a higher level of expenditure in real terms, what a different story we have had from them tonight. I doubt whether that is because they have higher expectations from a Tory Government. It could be because since they went into opposition they have abandoned any sense of national responsibility which they held when in government and are interested only in stirring every passing wave.

I hope with some confidence that the hon. Member for Garscadden never becomes Secretary of State for Scotland, because he would suffer fatal indigestion from swallowing some of the words that we heard from him today. I suspect that, as a man of some intellectual honesty, he is thoroughly embarrassed by his performance.

The hon. Member for Garscadden questioned the validity of the current expenditure guidelines. I listened closely to what he said, but I remained unclear about whether he was questioning the total amount of the guidelines of the methodology. I remind him that the methodology has been worked out over a long period by a working party on which COSLA was represented. It is generally accepted that it provides a fair system of assessing need and a system on which rate support grant distribution and the guidelines can be based.

I can tell my hon. Friend the Member for Fife, North-East (Mr. Henderson) that we are always looking for ways in which the system can be revised and improved. That work is continuing. In setting guidelines for individual authorities, we also recognise that authorities must be presented with realistic targets in relation to their current level of expenditure. That factor is taken into account in arriving at the guideline figure.

The hon. Member for Garscadden mentioned the relevant expenditure for 1985–86 which has been distributed through the guidelines. It is worth reminding him that the sum has been increased by about £95 million. The hon. Member for Falkirk, East should remember that the enhanced provision halves the gap between our plans and the budgets that local authorities presented to us through COSLA. The guidelines derived from the total figure present realistic targets to individual authorities.

The hon. Member for Garscadden was challenged by my right hon. Friend the Secretary of State on a matter on which he has so far failed to give an answer. I wish to put the question to him again. When challenged to state his position on the Labour party's conference decision to back local authorities that put themselves outside the law, the hon. Member for Garscadden remained silent. It is to my regret and, I suspect, to his shame that he has remained silent. Perhaps he would like to tell us his position now.

I recall occasions when I have taken part in broadcasts with the hon. Member for Garscadden when, courageously and often in the face of militant sentiment in his party, he has stated that he did not condone and would not support local authorities going beyond the law. Of course, those broadcasts were pre-Blackpool, pre-Scargill and pre-the shadow Cabinet elections. While, in Lord Acton's words, power may corrupt, a militant Labour party and elections to office within it can obviously bend even the most deeply held principles. It is a sad reflection on the hon. Member for Garscadden, and I hope that he never again preaches to me about his belief in the rule of law.

A large number of points have been raised during the debate and, obviously, it will not be possible to deal with them all now. I shall deal with one or two of the points and will write to hon. Members who raised other questions. Especially I shall reply in writing to the hon. Member for Linlithgow (Mr. Dalyell), who asked a series of detailed questions. I am sure that he will agree that it would not be appropriate to take up the time of the House in answering each of the specific questions——

Mr. Dalyell

Do the Secretary of State and the Minister accept in principle that there is an anomaly? That is all that I want to know this evening.

Mr. Ancram

The hon. Gentleman raised a number of questions and suggested that there were a number of anomalies. He referred especially to the HRA capital receipts and the effect of the assumptions of those on West Lothian. At present an authority's net allocation is arrived at after taking into consideration an estimate of its likely receipts. While that may appear to him to be an anomaly, it is something that COSLA said it would prefer when it was consulted about the introduction of a net allocation system. It would not be right to deal with each of the hon. Gentleman's points now, but I will deal with them in writing.

The right hon. Member for Western Isles (Mr. Stewart) asked questions relating to his local authority. I am familiar with the problems faced by the Western Isles in providing services to widely scattered communities. The assessment of relative expenditure needs which underlies current expenditure guidelines and the distribution of the needs element of rate support grant reflect in a number of ways the additional costs involved.

Over a long period Government grant has financed a large proportion—about 85 per cent.—of the council's expenditure, and that will continue. While the rate poundage is the highest in Scotland, the average domestic rate bill—which obviously reflects a very low rateable value—is little more than half the Scottish average. My right hon. Friend will shortly make decisions about rate support grant distribution for 1985–86, and will take into account the points made on behalf of the council.

The hon. Member for Garscadden spoke of the differences between our penalty and the penalty in England. He should remember that the penalty in England can extend up to 200 per cent. of overspend. The system is very different and I am not sure that either he or the right hon. Member for Western Isles would welcome it if it was applied in Scotland.

My hon. Friend the Member for Stirling (Mr. Forsyth) made a powerful speech. He gave some sign, if any were needed, of some of the areas of waste within local government in Scotland. I hope that that will have opened the eyes of some of the councils which say that savings cannot be made and show them some ways in which they can make savings and avoid penalties.

My hon. Friend asked why we had not levied a penalty of £114 million, that being the total of the overspend. Obviously, that is a matter of judgment for my right hon. Friend. He will decide what is appropriate in the circumstances to achieve the reduction in expenditure for which we are looking. My right hon. Friend has made it clear that the penalties that he will levy next year will. be more severe than this year.

A number of my hon. Friends raised questions about rural areas and the effect of the guidelines on them. I know that it is easy—and I find this in my local authority—to look at the guidelines and say that they are good for everyone else but all wrong for us. I suspect that there is always an element of that when anyone looks at the guidelines as they affect his local authority.

Subject to further refinements of the system, I am satisfied that the particular needs of rural areas are recognised in the formula. For instance, such questions as sparsity and the effects on education of small village schools are taken into account when arriving at the assessment that is fed into the guidelines.

My hon. Friend the Member for Aberdeen, South (Mr. Malone) asked about statistical data in guidelines and grant distribution. That matter has been discussed and considered at some length, but it is difficult to run a system in which there is not a consistent set of statistics on which to operate across the board. It has been the view that the population statistics which are now the basis of the guidelines should be applied across the board so that some consistency and comparability between authorities can be achieved.

The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) referred to his own local authority and complained about the authority which he shares with my right hon. Friend the Secretary of State. He made a number of observations in relation to Kyle and Carrick. I confirm that the budget was above guideline to the extent: of £337,000. In contradiction to the line that he put forward, however, he will be interested to note that that council has decided to trim its budget by £238,500, thus reducing its grant penalty by £192,000. I hope, therefore, that he will accept that that council is setting an example that we hope that others will follow.

None of us likes general abatements. We like them no more than our predecessors in office who regarded them, reluctantly, as a necessary form of expenditure control. Our sadness is that last year's abatement did not achieve the message that we sought for this year's budgets. Authorities continued to budget at the same high levels and the danger was becoming apparent that some authorities, somewhat cyncially and at the expense of their ratepayers, were prepared to rate up to meet the expected abatement. Considerable reductions amounting to £63 million have, however, been made. They must be welcomed and, as my right hon. Friend said, in some cases must be fully rewarded. I can only hope that the lessons of last year have now been learnt and that not only will next year's budgets be restrcited to guidelines but that local authorities will mitigate their penalties by reducing the current year's expenditure. It is worth remembering that if they did that they could achieve more rate support grant next year than this year under penalty as well as receiving back some of the penalty paid this year, thus doing their ratepayers a great favour.

We have heard much today about confrontation. I should make it clear that we have never sought confrontation. In the past we have often been accused of imposing limits and setting guidelines at such a late date that local authorities cannot meet them. This year we have gone out of our way, and intend to continue so to do, to give the earliest possible indications of the guidelines for next year. We have accepted that this is necessary for responsible councils to prepare to meet them. We have also been accused of giving no due warning of the implications of the guidelines and thus of somehow unfairly catching authorities by surprise when penalties are imposed. Again this year my right hon. Friend has made clear that excess over guidelines will be more severly penalised next year than this.

We have laid our hands on the table precisely to avoid confrontation. We have made the position clear in good time for authorities to make their dispositions to conform to them. There can be no accusations of surprise or of ambush. As my hon. Friend the Member for Fife, North-East said, local authorities know the score now. They know that in our guidelines we have come half way to meet their pleas. They know that they have no excuses for penalising the ratepayers by ignoring this information or disrupting services by deliberately opposing them. If next spring there is confrontation, it will not be of our making. If next spring there are penalties, they will have been incurred with the deliberate foreknowledge and decision of the councils that suffer them. If services are disrupted it will be because political councillors have deliberately willed that it should be so; and if ratepayers suffer it will be because that is a deliberate act of policy on the part of their councils.

What we are asking of councils is little more than our Labour predecessors asked in 1978. It is no massacre of services, no vast deprivation. We have moved towards them and we are now asking them to move towards us. I believe that we can achieve a situation in which local government accepts the hands of help that we are offering and in which we can get expenditure down to a level on which we can go forward with some stability. The order is a harsh necessity on that road. The Opposition will do the people of Scotland no favours by opposing it, and they will damage their own credibility. In our relations with local government, the Conservatives are looking for a better way. We are on the road, and we will not be diverted by the political shibboleths of Labour Members. I ask the House to support the order.

Question put:—

The House divided:Ayes 272, Noes 166.

Division No. 469]	[10 pm
AYES
Aitken, Jonathan	Grylls, Michael
Amess, David	Gummer, John Selwyn
Ancram, Michael	Hamilton, Hon A. (Epsom)
Arnold, Tom	Hamilton, Neil (Tatton)
Ashby, David	Hampson, Dr Keith
Aspinwall, Jack	Hanley, Jeremy
Atkins, Robert (South Ribble)	Hannam, John
Baker, Nicholas (N Dorset)	Hargreaves, Kenneth
Banks, Robert (Harrogate)	Harris, David
Batiste, Spencer	Haselhurst, Alan
Beaumont-Dark, Anthony	Hawkins, C. (High Peak)
Bennett, Sir Frederic (T'bay)	Hawkins, Sir Paul (SW N'folk)
Bevan, David Gilroy	Hawksley, Warren
Biffen, Rt Hon John	Hayes, J.
Body, Richard	Hayhoe, Barney
Boscawen, Hon Robert	Hayward, Robert
Bottomley, Peter	Heathcoat-Amory, David
Bottomley, Mrs Virginia	Henderson, Barry
Braine, Sir Bernard	Hickmet, Richard
Brandon-Bravo, Martin	Higgins, Rt Hon Terence L.
Brooke, Hon Peter	Hill, James
Brown, M. (Brigg & Cl'thpes)	Hind, Kenneth
Buchanan-Smith, Rt Hon A.	Hirst, Michael
Buck, Sir Antony	Hogg, Hon Douglas (Gr'th'm)
Budgen, Nick	Holland, Sir Philip (Gedling)
Bulmer, Esmond	Holt, Richard
Burt, Alistair	Hooson, Tom
Butler, Hon Adam	Hordern, Peter
Carlisle, Kenneth (Lincoln)	Howard, Michael
Carlisle, Rt Hon M. (W'ton S)	Howarth, Alan (Stratf'd-on-A)
Carttiss, Michael	Howarth, Gerald (Cannock)
Cash, William	Howell, Ralph (N Norfolk)
Chope, Christopher	Hubbard-Miles, Peter
Clarke, Rt Hon K. (Rushcliffe)	Hunt, David (Wirral)
Conway, Derek	Hunt, John (Ravensbourne)
Coombs, Simon	Hunter, Andrew
Cope, John	Jenkin, Rt Hon Patrick
Corrie, John	Jessel, Toby
Couchman, James	Jones, Gwilym (Cardiff N)
Cranborne, Viscount	Jones, Robert (W Herts)
Critchley, Julian	Jopling, Rt Hon Michael
Crouch, David	Kellett-Bowman, Mrs Elaine
Dorrell, Stephen	Kershaw, Sir Anthony
Douglas-Hamilton, Lord J.	Key, Robert
Durant, Tony	King, Roger (B'ham N'field)
Eggar, Tim	King, Rt Hon Tom
Emery, Sir Peter	Knight, Gregory (Derby N)
Fallon, Michael	Knight, Mrs Jill (Edgbaston)
Farr, Sir John	Knowles, Michael
Favell, Anthony	Knox, David
Finsberg, Sir Geoffrey	Lamont, Norman
Fletcher, Alexander	Latham, Michael
Fookes, Miss Janet	Lawler, Geoffrey
Forman, Nigel	Lawrence, Ivan
Forsyth, Michael (Stirling)	Lee, John (Pendle)
Forth, Eric	Leigh, Edward (Gainsbor'gh)
Fox, Marcus	Lennox-Boyd, Hon Mark
Franks, Cecil	Lewis, Sir Kenneth (Stamf'd)
Fraser, Peter (Angus East)	Lightbown, David
Freeman, Roger	Lilley, Peter
Fry, Peter	Lloyd, Ian (Havant)
Gale, Roger	Lloyd, Peter, (Fareham)
Gardiner, George (Reigate)	Lord, Michael
Gardner, Sir Edward (Fylde)	Luce, Richard
Garel-Jones, Tristan	Lyell, Nicholas
Gilmour, Rt Hon Sir Ian	McCrea, Rev William
Glyn, Dr Alan	McCrindle, Robert
Gow, Ian	McCurley, Mrs Anna
Gower, Sir Raymond	MacKay, Andrew (Berkshire)
Grant, Sir Anthony	Maclean, David John
Greenway, Harry	McQuarrie, Albert
Gregory, Conal	Madel, David
Griffiths, Peter (Portsm'th N)	Major, John
Grist, Ian	Malone, Gerald
Ground, Patrick	Maples, John

Marlow, Antony	Silvester, Fred
Mates, Michael	Sims, Roger
Mather, Carol	Smith, Sir Dudley (Warwick)
Maude, Hon Francis	Smith, Tim (Beaconsfield)
Mawhinney, Dr Brian	Soames, Hon Nicholas
Mellor, David	Speed, Keith
Merchant, Piers	Speller, Tony
Meyer, Sir Anthony	Spence, John
Miller, Hal (B'grove)	Spencer, Derek
Mills, Iain (Meriden)	Spicer, Jim (W Dorset)
Mills, Sir Peter (West Devon)	Spicer, Michael (S Worcs)
Miscampbell, Norman	Squire, Robin
Mitchell, David (NW Hants)	Stanbrook, Ivor
Monro, Sir Hector	Stanley, John
Montgomery, Fergus	Steen, Anthony
Moore, John	Stern, Michael
Morris, M. (N'hampton, S)	Stevens, Lewis (Nuneaton)
Morrison, Hon C. (Devizes)	Stevens, Martin (Fulham)
Moynihan, Hon C.	Stewart, Andrew (Sherwood)
Needham, Richard	Stewart, Ian (N Hertf'dshire)
Nelson, Anthony	Stokes, John
Neubert, Michael	Stradling Thomas, J.
Newton, Tony	Sumberg, David
Nicholls, Patrick	Tapsell, Peter
Norris, Steven	Taylor, John (Solihull)
Onslow, Cranley	Thomas, Rt Hon Peter
Oppenheim, Rt Hon Mrs S,	Thompson, Donald (Calder V)
Page, Sir John (Harrow W)	Thompson, Patrick (N'ich N)
Page, Richard (Herts SW)	Thorne, Neil (Ilford S)
Parris, Matthew	Thornton, Malcolm
Patten, Christopher (Bath)	Thurnham, Peter
Patten, John (Oxford)	Townsend, Cyril D. (B'heath)
Pattie, Geoffrey	Tracey, Richard
Pawsey, James	Twinn, Dr Ian
Pollock, Alexander	van Straubenzee, Sir W.
Porter, Barry	Vaughan, Sir Gerard
Powell, William (Corby)	Waddington, David
Powley, John	Waldegrave, Hon William
Price, Sir David	Walden, George
Prior, Rt Hon James	Walker, Bill (T'side N)
Proctor, K. Harvey	Wall, Sir Patrick
Raffan, Keith	Waller, Gary
Rathbone, Tim	Ward, John
Rees, Rt Hon Peter (Dover)	Wardle, C. (Bexhill)
Renton, Tim	Warren, Kenneth
Rhodes James, Robert	Watson, John
Ridley, Rt Hon Nicholas	Watts, John
Ridsdale, Sir Julian	Wells, Bowen (Hertford)
Rifkind, Malcolm	Wells, Sir John (Maidstone)
Rippon, Rt Hon Geoffrey	Wheeler, John
Roberts, Wyn (Conwy)	Whitney, Raymond
Robinson, Mark (N'port W)	Wilkinson, John
Rossi, Sir Hugh	Winterton, Mrs Ann
Rost, Peter	Winterton, Nicholas
Rumbold, Mrs Angela	Wolfson, Mark
Ryder, Richard	Wood, Timothy
Sackville, Hon Thomas	Yeo, Tim
St. John-Stevas, Rt Hon N.	Young, Sir George (Acton)
Scott, Nicholas	Younger, Rt Hon George
Shaw, Giles (Pudsey)
Shelton, William (Streatham)	Tellers for the Ayes:
Shepherd, Colin (Hereford)	Mr. Ian Lang and Mr. Tim Sainsbury.
Shepherd, Richard (Aldridge)

NOES
Adams, Allen (Paisley N)	Bidwell, Sydney
Anderson, Donald	Blair, Anthony
Archer, Rt Hon Peter	Boyes, Roland
Ashton, Joe	Bray, Dr Jeremy
Atkinson, N. (Tottenham)	Brown, Gordon (D'f'mline E)
Bagier, Gordon A. T.	Brown, Hugh D. (Provan)
Banks, Tony (Newham NW)	Brown, N. (N'c'tle-u-Tyne E)
Barnett, Guy	Brown, Ron (E'burgh, Leith)
Barron, Kevin	Bruce, Malcolm
Beckett, Mrs Margaret	Buchan, Norman
Beith, A. J.	Caborn, Richard
Bell, Stuart	Callaghan, Jim (Heyw'd & M)
Benn, Tony	Campbell, Ian
Bennett, A. (Dent'n & Red'sh)	Campbell-Savours, Dale

Canavan, Dennis	Loyden, Edward
Carlile, Alexander (Montg'y)	McCartney, Hugh
Carter-Jones, Lewis	McDonald, Dr Oonagh
Clark, Dr David (S Shields)	McGuire, Michael
Clarke, Thomas	McKay, Allen (Penistone)
Clay, Robert	McKelvey, William
Clwyd, Mrs Ann	Mackenzie, Rt Hon Gregor
Cocks, Rt Hon M. (Bristol S.)	McNamara, Kevin
Cohen, Harry	McTaggart, Robert
Coleman, Donald	McWilliam, John
Concannon, Rt Hon J. D.	Madden, Max
Conlan, Bernard	Marek, Dr John
Cook, Frank (Stockton North)	Martin, Michael
Cook, Robin F. (Livingston)	Mason, Rt Hon Roy
Corbett, Robin	Maxton, John
Cowans, Harry	Maynard, Miss Joan
Cox, Thomas (Tooting)	Michie, William
Craigen, J. M.	Mikardo, Ian
Crowther, Stan	Millan, Rt Hon Bruce
Cunliffe, Lawrence	Miller, Dr M. S. (E Kilbride)
Cunningham, Dr John	Mitchell, Austin (G't Grimsby)
Dalyell, Tam	Morris, Rt Hon J. (Aberavon)
Davies, Rt Hon Denzil (L'lli)	Oakes, Rt Hon Gordon
Davis, Terry (B'ham, H'ge H'l)	O'Brien, William
Deakins, Eric	O'Neill, Martin
Dewar, Donald	Orme, Rt Hon Stanley
Dobson, Frank	Park, George
Dormand, Jack	Patchett, Terry
Douglas, Dick	Pavitt, Laurie
Dubs, Alfred	Pendry, Tom
Duffy, A. E. P.	Penhaligon, David
Dunwoody, Hon Mrs G.	Pike, Peter
Eadie, Alex	Powell, Raymond (Ogmore)
Edwards, Bob (W'h'mpt'n SE)	Radice, Giles
Ellis, Raymond	Randall, Stuart
Evans, John (St. Helens N)	Redmond, M.
Ewing, Harry	Richardson, Ms Jo
Fatchett, Derek	Roberts, Allan (Bootle)
Faulds, Andrew	Roberts, Ernest (Hackney N)
Field, Frank (Birkenhead)	Robertson, George
Fields, T. (L'pool Broad Gn)	Robinson, G. (Coventry NW)
Fisher, Mark	Rogers, Allan
Foot, Rt Hon Michael	Rooker, J. W.
Foster, Derek	Rowlands, Ted
Foulkes, George	Sheerman, Barry
Fraser, J. (Norwood)	Shore, Rt Hon Peter
Garrett, W. E.	Short, Ms Clare (Ladywood)
George, Bruce	Short, Mrs H.(W'hampt'n NE)
Godman, Dr Norman	Silkin, Rt Hon J.
Golding, John	Skinner, Dennis
Gourlay, Harry	Smith, C.(Isl'ton S & F'bury)
Hamilton, W. W. (Central Fife)	Smith, Rt Hon J. (M'kl'ds E)
Harrison, Rt Hon Walter	Soley, Clive
Healey, Rt Hon Denis	Spearing, Nigel
Heffer, Eric S.	Stewart, Rt Hon D. (W Isles)
Hogg, N. (C'nauld & Kilsyth)	Stott, Roger
Holland, Stuart (Vauxhall)	Strang, Gavin
Home Robertson, John	Straw, Jack
Howell, Rt Hon D. (S'heath)	Thompson, J. (Wansbeck)
Howells, Geraint	Thorne, Stan (Preston)
Hoyle, Douglas	Tinn, James
Hughes, Robert (Aberdeen N)	Torney, Tom
Hughes, Roy (Newport East)	Wallace, James
Janner, Hon Greville	Wareing, Robert
John, Brynmor	Weetch, Ken
Johnston, Russell	Welsh, Michael
Jones, Barry (Alyn & Deeside)	White, James
Kaufman, Rt Hon Gerald	Williams, Rt Hon A.
Kennedy, Charles	Wilson, Gordon
Kirkwood, Archy	Winnick, David
Lambie, David	Woodall, Alec
Leadbitter, Ted	Young, David (Bolton SE)
Lewis, Ron (Carlisle)
Lewis, Terence (Worsley)	Tellers for the Noes:
Litherland, Robert	Mr. James Hamilton and Mr. Frank Haynes.
Lofthouse, Geoffrey

Question accordingly agreed to.

Resolved, That the Rate Support Grant (Scotland) (No. 2) Order 1984, dated 18th July 1984, a copy of which was laid before this House on 23rd July, be approved.