HC Deb 03 December 1985 vol 88 cc155-63 3.31 pm
The Secretary of State for Scotland (Mr. George Younger)

With permission, Mr. Speaker, I should like to make a statement about aggregate Exchequer grant for Scotland for 1986–87 and also about the arrangements for revaluation rate rebates next year.

On 24 July I announced an increase of £59 million in local authority expenditure provision for 1986–87, and that increased provision formed the basis of the current expenditure guidelines which I issued to all authorities in October. I am now in a position to announce the remaining element in the settlement for next year. Aggregate Exchequer grant for 1986–87 will be £2,005 million. That is a cash increase of £100 million over the figure initially announced for aggregate Exchequer grant for 1985–86, although, as the House knows, we made two substantial additions totalling £57.5 million to that initial figure as information became available about the effects of revaluation, taking the figure to £1,962 million. The figure that I have just announced is thus a cash increase of £43 million over the final grant figure for 1985–86.

A further addition will be made to the figure of £2,005 million, following consultations with the Convention of Scottish Local Authorities in recognition of the transfer to local authorities of financial responsibility for list D schools in 1986–87. The figure I have suggested to the convention for this transfer is £3.65 million.

On the basis of present estimates of loan charges the grant figure of £2,005 million will mean a reduction in the grant percentage from 57.7 per cent. this year to a provisional figure of about 56.1 per cent. in 1986–87. This continues the pressure on authorities to reduce their expenditure and come into line with our plans. The effect of this on rates is a matter for authorities. Expenditure above guidelines pushes up rates and grant penalties, both of which have to be financed by ratepayers. I hope that all authorities will bear in mind the effects of high expenditure on ratepayers when considering their budgets for next year.

I will be consulting the Convention of Scottish Local Authorities in two week's time on the division of the grant into its usual elements, and on its distribution among authorities. Following those consultations, I shall lay an order before the House.

Earlier this year, I introduced special relief under the Rating (Revaluation Rebates) (Scotland) Act 1985 to mitigate the effects of the revaluation on domestic and commercial ratepayers, whose new rateable value was over three times more than their old one. It was never intended that that relief should be a permanent part of the system, but I realised that those receiving relief would face large increases in their rate bills if it were ended next year. I have, therefore, decided that the relief will continue for 1986–87, but at a rate of 75 per cent. The maximum relief on any one property will be £7,500. The cost of the relief in 1986–87 will be about £20 million. I will lay the necessary order before the House shortly.

Mr. Donald Dewar (Glasgow, Garscadden)

This is an all too typical example of the Secretary of State's stewardship. It is another sad tale of an inadequate cash increase, marking a substantial cut in real terms. Will the right hon. Gentleman confirm that the grant is rising this year by only 2.2 per cent., which is well short of even the Government's most optimistic inflation forecasts? Is he not black affronted to announce a reduction of the rate support grant percentage to 56.1? Does he recall that the figure was 68.5 per cent. in 1980–81—more than 12 per cent. higher? Is he aware that if that figure were applied to this year's relevant expenditure a further £443 million would be available to help hard-pressed ratepayers? Is it not shameful nonsense that the Secretary of State can cooly announce a reduction in the help given to the unfortunates whose rateable values have increased by more than 300 per cent.? The relief on the excess is being reduced from 100 per cent. to 75 per cent., and there will be a great deal of irritation at that sadly inevitable but mean little saving.

Does the Secretary of State remember that at the Conservative party conference in Perth originally he promised £50 million and that it turned out to be £30 million in practice? Is he aware that he is now boiling the figure down to £20 million in the second year of the revaluation? It was not thought that relief would necessarily be permanent, but surely the Secretary of State will accept that there is no logic in giving help in the first year and then increasing the burdens in this way in the second year of the quinquennium. The way in which the money has been spirited away is a form of magic, but not the sort of magic that people want or desire. It looks more like sleight of hand.

What will happen to the domestic element? Will it be maintained at 8p? If so, will that have to be completely financed from the settlement that the Secretary of State announced today, or will he make additional money available? Where is the room in the grants total of which he has spoken for a realistic offer which might settle the teachers dispute? What has he included for that possibility in his calculations, or will he again provide additional funds for the type of settlement that will require a good deal of cash, but which we all badly want and hope to see soon?

The key to the statement is the statement: This continues the pressure on authorities to reduce expenditure and come into line with our plans. It is another piece of bullying and a recognition by the Secretary of State that this is a cut in real terms. It is increasing the pressure for a reduction in services and jobs. They could well have been added to the casualty list implied in that sentence.

Will the Secretary of State accept that there is no good news in his statement, either for those who believe in local democracy or for those who are worried about the increasing shift under the present Administration from the Treasury to ratepayers? It is thoroughly bad news for anyone who is interested in decent levels of local authority services.

Mr. Younger

The hon. Gentleman is long on rhetoric and short on fact. From what he said, one would not think that local authorities are planning to spend about 1.8 per cent. more in real terms this year than they were six years ago. That puts his ideas about cuts in spending into perspective.

The hon. Gentleman said that the settlement was miserable compared with that of last year. It is higher as a proportion than the original figure mentioned last year. I thought that the hon. Gentleman would welcome that.

It is true that the rate support grant percentage has been brought down. As the hon. Gentleman may remember, when the rate support grant percentage was kept steady for four years running, local authority expenditure soared as a result and the ratepayers had to pay a great deal more as a consequence. In this case, the rate support grant percentage will go down further to persuade local authorities to bring their spending more into line. If they did not do so, the ratepayers would have an even greater burden to face because they would have to finance still more extra spending by local authorities.

I was surprised that the hon. Gentleman was so inconsistent in what he said about the Rating (Revaluation Rebates) (Scotland) Act. He accepted that it should not be permanent but seemed to be advocating that it should remain as it was last year. If that is not being permanent, I do not know what is. This extra help for ratepayers will continue next year at the rate of 75 per cent. of what it was, which is extremely generous and much more than most people expected.

It comes ill from the hon. Gentleman to say such things, because when his colleagues were last in Government, at the last revaluation in 1978, as he may care not to remember, the increases for many ratepayers were greater than they have been in this revaluation, and the Government, in spite of repeated requests from me and other Conservative Members, refused pointblank to give any extra help to any ratepayer.

As to the teachers' offer, I have already found extra money and have been trying to persuade the teachers to accept it. Therefore, the hon. Gentleman's point about that does not carry any weight.

Sir Hector Monro (Dumfries)

In view of what would seem to be high current expenditure by local government in real terms, can my right hon. Friend assure me that those authorities that have behaved themselves and kept their expenditure to modest levels will do much better in the financial arrangements than they have done in the past? Will the guidelines be nearer the assessed needs than they have been in the past? I welcome my right hon. Friend's continuation of the rate relief. Is he confident that he will be able to introduce a new rating system before the next general election?

Mr. Younger

I am grateful to my hon. Friend. I can assure him that the settlement this year should enable those authorities that have been spending within the guidelines for some time to be pretty fairly treated, although he will understand that I cannot give the detailed distributions until I have had a chance to speak to COSLA in a fortnight's time. The guidelines this year are nearer to assessed needs, and I hope that we shall be able to ensure that there is progress towards this when we announce the distribution.

As to rating reform, I assure my hon. Friend that we are on course for what I have undertaken to do. The Government will produce proposals around the turn of the year.

Several Hon. Members


Mr. Speaker

Order. I remind the House that two important debates are to follow the statement, and short questions will be appropriate as there is to be a debate on the order later.

Sir Russell Johnston (Inverness, Nairn and Lochaber)

Would the Secretary of State like to speculate about the response he would make to this statement if he were in opposition rather than in government? He referred to the £43 million cash increase. What does it mean in real terms, taking inflation into account? As to the reduction of relief following revaluation to 75 per cent., why do we in Scotland have to bear this burden when there has been no revaluation in England and none is proposed? Is this not too much from a Government who promised rate reform in 1979?

Mr. Younger

On the last point, the hon. Gentleman knows that we have already moved a long way in that direction by producing a Green Paper and making changes in the rating system, and we are in any case now involved in a major reform of the system. We are on course for producing proposals around the turn of the year, and I hope that the hon. Gentleman feels that we can wait to look objectively at those proposals when they come. As to increases, authorities are planning to spend in real terms about 1.8 per cent. more than in 1985–86. The settlement for this year that I have announced today means that there will be a small reduction in real terms on their budget for last year. That is consistent with our desire to reduce public expenditure.

I am glad to respond to the hon. Gentleman's first request. If I were in opposition today I should say, "May I congratulate the Government on their great generosity in once more recognising the hard times that ratepayers have experienced because of the overspending by Labour-controlled councils."

Lord James Douglas-Hamilton (Edinburgh, West)

Is my right hon. Friend aware that the rates of many Edinburgh shopkeepers have escalated tremendously? Will this settlement be of benefit to them, provided that the local authorities keep within the guidelines?

Mr. Younger

Yes. If local authorities spend at or on the guidelines laid down by this settlement, it will be possible for there to be rate reductions, not rate increases.

Mr. Gregor MacKenzie (Glasgow, Rutherglen)

As the Secretary of State is anxious constantly to remind the House of Commons about the rate support grant percentage figures in 1979, will he go over them once again and tell the House that since he took office they have been reduced by over 12 per cent. and that he has been able to reduce them only by putting considerable pressure upon local authorities to reduce the number of people that they employ and the number of services that they provide for the people who elected them?

Mr. Younger

I appreciate the right hon. Gentleman's point about the reduction in the rate support grant percentage. I make no secret of the fact that it has been a major method of persuading local authorities to reduce their spending. However, 1 must confess that local authorities have not been very successful. They are still planning to spend more in real terms than they were when the right hon. Gentleman left office. However, the reduction in the rate support grant percentage has not, unfortunately, led to a reduction in manpower. By far the largest reduction in manpower achieved by local authorities took place when the right hon. Gentleman's party was in Government. In 1976, a very large reduction was made overnight. Even allowing for the reduction in the number of teachers, due to the fall in school rolls, the fact is that there has been a substantial increase in manpower.

Mr. Nicholas Fairbairn (Perth and Kinross)

May I ask the Secretary of State as quickly as possible to get rid of the ghastly guidelines concept that was introduced by the Labour Government? There is now an assessed needs basis. It is ridiculous that my right hon. Friend's distinguished officers should have to work out what an area needs and should then have to invent what is called a guideline that causes prudent authorities to lose and spendthrift authorities to gain.

Mr. Younger

I appreciate my hon. and learned Friend's point. We are making steady progress. I hope to continue to make steady progress over the assessed needs of all authorities. We should have made much better progress towards meeting the assessed needs of authorities and would have been very much nearer to meeting them if the overspending by certain authorities had not precluded the Government from moving as fast as they could towards recognising the efforts of those who have tried to reduce spending. It is a sad fact that the worst authorities are making life more difficult for those authorities which try hard.

Mr. Harry Ewing (Falkirk, East)

Does the Secretary of State have any comprehension of what he is doing to the ratepayers of Central region in general and Falkirk district in particular because of his rate support grant settlement for 1986–87? It was the Secretary of State who removed outside plant and machinery from the rating and valuation roll in Central region and who refused to compensate the region for the £8.5 million loss that central region and Falkirk district had to sustain. Therefore, the rate increases in Falkirk district are primarily his responsibility. How will the Secretary of State explain to the people of Falkirk that he willingly joined Her Majesty the Queen in opening the new leisure complex at Camelon, only to see it closed later because of his rate support grant settlement?

Mr. Younger

The effect of the rating system upon outside plant and machinery has two aspects: first, its effect upon local authorities, and, secondly, its effect upon the industries concerned. It was in response to the heartfelt pleas of the industries concerned and the jobs that they provide that the Government felt that they had to equalise the treatment of those industries with the treatment of their competitors south of the border. That is the answer to the hon. Gentleman's plea. That is a factor for the ratepayers of Falkirk district, but another factor is the level of spending of the local authority, and I hope that the hon. Gentleman will bear that in mind.

Mr. Barry Henderson (Fife, North-East)

Many ratepayers will welcome the fact that my right hon. Friend is maintaining downward pressure on the expenditure of local authorities, but will he recognise that the combination of the distribution formulae and the way in which the individual authorities establish their resources, on top of the perverse effects of revaluation, sometimes results in responsible authorities receiving less than they might reasonably expect while bolshie Labour authorities, including Fife regional council, which put a 10p impost on ratepayers this year, receive a great deal more?

Mr. Younger

I appreciate what my hon. Friend says. When I announce the distribution of the settlement after consultation with COSLA in a week or two's time, I hope that he will see that we have managed to recognise the efforts of those who have tried to spend sensibly. If all authorities spent according to guidelines, it would be possible to have reductions in rates this year, and I hope that that at least can be attempted by many authorities.

Mr. Donald Stewart (Western Isles)

Is the Secretary of State aware that he will be seen as Mr. Rising Rate in Scotland in reducing the rate relief to 75 per cent., which he ought not to do until the Government redeem their pledge to deal with the rating system? In view of the reduction in the grant percentage, do not the Government's figures show that the right hon. Gentleman is accepting a thinner and thinner slice of the cake of United Kingdom outlays year by year?

Mr. Younger

No, that is not the case. If the right hon. Gentleman looks south of the border, I think he will find that my colleagues there have a cash standstill this year and we do not. The right hon. Gentleman might welcome that. I repeat that we are once more agreeing to give generous help from next year to those with exceptionally high increases in rateable value, something which no previous Government have ever done in spite of repeated requests from me and others to do so. There is no excuse for the Opposition to complain about the generous treatment that I have announced this afternoon.

Mr. Michael Hirst (Strathkelvin and Bearsden)

I welcome the extra resources that my right hon. Friend has announced for local government in Scotland, but may I remind him that the revaluation rebate scheme, which is to be continued, will provide the most hard pressed ratepayers in Scotland with £20 million, a figure which is comfortably in excess of anything that those on the other side of the House, in particular the Liberal party, advocated that the Government should introduce last year?

Mr. Younger

It is remarkable how short memories are. If I recall rightly, the Liberals and possibly the Social Democrats, were talking about £2 million to £3 million being all that was needed to help the ratepayers. We are producing £20 million even in year two. My hon. Friend is right: most ratepayers will think that that is pretty generous.

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

Will the Minister confirm that he is receiving critical representations from Tory councils, including the usually sycophantic Struan Stevenson, the leader of the Tory group on the Kyle and Carrick council, who is pointing out that the right hon. Gentleman's policy could already mean the closure of Ayr baths, golf courses and other facilities, and, worst of all, the threat to the future of the Ayrshire art festival? Will the right hon. Gentleman confirm that his announcement today makes things even worse for Kyle and Carrick and that Struan Stevenson should be taking the right decision and moving out of the party as Gibson MacDonald did before him?

Mr. Younger

Of all the adjectives that one could apply to Mr. Stevenson, "sycophantic" is about the last. Kyle and Carrick exceeded its guidelines, and it is being treated just the same as anyone else, which is perfectly fair. The hon. Gentleman would be complaining his head off if I were doing anything special for it, would he not?

Mr. Dick Douglas (Dunfermline, West)

Will the Secretary of State enlighten us on his fiscal arithmetic for revaluation relief? We start with a figure of £50 million. The right hon. Gentleman achieved 60 per cent. of that and now he reduces it to 50 per cent. of the original figure. How far do we have to go in this stupidity before he recognises that he is putting on local authorities a burden that they should not have to bear? He is asking them to finance essential services by a regressive tax. When will he recognise that the Government have an obligation to ensure that local authorities are properly funded and that the services that people require are properly provided?

Mr. Younger

After that question, I look forward to the hon. Gentleman warmly supporting our rate reform proposals when they come forward. I remind him that central Government pay the majority of the money that is spent by local government. As for the money for rate revaluation rebates, the £50 million that was spoken of was £50 million more than the Labour Government ever gave, and the £20 million is £20 million more than they ever gave, and the ratepayers will note that.

Mr. Dennis Canavan (Falkirk, West)

What mandate did the Secretary of State receive from the people of Scotland for this deplorable statement?

Mr. Younger

I do not know what mandate the hon. Gentleman has from the people of Scotland—[Interruption]—considering that his party is also in a minority.

Mr. David Lambie (Cunninghame, South)

Now that the Secretary of State has announced the level of rate support grant for next year and recently informed district councils of the amounts of rate fund contribution that they could make before being subjected to clawback, is he prepared to state the rent increases that he is expecting in the coming year from district councils, the Scottish Special Housing Association and the new town development corporations?

Mr. Younger

I appreciate the hon. Gentleman's concern about this subject; it goes back a long time. He will appreciate that those details will be announced in the normal way after consultation shortly with the COSLA housing committee.

Mr. Tom Clarke (Monklands, West)

As local authorities attempt to make some sense of the remarkably low figures of 56.1 per cent., will the Secretary of State explain what figure he had in mind for inflation and what figure he has in mind for wage settlements? Are we to assume that the right hon. Gentleman is expecting no solution to the teachers' dispute over the duration of this settlement?

Mr. Younger

This is £43 million more, not less, than was previously projected. As for assumptions, this is the maximum that we can afford to provide and it is what local government must work within.

The answer to the hon. Gentleman's question about the teachers' dispute is that I have already found a large sum of extra money—£125 million—besides which the sums which we are discussing pale into insignificance, but so far the teachers have shown no sign of wishing to accept it.

Mr. Robert Maclennan (Caithness and Sutherland)

When he is removed from office, would the Secretary of State like to be remembered as having been generous to local government or as having been a disciplinarian?

Mr. Younger

I am not sure. Long ago I gave up speculating in what way I should be remembered after leaving office. I can only do the best I can while I am here.

Mr. John Home Robertson (East Lothian)

Will the extended revaluation rebate scheme bring the cumulative expenditure on this rebate over two years up to the £50 million that was promised in one year?

Mr. Younger

I suppose that, even on the hon. Gentleman's arithmetic, if one adds 30 to 20 one gets approximately 50.

Mr. Tam Dalyell (Linlithgow)

If there is a cut in real terms, on the Secretary of State's arithmetic, there must be a figure in St. Andrew's house for the number of men and women in the service of local government who will lose their jobs as a result of this package. What is that figure?

Mr. Younger

No, there is no such calculation. Indeed, the number of people in local government has increased in recent years—[Interruption.] I should have thought that the hon. Gentleman would know that the number of people in local government had not decreased but had increased. I wish it had not increased. The number should be reduced in the interests of ratepayers having less to pay.

Mr. Ron Brown (Edinburgh, Leith)

Will the Secretary of State, when he refers to the last Labour Government, remember that two wrongs do not make a right? As he is short on memory as well as cash, will he forgive me for reminding him that the ratepayers of Scotland, many of them Tories, throughout his period in office have been ripped off to the tune of over £1 billion? Will he recognise the situation, for example, in the Lothian region and meet the leaders of COSLA and explain his strategy to them? Does he have the guts to do that?

Mr. Younger

I frequently meet COSLA and my hon. Friend the Under-Secretary of State met COSLA yesterday. We shall be meeting again soon, and I shall discuss all the issues against the background that COSLA, is still spending more in real terms than it did six years ago. The hon. Gentleman said that two wrongs do not make a right, but there have been two wrongs and no right.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

I support the points made earlier by the hon. Member for Dumfries (Sir H. Monro) and the hon. and teamed Member for Perth and Kinross (Mr. Fairbairn). They said that the combination of the reduction in the percentage Exchequer grant and the reduction in the commercial rate relief and the delayed implementation of the client group approach leaves sensible, moderate and responsible authorities such as those in the Border region in an unjustifiably unfair position financially. It is wrong for the Minister to say that it is a shame that they cannot get more money because of the high-spending authorities in other regions.

Are we to assume that the reduction in the commercial rate relief to 75 per cent. will presage future reductions? May we expect the reduction in the 8p domestic element—a point raised by the hon. Member for Glasgow, Garscadden (Mr. Dewar)—next year?

Mr. Younger

The hon. Gentleman will have to wait until I announce the distribution. However, most of the authorities that have been spending sensibly have made steady progress towards their needs assessment arid towards a reasonable settlement.

The hon. Gentleman mentioned the revaluation rebates. I cannot give an undertaking about the future, but I shall take into account all the pressures on ratepayers when considering whether the scheme should be employed in the future. The domestic rate relief will be announced in the normal way when I meet COSLA.

Mr. Alex Fletcher (Edinburgh, Central)

On a point of order, Mr. Speaker. Shortly after my right hon. Friend the Secretary of State rose to make his statement, I went to the Vote Office for a copy of it. None was available, but I believe that copies were distributed elsewhere.

Mr. Speaker

That is a matter for the Government. I have no knowledge of it.