Local Government (Scotland)

HC Deb 24 January 1985 vol 71 cc1166-231 5.30 pm

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

I beg to move, That the Rate Support Grant (Scotland) Order 1985, dated 9th January 1985, a copy of which was laid before this House on 11th January, be approved. It may be for the convenience of the House if with this order we debate the following order: That the Rating of Industry (Scotland) Order 1984, dated 19th December 1984, a copy of which was laid before this House on 11th January, be approved.

Mr. Speaker

If the House agrees, so be it.

Mr. Younger

The first order is an annual occurrence — the main rate support grant order for the financial year, which begins in April. The other is less regular and fixes the level of industrial derating, in this case for the next five years. There is a strong link between the two in that my decisions on rate support grant distribution have to take into account the level of industrial derating. It will therefore, I think, be helpful to the House to discuss both the orders together.

Before I outline the details of the orders, I shall set the scene by making one or two general points about the relationship between central and local government at this time.

The impression given just now would suggest two main themes. The first is that local government has in the past been free to spend whatever it likes and that this Government have removed that freedom, leaving those in local government completely restricted in what they can do, and with no local decision-making worth talking about.

The second is that, as a result, local government spending has been cut so hard and so often that many local services are severely reduced or having to be more or less abandoned altogether.

Both those propositions are wildly inaccurate. Local government has never been considered free to spend whatever it likes. It has always, under all Governments, been expected to conform to the main priorities in the national economy set by the Government of the day. Through many Administrations it has always been accepted that this must be so and, while there have often been perfectly valid protests against various aspects of central Government policy, which have often been effective, it has always been accepted that in the end, national Government, of whatever party, have the right to expect that local government will conform and national Government have the duty to take action if necessary.

The change now is that this voluntary consensus, which has worked for many years, has been broken, particularly by a small number of highly political local authorities whose members see that as the best way to forward their political careers.

In face of this, the Government—any Government— have two alternatives: they can let the spenders go ahead without restraint, resulting in more and more being spent by local authorities thus forcing less and less to be spent on other priorities such as the Health Service or in industry; or the Government can ensure that national priorities are protected by strengthening Government powers to achieve results which were previously achieved by voluntary agreement, however reluctantly.

Mr. Robert Hughes (Aberdeen, North)

Will the Secretary of State explain how money raised locally by a local authority — and I am not speaking about Government money — from its rates detracts from the amount that the Government can spend on the Health Service?

Mr. Younger

I would have thought that the hon. Gentleman would know that very well as a person who knows about economics. Any money that is raised from whatever source — from the taxpayer, the ratepayer or any other place — and spent in the public sector is money that cannot be used in other places — for example, for job creation, wealth creation or whatever. That is well known. I would have thought that the hon. Gentleman would know that very well.

Mr. Hughes

The Secretary of State has not answered the question.

Mr. Younger

I have answered the question.

Mr. Hughes

The Secretary of State specifically said that he could not allow local authorities to spend money that could otherwise be spent on items such as the Health Service. He was as specific as that. If the money is raised by a local authority from rates, how does that affect the Government's ability to spend on the Health Service the money that they raise by taxation?

Mr. Younger

I have answered the question already. Any money that is raised by any of these means has a major effect on the national economy. It is money that cannot be used in any other way. The raising of it affects such matters as the retail price index and is wholly a part of the national economy, which is perfectly well known.

Mr. Barry Henderson (Fife, North-East)

On the specific point of the Health Service, is not one of the additional burdens on the Health Service which require additional Government resources, the extra rates that it has to pay to local authorities?

Mr. Younger

My hon. Friend makes a good point, and it is only one of many examples in which spending by one part of the public sector, from wherever the money is raised, has its effect on the economy as a whole and on other parts. The point is well made, and I am grateful to my hon. Friend.

The second myth is more simply dismissed. Local authority spending since 1979 has not fallen; it has risen. In 1978–79 local authority current expenditure was £1,428 million. This year, 1984–85, local authorities plan to spend £2,873 million. When account is taken of the effect of inflation on local authority services this is a rise in real terms of 2.6 per cent. So as we listen to the more lurid claims made by some of our friends from the Convention of Scottish Local Authorities or from hon. Gentlemen on the Opposition Benches about the so-called cuts in local spending, let us bear in mind that the points are being made by people who, as a whole, are spending more than ever before.

I now turn to the rate support grant order provisions. This order gives effect to my decisions about the aggregate of rate support grant and its distribution in the years 1983–84 and 1985–86. It follows extensive discussion with COSLA and has regard to local authorities' actions in the immediately preceding years. The accompanying report sets out what the Government think local authorities should be spending and discusses how much grant they are prepared to provide. In reaching their decision on the amount of grant, a major factor is whether local authorities are spending in line with the Government's plans or not. If, as is the case, they are not, the Government may have to put pressure on authorities by reducing rate support grant, as we are doing this year. There is nothing new in any of this. The Labour party followed exactly the same philosophy and, indeed, actions when they were in power.

This order is, as I have mentioned, made against a background of continued overspending and continued failure to reduce expenditure below the level of 1978–79. In 1984–85, local authorities planned to spend 2.6 percent, above their 1978–79 level of spending in real terms— that is in volume of local authority services. In cost terms, that is, using the general not the local authority rate of inflation—a more accurate measure of what the failure to reduce expenditure means to the economy as a whole —local authorities planned to spend 12 per cent, more than in 1978–79. In 1984–85, local authorities planned to spend 4.3 per cent, above the Government's plans — little improvement over their budgeted expenditure for 1983–84. I was, however, glad to note that local authorities did respond to the grant reductions in 1983–84 by bringing their overspending down from 4.6 per cent, to a little over 2 per cent.

It is interesting to consider this expenditure record in relation to authorities' manpower levels. After we came to office, these continued to rise until late 1980. There followed a slight fall in 1981 and 1982, although to nowhere near the minimum levels achieved under the last Labour Government, even though the number of teachers in post is now 4,500 fewer than in 1977 because of the fall in school rolls. The figures for manpower have been virtually static for 1983 and 1984 and may, indeed, be starting to show signs of rising. In the quarter to September 1984, the latest for which we have figures, there was a small rise in the numbers employed, after adjustment for seasonal factors. Thus, the failure to contain expenditure is reflected in the manpower figures.

For 1985–86 we have provided local authorities both as a whole and individually with realistic targets and I do not believe that what we are asking them to do is impossible. Relevant expenditure for 1985–86 is just under £3.4 billion. I made a substantial enhancement of £98 million to the original White Paper figures in August 1984 to arrive at this figure and present authorities with a realistic target. It is 5 per cent, above the corresponding figure in the 1984–85 order. Local authorities have criticised that figure as inadequate. They have projected their 1984–85 budgets forward and point to a gap of 3.7 per cent. However, I do not believe that that gap—that is, the level of savings they have to make to come into line with our plans—is as big as they claim. In the first place, what local authorities say they need to spend in 1985–86 is a projection of their budgets for 1984–85. What authorities actually spend is always below budget — more than 2 per cent, below in 1983–84. It is also important to remember that from year to year school rolls, a major determinant of local authority expenditure, are falling. In asking authorities to close the gap which I have narrowed by my enhancement, I am really not asking for anything unreasonable.

At the individual authority level also I believe that we have set realistic targets in the current expenditure guidelines. At one end, for 27 authorities, the guidelines for 1985–86 imply no real terms cut. At the other end the maximum cash cut required is 1.5 per cent., and this applies to 16 authorities. Thus, slightly over half the authorities will have to make real terms cuts to a greater or lesser extent, but if there is the will, I have no doubt that the savings can be made.

Mr. Malcolm Bruce (Gordon)

How is it reasonable for authorities that budget within guidelines for no-growth budgets to have to increase their rates by an average of 15 per cent., and sometimes by as much as 100 per cent.? How can the right hon. Gentleman suggest that it is reasonable for local authorities to have to do that?

Mr. Younger

I am about to come to the effects of distribution, which may be part of that. However, the hon. Gentleman's authority of Gordon has not been required to cut in real terms. I hope that that will be of some help to it. It is certainly better than having to cut in real terms.

While there was some response to our pressures for restraint, more remains to be done if expenditure is to be brought into line with our plans and reduced. I very much hope that the message which I have been sending to authorities since I met them on 24 August last year and which finds its statutory expression in the order will get through and that local authorities will bring then-expenditure down to their guidelines in 1985–86. Local authorities are now at the final stages of drawing up their budgets for 1985–86. I know that many will be budgeting in accordance with guidelines. With the realistic guidelines and the prospect of more severe penalties, I am confident that the number budgeting in line with guidelines will be more than in previous years. I say now to all authorities which have not made the decision to spend in line with guidelines that the cost to the ratepayer of not doing so will be very high. This year the grant penalty range was from 65 per cent, of overspend to 87 per cent. In 1985–86 the range will be more severe. An authority which is planning to spend above its guideline by any margin is doing no service to its ratepayers.

Mr. Tom Clarke (Monklands, West)

The Secretary of State has mentioned his meetings with local authorities. I assume that he is referring to COSLA. Yesterday, the Minister spoke on housing support grant, and several times gave the impression that COSLA agreed with Government policy. Will the Secretary of State make COSLA's views clear?

Mr. Younger

I appreciate the hon. Gentleman's anxiety. Yesterday my hon. Friend the Minister made it clear that the formula discussed with COSLA and the details of it had been agreed with it. However, no one who reads the newspapers can be in the slightest doubt that, whatever else we may disagree about, we are all agreed that COSLA does not like the present settlement. There is no doubt about that and there is no point in pretending otherwise.

I turn now from the general expenditure background to the valuation background. This year's order has to take account of the general revaluation of property in Scotland, which comes into effect on 1 April. I was interested to note some of the speeches of Opposition Members—

Mr. Ron Brown (Edinburgh, Leith)

Will the right hon. Gentleman give way?

Mr. Younger

With respect to the hon. Gentleman, if I give way all the time I shall take up too much of the debate's time.

Mr. Brown

Will the right hon. Gentleman give way?

Mr. Younger

I shall give way to the hon. Gentleman, but I do not want to give way too often.

Mr. Brown

I appreciate that the Secretary of State needs time to develop his theme. Why has the Conservative party reneged on its commitment to its supporters about repealing the antiquated rating system? Why have the Government not wholeheartedly devoted themselves to that objective, given the commitment that they gave during the general election? If the Government say, as they repeatedly do, that the rating system should be abolished, why do they not abolish it?

Mr. Younger

Perhaps I should send the hon. Gentleman a copy of the Scottish Conservative manifesto for the last general election. Obviously, he has not studied it fully, as otherwise he would know that we gave no such undertaking. As he knows, we looked carefully at all the alternatives to the rating system, but we found that everybody had great objections to all of them. That is why no major change has been made. However, many important changes have been made in the way that the rating system works. That commitment has been fulfilled, as we said that it would be.

I was saying that I was surprised to find that Opposition Members had been making a growing number of remarks suggesting that they were against revaluation. Perhaps they have discovered—or think they have—that, as it is unpopular, they had better line themselves up against it as soon as possible. However, regular revaluations are necessary if the rating system is to provide a fair basis of local taxation. It is common ground that it is useful and proper to have revaluations on a regular basis and we in Scotland are proud that we had been able to keep to our five-year pattern fairly regularly … The whole point of a revaluation is to provide the opportunity to adjust anomalies and distortions that have arisen during the … preceding years, possibly as a result of fluctuations in market prices and housing fashions."—[Official Report, 28 July 1982; Vol. 28, c. 1194.] I am interested that the Opposition seem to find that amusing. Those are not my words but the words of the hon. Member for Glasgow, Garscadden (Mr. Dewar).

Mr. Donald Dewar (Glasgow, Garscadden)

Although we have had some reservations, which I shall deal with, about the way in which domestic ratepayers should be protected in certain circumstances, I reaffirm that we are in favour of regular revaluations if the present system continues. The amusement arose because I was speaking in 1982, expecting that 1983 would be a revaluation year. However, there has been a delay of two years while the right hon. Gentleman and his colleagues have swithered, dithered and worried about what they were going to do.

Mr. Younger

I am grateful to the hon. Gentleman, because it is extremely helpful to know that he is lined up solidly behind the principle of regular revaluations. It puts paid to the idea that some injustice is being done to Scotland by having revaluations. We are all agreed that it is desirable to have them, and I am grateful to the hon. Gentleman for that confirmation.

Revaluations inevitably mean change, with some groups gaining and, inevitably, others losing. On the basis of the estimates I have received, the most striking effect of the revaluation this time will be the shift in the rating burden away from industry and public sector rates and, to a lesser extent, commerce, and on to the domestic sector. Such shifts in the burden are of course quite normal in revaluations and to try wholly to cancel out the effects of the changes would remove the whole point of the exercise. However, I recognise that the shift towards domestic ratepayers is a sharp one and that something has to be done to soften the effect. I therefore made a substantial increase of £19 million in the amount of aggregate Exchequer grant that I announced in August. That will be of significant help in financing a fivefold increase in the domestic element and reducing by a half the effect of revaluation on the domestic ratepayer. The estimates of revaluation also led me to reduce the level of industrial derating, which I shall deal with in more detail later.

After those general remarks I should like to turn to the order. It is very similar to the 1984–85 main order which was in a new format as a result of the introduction of the client group method of grant distribution. This method, developed in consultation with the Convention of Scottish Local Authorities, is generally regarded as a fairer and more systematic approach. It is fully described in the report accompanying the order. We continue with the work of refining the method of calculating relative expenditure need.

Aggregate Exchequer grant for 1985–86 will be £1,924 million, including the extra £19 million I mentioned. After taking account of the effect of the transfer of two further education colleges to central institution status on 1 September this year, this figure is slightly above the grant figure for 1984–85. It represents 56.6 per cent, of relevant expenditure.

As hon. Members know, rate support grant, which is the subject of the order, is part—very much the larger part—of aggregate Exchequer grant. The other part is accounted for by specific grants — for instance, police grant and urban programme grant. These specific grants total £232.2 million in 1985–86 and are listed in appendix C of the report. Rate support grant totals £1,691.8 million, and article 2 of the order shows how this is divided between the three elements. Domestic element is £63.8 million, much larger than it was in 1984–85 for reasons I have mentioned and resources element is £203.5 million and remains at the ratio of 1:7 to needs element, as it has been for some years. By far the largest part is the needs element, at £1,425.5 million.

The distribution of the needs element is the most significant aspect of the order. As for 1984–85, the amount of needs element payable to each authority is shown in schedule 2 to the order. The method of calculation is described in the report, with the calculations for individual authorities being shown in appendix E.

As I have mentioned, the distribution is based on the client group approach. If that was implemented in full, there would be significant grant gains for some authorities but significant losses for others. I have therefore placed a limit on the change in either direction, up or down, which an authority may experience in the amount of grant it receives in 1985–86 as compared with 1984–85.

No regional council will gain or lose more than £12.32 per head, the equivalent of a 4.8p rate. For districts, the limit is £10.32, the equivalent of a 4p rate in pre-revaluation terms.

In setting these limits I have had to strike a balance between further progress towards the client group approach and avoiding excessive grant losses. Given the limits set and the fact that, leaving aside Orkney and Shetland, only three authorities will now be receiving less than their client group entitlement, I think that a reasonable balance has been achieved.

Mr. Robin Cook (Livingston)

Will the right hon. Gentleman take this opportunity to say what advice he would offer a local authority such as West Lothian district council, whose expenditure is well below the client group method of assessment and is only barely above guideline, but which now faces a cut in grant of well over half the rate support grant? Would he advise such an authority to match that cut of over half its grant by cutting services, or by an increase in rates of 20 per cent., which is what is required to compensate for the cut in grant that the right hon. Gentleman is imposing?.

Mr. Younger

The best advice that I can give, without going in full detail into everything to do with West Lothian, is for the authority to keep within its guidelines. If it succeeds in that it should, I understand, have a rate increase above the average of not much more than 1p. The question is whether such authorities keep within their guidelines. In the case raised by the hon. Gentleman, Lothian region would have to play its part and do the same.

I would mention one other aspect of the needs element distribution. Each year it is necessary to decide how to split the total between regions and districts. My decision this year has led to concern among district councils, and there are a number of points I would make about that.

First, there is nothing fixed about the existing split of rate support grant between regions and districts. It has never corresponded to the split in expenditure and it has been changed from time to time, including by the Labour party when in government.

This year I decided that it was important to increase the grant to some regions and to keep to a minimum the grant losses of other regions, since regional rates account for by far the largest part of the bill ratepayers have to pay.

Secondly, as I said, there is a limit of 4p in rate poundage terms to the amount of grant loss which any district has to suffer, for whatever reason. District rates account for only about a quarter of the total bill that ratepayers have to pay. Thus, while that loss may look quite large as a percentage of the district rate, the ratepayer will look at it in terms of his total rate bill, which includes the regional rate, which is much larger. In these terms, the percentage effect of the change in the district rate will be much smaller.

Thirdly, many districts are spending above guidelines. If they reduce their expenditure to guideline, they will be able to offset to a large extent the effect on their rates of the reduction in grant. They will also be able to avoid the severe grant penalties for which they would be liable in 1985–86. Thus, I would not accept that the reduction in grant can automatically be equated with an increase in rates of an identical amount.

I accept that there are authorities spending at guideline to which the course of further expenditure reduction is not really open. Some of those authorities have substantial balances, and I would hope that they would consider carefully whether they need to maintain balances — exceeding, in some cases, a year's rate income — or whether it would be proper to apply those balances to the benefit of the ratepayers by keeping rates down. For authorities without substantial balances and which are spending, and continue to spend,, at guidelines, there will be rate increases above the average as a result of the pressure that we are applying to authorities as a whole through the grant percentage. However, the moderate policies of those authorities have kept the rates in those areas down and enabled their ratepayers to avoid the cost to them of grant penalties for spending above guideline. By continuing that policy, these authorities will be continuing to take the course which is in the best interests of their ratepayers.

I appreciate that the decisions I have had to make create problems for some authorities which have spent in line with our plans but which still face grant losses. However, initial grant distribution has never been linked to expenditure performance. Under the circumstances, we have had no option but to continue pressure on authorities generally by further reducing total grant. As a result, there is not enough grant to do all that I might have liked to do for districts, but I have taken careful note of the points that have been made by individual councils on these matters.

Those are the main features of the order for 1985–86. The order also implements routine variations in rate support grant for 1983–84 and 1984–85. For 1983–84, grant is increased by £20.5 million. As I announced in the debate on 23 October, grant is to be increased to protect authorities whose expenditure in that year is within, or close to, their guidelines, including the tolerance on account of the unallocated margin.

The amount required for that purpose is £17.4 million. The remainder is to take account of the final level of loan charges and leasing payments and to pay the balance of compensation for protection from the 1982–83 general abatement.

For 1984–85, grant will be increased by £15.3 million to reflect revised forecast interest rates and the additional cost of the September 1983 and September 1984 police pay awards.

Having described the order, I come to what it might mean for the ratepayer. For the reasons I have mentioned, in particular revaluation, the picture for 1985–86 is complicated. If all authorities spend at guidelines in 1985–86 and make no use of balances, the grant figure contained within the order implies an average rate increase a small way above inflation.

However, revaluation means markedly different effects on the rate bills of different groups of ratepayers. On those assumptions, industrial and public sector rate bills would, on average, come down by 7 per cent.; commercial bills would go up by 3 per cent.; and domestic rate bills by 13 per cent. I emphasise that these are averages.

There will be significant variations between and within local authorities. To the extent that local authorities exceed guidelines this year and have to pay grant penalty or exceed guidelines next year, these average figures will be higher. The convention's much higher estimates of rate increases seem to be based on continued overspending in both 1984–85 and 1985–86. I therefore urge authorities, for the sake of their ratepayers, to bring their expenditure down to guideline as soon as they can.

The Rating of Industry (Scotland) Order, which is the latest in a series made since 1965, is to provide that the level of derating of industrial and freight transport subjects in Scotland be reduced from 50 to 40 per cent. from 1 April 1985 for the period until 31 March 1990.

Industrial derating is, I should emphasise, not a part of regional policy and should not be seen as some kind of incentive to Scottish industry. Rather it is an instrument of tax harmonisation aimed at ensuring in the face of different rating and valuation systems north and south of the border that the rates burden on Scottish industry keeps broadly in line with that in England and Wales, thus preventing any significant competitive economic disadvantage or advantage.

Prior to 1963, industrial derating applied to industry throughout Great Britain. It came to an end in England and Wales in 1963, which was a year of revaluation there—a rare event. Scotland was expected to follow suit at its revaluation in 1966, but as 1966 approached it became clear that if derating were terminated, industrial rate burdens in Scotland would be very much greater than those in England and Wales. Accordingly, an order continuing 50 per cent. derating was made by the Secretary of State in 1965 to maintain a broad equivalence of rate burdens north and south of the border. If that order had not been made, industry's share of the total rate burden in Scotland would have risen to nearly 21 per cent. in 1966, when the share borne by industry in England and Wales was still 14 per cent. Since then the relative position has shown little change and derating for Scottish industry has been continued at 50 per cent. by a series of orders, the Last of which was made in 1982 and runs until 31 March this year.

The extent to which derating in Scotland assures equivalence with England and Wales may be assessed in two ways: first, by comparing industry's share of aggregate rateable value in Scotland and in England and Wales, and secondly, by comparing for each country the ratio of rates paid to sales of manufactured goods. From the revaluation in 1966 until now industrial derating at a level of 50 per cent. has maintained industry's share of the total rateable value in Scotland close to that for industry in England and Wales, and, similarly, the rates paid per £1,000 of sales have stayed broadly in alignment.

The issues are complex, even more so this year because of the complete revaluation of all heritable property in Scotland, which takes effect from 1 April. Regular revaluations are a feature of the rating system in Scotland and are necessary to keep up to date the relativities between the different classes of ratepayer and within each class. Inevitably, revaluation results in changes between classes of ratepayer, with some paying more, others less. The last revaluation benefited the domestic ratepayer; on this occasion estimates point to benefits for non-domestic subjects, especially the industrial and freight transport subjects that qualify for industrial derating. Those estimates show that following the revaluation Scottish industry would account for only 8.8 per cent. of total rateable value if 50 per cent. derating applied — as proposed in the order — compared to 9.9 per cent. in England and Wales, whereas at 40 per cent. the Scottish figure would become 10.3 per cent. with the possibility that that figure will slightly reduce following the settlement of appeals that will inevitably follow the revaluation. In terms of the comparison of the rate burden on industry expressed as a proportion of sales, it is clear from current data that, subject to uncertainties about local authority spending, the rate burdens on Scottish industry marginally exceed those in England and Wales. Following the revaluation, however, the Scottish figure would be quite significantly reduced if 50 per cent. industrial derating continued, but with 40 per cent. derating, the difference between Scotland and England would be reduced to within the range in which it has moved in recent years.

Taking the two tests together, therefore, I have concluded that 40 per cent. would be the right level to maintain the broad equality of treatment that we have always sought to achieve. In addition, to ensure that there are stable conditions in which industry can plan ahead with confidence, it is my intention that the order should run until 1990, when the next Scottish revaluation is due by statute. I reiterate that, even with that, industrial rate bills in Scotland should come down on average by about 7 per cent.

That brings me back to the various criticisms that have been made by the Opposition.

Mr. James Wallace (Orkney and Shetland)

Before the Secretary of State leaves industrial rating, I should like to mention one point that may arise on revaluation. Is the right hon. Gentleman aware that there is concern that the rateable value of oil installations in Scotland may change as a result of last year's legislation, which allowed comparability between England and Scotland? It is not a matter for the Secretary of State, but if that happens, can he give a reassurance that the loss of rateable revenue to local authorities will be made up by the Scottish Office?

Mr. Younger

That is a sweeping assurance. I could not make that one. As the hon. Gentleman rightly says, that matter would be dealt with by the normal statutory processes, by assessors, appeals and so on, under the statute. However, I can say that if there are exceptional effects and they are drawn to my attention, I shall be prepared to discuss and examine them, but I cannot give a guarantee that any shortfall would be made up—by magic, as it were—by the Scottish Office.

I should like to deal with some of the main criticisms that have been made by Opposition Members, particularly the hon. Member for Glasgow, Garscadden (Mr. Dewar) in various things that he is reported to have said recently, which are relevant to the background of the debate.

With respect to the hon. Gentleman, it is not enough for him to criticise the orders alone; he must, if he is to be credible, tell us what alternative he proposes to adopt. If he thinks that the districts should have more grant out of the needs element, as we understand he does, how much would he take away from the regions to help them? COSLA will not answer that question—perhaps the hon. Gentleman will. If it is wrong for the Government to try to limit local spending, would he have no limit? How much extra would he let the local authorities spend if he took off the shackles, which he is always talking about? Would he let them spend £100 million, £200 million or £400 million? How much would it be? If they did spend up in that way, which of the other Scottish Office programmes would he cut to compensate for the extra taken by local government? Would he cut the Health Service, the Scottish Development Agency, trunk roads, or what?

One has only to ask those questions and fail to get any answers to appreciate the emptiness of the whole position that the hon. Gentleman has taken on the matter. Of course, it is a continual matter of legitimate contention between us as to what the level of provision and of overall expenditure should be, and it is quite absurd to take seriously an official Opposition who pretend that they could ignore overspending and make no provision to meet it or even check it.

Mr. William McKelvey (Kilmarnock and Loudoun)

Will the right hon. Gentleman give way?

Mr. Younger

I must finish my speech.

I do not deny for a moment that it is difficult for local authorities to bring spending under control. I have always acknowledged that, and I have been warning them frequently that the longer they continue to overspend, the more difficult it becomes. All past Labour Governments have had to exercise controls over local government, and if the hon. Member for Garscadden really thinks he may one day belong to a Labour Government, he must accept that he will have to do so, too. He must today come clean to the House and all those outside in local government about how he would pay for the extra spending he is now encouraging his friends in local government to undertake. It is they, by their deliberate extravagance — some of them — over many years who have so distorted the system that even those who have reduced their spending are facing extra burdens which they need never have had in the first place. The hon. Gentleman has been trying to be all things to all men and has completely failed to face the issues. If he is to be believed today, he must face up to his responsibilities and answer those very relevant questions.

I am sure that the Rating of Industry (Scotland) Order continues the broadly equal treatment for Scottish industry that has always been our objective. I believe that the Rate Support Grant (Scotland) Order provides a reasonable measure of support for Scottish local authorities while maintaining our pressure on them to bring their expenditure into line with our plans in the interests of national economic objectives and of ratepayers.

I commend both orders to the House.

6.8 pm

Mr. Donald Dewar (Glasgow, Garscadden)

The variety of parliamentary life is endless — the housing support grant yesterday and the rate support grant today. Those of us who have to take an interest in the rather specialist entertainment that those events provide can take a certain delight in watching Ministers putting their own special gloss on the facts—a specious argument here, comments bordering on misrepresentation there. It is delicately done and carefully prepared. However, what we do not get is any nonsense about claiming credit for what is happening to local government and to many district councils, particularly the smaller ones represented by the Secretary of State's hon. Friends.

I object to some of the euphemisms, and it is time that the Minister faced up to what is happening. The point was made by my hon. Friends the Members for Glasgow, Provan (Mr. Brown) and for Monklands, West (Mr. Clarke) yesterday that we have had a nice line in euphemism, particularly from the Under-Secretary of State for Scotland, the hon. Member for Edinburgh, South (Mr. Ancram) when he spoke on local government finance. My favourite was the suggestion that COSLA did not feel able to suggest another formula. I gather that we were invited to accept that everything was all harmony and light, and no other formula could be accepted.

The truth of the matter, which the Secretary of State went some way to recognising, is that COSLA, the Opposition, and a large number of Conservative councils in Scotland do not want any formula, form, part or portion of either the housing support grant or rate support grant settlement this year. The Secretary of State spoke of euphemisms and understatements, but I treasure the thought that a large number of councils that will face disaster as a result of the Secretary of State's activities was skilfully downgraded at the beginning of his speech to an annual occurrence.

We dislike this settlement, and find it inadequate. I was flattered by the Minister's obsessive interest in my views. I am happy to spend some time talking about them. Some of my hon. Friends think that one of my faults is that I talk endlessly about my views, and there may be some substance in that. However, I realise that I have not been able to satisfy the Secretary of State.

There is room for expansion in the economy and we should have adequate and decent services. I am sure that the Secretary of State will have read, although he may not agree with it, something of the economic strategy being advocated by the Labour party. It is a legitimate and necessary part of that strategy to argue that we favour a much more generous approach to the real financial problems facing local authorities.

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

How much?

Mr. Dewar

These are juvenile witterings from the Minister. If he expects me to start throwing around figures at this stage, he is making a mistake.

We are facing some worrying issues. I should be fair, so I concede immediately that the problems this year have been bedevilled by revaluation. I do not object to regular revaluations while the present system continues, but I have severe reservations, as I think the Secretary of State does. I do not know whether this was mentioned in the last Conservative manifesto, but for a number of years Conservative Members have been talking about rating reform. Revaluation came in 1985, not 1983, because the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) deliberately postponed domestic revaluation because the Government were actively looking for ways to abolish at least domestic rates, and in those circumstances a revaluation would be of no importance or relevance.

There is a general discontent. We have had two years of what I described in my intervention as dithering and swithering. At the end, we have had the extraordinary proposition, which appeared in a White Paper, that radical rating reform had to be abandoned because, we were invited to believe, there was no public demand for a change. There self-evidently is public demand for a change, although there may be difficulties in getting the right answer to the problem of what should replace rates. That is the subject for another debate.

The difficulties of the revaluation have been compounded by the delay to which I have referred. We now see a massive swing against the domestic ratepayer and a threat of revaluation. I do not know what the figures are, but I understand that in Scotland the domestic ratepayer's rateable value is likely to go up on average by 170 per cent. and industrial ratepayers' rateable value by 70 per cent. In Glasgow, I am told, domestic ratepayers face an increase of 180 per cent., while industrial ratepayers face an increase of 30 per cent. I am sure that there will be a great deal of fear and dismay when that news rattles through the letterboxes of the Scottish people in the next three or four weeks. This is a substantial increase. I accept that it is not the rateable value but the rate poundage that matters, and that revaluation of the balance is a matter for the assessor. As a result, at the end of the day, a substantially increased percentage of the revenue from rates will be paid by the domestic ratepayer.

Mr. Younger

I know that the hon. Gentleman is trying to be fair, so I am sure that he will agree that nothing that he says should lead anybody hearing it or reading it to think that his rates will go up by 180 per cent. The rateable value is the important thing. I know that the hon. Gentleman knows this, but it is most important that people should not be unnecessarily alarmed.

Mr. Dewar

I agree, and I thought that I had spelt that out. I do not want to be an alarmist, but there will still be a substantial increase in the share borne by the domestic ratepayer. I accept that the Secretary of State has taken some steps to try to mitigate this, and it would be wrong to deny it. The derating of industry from 50 to 40 per cent. was mentioned in an interesting part of the right hon. Gentleman's speech. For years — if one adds the speeches up and lays them end to end it comes to months — I have listened to speeches in which Conservative Members have said that the rates in Scotland are a uniquely difficult burden for Scottish industry.

I was interested to hear the Secretary of State say that, if one takes the rate burden as a proportion of turnover, we are in equilibrium with England, and will remain so after the adjustment. I hope that Conservative Members will remember that, because it undermines the point of one of their favourite hobby horses—the so-called profligacy and irresponsibility of Scottish authorities.

We also have a complicated formula under which the domestic element, which was 3p on the old valuation standard, will go up to 5p in the new valuation. This is a substantial increase. Is this a permanency for the period of this quinquennium? The derating of industrial properties from 50 per cent. to 40 per cent. is specifically said to continue to 1990, but, as far as I am aware, nothing has been said about similar permanent arrangements to the end of this revaluation. If this is not to be permanent, the implications for the domestic ratepayer will be considerable.

Although partial help has been given, there is an element of the fraudulent in this system. I am sorry to use a rather ugly word. In the settlement for last year, some £14 million of the grant paid had to be devoted to support of the domestic ratepayer. Now, we are being asked to find £64 million from a slightly reduced settlement for the same purpose. In effect, that is a loss of £50 million to the local authorities. Even after that, we know that the equivalent burden for domestic ratepayers is an increase of 8 per cent. on the rates.

The Secretary of State will not quibble with the proposition that there is nothing wrong in helping to meet the burdens—to some extent, he is doing so. However, in view of the depressing statistics emerging from district councils and of the blow falling on the domestic ratepayer, the Secretary of State should have cushioned them more effectively and should have alleviated that burden. We shall return to this again and again. I recognise that there are always problems about cash resources, but in the present circumstances, to leave the domestic ratepayer partially unprotected would be unacceptable to Labour Members.

It is self-evident that all this has complicated this year's arithmetic. However one looks at the problem, this is another rotten rate support grant settlement. It is bad for the councils, bad for ratepayers and bad for those who use local authorities' services. Understandably, the Secretary of State made a great deal of play with the increase in relevant expenditure, but just as it is not only the rateable value but the rateable value and the rate poundage that have to be taken into account, so we have to look at the relevant expenditure and at the level of grant paid. That has dropped again from 62.2 per cent. to 56.5 per cent. As a result, in cash terms we shall be paying £6 million less this year than last to local authorities.

I know that the Secretary of State has said that that is an unfair comparison because somewhere two colleges are moving from one sector to another, but the Secretary of State has a nasty habit of mentioning special factors when they are in his favour and ignoring special factors when they are inconvenient for him. The truth is that we have lost £6 million. If we add to that the increase from £14 million to £64 million that I referred to in the domestic element, there is a loss in effect of £56 million.

Relevant expenditure has gone up by £194 million to allow for inflation. The Secretary of State makes a virtue of that, but it has not been reflected in the grant. If £194 million is the proper inflation figure, that should have been met in the grant settlement. If we add the lot together, we find that we are £250 million worse off than last year. That is a substantial loss to local authorities that are suffering the difficulties, problems and demands faced by almost all local authorities in Scotland.

The impact on services is bound to be severe. COSLA has supplied figures and I do not think they are open to challenge. If we apply to the 1984–85 budgets 4.5 per cent., 4.75 per cent. or whatever the proper deflator is that the Government have set in the White Paper, and compare the figures with the guidelines for 1985–86, we find that the standstill budgets would have to be cut by £101 million to meet guidelines. If that is measured against the crisis in education and the fact that the White Paper is proposing that by 1987–88 there will be a reduction in real terms of about 10 per cent. in education spending, we begin to see what bad news these figures add up to.

Mr. Younger

The hon. Gentleman is not correct in saying that, without at the same time saying how many fewer pupils there will be.

Mr. Dewar

I accept that that is a factor — the Government are entitled to draw attention to that—but the Secretary of State will not cavil at the suggestion that there is a real crisis in the classroom and that the introduction of Munn and Dunning, the 16 to 18-year-old action plan, at a time when resources are becoming more and more inadequate, has complicated the business of educating the children and running the schools. The cuts proposed by the Secretary of State will make the position worse. In any event, if the right hon. Gentleman accepts —I do not see how he cannot—that we are in real terms £250 million short on a standstill budget as against last year, even if every authority in Scotland went down to guidelines, we would still have about £150 million less because we would be coming down only by the £101 million to which I referred a few moments ago.

We all recognise that district councils in particular are suffering because of the settlement. Their needs element has come down from £130 million to £94.5 million. This substantial cut has led to a substantial crisis for many smaller district councils. They will suffer massive reductions in rate support grant settlement. If the Secretary of State wants to look to his laurels and maintain his pose as the ratepayers' champion, which I think he is fond of assuming, he must think again about what he is doing to many district councils and local authorities generally. His record on rates is not happy, as he knows. He would say —I recognise his defence—that he has been struggling to do something about it, but the record is there.

Between 1978–79 and 1984–85, the annual domestic ratepayer's bill in Scotland has gone up from £132 to £326, an increase of 147 per cent. My contention is that one of the first and primary reasons has been the persistent and continuing cuts in the rate support grant settlement and other support given to local government. The cuts are being repeated and compounded in this order.

An important point which I am sure will be appreciated by many Conservative Back Benchers is that the Government have planned deliberately. I understand that the assumed rate contribution in district councils, on the basis that they meet their guidelines, is an increase of 34 per cent. and that for the regions the increase is 17 per cent. The Secretary of State is assuming that, if district councils meet their guidelines, the proportion of expenditure to be met from the rate contribution will increase by 34 per cent. Therefore, he is deliberately assuming a substantial increase or else the eating of the seed corn by a raid on what little is left at this stage in the balance of most local authorities.

The answer is that, even if councils do everything that the Secretary of State asks of them, many of them will be faced with a substantial rate increase. We can see that if we look around Scotland. Let us take north-east Fife. The leader of north-east Fife, who is, I think, a member of the Liberal party, was at the COSLA lobby on Tuesday. He told me, and I have no reason to doubt the accuracy of what he said, that the Tory budget last year was over guidelines. The Liberals, for reasons that may have seemed good to them, made cuts to get within the guidelines. This year they are budgeting to stay within the guidelines. That is what the Secretary of State has been seeking and no doubt they will get a gold star for effort. Their reward is that their rate support grant settlement this year has dropped by 49 per cent. and they are faced with a rates increase of 37 per cent.

Let us consider Nithsdale; I know that it is not a local authority that is liked by the hon. Member for Dumfries (Sir H. Monro). He told us recently that it was hellbent on confrontation and illegality. He has a point, because I understand that on budget it will be 8 per cent. over guidelines. Its rate increase will be 45 per cent. Even if it came down to guidelines it would still have a rate increase of 36 per cent. on the arithmetic unless it has something salted away in the chest. That can hardly be satisfactory.

What about Dumfries and Galloway, the region of the hon. Member for Dumfries? It has been within the guidelines from time immemorial, certainly for as long as there have been guidelines. Again, no doubt it will get brownie points for prudence from the Secretary of State. On 13 December he told the House: I … greatly appreciate the splendid efforts that various local authorities, including Dumfries and Galloway, have made".— [Official Report, 13 December, 1984; Vol 69, c. 1224.] His gratitude is not reciprocated, because Major Peter Fox appeared in an unlikely starring role earlier this month in the Daily Record, talking about a rate increase of 20 to 25 per cent.

COSLA has been making inquiries and information is available in the returns coming to it because everyone is in a position to finalise the figures. I am told that there is a deadline of 31 January for the statutory consultation process. Unless authorities raid balances—in some cases balances do not exist — and cut services below the guideline level, they will be faced with substantial rate increases. I shall not go into them in detail, but the figures for some authorities are dramatic.

Ettrick and Lauderdale is heading for a rate increase of 65 per cent. Eastwood, even if it comes down to guidelines — it is well above them — will have a 57 per cent. increase. Banff and Buchan—I am not surprised that the hon. Member for Banff and Buchan (Mr. McQuarrie) has hidden himself somewhere — has a possibility of a 70 per cent. increase. Angus has fixed an increase of 56 per cent. As the hon. Member for Gordon (Mr. Bruce) pointed out in an intervention, Gordon is contemplating an increase of 129 per cent. In the main, these are people who have come down to guidelines, or are on guidelines or below them, and who can avoid increases only if they can find cash from balances or if they cut substantially to get below the parsimonious and inadequate level of services which the guidelines allow.

The hon. Member for Dumfries said in the House the other day that talk of a rates increase of 30 to 40 per cent. was very much exaggerated; he is in for a nasty shock. These are not the problems of a small number of highly political councillors, as the Secretary of State tried to suggest, nor a matter of profligate, revolutionary cliques hijacking councils with unreasonable policies. I do not think Major Peter Fox would like to be described in that way. It is a case of ordinary, very often Tory, councillors being clobbered by Tory cuts. The people who will pay at the end of the day are the ratepayers whom the Conservative Government so arrogantly and so inaccurately claim to champion.

The average over Scotland will be nothing like as high as the figures that I have mentioned. I have been talking about small district councils and I would not like to give the impression that the average figure will be anything like the individual figures I have quoted. Obviously, the figures for the regions will be lower. District council rates are often quite low, as the rate poundages are low. However, there may be some shocks even among the big boys when their figures are measured against those which the Secretary of State has been claiming. I suspect, for example, that Tayside will not be in the right hon. Gentleman's good books when its rate is finally announced.

I am pretty sure that there will be an average rate well above that predicted by the right hon. Gentleman. That is because he has introduced an inadequate rate support grant settlement. He has placed many of his political friends and many local authorities in Scotland in a trap of his making.

His policies threaten the central services and in many areas they will send rates soaring. I challenge any Conservative Member representing any of the areas which I have mentioned to tell me that the figures that I have quoted are wrong or inaccurate. When we consider the impact on services, we see that the Government are guilty of a form of vandalism.

As I have said, the Secretary of State likes to pose as the ratepayers' friend. I believe that he has paid far too much attention to the words of the Chancellor of the Exchequer. The sad result of his almost total subservience is to be seen in the miserably inadequate statement that he has presented to the House.

6.32 pm

Mr. Nicholas Fairbairn (Perth and Kinross)

It is a pleasure to take up the remarks of the hon. Member for Glasgow, Garscadden (Mr. Dewar). If I may say so without spoiling the hon. Gentleman's reputation, he always increases his standing in the House by the fluency and reason with which he advances his argument. I am happy to pay tribute to the way he does so, irrespective of whether I agree with all that he says.

I wish to discuss in the presence of my right hon. Friend the Secretary of State the equity of the system by which we have arrived at the order. I am bound to tell my right hon. Friend that, being almost entirely uneducated. I do not understand now the meaning of simple words. I have always understood that if we talked about an assessed need, it meant that someone's needs had been assessed, but it appears that that is not the meaning of "assessed need". Having assessed the need of a local authority, the Scottish Office offers it something different. I stand to be corrected, but it seems that the sum offered by the Scottish Office is always less than the assessment. Either an authority needs the amount which has been assessed or it does not. If a sum has been assessed as necessary, it seems strange that the Scottish Office should put a certificate under the assessment to the effect that the assessed sum is unnecessary.

The local authorities in my constituency are struggling desperately to obey the intelligent thrift which my right hon. Friend has urged upon them. When he assesses their need to be what they say it is, it is strange that he should then give them less than they need which has been assessed.

It is acknowledged that the House has a right to constrain, investigate and scrutinise the spending of other people's money by either elected representatives or officials. That is the essence of political responsibility. I should be the last to do other than congratulate my right hon. Friend on preventing local authorities from extravagant expenditure. As one who has the fortune or misfortune to live both in Fife and in Lambeth, I know the extent to which that power can be exercised. The amount of money spent on the adoption by lesbians of little girls and on male homosexuals who wish to adopt little boys makes the rating of my pinhole in Lambeth greater than the sum which Fife extracts from me for what is termed a grander residence. I understand that there is no difficulty for a local authority in the exercise of its egotism and arrogance to say, "The more we spend, the more potent we are." I am happy with the intention of my right hon. Friend, but I do not believe that it is possible to make the present system equitable. Therefore, I believe that the rating system should be changed.

I take that view because I believe that the system is massively and inevitably inequitable and not because of statements in manifestos or commitments. If those who contribute, apart from the Government, to the revenue of a local authority are categorised, they fall into three. The three categories are industrial, commercial and domestic. Industrial managers and their work forces have no vote on the rating of the premises in which they function. Likewise, those who own shops or commercial undertakings have no vote in the areas in which their businesses lie if they live outside them. As for domestic ratepayers, only the house owner who pays the rates is likely to be concerned about the matter.

I do not want to speak for my right hon. Friend the Secretary of State for Scotland, but I would be surprised if Mrs. Younger, Master Younger or the Misses Younger were greatly concerned about the cheque which my right hon. Friend has to write in payment of his rates. Knowing where he lives, I imagine that he is concerned. Members of the public over a certain age have a vote and rating increases affect the majority of them only socially. Only the householder who pays the rates is affected directly, although I accept that the other members of his household might be affected vicariously.

A huge number of domestic ratepayers receive a rate rebate and the majority of the public benefit from increased expenditure without having to contribute to it. I understand that about 70 per cent. of the population of Greater Manchester are in that position. That is thoroughly inequitable. It is no good saying that if a local authority increases its rate to an unacceptable level it can be thrown out at the next election. That cannot happen, because those who are contributing to the increased expenditure are not those who can vote out the authority. In my opinion, the system is so inequitable that I urge my right hon. Friend to tell the Government that such inequity cannot continue.

When my right hon. Friend attempts to prevent the robbery of the paying ratepayer and indulges in orders, rate capping, restrictions, guidelines and needs assessment, he finds himself alienating everyone. It does not matter whether the individual is a supporter of the Labour party, the Communist party, the Liberal party or the Conservative party. Every local authority in Scotland is upset by the position in which it finds itself. Some authorities are upset because of their pig-headed extravagance in the past, but some of them, such as Perth and Kinross, are upset because, having been thrifty, they are punished for taking that line because of the effect of needs assessment and guidelines. They are punished while those authorities which have been extravagant are rewarded for being extravagant, and are only partly punished. My poor, dear right hon. Friend the Secretary of State discovered that he had set off to be Florence Nightingale and had come back as Jack the Ripper. The system is the reason why that happened.

People write to me asking, "Why don't the English revalue? Why do the Scots have to revalue if the English don't?" God help the English if they put off revaluing, because a volcanic effect will overwhelm them when they eventually do.

Let us consider what happens if the three categories of industry, domestic ratepayers and commerce are derated. I have never understood why industry should be derated. I have always understood why ancient monuments, such as the one in which I live, should be derated. The Opposition keep telling me that my building is not fit for human habitation.

I remember arguing a case — I may have been instructed by the hon. Member for Glasgow, Garscadden — before the Lands Valuation Appeal Court about whether the ripening of a banana was an industrial process. It was held to be an industrial process on the basis of a case in which it was held that the maturing of an object used for birth control was an industrial process.

Why should industry, which cannot put its rates bill against its tax bill, be derated when the domestic ratepayer, who is not derated, cannot put his rates bill against his tax bill? That is thoroughly unfair.

In this revaluation, industry, which is derated, benefits. Commerce and small offices and shops, which are most likely to employ people and affect unemployment figures, are punished most. Those businesses receive no relief and are not derated. The rating of offices and shops in every large and small town in Scotland has prevented a great deal of employment.

The domestic ratepayer will have to pick up from industry what was handed to industry in the last two valuations. Where is the fairness in handing this to the ratepayer? Where is the logic in saying, "We want everyone to be a householder," and then saying, "Make sure, if you are mug enough to become your own householder, that you have the money to pay for it."? That places an inequitable burden on some householders. A great many householders receive rate rebates, so this rating becomes a false tax. The burden will fall on those who cannot afford it—not the very rich or the very poor, but the mugs in between.

I am not criticising my right hon. Friend the Secretary of State. I am appealing to him to change an indefensible system. My right hon. Friend is like the Dutch boy, except that in this case there are many holes in the dyke. My right hon. Friend is attempting to plug the holes with his elegant finger.

I believe that the system is not capable of being contained by my right hon. Friend's procedures. Every year, it has been demonstrated that the system is probably unfair to everyone. The system does not tame the extravagant or reward the thrifty. If does not do justice. It certainly does not—I am sure that this would never be a consideration of a Secretary of State—gain votes or keep votes. My right hon. Friend is in an impossible position. He has grandly defended his order, but there is only one answer to the problem: the system must be reformed, because taxation without representation is contrary to our constitution and our principles. The rating system does just that, and it does so unfairly.

6.45 pm

Mr. Bruce Millan (Glasgow, Govan)

I was not surprised to hear the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) attack the rating system, especially in the light of the experience of Perth and Kinross district council. That council already receives no housing support grant from the Government, and next year its rate support grant will be halved. That is what is happening to an authority which, as the hon. and learned Gentleman said, has been loyal to the Government.

The hon. and learned Member for Perth and Kinross might have added, as a reminder to the Secretary of State, that the Government promised in the 1974 election to abolish the domestic rating system. The Government have produced very little. They have forgotten that promise.

I do not go along with a good deal of the criticism of the rating system, but the effects of successive rate support grant orders from the present Secretary of State help us to understand why there is a widespread feeling in Scotland about the system's inequities and widespread anxiety about the ever-increasing burdens placed on ratepayers.

My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) dealt comprehensively with the speech by the Secretary of State. As we have come to expect, the speech by the Secretary of State was full of claptrap about how anxious he was to protect ratepayers from additional rating burdens. Because my hon. Friend the Member for Garscadden dealt comprehensively with that speech, I shall deal with some of the major issues that arise from the settlement.

We have the same pattern this year as we have had every year since this Secretary of State took responsibility for rating in Scotland. The expenditure level at which grants will be paid in 1985–86 is unrealistic. There is no chance in 1985–86 of local authorities generally budgeting for the figures provided for in the order. Their budgets will be well above that level. There is some dispute about how far above that level individual local authorities will be, but, taken as a whole, they will not fit the guidelines laid down by the Secretary of State. Their total budgets will certainly be higher than the relevant expenditure provided for in the order.

Every year we have said, "The expenditure provided for by the Secretary of State is completely unrealistic." Every year the Secretary of State has said, "It is a perfectly realistic figure. If only local authorities were sensible and reasonable, they would reach the figure I have laid down."

Paragraph 8 of the statement accompanying the Rate Support Grant (Scotland) Order 1984 stated that £64 million would be added to the provision for the relevant current expenditure for 1984–85. That amount was an increase on the level proposed in the White Paper published a few months previously. The £64 million was added to bring the amount up to a "realistic expenditure" level.

If one says that extra money must be added to bring the amount up to a realistic figure, one says that the previous figure was unrealistic, and that is precisely what the Opposition said at that time. We said that, even with the addition of £64 million, the amount was still unrealistic. Of course, the Secretary of State said that that was not so and that, if everyone behaved himself, there would be no problem. The local authorities budgeted for £114 million above the rate support grant figure. In July 1984, the Secretary of State told the House that he had imposed a penalty on them of £90 million.

We are going through the same process again this year. The Secretary of State talks about a so-called enhancement of £98 million for 1985–86, to make the figures realistic. Why do we need an enhancement if the original figures were realistic, as was claimed at the time of the publication of the White Paper? We said at the time that they were not realistic. We said that there was no hope that in 1985–86, if the Government stuck to the figures, the local authorities would even approach them.

The Secretary of State makes a virtue of the so-called enhancements, but the figures that were used for a number of years were so ludicrously out of scale with actual expenditure by local authorities that they made a complete nonsense of the public expenditure White Papers. The right hon. Gentleman had to enhance the figures, not even to make them realistic but just to prevent that discrepancy between his figures and reality from growing worse each year.

However, at the same time as the right hon. Gentleman enhances the figures with an extra £98 million, he reduces the rate of grant by a larger amount, so that the local authorities are not better off but worse off. The reduction in the rate of grant is greater than the so-called enhancement of the figures. For 1985–86, the amount of rate support grant provided for in the order is less than the amount provided for 1984–85 in the equivalent order last year. The amount of money going to the local authorities by way of grant has been reduced by £6 million, despite inflation and increased costs.

Even if local authorities budgeted for 1985–86 on the same basis as for the current year, and took account of the Secretary of State's ideas about what the inflation rate will be in 1985–86—which will be proved to be an underestimate — they would still have to reduce their expenditure by about 3.6 per cent. in real terms. The reduction would be somewhat more for the districts and less for the regions. However, they are not going to make that reduction.

The Secretary of State's figures are becoming closer to reality not because of his generosity but for the reasons that I have explained. But the local authority budgets for 1986 will not be reduced to the figures in the order or in the guidelines based on it. There will therefore be the same rigmarole in July. The Secretary of State will tell the House that, because the local authorities have budgeted above the guidelines, he will, unfortunately, have to impose penalties. We understand from a threatening passage in his speech that those penalties will be even more severe in 1985–86 than they were in 1984–85.

The Government's attitude might suggest that there has been some extravagant explosion of expenditure by local authorities in recent years. That is not true. The Secretary of State quoted some Government figures this afternoon. They were given in an answer on 10 January. It was said that, between 1978–79 and 1984–85—in six years—there had been an increase of 2.5 per cent. in real terms in local government expenditure relevant to the rate support grant.

What the Secretary of State did not say was that since 1980–81 there had been no increase at all. In 1984–85 the figures were, in fact, slightly lower than in 1980–81. Over those years, local authority expenditure, in real terms, has been frozen.

The Secretary of State boasts about it. He says that there have been no great cuts. One would think that he had planned for a freeze, but every year he plans for a reduction in the following year—not a freeze. When he cannot get it, he points out that, for instance, the pupil-teacher ratio is not as bad as we had said it would be. However, that will only be because, very sensibly, the local authorities have paid no attention to some of the strictures laid on them by the Secretary of State.

If services have not been slashed, it is no thanks to the right hon. Gentleman. In the first year of his responsibility for the rate support grant, the right hon. Gentleman wanted the authorities in the following year to reduce their services by 7.5 per cent. in real terms. He has more modest ambitions now. He said that that reduction could be achieved without difficulty because there was plenty of fat. That was proved to be nonsense, and in recent years, local authority expenditure has been frozen in real terms.

That, of course, means a real cut. The situation is similar to that in the National Health Service. Unless there is a modest improvement in real terms each year in finance for the NHS, to take account of demographic and technological changes and so on, the NHS deteriorates. The same argument applies to the local authorities. Especially in the urban areas such as Glasgow, but also in rural areas, we all know that because of the increasing demands being placed on local authorities and their inability, because of Government cuts, to meet those demands, there have been real reductions in services.

In the past few years, the reduction in the quality of services has sometimes been savage. Every hon. Member knows in his heart that that is so. Opposition Members have acknowledged the fact and have protested against it whenever we have been presented with one of these orders. The level of the services has not been maintained. There have been real reductions in the quality of the services provided by local authorities—in some cases, savage reductions.

All that might have been justified—although not by me—if, somehow or other, the burden on the ratepayer had been kept to a reasonable level. One could have said to the ratepayers, "You may be getting a worse service, but at least you are not paying for a better one." What is the reality? My hon. Friend the Member for Garscadden mentioned what has happened to domestic rates between 1978–79 and 1984–85. The average bill has risen from £132 to £326—an increase of 147 per cent. In other words, in the current year, domestic ratepayers are paying two and a half times as much as they paid in 1978–79, but receiving poorer services.

What is the reason for that huge increase? First of all, there is inflation. The Government try to blame the local authorities for everything, but they cannot blame them for the level of inflation.

Secondly, there are the constant and consistent reductions in the rate of grants. This is the first time that, in speaking on a rate support grant order, the Secretary of State has not mentioned the reduction of 4 per cent. in one year during the last Labour Government. I will answer that point in any case, as the Minister who replies to the debate may well make it.

When the Labour Government left office in 1979, the rate of grant was higher than it had been when we took over in 1974. It had risen from 68 per cent. to 68.5 per cent. The present Government cannot claim to be following some long-term trend. Between 1974 and 1979 we slightly enhanced the rate of grant. We certainly maintained the real rate of grant to local authorities.

Since 1978–79, the figure has fallen. Last year it was 60.2 per cent. and this year it is 56.6 per cent.—but even 56.6 per cent. is not the correct figure. There will inevitably be penalties during the year, so the real rate of grant will be below 56.6 per cent. It has already been reduced from 60.2 per cent. to 57.7 per cent. because of penalties in 1984–85. Ratepayers are bearing an even greater burden and getting poorer services because of wholesale reductions in grant, not just because of inflation.

We might be comforted if the outlook for 1985–86 was a little better. The sacrifices might have been worth while if the rate burden was unlikely to increase further, but that will not happen. As has been said, Dumfries and Galloway has been a good boy and gone along with the Secretary of State, yet it faces substantial increases in its 1985–86 rate burden. We know that the real increase in 1985–86 will be well above the rate of inflation. Circumstances will be even worse for domestic ratepayers.

The Secretary of State said today that if everyone sticks to the guidelines—they will not—there is no need to worry about domestic ratepayers, as they will face an increase of only 13 per cent. That figure was produced as if it was a triumph. Who is getting a 13 per cent. wage or salary increase in 1985–86? The teachers and local authority workers certainly will not if the Government have anything to do with it. However, the real average increase for domestic ratepayers in Scotland will be considerably more than 13 per cent. We do not know what the increase will be, but it will be far more than 13 per cent.

Even that average disguises large variations in authorities, depending on how the revaluation has worked out. Scottish domestic ratepayers face an average increase of 8 per cent., purely as a result of revaluation. The increase in Glasgow is 18 per cent. That could have been avoided, as there is no need to have a domestic element that is exactly the same—5p in the pound—for every rating authority in Scotland. Labour's legislation of 1975 and the Rating and Valuation (Amendment) (Scotland) Act 1984 provide that the domestic element can be varied according to the circumstances of different areas. The 18 per cent. increase faced by Glasgow domestic ratepayers is not an inevitable consequence of revaluation, because the domestic element could have been adjusted.

The Government, who pretend to be the ratepayers' friend, have not bothered to use the flexibility available to them. The Government have taken ever more dictatorial powers over local authorities in Scotland so that they cannot function effectively as bastions of local democracy, which is what they ought to be and what they were before 1979. They are now subject to more restrictions, controls and dictation from St. Andrew's house. The result is poorer services and higher rates. It is not an attack on elected councillors as such, although that is serious enough, as we understand the anxiety and anger of councillors, not all of whom are members of the Labour party or the Liberal party. The attack on local councillors is an attack on ratepayers and the people of Scotland. They are paying more and getting less, despite all the bland words of the Secretary of State. The responsibility is the Secretary of State's, and the Government's.

7.4 pm

Mr. Gerald Malone (Aberdeen, South)

I should like to deal with some general matters before considering some specific constituency ones.

Much has been said about the relevance of local authority expenditure in Scotland in the context of public spending as a whole. The Opposition have made light of that, but the Government are right to ensure that they do not consume more than a certain proportion of public expenditure. I endorse the Government's objective of reducing that proportion. Local authority expenditure cannot be seen in isolation, as it is part of the Government's attempt to keep public expenditure within certain bounds and then to reduce it.

The Government's White Paper Cmnd. 9428 makes sad reading, as we learn from it that, despite the Government's attempts to bring public expenditure within constraints, they have not so far been successful. It would be nonsense to continue the fight against inflation while ignoring what local authorities do and allowing them to consume an ever greater proportion of public expenditure to finance services. Some Opposition Members have conceded that it is important that inflation be taken into account when local authorities budget. The Government's general objective of keeping inflation within reasonable bounds will eventually make it easier for local authorities to budget securely.

Although the Government have attempted to hold public spending steady in real terms in the past few years, and will continue to do so, it is vital that we ensure that local authority expenditure is kept within the bounds that the Government set. I am always amused to hear Opposition Members talking about the relationship between the Government and local authorities when it comes to restraining public expenditure. I am sorry to disappoint the right hon. Member for Glasgow, Govan (Mr. Millan), but I do not intend to mention the 4 per cent. to which he referred in a form of pre-emptive strike. However, the system of control started in 1976 in an exceptionally loose form. The Government at that time recognised that there had to be some constraint on local authority spending.

It is interesting to see COSLA's view of what happened in 1976. It said that the guidelines were set out to help local authorities bring their plans within the constraints of overall public expenditure limits which were to be set by the Government. An important principle is enshrined there. It shows and confirms that COSLA's view, when it was probably working with a Government with whom it had political sympathy, was that there was a genuine objective and that it should work within public expenditure guidelines set by the Government. That has changed. It has since become ever more difficult to ensure that local authorities keep within the guidelines. That is why we have had legislation and now have on order on the subject.

Mr. Tom Clarke

I am especially grateful to the hon. Gentleman for giving way, as one of the disadvantages of having a Labour majority in Scotland is that Labour Members listen to more speeches than they make. I heard the hon. Gentleman speak last night, I am listening to him again today, and I might not be able to speak myself. He referred to COSLA in 1976. I was active in that organisation then. In 1976 the guidelines were accepted as indicative, rather than definitive, and were regarded as such by the Government and by COSLA. Moreover, my recollection is that no one had political control in COSLA at that time.

Mr. Malone

My point is that there was co-operation with the principle, which I believe is important, namely, that central Government public expenditure limits should be taken seriously into account by local authorities. That principle has been lost sight of. Over the past eight years there has been a departure from a genuinely helpful principle.

While I am dealing with that point, perhaps I may refer to an intervention during the speech of my right hon.

Friend the Secretary of State for Scotland by the hon. Member for Aberdeen, North (Mr. Hughes). I could not understand from the hon. Gentleman's intervention what it is that the Opposition want. I took his remarks to mean that rate income should not be assessed in terms of overall public expenditure totals and that he would be happy if local authorities levied rates up to any amount that they wished without central Government control in any shape or form.

If that is the implication of the hon. Gentleman's argument, it will be sad indeed for the ratepayers of Aberdeen. It is a policy of irresponsibility. It is absurd and naive to suggest that whatever rate is levied, it should not be considered when looking at public expenditure as a whole. Of course what is levied in rates affects the economy as a whole. It will affect the overall demand in the economy by reducing the amount of spending power that lies in the hands of the purchaser. For Opposition Members to say that it is not relevant is to fly completely in the face of the facts.

According to Aberdeen's assessment of the -matter, if it abides by the guidelines there will be a rates increase that is totally in line with my right hon. Friend's statement, namely, 13 per cent. Therefore, Aberdeen is art average case. However, that is not what Aberdeen is planning to do. If Aberdeen tries to operate outwith the guidelines, the projected increase in rates is 42.2 per cent. That is an absurd and irresponsible approach for Aberdeen district council to adopt. I hope that it will reconsider its decision before it fixes the rate, so as to ensure that it comes within the Government's guidelines.

The right hon. Member for Govan, from a sedentary position, seems to be saying that 13 per cent. is above the rate of inflation, and I take his point, but he must remember that another element to be taken into account is the change in the balance because of the client group approach and the way in which rate support grant is redistributed between Grampian regional council and Aberdeen district council. It is interesting to note that no representations have been made to me by the Grampian regional council, or by COSLA on behalf of the council, about the formula that has been adopted. Of course there must be a change in the balance. As soon as all the figures are provided, perhaps this will•be compensated for by the regional rate when it is fixed.

Mr. Bruce

Would the hon. Gentleman care to defend not only that rate increase but the fact that, of the four cities in Scotland, the Government's contribution to Aberdeen's rate support grant has been reduced from 37.3 per cent. in the previous year to 21.5 per cent., compared with other cities whose grant is either stable or has increased? Would the hon. Member care to defend that policy to the ratepayers of Aberdeen?

Mr. Malone

It depends upon the figure from which the hon. Member for Gordon (Mr. Bruce) is starting. Aberdeen is being treated relatively fairly in the guidelines. It depends upon whether the hon. Gentleman believes that the guidelines are reasonable, or that the inflated budget of Aberdeen district council is reasonable. I suggest that the latter is not reasonable. When one looks at the suggestions of Aberdeen district council to the people of Aberdeen about which items of expenditure should be cut in order to come within the guidelines, one begins to understand the political essence of the argument.

Aberdeen district council says that it will close the Bon Accord baths, certain libraries and various services, which will hit individual ratepayers. Such closures and cuts are being suggested for political motives. There are many other ways in which the administration of Aberdeen could be pared.

Mr. Robin Cook

How?

Mr. Malone

If the hon. Member for Livingston (Mr. Cook), who is shouting "How?" from a sedentary position, had been here yesterday he would have heard the point that I made, that interest charges in Aberdeen are substantial and that Aberdeen could reduce the capital borrowings upon which it pays those charges by continuing to sell enthusiastically its stock of council houses. There are many ways in which expenditure can be reduced. I hope that Aberdeen district council will think again about its priorities. I assure the House that at least the Conservative group on Aberdeen district council will, during the course of the next few weeks, produce a detailed programme to counter what I believe to be a series of vindictive cuts which are being suggested by the council.

On the question of the client group approach and the way in which it is affecting the distribution of rate support grant, I was very interested to hear my right hon. Friend the Secretary of State make the point in his opening remarks that the client group approach would be continually observed and reviewed with a view to refining the way in which it applies to local authorities. I presume that by those remarks my right hon. Friend meant both regional and district authorities. I hope that he will continue to pursue that policy and the way in which the client group approach is applied to Grampian region as a whole.

My right hon. Friend will be well aware that Grampian region is unusual compared with the rest of Scotland. The population is growing substantially. The client group calculation is based upon statistics which are out of date and which lead to a shortfall in Grampian regional council's entitlement to support from the Government. Although the response that I have received to date from the Government has been negative, I hope that the undertaking that has been given by my right hon. Friend constantly to review the way in which the client group approach is calculated and applied to local authorities, and to Grampian region in particular means that there will be a review of the way in which future formulaes are fixed.

These are extremely complex matters. They will be difficult for some Scottish local authorities to cope with. However, at the end of the day they underlie the Government's commitment to contain public expenditure within resonable bounds. That is the essence of our debate. I do not believe that these matters will have the effect upon local authorities that is being suggested by the Opposition. In some senses they will be difficult to cope with, but it is far from impossible for local authorities to cope with them. If local authorities approach the problem with good will and as constructively as they were prepared to approach it under a Labour Government in 1976, I see no reason why they should not come within the guidelines and be able to make use of the support that the Government are to give them this year, without any real detriment to the services that they offer to their ratepayers.

7.20 pm

Mr. David Lambie (Cunninghame, South)

I have spoken in all the rate support grant and housing support grant debates that have taken place since I became a Member of parliament in 1970. Tonight I shall oppose the Government's proposed rate support grant, as I have opposed the rate support grant of not only previous Conservative Governments but previous Labour Governments, including the Labour Government of 1976. I can count my hon. Friends the Member for Falkirk, West (Mr. Canavan) and for Livingston (Mr. Cook) as part of a team that used to organise opposition to the rate support grants of both Labour and Conservative Governments. When we started that campaign we were told that we dare not vote against the rate support grant order because to do so would mean that the local authorities would have no money, their financial structure would collapse and all the workers would be after us because they would not receive any wages.

That was at a time when the rate support grant order was discussed at the end of November. We are now discussing it at the end of January. Luckily, one learns through experience that the advice given to a new Member is not always the correct advice. Labour Members, and a few Conservative Members, have consistently opposed the Government and their financial proposals for local authorities.

We have seen, and we are seeing again tonight, an attack by the Government on the power and resources of local authorities. We have gradually seen a reduction in the power of local authorities and more central control at a time when the burden of taxation has been shifted by the Government from the national to the local exchequer.

I listened carefully to the Secretary of State tonight and I still cannot understand why the rate support grant for 1985–86 has been reduced to 56.6 per cent. of the relevant local government expenditure—a drop from the 1980–81 position of 68.5 per cent. of the relevant expenditure. I cannot understand why the Government do not accept that they are following the Treasury's line of cutting back on public expenditure. When the Under-Secretary of State replies, I hope that he will give us and the ratepayers of Scotland some explanation of why he is following so meekly behind the Chancellor of the Exchequer's policy.

Local authorities have been complaining since 1980–81 that the Secretary of State assumed in his settlements total relevant expenditure which was too low, having regard to the real and urgent needs of local authority services in Scotland, and which showed no significant increase in real terms. I shall not develop that argument, because it was fully developed by my right hon. Friend the Member for Glasgow, Govan (Mr. Millan). He also asked some relevant questions to which I hope we have the answers.

At the same time, the percentage to be met by the rate support grant has been cut year by year, with serious consequences for all Scottish ratepayers. This year the situation has been made worse for district councils by a change in the distribution formula, which has reduced their share of the needs element in the grant from 9 per cent. to 6.5 per cent.

Again, I listened carefully to the Secretary of State for some explanation of such a change at this time — a change in the distribution formula reflecting the percentages given to the regional and district authorities. I received no answer. I hope that the Under-Secretary of State will try to give us an answer tonight. Why are we making this change at this time when we have all the other changes associated with revaluation?

My constituency is within Cunninghame district. I am sure that the hon. Member for Cunninghame, North (Mr. Corrie) although belonging to a different political party, will recognise that our council has tried to maintain local services and to keep a reasonable level of rent and rates. But it is finding great difficulty in maintaining the services which people expect and keeping rents and rates at a reasonable level. A statement given to me by the chief executive of Cunninghame district council shows a frightening position, especially for the ratepayers.

In the draft estimates for the next financial year net expenditure is up by £211,000–1.29 per cent. over the coming year. That is against a background of a 4 to 5 per cent. increase in the rate of inflation. Therefore, the council has been trying to maintain its services without increasing costs. It will manage to do that, if the estimates are accepted, against a rate of inflation set by the Government of between 4 and 5 per cent.

Because of Government action in taking back part of the current rate support grant, the council will probably start the year at 31 March with a deficit of £200,000. That compares with a credit balance of £700,000 at the beginning of 1984–85. The rate support grant needs element has been reduced by £1,245,000 and is likely to be further reduced, possibly by some £700,000.

There are also serious doubts about the sum that will be received by the council as the rate support grant resources element. I hope that we shall have some information on that, either now or in the near future.

On the proposed budget, the total amount payable by ratepayers will increase by nearly £1.5 million — an increase of 13.01 per cent. over the 1984–85 figure. Of that increase, £211,000, roughly 1.87 per cent., is because of increased expenditure by the council, and £264,000–2.35 per cent.—is because of changes in the balances. Nearly £1 million—8.79 per cent.—is because of the withdrawal of the Government's support through the rate support grant. With that amount of withdrawal, no council can keep within the guidelines and still play fair with the ratepayers on services.

Due to revaluation, it is not possible to compare the rate poundages, as has been stated often tonight, in 1984–85 and in 1985–86. But examples of district rates increases, based on overall changes in the rateable value which we already know, show startling increases for domestic ratepayers. I put those figures to the hon. Member for Cunninghame, North and remind him of them and I hope that he will remember them when he votes tonight.

In public sector housing, we shall see an average increase in rates not of 13.01 per cent., as I have already quoted from the estimates, but, because of the change in the revaluation, of 30 per cent.

The owner-occupier, the backbone of the Tory vote in our area, will face a percentage increase, because of the changes in the revaluation, of 37.25 per cent. I wonder how the hon. Gentleman will explain to all the Tory voters in Arran, West Kilbride, Fairlie and Largs an increase of 37.25 per cent. That is not because of the sensible council's policy but because of policies forced on it by the Government and the implications of not only the housing support grant order but the rate support grant order that we are discussing tonight.

Before the election I represented Central Ayrshire which spread from Cunninghame into the neighbouring district council of Kyle and Carrick, for which at that time I had the honour of sharing responsibility with the Secretary of State. I sometimes doubt whether the district council of Kyle and Carrick still has a Tory majority, because the Tories keep expelling people, but unfortunately the Labour party does so too, which maintains the balance. But giving Mr. Gibson McDonald the benefit of the doubt and assuming that he is still a Tory, even Kyle and Carrick, with a Tory majority, is finding itself in great difficulty in trying to be fair to the ratepayers.

The latest estimates prepared for the council show that an increase of 10.5 per cent. is needed in the average district rate. That is clawback of more than £1 mil nor from local ratepayers. I hope that the Secretary of State can answer the ratepayers in Troon and Ayr for that clobber.

That increase does not take into account the effects of revaluation of domestic ratepayers. Everyone has spoken about that, and I highlighted the case of Cunninghame. The average increase in domestic valuations in Scotland is 17 per cent. The Secretary of State made great play of the fact that he has given a subsidy of 9 per cent., but that leaves 8 per cent. to be met by domestic ratepayers. Will that subsidy of 9 per cent. be paid this year only or will it be paid from now until the next revaluation? If it is only to be paid this year, the Secretary of State is conning our people and getting Tory Back-Bench Members to support the order on the basis that he is giving what in his terms is, a substantial subsidy. If it is only to be paid this year, the Secretary of State will give the authorities nothing in the following four years and Conservative Members will find difficulty in justifying the increases in rates. If we add the two average percentage increases of 10.5 per cent. and 8 per cent., the Secretary of State's own domestic ratepayers will face an extra 18.5 per cent. this year, before any changes. That is a minimum figure.

I hope that the ratepayers of Troon and Ayr have long memories and remember the vicious action by the Strathclyde assessor during the 1978 revalution of their properties. The assessors are now doing to domestic ratepayers what was done in Kyle and Carrick, Troon, Prestwick and Ayr in 1978. I am sorry to say this when the Secretary of State is absent, but he will know that I am not attacking him but drawing the attention of his voters to his previous actions. In 1978, the Strathclyde assessor illegally assessed private houses in Troon, Prestwick and Ayr.

At that time, the right hon. Member for Ayr (Mr. Younger) was in opposition, and there was a Labour Government. He and I had numerous meetings with representatives of the ratepayers associations for Troon and Ayr. Together we led a deputation on behalf of ratepayers complaining about the illegal assessments on private houses by the Strathclyde assessor. I remember going with him to St. Andrew's house to meet my right hon. Friend the Member for Glasgow, Rutherglen (Mr. MacKenzie), who at the time was Minister with special responsibility for rating and valuation. We told him that the Strathclyde assessor had illegally fixed valuations on private houses in Troon and Ayr.

When an assessor fixes valuation levels, he must take into account rent levels in an open market—that is, where there is neither a surplus nor a shortage of houses.

Because there was no rental evidence, the assessor did not carry out the law and use rental evidence; instead he used capital values.

My point tonight is that this year, at the secret meeting before they started to look at revaluations, Scottish assessors decided to do what the assessor in Strathclyde did in 1978 and use capital values, which is illegal.

Following the last revaluation, about 50 ratepayers in Troon appealed to the Lands Valuation Appeal Court in Edinburgh: it has gone down in history as the Troon decision. They won their case because the Ayr assessor refused to provide the evidence on which he based his valuation; he had based it illegally on capital values, since there was no rental evidence. The ratepayers of Troon won their case and got substantial reductions in rates, some of which amounted to more than £1,000. The ratepayers had the full co-operation of the present Secretary of State for Scotland and me.

I was surprised, therefore, that the Secretary of State thought that this revaluation was the best thing since sliced bread. He implied that it was great because the English were losing and were unfortunate not to have had a revaluation since 1973. I was taught to believe that the English were cunning, and I know that they are, because most of their political parties have had the sense to stop revaluation until the rating system is examined.

Why does the Secretary of State not stick to the policy he advocated when he was in opposition? The revaluation must be halted. I know that it is difficult because time is short, but if we do not halt it, ratepayers will face tremendous increases. Moreover, domestic ratepayers, council tenants and Tory voters will be hammered by the new rate levels.

The hon. and learned Member for Perth and Kinross (Mr. Fairbairn) also said that something would need to be done about the rating system. The Tories cannot get away with this. The Prime Minister and her Government remain committed to the abolition of the rating system. Why do they not stand up and say so? Why all this shilly-shallying? It was in the 1974 manifesto, but not in the 1979 manifesto. I am a traditionalist and believe that, if something is in a manifesto, it should be justified and carried out.

The Prime Minister remains committed to the abolition of the rating system. Indeed, it is time that we examined the system. I used to believe in keeping local democracy in the family. That was in the good old days of Labour and traditional Tory Governments—Governments that used to be led by Lord Stockton, who is now making tremendous speeches in another place. But now we are dealing with hard-hearted, first-generation men, like the hon. Member for Stirling (Mr. Forsyth), who have neither heart nor soul, and who look at the balance sheet and carry out anything that goes below the line.

The Opposition want the revaluation halted, and a reconsideration of the system of local government finance. Despite my family's tradition in local government, and the fear of the threat to local democracy, I now believe that we should scrap the rating system. If we Cannot find another method, we should use 100 per cent. Government grants. At present, the Government are paying half the money, but they have put many restrictions on the spending of the other half. We wish to return to square one.

To give us time to reconsider the system, we should introduce 100 per cent. Government grants and allow local authorities to work within them to the best of their ability. We shall then know who to blame. It is unfortunate that hon. Members, who must take the decision, are not at the sharp end. When our constituents come to our surgeries and complain that services have been cut, and rents and rates increased, we say to them, "It is not our fault. It is your local councillors' responsibility." But it is our responsibility, and we must protect local councillors.

I hope that many Conservative Members will get off their knees tonight and come into our Lobby to take action against the policies of this Government. If ever action was needed, it is tonight.

7.41 pm

Mr. Donald Stewart (Western Isles)

I am pleased to follow the hon. Member for Cunninghame, South (Mr. Lambie), although I disagree with his suggestion of transferring the antagonism of our electors back to the local council. We should tell them clearly that the fault is entirely that of central Government. If hon. Members thought that the hon. Gentleman's attack was robust, they should have met his father. During the 1950s and 1960s I met Provost Lambie of Saltcoats at the Convention of Royal Boroughs; he was fighting the Scottish Office as hard then as the hon. Gentleman is now.

In his opening speech, the Secretary of State put up a couple of Aunt Sallies simply to knock them down. He said that a story being put about by people opposed to the Government suggested that in the old days local authorities were free to spend what they wished. I have long experience of government at town council and county council level, and I do not remember, even in the most comfortable times, being allowed to spend what we wished. The Secretary of State is right: the position was never so cushy that authorities could spend what they wished. However, no one in the Opposition has suggested that there was a time when that happened.

When considering such matters, we must bear in mind the functions that have been laid on local authorities by Parliament. When that was first done, the Government of the day funded those functions properly. However, gradually, the finance for those functions has been withdrawn by the Government, yet they and certainly the local residents expect the functions to be carried out at the same level as before.

The Secretary of State said that another common story was that services in local authorities had been cut almost to nothing. That is also perfectly true. There has been a severe erosion of the services which the public are entitled to receive from local authorities. The Government talk about the necessity for savings, but some of those savings are unwise. The unpainted council house window this year becomes the window that must be replaced in a few years' time. It is extremely short-sighted economy, even from the Government's point of view.

It is completely false to say that in recent years local authorities have gone on an irresponsible spending spree. The Secretary of State said that he appreciated that he was creating problems for some authorities. He is creating problems for them all. The right hon. Member for Glasgow, Govan (Mr. Millan) talked about guidelines, but my local authority in the Western Isles cannot get near to the guidelines laid down by the Scottish Office; goodness knows, it is a mean enough limit for the council to reach.

In 1981–82, the rate support grant for Scotland made up almost 64 per cent. of local authority expenditure. In 1975, it made up about 80 per cent.

Mr. Ancram

The right hon. Gentleman talks about the difficulty that the Western Isles council has in meeting the guidelines. I know that he would wish to be fair. Is it not true that this order will mean an increase in the rate support grant for the Western Isles of £714,000? It is one of the few authorities whose rate support grant will be increased, and I hope that the right hon. Gentleman recognises the fact.

Mr. Stewart

I certainly do, but it falls far short of the amount needed. From the document produced by the council and circulated to all Scottish Members, if the Minister's claim is correct, the council would have received an additional £5.8 million during the past two or three years.

In 1985–86, the rate support grant will make up 56.5 per cent. of local government spending, and less money will be made available next year than this year.

Mr. Tom Clarke

As the Western Isles authority, whose case the right hon. Gentleman is representing so well this evening, is an all-purpose authority, it is impossible for the Minister to make comparisons with regions and districts which, by their nature, have separate functions.

Mr. Stewart

I accept the hon. Gentleman's point entirely.

The current expenditure guidelines, introduced by the Labour Government in 1976 and applied punitively by the Conservative Government since 1981, are not easily understood and seem to be applied arbitrarily and unfairly. The guidelines were recently made mandatory under the Rating and Valuation (Scotland) Act 1984. If they follow the guidelines, which must be applied practically, all Scottish district councils will have to reduce expenditure by as much as 7 or 8 per cent. The average reduction will be 5 per cent., which of course is in addition to any previous reduction.

Yesterday, in opening the debate on housing support grant, the Under-Secretary of State—the hon. Member for Edinburgh, South (Mr. Ancram)—said that the Scottish Office has reached agreement on a formula with COSLA. I know that he did not intend to pull the wool over the eyes of hon. Members, but if that was reported in the press, the public might get an entirely wrong impression. I and the hon. Member for Monklands, West (Mr. Clarke) met representatives of COSLA today, who told us that, in relation to housing support grant and rate support grant, the Scottish Office had united all Scottish councils in opposition to its plans.

Opposition to the policies of the colonial administration in Edinburgh extends beyond the councils. Even the Federation of Self Employed and Small Businesses in Scotland—this should be of some concern to Ministers—has slammed the cuts in rate support grant. The secretary of the federation wrote to the Secretary of State saying that he was "horrified" by the extent of the cut, and he warned that the Conservative party was in great danger of losing traditional areas of support. I sincerely hope that his assessment is correct. The Conservatives may not be unduly worried. They are getting so thin on the ground now that—

Mr. Ancram

We got ten times what you got!

Mr. Donald Stewart

The Conservative party got ten times what we got, but we are on the way up and they are on the way down. The Conservatives in Scotland are like the buffalo in America: there are a few still in awkward pockets, but the great herds have gone for ever.

This year's cuts will be made even more difficult to bear in Scotland because of the impending revaluation. I support the hon. Member for Cunninghame, South in his suggestion that the revaluation ought to be postponed. Because of this the domestic ratepayer in Scotland could be faced with rates increases of up to 25 per cent. in some areas. I could go into more detail and give more facts and figures about these effects, but I want to concentrate now on the underlying problem which has left Scotland in the present situation.

Scotland has been starved of funds by the Government. The Secretary of State, who only performs the role of a colonial governor, is virtually powerless to do anything about the situation. The squeeze on Scotland has been carried out by the English Cabinet and the English Treasury.

I have studied the latest public expenditure plans. In the next three financial years, the Scottish block suffers more cuts in real terms. The estimated outturn for 1984–85 is £6.8 billion. For 1987–88 the figure in real terms will be only £6.2 billion. I want the Minister to deal w ith that point. Apart from what the Minister is doing for local authorities, the Scottish slice of the cake from the United Kingdom Treasury is being reduced by the Government.

An examination of the situation over a longer period emphasises the cuts. In 1979–80 the Scottish block comprised 5.9 per cent. of the United Kingdom total, and in 1987–88 we will have only 5.15 per cent. The policy will impoverish Scotland, even though we could and should be one of the wealthiest nations in Europe, if not in the world.

The majority of people and political organisations in Scotland oppose the cuts in rate support grant and the policies of the Government towards Scotland in general, but the opposition to the Government will be impotent unless it takes political action to ensure that Scotland does not suffer any longer at the hands of an uncaring and hostile London Government. Those who claim to speak for Scotland can give force to their claim if they join the struggle for an independent Scottish Government. That is the reality which they will all have to face at the end of the day.

7.52 pm

Mr. Michael Forsyth (Stirling)

I am grateful for the opportunity to respond to the points made by the right hon. Member for Western Isles (Mr. Stewart) about public expenditure. The test of the wealth of a country, or a nation as he would describe it, lies not so much in how much is spent by the Government, as in how much is created in the private sector. It is odd that the right hon. Gentleman should seek to argue for a wealthy and prosperous Scotland while arguing against the Government's public expenditure strategy, which is to increase the proportion of the gross domestic product not spent by the Government.

While listening to some of the arguments on public expenditure which have been advanced by Opposition Members I was struck by a feeling of astonishment and amazement because, if any criticism is to be made of the Government's public expenditure policy, it should come from the Conservative Benches. The fact is that the Government have not cut public expenditure at all, and the White Paper published this week makes it clear that the Government have abandoned all attempts to cut public expenditure. They have decided to content themselves with containing it at its present level and achieving a level of growth in the economy that will reduce it as a proportion of the gross domestic product.

As local government is responsible for spending some 51 per cent. of the allocation which is in the gift of the Secretary of State and the Scottish Office, it is surely self-evident to any hon. Member, whatever his political persuasion, that local government must play a part in exercising restraint. This is true for the country as a whole. The proportion is approximately 25 per cent. of all public expenditure.

What is most astonishing in listening to the debate is to realise that no Opposition Member has been honest enough to admit that the problem that we face is that in 1978–79, when the Conservatives came to power, local authority expenditure was 2 per cent. less in real terms than it is now. We have heard of the expectation in the representations of COSLA and in the speeches of some Opposition Members that somehow or other local government should be insulated from the problems which beset the rest of the economy and that local authorities should be entitled, as of right, to expect their incomes to go up in line with or beyond inflation because of their particular difficulties.

I find that remarkable. Do opposition Members not talk to the people whom they represent, to the business community and to people on fixed incomes? Do they not recognise that for the vast majority of people the expectation that their incomes, whether they be businesses or private individuals, can increase year after year in line with or ahead of inflation would be considered absurd? Despite that, all the debate about local government is conducted in that context.

A similar situation exists with respect to manpower levels. After the blizzard which the Government are supposed to have imposed on local government in September 1984, the manpower levels in Scotland stood at 252,000, and in 1976 they stood at 255,000. After the Labour Government had had their go at reducing local authority expenditure and manpower levels, the figure fell to 245,000. Thus, local authority manpower levels today are some 7,000 ahead of what they were in 1976.

Mr. Dewar

What about housing benefit?

Mr. Forsyth

The hon. Gentleman asks about housing benefit. Not even this Government, whom he claims are vindictive in their attacks on local government, have tried to do what his Government did, which was to cut manpower levels in one year by some 10,000. Would that they were able to achieve that, and would that they were able to have the sort of support that Opposition Members gave to the then Labour Government. Indeed, as my hon. Friend the Member for Aberdeen, South (Mr. Malone) pointed out, COSLA gave its support with enthusiasm. It is astonishing that the guidelines presented then were guidelines to assist local authorities.

Mr. Tom Clarke

It astonishes me that the hon. Member for Stirling (Mr. Forsyth) should present himself as a historian on COSLA. Has he enough respect for COSLA and for local government to read the record of that period? If he does, he will find that COSLA was opposed to the manpower reductions. If he has any doubts about that, will he consult the then vice-chairman, who happened to be myself, and I will confirm that that was so?

Mr. Forsyth

I am grateful to the hon. Gentleman. Perhaps he could take the matter up with my hon. Friend the Member for Aberdeen, South, whom I may have misrepresented, and I take the hon. Gentleman's word for it and withdraw what I said.

If I take what the hon. Gentleman says at its value, no doubt when I read the record I will find that COSLA said that it was impossible to achieve these reductions, that there would be endless hardship and that local government would suffer. The fact that the then Government managed to do this shows what COSLA' s special pleading is worth. We hear this special pleading from local government in terms of its right to have its resources increased over and above inflation year after year and we have seen the political irresponsibility of many local authorities which supposedly care about their constituents. We have seen the phenomenon of local authorities deliberately making cuts where they are going to hurt most, where they will result in the biggest newspaper headlines and where they will have the greatest impact on the local community, despite the sure and certain knowledge that they could achieve economies without imposing hardship.

Mr. Donald Stewart

Where?

Mr. Forsyth

If the hon. Gentleman is patient, I shall endeavour to deal with that.

I deal next with two authorities in my area, Stirling district council and Central region. From my correspondence as a Member of Parliament, I was astonished to find that as a result of Government cuts, Central region does not have enough money to fit a handrail to an old lady's bath. I find that Central region cannot operate community buses any more. I also find that there is no money to teach music and special subjects in the schools, and that the district has no money with which to carry out repairs and maintenance. The region apparently has no money for repairs to roads, and the district has no money for the pavements. The region apparently cannot do anything about flooding or any of the other things, because of Government cuts. Central region cannot do anything either about helping teachers where alterations have been made in mid-term.

All of those things involve relatively small sums of money — [Interruption.] The last case that I cited involved Killearn primary school. The authority does not have enough money to avoid disruption to all the classes in that school in the middle of the year, because that would cost £ 11,000 and it would incur penalties if it spent that money, but of course that is not true. The council does not have £11,000, but it has £250,000 to give to striking miners' families. Oh yes, it can do that! Fife has £1.5 million to give to striking miners' families, Glasgow has £30,000 and Edinburgh has £25,000, as well as £5,000 to give every month to striking miners' families. Of the 326 miners' families in the Edinburgh area, 274 have gone back to work, so Edinburgh is supporting not the mining community, but the political activists.

The list is endless and I could go through authority after authority. For example, Falkirk, Stirling and Clackmannan have £3,000 a week to give away, yet they have the nerve to argue that they do not have the resources with which to carry out their basic functions. I have just seen my district council. Apparently, six councillors need to come to Westminster to lobby me without having made prior arrangements. They put in green cards without telling me that they were coming, so it took some time before we met each other. It took six councillors to come to tell me of the council's views on the Government proposals.

As I live in the constituency and am in Stirling virtually all the time when I am up there, that seems astonishing, but it is even more astonishing that I have not seen those councillors in the Gallery listening to the debate, although I arranged two tickets for them — [HON. MEMBERS: "They were there."] They may have been there earlier, but they are not here now and they seem to have misinterpreted the meaning of the phrase, to make one's case at the Bar of the House. If local authorities expect to be taken seriously about expenditure, it is high time that they showed themselves to their ratepayers and to the Government as being concerned about expenditure levels.

Mr. Dennis Canavan (Falkirk, West)

The hon. Gentleman should not insult councillors who made a long and difficult journey to Westminster to get hold of him. Many of us know the difficulty of getting hold of the hon. Gentleman in his own area. He does not even advertise exactly where his surgeries are, and constituents have to be vetted by the local party machine before they get an interview with him. I know, because I am a constituent of his. On more than one occasion, when local authorities have arranged meetings with all the local Members of Parliament, the Labour Members have turned up to a man, while the hon. Gentleman has not even bothered to do so. No wonder those councillors had to come to London to get a grip of him.

Mr. Forsyth

I am grateful to the hon. Gentleman for that intervention. If he has something to say in the debate, I hope that his argument will be a little firmer. As he well knows, my surgeries are advertised regularly. There is one this Friday, which will have 10-minute appointments, and which will last from 2.30 pm to 6.30 pm. The hon. Gentleman knows that only too well. I mean no offence to him or to other Opposition Members, but there is a tendency for meetings to be fixed and for invitations to be sent to me at seven days' notice. I must say to those Labour Members in Central region that I do not know how they manage to represent their constituency interests if they are available at that sort of notice to attend meetings with Central region. I am busy meeting people in my constituency and doing my job as a Member of Parliament—

Mr. Deputy Speaker (Mr. Harold Walker)

Order. I think that we are moving away from the subject of Scottish rates. I hope that the hon. Gentleman will address his remarks to that.

Mr. Forsyth

rose—

Mr. Harry Ewing (Falkirk, East)

The hon. Gentleman told a lie about why he did not come. He was on television.

Mr. Forsyth

I ask the hon. Gentleman to withdraw that remark. Will he withdraw it? He said that I told a lie about being unable to attend and that I was on television, but that is untrue. The hon. Gentleman is referring to a letter. Will he please withdraw his remark? I shall give way to the hon. Gentleman so that he can do so.

Mr. Canavan

I shall speak now, Mr. Deputy Speaker. Thank you very much. I am glad to have an opportunity to follow the hon. Member for Stirling (Mr. Forsyth)—

Mr. Forsyth

rose—

Mr. Deputy Speaker

Order. I thought that the hon. Member for Falkirk, West (Mr. Canavan) was responding to the remarks of the hon. Member for Stirling (Mr. Forsyth).

Mr. Canavan

I thought that the hon. Member for Stirling had finished his speech, and I was about to begin mine.

Mr. Deputy Speaker

I call Mr. Forsyth.

Mr. Forsyth

I had asked the hon. Member for Falkirk, East (Mr. Ewing) to withdraw his remark. He said that I had told a lie and that I was on television. That is completely untrue. He knows that I wrote a letter to Central region explaining why I could not be at the meeting. I think, from memory, that I had five or six engagements that day, of which appearing on television was one. The television interview was live at the BBC, and was at 11 pm. I take it that the meeting did not go on until then. Will the hon. Gentleman please withdraw his remarks? I give way for him to do so.

Mr. Deputy Speaker

I do not know which hon. Member is being referred to. I did not hear the remark that is alleged to have been made.

Mr. Forsyth

It seems to me—

Mr. Ewing

I did not rise earlier, because the hon. Member for Stirling (Mr. Forsyth) has not yet been here long enough to assume the powers of Mr. Speaker or Mr. Deputy Speaker. I assumed that he would appeal to you, Mr. Deputy Speaker, and would not take your powers unto himself. However, I stand by what I said. The hon. Gentleman wrote a letter to Central region saying that he was at the Wallace high school in Stirling, when in fact he was on television. I shall not withdraw my remark, because it is absolutely true. The hon. Gentleman knows it to be true, and I shall not in any circumstances protect the hon. Gentleman from his own folly. He said that he was at an evening engagement—a cheese and wine party at Wallace high school—when he was on BBC television debating the miners' dispute and attacking the miners.

Mr. Forsyth

I do not want to take up too much time, because there are more important matters before us, but I went to the "Any Questions" session at the Wallace high school, stayed for a glass of wine and drove straight to Glasgow and appeared on a programme. We will get that information confirmed. I hope that the hon. Gentleman will have the good sense and courtesy to withdraw his remarks—

Mr. Deputy Speaker

Order. Now that he have had explanation and counter-explanation, can we get back to the subject under debate?

Mr. Forsyth

I apologise, Mr. Deputy Speaker, but it really is too much that the argument seems to have been given over to personal abuse.

Stirling district and others have said that they are concerned about housing. Although we are not discussing housing tonight, it is indicative of their attitude to expenditure that they refuse to go out and sell council houses, although they say that they are concerned about housing, and Scottish authorities can use all of their receipts for housing purposes. It is astonishing that my district council can say that it is concerned for the ratepayer—

Mr. Younger

I am sorry to interrupt my hon. Friend, but it was in the clear hearing of every hon. Member that the hon. Member for Falkirk, East (Mr. Ewing) stated that my hon. Friend had told a lie. Irrespective of the issue, I think that that is an unparliamentary expression and it would be helpful, Mr. Deputy Speaker, if you could clear up the matter.

Mr. Deputy Speaker

As I have said, I did not hear the remark. If it was made by any hon. Member about any other hon. Member, it was certainly unparliamentary and discourteous and should be withdrawn.

Mr. Ewing

In the interests of good order and to facilitate the debate—and in due deference only to you, Mr. Deputy Speaker—I withdraw the remark. I do so if I have offended you, Mr. Deputy Speaker.

Mr. Forsyth

I am grateful to the hon. Gentleman for his courtesy in withdrawing the remark.

I find it difficult to believe the representations that are made, for example by Stirling district council, to the effect that the Secretary of State is so reducing the rate support grant that it is unable to provide services, when that council can find £50,000 for Christmas lights, can put on laser displays, can combine with other authorities and the Central regional council to deliver through letterboxes at Christmas time a board game in four colours, supposedly to explain the difficulties of running a district council on a tight budget, can spend £10,000 on setting up a women's committee and can send councillors on beanos not only to Westminster but to East Germany. The tragedy is that those councillors were not given a one-way ticket.

Mr. Dewar

The hon. Gentleman should accept that this has been an exceptional week in the House of Commons, with the whole district council policy committee of COSLA being in attendance at the House. Its members came here to brief hon. Members, which they did most effectively, though they had some difficulty in catching up with most Conservative Members.

On the substantive point, the hon. Gentleman will be aware that the needs element of Stirling's rate support grant has been cut from £1.6 million last year to £800,000 this year. Does he think that that is fair and just? Does he support that cut of 50 per cent. in the needs element of Stirling's rate support grant?

Mr. Forsyth

Not only is it fair and just, but, in view of the way in which Stirling district council has wasted resources, it is, if anything, over-generous. I am conscious of the passage of time, otherwise I would give a longer list of examples of the activities on which that council is spending money. Not only is it indulging in extravagant expenditure, it is incurring open-ended expenditure. For example, it has said that it will sue the National Coal Board and, if need be, take the case to the House of Lords, over the closure of Polmaise.

Mr. Gerald Howarth (Cannock and Burntwood)

Although I do not represent a Scottish constituency, my hon. Friend might care to acknowledge that, for example, in Cannock we had Christmas lights for the first time in 14 years, and those lights were funded entirely by voluntary subscriptions.

Mr. Deputy Speaker

Order. We are dealing with Scotland, not Cannock.

Mr. Forsyth

I am grateful to my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth) for making that point. Indeed, I put it to Stirling district council that it might get the local business men, whom we were told benefited from the display, to pay. The council responded that the business men much preferred the district council to pay.

Mr. Canavan

rose—

Mr. Forsyth

I have given way generously. I hope that the hon. Gentleman will forgive me for not doing so again, although I always find his interventions entertaining.

Even more worrying is the way in which some district councils are not only being extravagant in their expenditure, but are using it for political purposes, and in so doing are going out of their way to undermine the need to obtain value for money for their ratepayers. I have in mind a resolution passed by Stirling district council not to allow to tender firms associated with, or which had as customers, companies which crossed miners' picket lines — [Interruption.] I understand that that resolution has been circulated widely among other authorities.

Another example is that of Dumbarton, which has excluded Tarmac from its tender list on the ground that that company once did work at Greenham common. That is disgraceful, for it is a clear attempt to prevent competition and the ratepayers from getting the best value for money.

My right hon. Friend will have received a large number of representations about hard-pressed authorities, and I have spoken of Stirling. However, there are others. For example, Edinburgh can find £1,100 for posters about Chile and can support "Scientists Against Nuclear Arms". It can find £2,000 for a miners' wives art exhibition and money to support the Scottish Labour party history society, which presumably will not be a long-term open-ended commitment. It can also find money for a number of other groups. Indeed, it found a total of £37,000 for donations to Left-wing causes and groups.

While I welcome the order, I hope that my right hon. Friend will focus attention on the abuses that occur, because ratepayers find it difficult to understand how it is possible for local authorities to continue to sting them and incur expenditure in the ways that I have described.

I listened to the representations made by COSLA, and I pay tribute to the care with which it prepared its case. It is clear that the rating system is creaking. There is a feeling abroad that we may be testing it to destruction. As a system, it is not only unfair and bears no relation to the cost of the services provided, but it has clearly demonstrated that it is capable of encouraging irresponsible rating and other actions by local authorities.

I wonder how long the Government and my party can hide behind the need for general agreement. We did not go for general agreement when we decided on our policies, which I fully support, for example, of denationalisation or the introduction of Trident. The time and energy of Ministers and their civil servants would be better spent finding the means for reform rather than for controlling irresponsible authorities.

I find myself in curious agreement with the hon. Member for Cunninghame, South (Mr. Lambie), in that he has come full circle and wants a system by which 100 per cent. of the funding comes from central Government, yet he complains about the Government controlling local authorities from the centre. I believe that 100 per cent. funding by central Government would represent the worst of all worlds.

However, I agree with the hon. Gentleman that the rating system may be at the end of its days. Accordingly, I ask the hon. Gentleman to consider the idea of a poll tax, and I would go with him in funding education from central Government. We should, at the same time, increase benefit levels and pensions to reflect the average level in Scotland of poll tax. Everybody would then have an incentive to see that local authorities behaved responsibly.

I hope that my right hon. Friend will recognise that he has enthusiastic support from these Benches for what he is doing, that we have not been taken in by the arguments of Labour-controlled councils and that we are concerned about the pressure on the rating system due to their irresponsibility. We are concerned for Conservative councils which have behaved responsibly but which are suffering. We are looking for radical change.

Several Hon. Members

rose—

Mr. Deputy Speaker

Order. If the debate is to conclude at a reasonable hour, hon. Members will have to exercise more restraint in the length of their speeches.

8.19 pm

Dame Judith Hart (Clydesdale)

I shall not even attempt to follow the hon. Member for Stirling (Mr. Forsyth) in his astonishing exercise in how to make friends and influence people. I think that he made more enemies in his lengthy speech than most people do in a lifetime in the House. I shall not attempt to follow his nonsense.

I have one thing in common with the hon. Gentleman. Tonight I shall speak about a council the political opinions of which I do not share. The hon. Gentleman does not share the opinions of his district council — that is abundantly clear. Hamilton district is in my area. Its concerns are great; it is deeply alarmed about all that is happening, particularly about the housing support grant, which was discussed yesterday. However, my major council is Clydesdale. The Secretary of State talked about highly political local authorities. Like the hon. Member for Stirling, he uses the word "political" to describe anything with which he does not agree.

Clydesdale has a majority that is predominantly Conservative, with a couple of Right-wing Scottish Nationalists. Therefore, my party is in the minority. I have seen my council and it has asked me to express to the Secretary of State its deep alarm at the consequences of the level of rate support grant that it will receive this year. It has been a comparatively well behaved council, by the Secretary of State's standards. It exceeded his guidelines in 1983–84 by some 14 per cent., but it believes that at the outturn of 1984–85, in a month or two, it will probably be shown that it is within the guidelines or very near them.

My area, in which Clydesdale district council is seeking to carry out its obligations to provide services, has a male unemployment rate that has hovered between 23 and 25 per cent. for the past two or three years. Most of the unemployed are long-term unemployed, and therefore on supplementary benefit. So quite a lot is needed, particularly for the young people who are unemployed, yet Clydesdale will have to have a standstill budget with no improvement in services in the coming year. It projects that it will need a 4p increase in the rates, which is an increase of 16.3 per cent. In the region, because of revaluation, it is expected that there will be an 18 per cent. increase. Therefore, Clydesdale will face high increases in rates, and it will be difficult for the council to provide the minimum level of service.

I should like to take up one point of detail to illustrate the nonsense of what is being done. The assessment of expenditure needs under the client group approach, is laid out in the Secretary of State's circular. There is an assessment of expenditure needs for Clydesdale district council for several different services. I should like to refer to two minor points first. According to the Secretary of State, in the coming year of 1985–86 there will have to be a reduction of 0.8 per cent. on environmental health and 0.6 per cent. on cleansing. I do not know how any authority can reasonably cut cleansing. I do not know what one has to do to cut cleansing. The streets do not stay cleaner because there is 0.6 per cent. less in the budget.

Mr. Ancram

Privatise the service.

Dame Judith Hart

The Minister may prefer that, but the normal consequence of privatisation is lower than average wages. As the wages in my part of Clydesdale are abysmally low, I do not think that there is an answer in that.

Perhaps the hon. Gentleman thinks that this service should be privatised. The major point in Clydesdale's projected budget to which I should like to draw attention is administration of housing benefits. In the coming year there will have to be a reduction of 25 per cent. in the budget for administering housing benefits, yet there is a rapidly increasing number of long-term unemployed on supplementary benefit, which means that the proportion of the population of Clydesdale entitled to housing benefits, which must be administered by the council, is growing massively. How does a council cope with that problem with a 25 per cent. reduction in its budget? Perhaps the Minister has an answer, but I cannot find one.

Because of the high unemployment there are many needy people. Strathclyde region will have less to spend on community services and social work. It is a crazy business when the Government provide less to meet a need that is so clearly and devastatingly growing.

What is the background to all that? Some Conservative Members have said that we in the Opposition do not seem to understand what the economic basis is. Sometimes some of my hon. Friends talk as if the Secretary of State for Scotland is really quite a decent chap, but is just making mistakes and cannot win in the Cabinet against the Prime Minister and the Treasury. I wish that the right hon. Gentleman were present to hear me say this. I do not think that he is losing. He has shown himself to be as committed as any of the driest people in the Cabinet to the monetarist economic policies that the Prime Minister and the Government are pursuing. What is happening to rate support grant and housing support grant is all part of that. It is not simply that one asks local authorities to cut their public expenditure; it is rather that one asks them to cut public expenditure so that there may be reductions in taxation. On the whole, that is the Government's policy.

The Government resist demands for increasing public expenditure as an employment-creating measure. Many of the aspects of increased public expenditure that are job-creating fall within the direct range of local authority spending, such as sewerage, roads, and house building, modernisation and repairs, which are all highly labour-intensive. Those services which offer possible future employment are being cut by the steps that the Government are taking.

The Government tell the local authorities that they may not engage in increased public expenditure, and in many cases they have to cut it in real terms. The Government say that in any case the ratepayers will have to pay an increase of anything between 15 per cent. and 50 per cent. in their rates. However, at the same time as doing that the Government are deflating further because they are taking money out of the economy. They are reducing consumer demand by allowing the ratepayers less money to spend on items that at least might represent a small stimulus to the economy. Of course, the situation will become worse.

The Blue Book on expenditure plans, which we debated on Tuesday, shows the expected plans for the next two years for local authorities on a United Kingdom basis. The increase in total spending by local authorities is to decrease at a rate well below that of inflation. In other words, real cuts are predicted for each of the next three years, allowing for inflation. Therefore, we are targeted on a programme that will have a severe impact on the economy and on the ability of local authorities simply to provide the necessary services, let alone improve them.

The difficulty is that among Scottish Conservative Members there are not the rebels whom we have seen in local government in England and Wales. What we have is the rebel who would like to go a great deal further, the sort who regards his Prime Minister as somewhat dangerously to the left, if we are to take the speech of the hon. Member for Stirling as an example. Nobody on the Conservative Benches has the courage to say that this is the wrong way forward. I can think of many right hon. and hon. Members who are prepared to do so in debates on rate-capping and local authority expenditure in England and Wales. What is wrong with the Scottish Tory Members of Parliament?

Mr. Canavan

They are all gutless.

Dame Judith Hart

My hon. Friend uses a word that is too indelicate for me to use, although I am prepared to accept it.

Mr. Canavan

They are spineless.

Dame Judith Hart

That word is not too indelicate. They are spineless. Not only do they lack courage, they lack the understanding to realise what they are doing and just what the Secretary of State is doing.

If there was ever a time when I thought that the Secretary of State was a nice sympathetic chap who, at the behest of the Cabinet, was having to do some rather nasty things that he did not go along with, that idea has disappeared out of the window.

We have heard that one day the right hon. Gentleman may become Secretary of State for Defence. He would have a real problem there, because big decisions will have to be taken about Trident. Earlier, we were asked what we would do to get more money for the local authorities. The answer is to cut out expenditure on Trident, settle the miners' strike instead of going hell bent for confrontation and save money there, increase public expenditure in general and reduce the amount of unemployment and supplementary benefits that have to be paid, and do something about finding a solution in the Falklands. All those taken together would result in a nice increase in expenditure for my council, which would be able to improve its services rather than cut them.

This is a disastrous evening for local government in Scotland. Most of all, it is a disastrous evening for the people who will suffer from the inability of local authorities to meet their needs.

8.31 pm

Mr. Malcolm Bruce (Gordon)

The little ding-dong that we had earlier was a little unfortunate, because it obscured the fact that the Secretary of State's argument cannot be viewed in purely party political terms. As many hon. Members have said, the facts of what he is doing do not stand up to analysis. It is a pity to obscure that with rhetoric we have heard, particularly from the hon. Member for Stirling (Mr. Forsyth), who might have done better to recognise that many Conservative councillors are concerned about what the Government are doing to their councils and to their local communities.

We hear some of the general things that are simple facts and not party political matters. The latest settlement represents a reduction in the Government's contribution to local authority budgets, from 66.7 per cent. in 1981 to 56.6 per cent. now. That means that local authorities' overall total allowable expenditure—it is not money that the Government have given them, but what the Government are allowing them to spend—will go up by 5 per cent. Across the board, that means no growth. However, for that no-growth budget, the ratepayers will have to find, on average, 15 per cent. more next year, and the average varies considerably. For district councils, the figure is 34 per cent. on average, with some wide variations.

As has already been said, the Government are in no position to suggest that they have done anything for the ratepayer since they came to power, as they have consistently been instrumental in forcing up rates and reducing services. Therefore, it is no wonder that the National Federation of Self Employed and Small Businesses is so angry and frustrated by what the Government have done. It realises, and it has made clear that it realises, that its argument is not with the local authorities but with the Secretary of State. As the secretary of the federation said about the Secretary of State: We are ready to meet him at any time. The Government are the major cause of rate rises in 1985–86, and perhaps we are wasting our time talking only to local authorities under the mandatory Consultation with Non-Domestic Ratepayers". If the Government have upset a body such as that, they have few friends north of the border.

The districts are facing particular difficulties as a result of this settlement. Their share of the total settlement has been reduced in one year from 9 per cent. to 6.6 per cent., which is a cash reduction of £36.4 million. No wonder that the settlement has been greeted with widespread dismay. The district councils have been faced with an impossible task. The hon. Member for Stirling may like to rant about Stirling council, but that is not the only council that has complained. Authorities such as Nairn, Gordon, Perth and Kinross, Ettrick and Lauderdale, hardly bastions of the Socialist revolution, or determined to bring down the Government and defy them at all costs. When such councils feel like that, the Government cannot defend what they are doing. They are hopelessly undermining the mutual respect that should exist between Government and local authorities.

While the district councils have been excessively penalised, it would be folly to pretend that the regional councils have benefited. Once or twice, the fact that the regional councils have been given slightly more of the allocation has obscured the fact that there is still a reduction. Their allocation has been cut by £24.6 million, which is just under 2 per cent.

Given that the public expenditure figures have been produced this week, it is worth looking at some of the major sectors where the cuts will fall. The hon. Member for Glasgow, Garscadden (Mr. Dewar) referred particularly to education, which is the biggest single item within local authority expenditure, and the major item for regional councils. However, the total allowable increase in local authority spending for education is 3.9 per cent., which is below the level of inflation. The Secretary of State may say that we have falling school rolls, but most people would have thought that that was an opportunity to re-invest in education rather than cut it. In real terms, with the allowance for inflation, local authorities should have been allowed an extra £20 million for their education budget.

Mr. Gordon Wilson (Dundee, East)

Does not the figure that has been quoted for education in the public expenditure White Paper, and the reductions that are due to take place, effectively put into perspective the offer that the Secretary of State for Scotland was making to the teachers, saying that there might be benefits for them if they would accept his phoney terms and conditions for negotiation? Obviously the Chancellor of the Exchequer has not been told that.

Mr. Bruce

I agree with that point, and I was just about to come on to deal with it. In the total education budget, including the Scottish Office section, there is a cut of £61 million in Scottish education for next year. That is a cut of 4.5 per cent. when, simply to protect education in real terms, there should be an increase of £96 million. If we had such an increase, there might be realistic discussions about how the teachers can be properly rewarded and how we can have a realistic framework for negotiations. As the hon. Member for Dundee, East (Mr. Wilson) has rightly said, the Secretary of State's offer means nothing when his budget shows that there are no conceivable resources in it to meet any realistic, sane or fair settlement. The teachers are right to dismiss the Secretary of State's offer as the demonstration of bad faith that they know it to be. The Secretary of State is in no position to offer it, and that is regrettable.

The practical consequences of this problem in education can be stupid, to say the least. Some years ago, the regional council in Grampian decided, perhaps because it had been motivated by the enthusiasm of a former Secretary of State for Education and Science, now the Prime Minister, to cater for pre-school children, and to build some nursery schools. There are two custom-built nursery schools in my constituency that have never functioned as nursery schools. My constituency has the highest number of pre-school children of any constituency in Scotland. Despite that, such custom-built nursery schools are not open and not providing facilities.

In the same local authority area, in the city of Aberdeen, 45 per cent. of pre-school children go to nursery schools. In Gordon district, under the same local authority, 4.5 per cent. go to nursery schools. Yet in Inverurie, the main centre of Gordon district, there is a nursery school that is not open. Understandably, the people are campaigning hard, with my full support, for it to be opened. That is not sensible budgeting by the Government. It is stupid and provocative to local communities.

The districts and regions that make up my constituency represent a good cross-section of Scottish local authorities. Gordon district is a non-political council; the city of Aberdeen is Labour-controlled and Grampian region has a minority Tory administration. Yet all of them are equally angry about what they are being asked to do.

When I intervened in his speech at the start of the debate, the Secretary of State was unable to give a satisfactory explanation of why Gordon district, even with a no-growth budget increase of 5.5 per cent. on last year, within guidelines, will be recommending a 100 per cent. rate increase. The rate increase would be 138 per cent. if the council did not have reserves from last year to draw on. No rational person could believe that that was justifiable. The Secretary of State cannot possibly defend it.

It is perhaps worth reminding hon. Members of the peculiar nature of Gordon district as a council. It has a population growth running at an average of 4 per cent. to 5 per cent. per annum. In 1975, the population was 47,000; it is now 68,000, and the projection for 1990 is 80,000. Yet it is not able to meet even the inflation rate, never mind the population growth, and will have to double its rate. I should make it clear that the total rate for Gordon district includes the regional rate, but that does not resolve the problem.

Mr. Ancram

I am sure the hon. Member wishes to be fair. He can perhaps confirm that the rate in Gordon at the moment is 9p in the pound and is one of the very lowest in the country. When he talks about the difficulties that it is facing, he could perhaps confirm that in the current year it has budgeted for a balance of £789,000, which is about 85 per cent. of its rate income. If it is concerned about ratepayers because of some of the pressures that are necessary, does he not think that it could help the ratepayers by using some of that balance?

Mr. Bruce

If the council had not had last year's balance to draw on, the rate would have gone up even more. In its budget it is no doubt anticipating what will happen next year—the total withdrawal of Government grant. If the Minister can give me an assurance that that will not happen, I may be able to persuade the council to budget for slightly less of a surplus Given that the grant has been cut this year, it is arguable that the council is not being imprudent. Certainly it has not been rewarded for its prudence in the past.

Grampian regional council, which covers a wider area, has sustained a population growth averaging 1 per cent. For a 4.5 per cent. increase in its budget next year, within the guidelines, it will be proposing a rate increase of 12.5 per cent., three times the rate of inflation. That is not defensible. Hon. Members will appreciate that a 4.5 per cent. increase in the budget is a real cut because there has been population growth.

The client group method of assessing rates seems to be unfair in its application to a number of areas. Although many people argue that the client group approach is fairer than the previous ways of assessing rates, nevertheless it contains an element of historical analysis which means that high-spending authorities benefit more than prudent authorities. It does not take proper account of authorities which have high growth rates, because the figures for population are out of date. Consequently, authorities are penalised. Its speedy implementation means that it is difficult for authorities which are losing on the system to adjust. The Minister should give an assurance that the phasing in of this system will take the four or five, or more, years originally suggested rather than the two or three years that appears to be the case.

Over the last few years the contribution to the regional council has been reducing, compared with that to other regions in Scotland. It might be argued that Grampian is more prosperous and could expect that. Given the growth in the area, the extent of the reduction in grant has been unfair. In 1977–78 Grampian had 8.83 per cent. of the population and got 8.41 per cent. of the Scottish total. In 1985–86, with 9.85 per cent. of the population, it will get 8.74 per cent. of the total. The Government's contribution to Grampian has fallen from 75 per cent. to 52 per cent., which is less than the overall average.

The third council which completes the representative group in my constituency is Aberdeen city. The hon. Member for Aberdeen, South (Mr. Malone) is not here at the moment. It is easy for him to play party politics with the budget that the Labour group wishes to set in Aberdeen city, but it is inescapable that, if Aberdeen were to follow the Government guidelines, it would have a 6.5 per cent. reduction in services for a 13 per cent. increase in rates.

The hon. Gentleman mentioned the closing of Bon Accord baths and the proposed closure of branch libraries. These proposals have been through the relevant committees and no counter-suggestion came from the beleaguered and diminishing Conservative group. If the Conservative councillors feel so strongly about it, one would have thought that they might have put forward alternative suggestions. So far as I can discover, they made no contribution to the debate. This is probably why they will soon disappear altogether from the council, and the sooner the better.

In the city of Aberdeen there will also be rent increases of nearly £4 a week. The popular view of north-east Scotland, including Aberdeen, is that it is full of oil-rich people. The housing manager in the city of Aberdeen estimates that, after the rent increase that will be required because of the Housing Support Grant (Scotland) Order passed by the House yesterday, 75 per cent. of council tenants will be on housing benefit in that supposedly oil-rich city. That is the achievement of the Government. When they try to play cheap party politics, the Government should remember that there are ordinary peoople at the bottom of the calculation who have to try to make ends meet and who are getting little help from the Government under the order that we are debating.

The settlement is unreasonable in every way. The Minister will not impress people outside the House if he chooses to play cheap party political games when the facts staring him in the face are that he is forcing up rates for a reduction in services in every council. He is doing so in a way that is unjust and unfair even by his parameters—that the councils that have followed Government policy have been penalised just as much as the rest. There is not much incentive for councils to be responsible when the Government treat them in that way. Proper account should be taken of the population growth in the north-east. If the Government showed a real interest in tackling the problems of local rates, local authorities might be able to run their affairs properly.

The Minister should take account of the specific problems of growth areas. He should recognise that what he has done is unjust and is seen to be unjust by many, including those within the Conservative party. Conservative Members who represent Scottish constituencies know that many Conservative councillors in Scotland are unhappy. Of course, such councillors are a disappearing breed. Unfortunately, Conservative Members have not had the courage to take up the feelings of Scottish Conservative councillors, save for the hon. and learned Member for Perth and Kinross (Mr. Fairbairn). In the circumstances, my colleagues and I will vote against the order.

8.50 pm

Sir Hector Monro (Dumfries)

I am aware that the House wishes to get on with the debate, and I hope that the hon. Member for Gordon (Mr. Bruce) will forgive me if I do not take up his remarks.

This debate takes place, as did last night's, against the background of the Government's statement on public expenditure, which calls for constraint. Opposition Members talk about cuts, but in real terms we are spending far more on local authorities than we were when the previous Labour Government were in power. There are substantially more people in post in local authorities than there were in the middle of the 1970s.

We hear the continual cry about reducing the percentage of Government support, but in 1978–79 the then Labour Government cut the percentage of support by 4 per cent., which was substantially more than the cut this year. Labour Members should take account of the record of the previous Labour Government before making the sweeping statements in which they have indulged today and yesterday.

I accept that revaluation this year has made it extremely difficult to make fair comparisons. Percentages have been bandied around the Chamber tonight, and many of them are probably extremely unreal. We have heard about rates being increased by 100 per cent., but much depends on the base from which we start. An increase from 2p to 4p is not so dramatic as talk of an increase of 138 per cent.

The Government have introduced an additional settlement of £19 million since the original announcement in August 1984. My right hon. Friend the Secretary of State has made it clear that if local authorities spend to their guidelines there will be more spent in real terms than there was last year. That is not a cut in local authority expenditure.

If we exclude revaluation and a local authority is on a standstill budget in real terms, rate increases should surely be near to the rate of inflation. If we allow for revaluation, increases should certainly be under 10 per cent. What are we to adjudge from the increases that are being announced of 20 to 25 per cent. for regions, and 30 to 40 per cent. for districts? Are we to assume that the formula has gone haywire or that the client group system has not worked, or have authorities increased their budgets far beyond the 1984–85 level in real terms? In the first place, we must look for savings.

If the formula has gone haywire, it is up to my right hon. and hon. Friends to find a formula that works. If the client group method has not worked, local authorities must examine their budgets again before fixing their rates, which will probably be done next month.

It has always been difficult for local authorities to meet the targets that are set by finance committees. It is as hard now as it has ever been. I hope that my hon. Friend the Under-Secretary of State will give us more information about the impact of revaluation, which is perhaps the greatest mystery in the whole conundrum. My hon. Friend knows that Dumfries and Galloway has an exceptional record of keeping within guidelines and keeping down its expenditure. However, it has found that its rate will increase by 22 per cent., and that 15 per cent of the increase will be due to revaluation. That is a bitter pill to swallow for a region that has behaved in model terms in setting its expenditure.

I am extremely glad that there has been an increase in the needs element of £1.8 million for Dumfries and Galloway, but, conversely, the districts within the region have had to suffer substantial cuts in their needs element. I accept that expenditure on education, roads and transportation is regional expenditure. As my hon. Friend the Under-Secretary of State knows, I have a particular wish to see rural schools maintained. If the education budget has to be reduced, that will put some of them in jeopardy.

We spoke last night about housing and I mentioned the difficulties facing the district councils. The regional and district councils will have to make some harsh decisions in the coming weeks before they fix their rates. They must try to get much nearer to the guidelines.

Can my hon. Friend the Under-Secretary hold out any hope for further discussions on the year's examination that will be relevant to the needs element of some of the rural districts and regions, which seem to be most seriously affected by the formula that we have put into operation this year?

Bearing in mind the constraint on time, I shall not enter into a discussion on the rating system. However, if it is to give rise to the incomprehensible system of local government finance that some suggest, the sooner that we find an alternative system the better. I shall support my hon. Friend the Under-Secretary of State in any efforts that he makes substantially to change the system.

I have said frequently that I have never underestimated the importance of good housekeeping in local authority finance and the necessity to keep manpower to a minimum. I hope that the authorities that keep within the guidelines will make a firm effort over the next few weeks to examine their manpower figures within the budgets that they have submitted.

I find the Opposition irresponsible in the statements that they have made over the past two days. They seem not to understand the risk of inflation and the need to contain public expenditure. It is crucial that we contain the level of inflation, or even reduce it over the coming year. It is only in that way that we shall in the long run—

Mr. John Home Robertson (East Lothian)

Why are the Government forcing up the rates?

Sir Hector Monro

The hon. Member for East Lothian (Mr. Home Robertson) is becoming the most arrogant Member of this place. His move to the Opposition Front Bench has gone to his head. I wish that he would try to behave in a more reasonable way.

We must work towards maintaining the minimum rates increase necessary to keep inflation down. I know that that will be hard and difficult work, but, in the long run, it will be the only way forward. For local authorities, public expenditure is as important as Government expenditure. I hope that Ministers will stick to this line: if they can find any extra money, they should be prepared in the coming year to give it to important items such as education and housing.

8.59 pm

Mr. Dennis Canavan (Falkirk, West)

These orders are a recipe for further attacks by the Tory Government on the living standards of the people of Scotland. If implemented, they will cause massive rate and rent increases and threaten many of the essential services provided by local authorities, such as education, transport, housing and social work provision for the elderly, sick and disabled.

Since the Conservative party came to power in 1979, it has cut rate support grant from 75 per cent. to 56.6 per cent. of total expenditure. There is particular concern about the cut in the needs element payable next year to district councils. My district council of Falkirk will suffer a cut of £1.5 million in the needs element payable—a reduction of almost 50 per cent.

This morning, we questioned COSLA representatives and asked whether they could quantify the effect of these measures on rate increases. We were told that some local authorities, even if they keep to the guidelines issued by the Secretary of State, will need to increase rates by more than 60 per cent. Those COSLA representatives were not just giving instances of Labour-controlled authorities. We were told that the average Scottish domestic ratepayer would face an increase of about £50 per annum — an increase of more than 15 per cent., which is more than three times the rate of inflation. Yet the Secretary of State has had the audacity to tell us that the rates increase should be in line with inflation. The right hon. Gentleman's sums do not add up. Of course he may be just abusing the English language. The right hon. Gentleman is either innumerate or illiterate, or perhaps he is both.

Since the Tory party came to office in 1979, rents have more than doubled. The orders passed last night will mean an increase in rents of at least 10 per cent., if the Secretary of State has his way. About 80 per cent. of total council housing costs will now be met from rents. That places a considerable extra burden on council house tenants in every local authority area in Scotland.

When talking about services under threat, we are referring not just to Christmas trees and Christmas lights, which the Scrooge who represents Stirling constituency wants to switch off. Matters are much more serious than that, although I admit that the Christmas lights are important in my area and that the council would be unpopular if it tried to make cuts there. Other more essential services will be threatened unless Labour councillors fight the Secretary of State. For example, there is a threat to education at a time of great crisis in virtually every classroom in Scotland. That crisis has been created by the Secretary of State through his mishandling of the teachers' justifiable pay claim. There is a threat to transport, especially in outlying areas. That threat has been posed not only by these orders but by the Bill that will be introduced to privatise or deregulate public transport. There is a threat to leisure and recreation services at a time of record unemployment. There is a threat to social work services at a time when there is an increasing population of elderly people. There is a threat to the sick and the disabled and to the families of miners who are nearing the twelfth month of a long and hard struggle.

Despite what has been said by the hon. Member for Stirling (Mr. Forsyth) and other Conservative Members, I applaud all the Labour-controlled councils, whether regional or district, which are supporting the miners and their families. Although Conservative Members might disagree with us on the merits of the strike, surely it is morally unjustifiable in any circumstance to use starving wives and children to break a strike, using them as political pawns. That is what the Government are trying to do through their DHSS legislation. However, I am glad that Labour-controlled authorities are providing a safety net for the miners and their families.

The orders represent yet another attack on what little local democracy remains in Scotland. Since the Tories came to power in 1979, there have been many attacks on local democracy. The Secretary of State for Scotland has treated the people of Scotland almost as guinea pigs. He tries the legislation out on us before his counterpart the Secretary of State for the Environment copies certain aspects of it in England.

The Secretary of State for Scotland now has a battery of powers of intervention in what were previously the affairs of the locally elected councils. That battery of powers has been created by means of Bills that have— in most, if not all, cases—been voted against by the majority of the elected representatives of Scotland in this place as well as being opposed by the majority of elected representatives in local government.

The Secretary of State and others have raised the spectre of councillors possibly breaking the law. If the Secretary of State pretends to be the guardian of the democratic tradition, he has a responsibility to bear in mind the fact that many of the laws that people may be tempted to break were passed against the wishes and votes of the majority of hon. Members representing Scotland.

In many instances, councillors may not be faced with a simple choice of whether or not to break the law. More agonisingly, they may have to choose which law to break. On the one hand, the Secretary of State has built up the battery of powers of intervention enabling him to dictate to councillors to make cuts. On the other hand, volumes of legislation have been passed over the years imposing statutory obligations on local authorities, involving minimum standards in education, social work, transport and many other essential services.

If it comes to the crunch and we are asked whether we support a discredited Secretary of State or the Labour councillors who are taking up the cudgels against him. I know on whose side I shall be. I shall be on the side not just of the majority of councillors in Scotland but of the majority of the people, rather than on the side of a Secretary of State who, as I have said on many occasions, received no mandate from the people of Scotland. The councillors whom he criticises have a far better mandate to represent their people. They have a mandate to stand up and defend the rights of the people of Scotland against the Secretary of State.

Once again, at 10 o'clock, all the Tory worms will come out of the woodwork. They will not have listened to a single word of the debate, but they will be whipped through the Lobby to vote for the orders of a Secretary of State who does not represent the people of Scotland.

If ever there was an argument for setting up a Scottish Parliament, here it is. Speed the day when that Parliament is set up and when the voice of the people of Scotland is heard, rather than the voice of a mug of a Secretary of State who does not speak for the people of Scotland.

9.9 pm

Mr. Robin Cook (Livingston)

As I understand the argument that the Secretary of State advanced and the theme that has been echoed by those of his Back Benchers who have chosen to support him, it is the contention of the Conservatives that this rate support grant order buttresses their economic record and strategy by containing public expenditure by local authorities.

It is appropriate therefore to reflect in passing that the Government's economic strategy has produced a record that consists of the highest unemployment in British history, the lowest pound in British history, the highest real interest rates in British history, record bankruptcies in each of four successive years and the worst balance of trade figures in manufactured goods since the Tudor dynasty. In view of that record, it is brazen for the Conservatives to argue that what they are doing is desirable because it will buttress their economic strategy.

If that is their contention, and even if we set aside the appalling economic record that the order is supposed to support, it is still irrelevant to argue that the order is part of the process of containing public expenditure. The key issue is not what should be the level of public expenditure by local authorities—although I am quite prepared to have a debate on that and to argue that it should be a good deal higher—but how the guideline expenditure should be financed, what proportion should be met out of rate support grant and what proportion should be left to rates. It is clear from every speech so far that the order will increase the proportion that is met out of rates and that that will result in large increases in rates throughout Scotland.

I take issue with the hon. Members for Dumfries (Sir H. Monro) and for Stirling (Mr. Forsyth). In an extraordinary speech the hon. Member for Stirling appeared to suggest that the grant to his local authority should be cut still further. Both hon. Members argued that, in some way, the order helps the Government to combat inflation. The order ensures that rates in Scotland will increase by roughly three times the level of inflation and it is part of the higher lunacy of monetarism to argue that, by putting up rates three times faster than inflation, the Government are somehow helping to contain inflation.

While the Government are shifting the balance of expenditure to be met from local sources on to local authorities, they are leaving those local authorities with less financial independence and discretion. It is impossible to view that trend without unease, because we are witnessing a growing centralisation of the state. It worries me to see growing accretion of power at the centre—on grounds of high principle, because it is an erosion of local democracy. It worries me also on grounds of practicality because it is impossible for the Scottish Office to regulate properly the affairs of 70 local authorities. I intervened during the Secretary of State's speech and it was quite clear from his response that he does not know or understand the financial circumstances of West Lothian district council. I do not criticise him on that count, but his response proves conclusively that it is impossible for any Secretary of State, even one as able and fluent as the right hon. Gentleman, to impose an appropriate financial straitjacket on local authorities which vary so much. We should reflect their differences by giving local authorities the greatest latitude.

West Lothian district council is traditionally controlled by Labour. I do not apologise for that or seek to excuse it. It also has a long history of finsncial responsibility. The council has pursued the pragmatic policy of seeking value for money. I invite Conservative Members not simply to take my word for it. Reference has been made three times during the debate to the letter to the Secretary of State from the Federation of Self Employed and Small Businesses. One paragraph of that letter states: We … must specificlly cite the proposed grant cut to West Lothian District Council of some £1.4 million. West Lothian is one of Scotland's more efficient councils"—

Mr. Tam Dalyell (Linlithgow)

Hear, hear.

Mr. Cook

I am most grateful for the support of my hon. Friend— whose spending per head of population is only some two thirds of the Scottish average. A rates support grant cut of this severity will have a dire effect on their ability to provide services and will result in businesses paying more for less". I would also cite the statement of the local ratepayers action group, whose secretary, an estimable woman who put considerable effort at the last general election into trying to prevent me from becoming the representative of the Livingston constituency, inspected the books of the West Lothian district council the other year and afterwards congratulated it upon its book-keeping and financial housekeeping. That testimony does not come from traditional Labour sources. It is testimony to a long tradition of stringency which that local authority has applied to its financial outlays.

What is the result of that effort? It is a savage cut in rate support grant of two thirds, taking it, over two years, down to one third of the current rate support grant. The speech of the Under-Secretary of State for Scotland on this point on Tuesday was greeted with incomprehension by those who heard it. I hope, Mr. Speaker, that I do not transgress the rules of the House if I say that the director of finance of West Lothian district council somehow managed to hear the speech of the Under-Secretary of State when he replied to the Adjournment debate on Tuesday. Afterwards, he told me that he was worried when he heard the Under-Secretary say that this cut would not require an increase of 20 per cent. in the rates because, he said, "We might actually do it on 19.5 per cent. and that is what I thought he was going to say."

The Under-Secretary said that the cut in our rate support grant would require an increase in rates in the Lothian region, including West Lothian, of only 1 per cent. That is wholly beyond the understanding of the officials, never mind the councillors, who are responsible for administering the finances of the district council.

Mr. Ancram

The hon. Member ought to be accurate about what I said on Tuesday. I said that, if West Lothian both this year and next spends within the guideline and if Lothian region were to do the same, that would be the overall effect on the rate. What I did not say to the hon. Member on Tuesday — perhaps he would like to comment upon it now—is that my understanding is that, in the current year, West Lothian is rating for a balance of 25 per cent. on its rate income. In his concern for the ratepayers, does not the hon. Member think that this could also be used in some way to support them?

Mr. Cook

I have no doubt that the district council will make an adequate, prudent and judicious use of its balance. The Minister has made this point twice during the debate. It is extraordinary that the Government should now attempt to argue for financial stringency and financial discipline while they oppose those local authorities that prudently lay up a balance. When I was involved with local government, it was regarded as an act of prudence rather than as a matter for criticism to lay up a balance.

I shall send back to the Under-Secretary a question to which he can reply when he winds up. Let me take the calculation that he has just offered to the House — I leave aside for the time being Lothian region — and assume that West Lothian district council comes down to the guideline. We are talking about a cut of less than 1 per cent. in total expenditure. What, then, in his calculation will be the percentage increase in rates in terms of the district rate required to compensate for the cut in rate support grant that he is making? It will be a minimum of 15 per cent. — three or four times above the level of inflation.

I wish to make only one further point in support of the case of my local authority for more resources. It takes us to the heart of the debate about rate support grant. One of the reasons why Governments have hitherto used rate support grant as a means of financing local services is that the means by which central Government raise taxation is, on the whole, more progressive than the rating system. Therefore, through income tax and corporation tax they are able to use the rate support grant in a way that redistributes resources from the wealthier to the less well off areas of our country.

There can be no doubt whatever that West Lothian district is one of those less well off areas. It is the area with the third highest unemployment anywhere in mainland Scotland. I constantly see, as I am sure my hon. Friend the Member for Linlithgow (Mr. Dalyell) sees, men over 45 coming to my surgery who have been unemployed for one or two years and who are reduced to grinding poverty by the conflict between short-term supplementary benefit rates and long-term unemployment. It is a source of distress to me that I am unable to offer them any solution to their poverty.

We have a male unemployment rate of 25 per cent., which will get worse before it gets better. We now face a cut in rate support grant from the Government to one third, following the total extinction of our housing support grant. In six years, Government support will have fallen from £7 million in 1980 to a forecast £700,000 in 1986. It has fallen to one tenth of its level of five years ago. Effectively, this area, one of the most deprived and poor areas of central Scotland, is being told that it will have to meet all its own services and needs out of its own resources and revenue raised locally. That is grotesquely inequitable.

There can be no doubt that part of the problem that we face in West Lothian, part of the poverty, part of the loss of jobs, is the result of a loss of purchasing power from that decline of Government grant to the local authority.

The Secretary of State began by referring to some highly politicised local authorities. My local authority has not approached this dispute in a spirit of confrontation. Indeed, little of what I have said will be controversial in West Lothian. Conservative as well as Labour voters are affected by the increase in rates. Conservative as well as Labour supporters in my constituency fall unemployed and find themselves dependent upon benefits. There would be broad support for what I have said throughout the political community of West Lothian. I deprecate the spirit of acrimony and confrontation in which the hon. Member for Stirling (Mr. Forsyth) addressed himself to the community affairs of the constituency that he represents.

There is at present consensus in West Lothian over what I am saying and there is no attempt by the local authority to push the issues of political confrontation, because it would much rather have a solution. Yet if the Government want political confrontation with my and other local authorities, they are going the right way about securing it. If they want to avoid that confrontation, they should seek to reverse the irresponsible, irrational and deeply damaging cuts in grant that they now propose.

9.22 pm

Mr. Tom Clarke (Monklands, West)

I am grateful to my hon. Friend the Member for Livingston (Mr. Cook) and others of my hon. Friends for shortening their speeches and enabling me to make my contribution.

Let it be clear that the Government's proposals today have much less to do with the realities of local government and essential services in Scotland than with their central objective to reverse the burden of taxation, as they see it, and to impose that burden upon ratepayers, and in particular, upon those who are paying rents. That is what this rate support grant order is all about.

The Secretary of State has increased the domestic element, but there is nothing generous about that. He has taken it from the needs and resources element, and few district or regional councils would agree with that approach.

When Governments make such proposals and try to relate them to local authority interest, they should take into account the problems of communities and the general atmosphere that exists. How can the Government ignore the economic and industrial plight which has beset Scotland and which is in no way reflected in the proposals which they have put before the House?

I want to deal briefly with the two local authorities which are of concern to my constituency, Monklands and Strathkelvin. I know that the hon. Member for Strathkelvin and Bearsden (Mr. Hirst), who has met Strathkelvin district council and knows of its problems, is in Edinburgh on important parliamentary business. I make no criticism of that. I mention it to illustrate the fact that in Strathkelvin the local council is not irresponsible and rebellious for the sake of it, but is anxious to do what Parliament has asked it to do; that is, to carry out the functions which we expect district councils to perform in a way that responds to the community's needs. The orders would make life in Monklands and Strathkelvin extremely difficult.

In addition, the order that we approved last night on housing support grant would mean that rents in Monklands would be forced up by £2.70 a week because we shall have lost both housing support grant and rate fund contributions. In Strathkelvin the increase would be £2.50 a week.

It is not, therefore, simply a case of examining the rates that people will pay. We must examine the rents which the Government seek to impose, as well as the additional burden of rates which this order would impose, if only because council tenants are also ratepayers.

The hon. Member for Strathkelvin and Bearsden and I have received a letter from Mr. Mallon, the chief executive of Strathkelvin district council. He refers to the rate support grant, the housing support grant and rate fund contributions. He states: In common with all Authorities we now have all of the above information to hand and can see very clearly the bleak picture facing us. The decisions of the Secretary of State on these matters have brought about a set of circumstances which will have very painful consequences for all ratepayers. In fact, it would seem to be clear that if Authorities are to continue to take their duties towards their ratepayers seriously they will have very great difficulty in meeting the guideline figures imposed by the Secretary of State. It is probably true to say that only a few Authorities can realistically do this. Mr. Mallon continues: Other effects of the grant settlement will be disastrous. As far as the distribution of needs element is concerned, in 1985/86 the Secretary of State proposes to move to the second stage of distribution based on the relative assessed needs (the Client Group approach). These models purport to be more discriminating and sensitive but in no way do they meet the individual needs of particular Authorities. For instance, such a generalised model takes no note of particular factors applying to us, such as the existence of a Sports Centre which we simply cannot wish away but which necessarily needs hefty Revenue commitment. This Sports Centre was built prior to Reorganisation and was, therefore, in effect, inherited by Strathkelvin … In 1985/86 the Secretary of State has decided to make a restriction of 4p in the £ loss as far as Districts are concerned. This means a loss of grant in Strathkelvin of £900,000, with the possibility of further losses in future years. The unreasonableness of this is self-evident. I entirely agree with the sentiments expressed in that letter.

In the light of the rate support grant order and the Government's disregard for the statistics, especially those for inflation, which Opposition Members have presented to them, they should publicly defend the reduction in services, which will inevitably arise from their policies.

When local authorities in the Strathclyde region find it necessary to take unpopular decisions, such as the regional council's present consideration whether to close fire stations in my constituency and in Strathkelvin, it is extremely nauseating to find Conservative spokesmen attacking those decisions and giving the impression that they are the sole and exclusive responsibility of Strathclyde. I hope that Strathclyde region can avoid such closures, but Conservative spokesmen know in their hearts that it is impossible for Strathclyde to meet the Government's figures without reducing these or similar services.

Today I received a letter from the parents of pupils at Lenzie academy, protesting, rightly, about the problems of education. Those problems will continue if councils are denied resources. That is the real argument. The Government have not been successful in reducing public expenditure. The hon. Member for Stirling (Mr. Forsyth) was wrong about most things, but he was at least right to assert that, although the Government have not reduced public expenditure to the extent that they said they would, they have changed the emphasis so that local authorities are being encouraged to reduce manpower and thereby to put more people on the dole, at enormous public expense.

During last night's debate on the housing support grant some Conservative Members appeared to recite from Treasury briefs. A point that shone through their speeches and, I regret to say, through the speech of the Under-Secretary of State, was that they had persuaded themselves that Scotland was getting a better deal than England. The Minister must accept that local government in Scotland is different from local government elsewhere. In England, local authorities are not responsible for water, sewage, or probation. Scotland has twice the number of home helps that England has, because that is the sort of people we are. Scotland has many geographical problems, especially in the highlands. If councils tried to save on road works five or six years ago, the people count the cost today. Costs have increased substantially, and it is not good enough to say now that authorities have not kept within the guidelines.

Even at this 11th hour the Minister should speak for Scotland and accept that the points that I have just made about Scottish local government, and the points made by my hon. Friends, should also be made by him and by the Secretary of State. If they fail in that duty, they should be clear that the people of Scotland will neither forgive nor forget.

9.32 pm

Mr. Jim Craigen (Glasgow, Maryhill)

If my hon. Friend the Member for Monklands, East (Mr. Clarke) thinks that he has problems now, he ain't seen nothing yet. He must only wait until the 1985 rate support grant order has its effect. From listening to the Secretary of State for Scotland this afternoon one would have thought that this was any old year for rate support grants, give or take the impact of revaluation. However, 1985 will be the year in which domestic rates will erupt because inflation and revaluation will take their toll. Moreover, the chickens will come home to roost for the Government. The Government have reneged on the long-heralded rating reform; they have reduced yet again the rate support grant to local authorities below the rate of inflation; and they have resiled from giving full coverage to domestic rate payers by providing new money to give them the relief that they require.

Scottish Office Ministers seem determined to give Scottish local government a bad name and domestic ratepayers a poor deal with higher rates and reduced services. As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) pointed out, the Government effectively will be taking an extra £250 million out of the rating system. The figures can always be misleading, but the domestic ratepayer can expect an average of an extra 21p on rating, excluding the impact of the revaluation. Even authorities within the spending guidelines laid down by the Scottish Office will have to increase their rates as a result of the reduction in grant aid.

When I listened to the speech of the hon. Member for Dumfries (Sir H. Monro), I wondered whether I was in the same place that I was in this morning when the convenor of Dumfries and Galloway, councillor John Jamieson, was pointing out the special difficulties that his regional council faces over education in particular. Specialist teacher posts are having to be cut out because of the difficulties now faced by his authority which has operated within the guidelines over the years. But it is typical of the easy-osey fashionable way in which the hon. Member for Dumfries operates.

As to the hon. Member for Aberdeen, South (Mr. Malone), thank heavens that he is not running Aberdeen district council or Grampian region. The Government are making a big enough mess of national affairs without the hon. Gentleman's ineptitude stretching into the pockets of local authorities. He mentioned that all the problems would be resolved if only the councils could sell more council houses. I have news for the hon. Gentleman. North-east Fife, which the Government for the first time, I believe, have turned into a non-Tory-controlled authority — [AN HON. MEMBER: "Still Tory."] the authority is still Tory in name, perhaps—has sold proportionately more council houses, yet one of its district councillors pointed out yesterday that a rates rise of 37 per cent. would be necessary just to maintain the present level of authority services.

The Secretary of State did not challenge the rate rise increases for the borders and elsewhere that were quoted by my hon. Friend the Member for Glasgow, Garscaclden, which will now be necessary because the Government are cutting back on the proportion of grant aid allocated to local authorities. District councils, as we have heard today, will be particularly hard hit. They will fare even worse than the regional councils. The needs element is being slashed back in the district councils.

The Secretary of State is quoted as saying that it is all a matter of judgment. He has not explained how he reaches that judgment. He certainly did not give a very convincing explanation today.

My hon. Friends the Members for Livingston (Mr. Cook) and for Linlithgow (Mr. Dalyell) both spoke in the Adjournment debate on Tuesday, 22 January. I commented to my hon. Friend the Member for Linlithgow — because my late in-laws used to live in his constituency, and voted for him, of course—that it is well seen that the hon. Member for Edinburgh, South (Mr. Ancram) did not become the Tory Member of Parliament for West Lothian when the hon. Gentleman fought my hon. Friend. He would not have given that kind of rubbish to the constituents of West Lothian or he would have been chased out of West Lothian.

Mr. Dalyell

The hon. Member for Edinburgh, South was not chased out, because he made speeches that the constituents wanted to hear—which were a bit different from what he has been saying today.

Mr. Craigen

I always knew that the hon. Gentleman was a slick lawyer.

Scottish householders will be paying on average an extra 8 per cent. as a consequence of the revaluation. Glasgow reckons that its average increase will be 18 per cent., and the city will be particularly hard hit as a result of the orders approved by the House last night and the rate support grant order that the House is asked to approve tonight.

Local authority spending forecasts are in excess of what the Secretary of State says the authorities will receive in 1985–86. Several services, such as transport, including concessionary fares, will be particularly hard hit. It will be difficult for some regional councils to operate their concessionary fares at the present percentage rates. At a time of record unemployment, leisure and recreation facilities will be hit. At a time when the House is considering the National Heritage (Scotland) Bill, libraries and museums will be affected.

The constant pressure on local government resources is a sort of Chinese torture on councillors. As was pointed out by the treasurer of Strathclyde regional council, if the Government had maintained their grant aid as a proportion at 1979 levels, householders in Strathclyde would be £1 a week better off. The Government are shifting the cost of local government services on to the ratepayers. That is the political message that is coming across. Just as the Government are moving from direct to indirect taxation, so the cost of national services, operated by local authorities, is being shifted more and more on to the ratepayers.

The proportion of money that ratepayers are being asked to cough up is constantly increasing, because the Government are cutting their aid. As my right hon. Friend the Member for Glasgow, Govan (Mr. Millan) pointed out, the Government could have done more for domestic rates relief in the settlement that must follow the revaluation. The Under-Secretary of State who is responsible for health talks about limiting the number of drugs that will be prescribable on the NHS. When the people get their rating assessments next month, they will be zooming to the medicine cabinets. They do not know what is about to hit them.

We are discussing the issue in a largely academic atmosphere, and people will admit that they do not know what it is all about. We are looking to the Secretary of State for greater assistance for domestic ratepayers. We want him to give the guarantee that he is giving to industrial ratepayers, that there will be no going back on the domestic reliefs to local authorities. It is ironic that the Government, who have permitted the industrial sector to suffer so much from the economic policies, should, on the ground of conscience, be trying to ameliorate the situation. After all, the industrial sector will gain most as a result of the revaluation.

The Secretary of State talks about cross-border comparisons, but we have been through all that before. In the Rating and Valuation (Amendment) (Scotland) Act 1984 he did his best to protect the caravanners, football grounds and racecourses. But we want comparability for Scotland's domestic ratepayers as well. It is important that the Secretary of State should be more forthcoming.

The right hon. Gentleman also mentioned the availability of appeals. There will be a great queue of domestic ratepayers submitting appeals once they have received their assessments next month. I just wonder whether there will not be a chaotic period in local government before all those issues are settled, as it will take many months to settle them.

Several hon. Members have referred to the National Federation of Self Employed and Small Businesses Limited, and I wish to mention the letter that we have received. The secretary said that the federation had proposed to the Secretary of State that he should extend rates consultation to include himself and his Ministers. The federation said that it was ready to meet him at any time, and added: The Government are really the major cause of rate rises in 1985–86". My right hon. Friend the Member for Clydesdale (Dame J. Hart) referred to unemployment and the difficulties of the housing benefit operation in Clydesdale. Her contribution tonight emphasised how serious things are in Scottish local government. I assure my right hon. Friend the Member for Clydesdale that the problems in Glasgow are also horrendous in terms of the amount that ratepayers will have to pay to sustain the housing benefits system. That is because the local authorities are not entirely reimbursed by central Government for what should be a national service.

He who pays the piper calls the tune is a well-known phrase, but the Government, now paying so much less, perhaps half, of the costs of local government, are demanding the total say in the running of local government in view of the Secretary of State's new rate-capping powers. No doubt he will be driven to use them in the current year as a result of the policies that he is pursuing, not as the result of any action by individual local authorities.

The hon. Member for Aberdeen, South spoke of responsibility. We want to know who is responsible and whom to blame. We want it to be elected councillors so that the buck stops with them. To think that we shall be leaving the fortunes of Scottish local government to that lot of Members on the Government Benches—when half of them do not have a clue and the other half have not even been here for the debate—is a nonsense and an outrage.

The real culprit of higher rates is the Secretary of State for Scotland. The casualties in the coming year will be the ratepayers. I hope that they will write letters to those Conservative Members who go into the Lobby tonight to support what the Government are proposing.

9.47 pm

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

We have had another of what seem to be regular rate support grant debates. It is always with interest that I await the speeches of Opposition Members on this subject. Having heard all their criticisms of the Government's policy—they repeat them consistently, almost verbatim, on every occasion — I continue to look forward to the day when we hear what they would do if they were in government.

I was surprised to hear from the hon. Member for Glasgow, Garscadden (Mr. Dewar), when I asked him by how much he thought we should increase the figures, that this was not a time for "throwing around figures". If he wants the people of Scotland to take him and his party seriously, he must start explaining what he would do if he were in the position of my right hon. Friend the Secretary of State. Indeed, my right hon. Friend asked where the hon. Gentleman would get the money. Unless he makes that equation, there is no reason for us to take his remarks seriously.

The only person who tried to suggest where the money would come from to provide for local government in the way she wished was the right hon. Member for Clydesdale (Dame J. Hart). If I understood her correctly, she would abandon the country's defence programme to do it. Perhaps at a later date we shall hear whether that is official Labour party policy.

What we are talking about tonight is what we have talked about every time we have discussed this subject, and that is the level of expenditure by local government in Scotland. We have heard again tonight from Opposition Members accusations that the Government have imposed vicious cuts on local authorities in Scotland. The hon. Member for Garscadden knows well — because the figures were agreed with COSLA — that since 1979, spending by local authorities in Scotland has increased by 2.6 per cent.

Mr. Dewar

indicated dissent.

Mr. Ancram

The hon. Member for Garscadden indicates that that was not agreed. Last year, we agreed the basis of making the calculation with COSLA, and we agreed that that was the figure produced by the basis of calculation.

Dame Judith Hart

I seem to detect the opinion among my hon. Friends that I should reassure the Minister that it is indeed the official programme of the Labour party and of the parliamentary labour party not to have Trident.

Mr. Ancram

I do not want to trespass on anybody else's ground, but my reading of that policy was that the money would be used in other ways within the defence budget. Perhaps the Labour party can sort that out at a quieter time.

We are talking about whether there is room to cut services and expenditure by local authorities in Scotland that have increased over the past five years. I listened carefully to the right hon. Member for Glasgow, Govan (Mr. Millan), who once held the responsibilities of Secretary of State for Scotland. He said that it was unrealistic to expect reductions. I find that interesting, because, when the right hon. Gentleman was Secretary of State for Scotland, Scotland's manpower figures — in terms of non-manual workers—were 20 per cent. lower than they are now. Presumably at that time, as he was presiding over that situation, he believed that it was realistic. If he believed that it was realistic then, it is possible that such savings can be made again, and those savings are precisely the ones that we are looking for.

I suggest that those who say that it cannot be done should look at certain local authorities in Scotland. I do not normally praise the district council in Glasgow, but it has reduced its direct labour organisation by 40 per cent. and is still doing the same amount of work as before. I repeat to Opposition Members that if that council can do it, so can others. For the right hon. Member for Govan to say that it is unrealistic to expect local government expenditure to be reduced is flying in the face of all the facts.

In a sense, the basic question in the debate was not about expenditure but about the system of distributing rate support grant. The House must address itself to a serious question. As hon. Members know, the system of distributing rate support grant was changed last year from the historic system to the client group method. In effect, that means that a distribution can be made which takes account of the needs assessments of individual authorities and tries to make sure that the same services can be provided at basically the same cost within authorities. COSLA has accepted the system in principle. I concede that last year it said that it was not sure whether we should introduce it as soon as this, but nobody has disputed that this is a fairer system.

I look to the hon. Member for Garscadden again, because this is a question that I believe he can answer. Do he and his party support rate support grant distribution by the client group method? Does he agree with COSLA in that? I shall give the hon. Gentleman the chance to answer the question.

Mr. Dewar

indicated dissent.

Mr. Ancram

The hon. Gentleman is even refusing to answer that question. I suspect that when he addresses himself to it in a quieter moment, he will realise that he can only say yes. If he says yes, he must be prepared to bear the consequences. One of the consequences of introducing the new system is that there are gainers and losers.

Mr. Dewar

In case the Minister does not get round to dealing with it, what the debate is really about is whether it is fair for the Government, on no basis of justice, to claw back in some cases over 50 per cent. of the rate support grant that is available to certain district councils, substantially to cut in real terms the money available to local authorities as a whole and to leave the unfortunate ratepayers whom the Minister claims to defend with a large share of the burden of the change in the revaluation system.

Mr. Ancram

I am answering the first part of that question in the one that I am asking the hon. Gentleman. If we introduce the client group method of distributing the rate support grant, there will be gainers and losers. In many cases, the losers will be district councils and the gainers regional councils. We have decided that that is a fairer way, which must be introduced. While introducing it, we have made sure that we have put a limit on the effect that it can have, district by district and region by region. In doing so, I believe that over this year, next year and the years to come we shall provide a fairer system of distributing rate support grant than existed before.

Mr. Dewar

rose—

Mr. Ancram

I shall not give way to the hon. Gentleman any more. He made points about individual councils, and talked about the effects on those individual councils in terms of rate increases. However, at no stage did he look at the rate basis from which the percentages that were announced came. I do not think that he was here when I mentioned the figures. In Gordon, the current rate is 9p, so the increase about which he was talking is from a small base. He did not mention what the balances of these councils were, and what proportion of their rates went into balances. He did not mention that Banff and Buchan has 49.6 per cent. of its rate in balance. Gordon has 84.7 per cent., Moray 47.3 per cent. West Lothian 25.4 per cent., Cumnock 54.8 per cent. The hon. Gentleman calls them savings, but they are balances that could be used to protect and help the ratepayers, and I hope that the authorities will consider that method this year.

The hon. Member for Glasgow, Maryhill (Mr. Craigen) talked about bringing Scotland into parity with England and about treating the ratepayers of Scotland as fairly as the ratepayers of England. However, at present the average domestic rate is 159p in England and 136p in Scotland. What is more important to the domestic ratepayer is the bill. Taking account of the different ways of paying for water and sewerage, the average rate payment for a Scottish householder in the current year is £328, as against £393 for England and Wales. Even with the swing from revaluation to the domestic sector in Scotland, the average domestic rates bill was considerably lower in Scotland than in England.

A number of points were raised by hon. Members, and I hope to be able to deal with some of them. The hon. Member for Garscadden talked about the figure produced by COSLA of the extra burden of rates being £250 million. That figure is based on a comparison of this year's provision with next year's and that is not a fair or true comparison. The true comparison is between the actual budgets of 1984–85 and what we are asking them to do next year. On that basis, rateable expenditure will increase by £97 million. If all this fell on the rates in the current year, that would represent an average increase of 6 per cent.

My hon. Friend the Member for Aberdeen, South (Mr. Malone) asked a question that he has addressed to me before, about the problems of population increases in arriving at guidelines and grants. The client group assessments are based, as agreed wih COSLA, on the latest and firmly based population estimates and other data. Those for 1985–86 are generally those made in 1983. My right hon. Friend and I understand that there is concern about this, and we undertake to take careful note of the views that have been expressed.

My hon. Friend the Member for Dumfries (Sir H. Monro) thanked the Government for the increase in the needs element of the rate support grant. I hope that he will make it clear to his constituents that his authority is one of the few that saw an increase in the needs element this year. That reflects the behaviour of that council in recent years.

My hon. Friend the Member for Stirling (Mr. Forsyth) raised the question of a poll tax. In the review that is taking place, I shall bear in mind the points that he has made. At the same time, he will discover, if he looks at the reactions to the Green Paper, that a poll tax is not necessarily regarded as the safest way to proceed.

The hon. Member for Cunninghame, South (Mr. Lambie) made the most extraordinary suggestion of all. His basic accusation against the Government was that we were interfering in local government and telling local government what to do and that we do not allow local government the freedom it had in his day. Yet his basic suggestion was that we should allow 100 per cent. rate support grant to local authorities in Scotland. If he wants to see direct control, that would be the clearest way of achieving it.

Yet again we have heard from the Opposition the irresponsible voice that we have come to expect from them. Methods used to control local government expenditure when they were in office are now condemned as unacceptable. Levels of expenditure which were higher in real terms when they were in office are now described as slashing cuts. Levels of manpower acceptable when they were in government are now condemned as inadequate. Either this is a demonstration that they have abdicated the responsibility and realism that would fit them to government, or they are practising a cruel deception upon their friends. It does not matter which is the case because these orders provide a balanced programme for local government in Scotland in the coming year and I commend them to the House.

Mr. Dennis Canavan (Falkirk, West)

On a point of order, Mr. Speaker.

Mr. Speaker

Order. We can go on until half-past eleven, but the hon. Member has made a speech.

Mr. Canavan

I am raising a point of order, Mr. Speaker.

Mr. Speaker

What is it?

Mr. Canavan

I can hardly hear what the Minister is saying because of all the hon. Members whose constituencies will not be affected by this lousy order but who are coming in to try to stifle parliamentary debate. Can you not order them to shut up or to go away so that only Scottish Members of Parliament may vote on the order?

Mr. Speaker

Order. I think it is time that I put the question.

Question put:—

The House divided: Ayes 258, Noes 166.

Division No. 77]	[10.01 pm
AYES
Adley, Robert	Clark, Hon A. (Plym'th S'n)
Aitken, Jonathan	Clark, Dr Michael (Rochford)
Alexander, Richard	Clark, Sir W. (Croydon S)
Amery, Rt Hon Julian	Clegg, Sir Walter
Amess, David	Cockeram, Eric
Ancram, Michael	Colvin, Michael
Arnold, Tom	Conway, Derek
Ashby, David	Coombs, Simon
Aspinwall, Jack	Cope, John
Atkins, Rt Hon Sir H.	Corrie, John
Atkins, Robert (South Ribble)	Couchman, James
Atkinson, David (B'm'th E)	Cranborne, Viscount
Baker, Rt Hon K. (Mole Vall'y)	Critchley, Julian
Baker, Nicholas (N Dorset)	Crouch, David
Baldry, Tony	Currie, Mrs Edwina
Batiste, Spencer	Dicks, Terry
Bendall, Vivian	Dorrell, Stephen
Benyon, William	Douglas-Hamilton, Lord J.
Bevan, David Gilroy	Dover, Den
Biffen, Rt Hon John	du Cann, Rt Hon Sir Edward
Biggs-Davison, Sir John	Dunn, Robert
Blackburn, John	Dykes, Hugh
Body, Richard	Edwards, Rt Hon N. (P'broke)
Bonsor, Sir Nicholas	Eggar, Tim
Boscawen, Hon Robert	Emery, Sir Peter
Bottomley, Peter	Evennett, David
Bottomley, Mrs Virginia	Eyre, Sir Reginald
Bowden, A. (Brighton K'to'n)	Fairbairn, Nicholas
Bowden, Gerald (Dulwich)	Fallon, Michael
Boyson, Dr Rhodes	Farr, Sir John
Braine, Rt Hon Sir Bernard	Favell, Anthony
Brandon-Bravo, Martin	Fletcher, Alexander
Bright, Graham	Forman, Nigel
Brinton, Tim	Forsyth, Michael (Stirling)
Brooke, Hon Peter	Fox, Marcus
Browne, John	Fraser, Peter (Angus East)
Bruinvels, Peter	Garel-Jones, Tristan
Bryan, Sir Paul	Glyn, Dr Alan
Buck, Sir Antony	Gow, Ian
Bulmer, Esmond	Grant, Sir Anthony
Burt, Alistair	Greenway, Harry
Butterfill, John	Griffiths, E. (B'y St Edm'ds)
Carlisle, Kenneth (Lincoln)	Grist, Ian
Carttiss, Michael	Ground, Patrick
Cash, William	Gummer, John Selwyn
Chalker, Mrs Lynda	Hampson, Dr Keith
Channon, Rt Hon Paul	Haselhurst, Alan
Chapman, Sydney	Hawkins, C. (High Peak)
Chope, Christopher	Heseltine, Rt Hon Michael

Hickmet, Richard	Portillo, Michael
Higgins, Rt Hon Terence L.	Powell, William (Corby)
Hind, Kenneth	Powley, John
Holt, Richard	Price, Sir David
Hordern, Peter	Raffan, Keith
Howard, Michael	Raison, Rt Hon Timothy
Howarth, Gerald (Cannock)	Rathbone, Tim
Hunter, Andrew	Rees, Rt Hon Peter (Dover)
Joseph, Rt Hon Sir Keith	Renton, Tim
Kershaw, Sir Anthony	Rhodes James, Robert
Kilfedder, James A.	Rhys Williams, Sir Brandon
King, Roger (B'ham N'field)	Ridley, Rt Hon Nicholas
King, Rt Hon Tom	Roberts, Wyn (Conwy)
Knox, David	Robinson, Mark (N'port W)
Lamont, Norman	Roe, Mrs Marion
Lang, Ian	Rossi, Sir Hugh
Lawler, Geoffrey	Rost, Peter
Lennox-Boyd, Hon Mark	Rowe, Andrew
Lester, Jim	Rumbold, Mrs Angela
Lewis, Sir Kenneth (Stamf'd)	Ryder, Richard
Lightbown, David	Sackville, Hon Thomas
Lilley, Peter	Sainsbury, Hon Timothy
Lloyd, Ian (Havant)	Sayeed, Jonathan
Lloyd, Peter, (Fareham)	Shaw, Giles (Pudsey)
Lord. Michael	Shaw, Sir Michael (Scarb')
Luce, Richard	Shelton, William (Streatham)
Lyell, Nicholas	Shepherd, Colin (Hereford)
McCurley, Mrs Anna	Shepherd, Richard (Aldridge)
Macfarlane, Neil	Shersby, Michael
MacGregor, John	Silvester, Fred
MacKay, John (Argyll & Bute)	Sims, Roger
Maclean, David John	Skeet, T. H. H.
McNair-Wilson, P. (New F'st)	Smith, Sir Dudley (Warwick)
Madel, David	Soames, Hon Nicholas
Major, John	Speed, Keith
Malins, Humfrey	Speller, Tony
Malone, Gerald	Spencer, Derek
Maples, John	Spicer, Jim (W Dorset)
Marlow, Antony	Squire, Robin
Marshall, Michael (Arundel)	Stanbrook, Ivor
Mates, Michael	Stanley, John
Mather, Carol	Steen, Anthony
Maude, Hon Francis	Stern, Michael
Mawhinney, Dr Brian	Stevens, Lewis (Nuneaton)
Maxwell-Hyslop, Robin	Stevens, Martin (Fulham)
Mayhew, Sir Patrick	Stewart, Andrew (Sherwood)
Merchant, Piers	Stewart, Ian (N Hertf'dshire)
Meyer, Sir Anthony	Stokes, John
Miller, Hal (B'grove)	Stradling Thomas, J.
Mills, Sir Peter (West Devon)	Taylor, Teddy (S'end E)
Mitchell, David (NW Hants)	Terlezki, Stefan
Moate, Roger	Thomas, Rt Hon Peter
Monro, Sir Hector	Thompson, Donald (Calder V)
Montgomery, Sir Fergus	Thompson, Patrick (N'ich N)
Moore, John	Thorne, Neil (llford S)
Morrison, Hon C. (Devizes)	Thurnham, Peter
Morrison, Hon P. (Chester)	Townend, John (Bridlington)
Moynihan, Hon C.	Townsend, Cyril D. (B'heath)
Mudd, David	Twinn, Dr Ian
Murphy, Christopher	van Straubenzee, Sir W.
Neale, Gerrard	Vaughan, Sir Gerard
Needham, Richard	Waddington, David
Nelson, Anthony	Waldegrave, Hon William
Neubert, Michael	Walden, George
Nicholls, Patrick	Waller, Gary
Norris, Steven	Ward, John
Onslow, Cranley	Wardle, C. (Bexhill)
Oppenheim, Phillip	Watson, John
Osborn, Sir John	Watts, John
Ottaway, Richard	Wells, Bowen (Hertford)
Page, Richard (Herts SW)	Wells, Sir John (Maidstone)
Parkinson, Rt Hon Cecil	Wheeler, John
Parris, Matthew	Whitney, Raymond
Patten, John (Oxford)	Wilkinson, John
Pattie, Geoffrey	Winterton, Mrs Ann
Pawsey, James	Wolfson, Mark
Percival, Rt Hon Sir Ian	Wood, Timothy
Pollock, Alexander	Yeo, Tim

Young, Sir George (Acton)	Tellers for the Ayes:
Younger, Rt Hon George	Mr. Archie Hamilton and
	Mr. Tony Durant.

NOES
Adams, Allen (Paisley N)	Hardy, Peter
Archer, Rt Hon Peter	Harrison, Rt Hon Walter
Atkinson, N. (Tottenham)	Hart, Rt Hon Dame Judith
Bagier, Gordon A. T.	Healey, Rt Hon Denis
Banks, Tony (Newham NW)	Heffer, Eric S.
Barnett, Guy	Hogg, N. (C'nauld & Kilsyth)
Barron, Kevin	Holland, Stuart (Vauxhall)
Beckett, Mrs Margaret	Home Robertson, John
Bell, Stuart	Hoyle, Douglas
Bennett, A. (Dent'n & Red'sh)	Hughes, Dr. Mark (Durham)
Bermingham, Gerald	Hughes, Robert (Aberdeen N)
Bidwell, Sydney	Janner, Hon Greville
Blair, Anthony	John, Brynmor
Boothroyd, Miss Betty	Kaufman, Rt Hon Gerald
Boyes, Roland	Kilroy-Silk, Robert
Bray, Dr Jeremy	Kirkwood, Archy
Brown, Gordon (D'f'mline E)	Lambie, David
Brown, Hugh D. (Provan)	Lamond, James
Brown, N. (N'c'tle-u-Tyne E)	Leadbitter, Ted
Brown, Ron (E'burgh, Leith)	Leighton, Ronald
Bruce, Malcolm	Lewis, Ron (Carlisle)
Buchan, Norman	Litherland, Robert
Caborn, Richard	Lloyd, Tony (Stretford)
Callaghan, Jim (Heyw'd & M)	Loyden, Edward
Campbell-Savours, Dale	McCartney, Hugh
Canavan, Dennis	McDonald, Dr Oonagh
Carlile, Alexander (Montg'y)	McGuire, Michael
Carter-Jones, Lewis	McKay, Allen (Penistone)
Cartwright, John	McKelvey, William
Clark, Dr David (S Shields)	Mackenzie, Rt Hon Gregor
Clarke, Thomas	McWilliam, John
Clwyd, Mrs Ann	Madden, Max
Cocks, Rt Hon M. (Bristol S.)	Marek, Dr John
Cohen, Harry	Marshall, David (Shettleston)
Coleman, Donald	Maynard, Miss Joan
Cook, Robin F. (Livingston)	Meacher, Michael
Corbett, Robin	Michie, William
Corbyn, Jeremy	Mikardo, Ian
Cowans, Harry	Millan, Rt Hon Bruce
Cox, Thomas (Tooting)	Miller, DrM. S. (E Kilbride)
Craigen, J. M.	Mitchell, Austin (G't Grimsby)
Crowther, Stan	Morris, Rt Hon A. (W'shawe)
Cunliffe, Lawrence	Morris, Rt Hon J. (Aberavon)
Cunningham, Dr John	Nellist, David
Dalyell, Tarn	O'Neill, Martin
Davies, Ronald (Caerphilly)	Park, George
Davis, Terry (B'ham, H'ge H'l)	Parry, Robert
Deakins, Eric	Patchett, Terry
Dewar, Donald	Pavitt, Laurie
Dixon, Donald	Pendry, Tom
Dobson, Frank	Penhaligon, David
Dormand, Jack	Pike, Peter
Douglas, Dick	Prescott, John
Dubs, Alfred	Radice, Giles
Dunwoody, Hon Mrs G.	Randall, Stuart
Eastham, Ken	Redmond, M.
Edwards, Bob (W'h'mpt'n SE)	Rees, Rt Hon M. (Leeds S)
Evans, John (St. Helens N)	Richardson, Ms Jo
Ewing, Harry	Roberts, Ernest (Hackney N)
Fatchett, Derek	Robertson, George
Faulds, Andrew	Robinson, G. (Coventry NW)
Field, Frank (Birkenhead)	Rogers, Allan
Fisher, Mark	Rooker, J. W.
Flannery, Martin	Ross, Stephen (Isle of Wight)
Foot, Rt Hon Michael	Rowlands, Ted
Foster, Derek	Ryman, John
Fraser, J. (Norwood)	Sheerman, Barry
Freeson, Rt Hon Reginald	Sheldon, Rt Hon R.
Garrett, W. E.	Shore, Rt Hon Peter
George, Bruce	Silkin, Rt Hon J.
Gilbert, Rt Hon Dr John	Skinner, Dennis
Godman, Dr Norman	Smith, C.(lsl'ton S & F'bury)
Gould, Bryan	Snape, Peter
Hamilton, James (M'well N)	Soley, Clive
Hamilton, W. W. (Central Fife)	Spearing, Nigel

Stewart, Rt Hon D. (W Isles)	White, James
Stott, Roger	Williams, Rt Hon A.
Strang, Gavin	Wilson, Gordon
Straw, Jack	Winnick, David
Thompson, J. (Wansbeck)	Woodall, Alec
Thorne, Stan (Preston)	Young, David (Bolton SE)
Tinn, James
Torney, Tom	Tellers for the Noes:
Wallace, James	Mr. Frank Haynes and
Weetch, Ken	Mr. John Maxton.

Question accordingly agreed to.

Resolved, That the Rate Support Grant (Scotland) Order 1985, dated 9th January 1985, a copy of which was laid before this House on 11th January be approved.

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1. RATING OF INDUSTRY (SCOTLAND) 28 words
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2. STATUTORY INSTRUMENTS, &c. 18 words
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3. AGRICULTURE AND HORTICULTURE 34 words
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4. RATING AND VALUATION 29 words
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5. CONSUMER PROTECTION 45 words