Public Expenditure (Scotland)

HC Deb 09 December 1986 vol 107 cc184-97 3.49 pm

The Secretary of State for Scotland (Mr. Malcolm Rifkind)

With permission, Mr. Speaker, I wish to make a statement about the allocation of my public expenditure provision in the next three years.

Total expenditure on the programmes within my responsibility will be £7,957 million in 1987–88, which is £390 million or 5.1 per cent. above provision for this year, and some £540 million higher than the plans for 1987–88, published in the public expenditure White Paper last January. An annotated table giving the allocations for each service is available in the Vote Office and I am arranging for it to be published in the Official Report.

I have given high priority to the Health Service to enable it to meet growing demand for health care over the next three years. Spending on the health programme will be increased by £130 million, which is 2.5 per cent. more than forecast inflation, to £2,216 million in 1987–88. For hospital and community health services next year there will be £1,540 million, some £87 million or 6 per cent. more than for this year. I propose to hold a small amount of this extra cash in hand for specific service developments. Allocations to health boards will allow a further movement towards parity under the SHARE formula. In addition, boards will be able to retain resources released within their budgets through efficiency and economy measures.

Capital investment in the Health Service will be about £370 million over the next three years, and will maintain the programme of major hospital projects, continue the upgrading of the NHS estate, and allow for spending on new technology and computer hardware. Provision for local authority capital spending on social work has also been increased.

To meet fully the needs of law and order services, my plans provide £625 million in 1987–88. This includes sufficient for a modest increase over the present police establishment, and for increased costs of the prison service, including recruitment of an additional 126 prison officers next year. Capital expenditure within this programme over the three years will be nearly £150 million and will provide for a new prison at Peterhead and for new or improved courthouses.

There will be a total increase in education in 1987ߝ88 of £214 million, which is 12 per cent. over provision for the current year. This includes the extra resources that we have said we will make available for an acceptable deal on pay and conditions of service for schoolteachers; and the £50 million unallocated education margin which I have already announced, as well as £6 million for additional non-teaching costs associated with standard grade and action plan. Capital expenditure on local authority education projects is planned to rise by £5 milion in 1987–88 to cover priority building work and equipment for science and technology subjects.

Mr. Dennis Skinner (Bolsover)

When is this election?

Mr. Rifkind

The latter will be of special help in meeting the needs of standard grade. Centrally funded work on curricular reform in schools and further education is to be maintained and Scottish PICKUP extended. The importance of higher education has also been fully recognised. An additional £6.1 million is being provided for the central institutions and the colleges of education. [Interruption.]

Central Government expenditure on the arts is being increased by £1.1 million or 5.5 per cent. I have authorised a start to the planning of the second phase of the new building for the National Library of Scotland and Causewayside; I am providing maintenance for the buildings of the three Scottish national institutions; and I am continuing to back staffing improvements at the Royal Museum of Scotland.

There will be an increase of £25 million or 10.8 per cent. in our provision for industry in 1987–99 compared with the plans published last year. The increase will go almost entirely to direct grants to industry to meet a continued upsurge in demand which brings valuable jobs and investment to Scotland. This follows a recent increase of £40 million in the amount available this year for such grants, mainly to provide for higher than expected investment during the transitional period for payment of old regional development grant.

My plans will permit consolidation of our policy of developing cost-effective agriculture and fishing industries with particular regard to supporting the rural economy. In response to representations from the agricultural community, I have made available an additional sum of £750,000 in each of 1987–88 and 1988–89 for the advisory services in Scotland.

For housing in 1987–88, total net provision will be £696 million, an increase of £51 million over provision for the

£ million
	1986–87	1987–88	1988–893	1989–903
	Cmnd. 9702-II1 Provision	Estimated Outturn	Cmnd. 9702-II1 Provision	Revised Provision 2	Cmnd. 9702-II1 Provision	Revised Provision2	Provision2
Agriculture	188	189	183	186	190	190	190
Industry	304	344	232	257	240	240	250
Tourism	13	13	13	13	10	10	10
Transport	587	582	595	601	600	620	630
Housing	645	637	673	696	700	700	730
Other environmental services	588	616	596	609	600	630	650
Law, order and protective services	563	566	577	625	580	650	660
Education	1,792	1,945	1,796	1,956	1,800	2,040	2,090
Arts and Libraries	75	75	75	82	70	80	90
Health and Social Work	2,443	2,464	2,535	2,605	2,620	2,710	2,830
Other public services	112	112	114	118	120	120	120
All current expenditure not allocated to services	19	0	19	124	20	130	130
Nationalised Industries external financing	239	239	1	87	-120	-20	-170
	7,567	7,783	7,409	7,957	7,430	8,110	8,220
1 White Paper (Cmnd. 9702-II) figures adjusted for pre-survey changes.
2 Figures reflect survey changes. Some figures may be subject to detailed technical amendment.
3 Figures for 1988–89 and 1989–90 are rounded to the nearest £10 million. Due to rounding, individual figures may not sum to totals.

Mr. Donald Dewar (Glasgow, Garscadden)

The right hon. and learned Gentleman has produced his statement with pride, but it is not a pride that can be justified. I fear that my hon. Friend the Member for Bolsover (Mr. Skinner) was characteristically too generous with his interventions during the past few minutes.

The Secretary of State said that there is to be an increase of £390 million, or 5.1 per cent., over planned provision for this year. Of course, if we consider the outturn, the Government expect to spend £7,783 million current year, and £23 million higher than the previously planned provision for 1987–88. It remains my intention to concentrate resources on investment in particular, to meet the needs identified in local authorities' own stock and to accelerate the payment of private sector improvement grant claims which have already been approved. I have therefore increased net capital provision by 20 per cent., which is £90 million, to £548 million. for 1987–88 compared with 1986–87. I expect this to take up some 79 per cent. of the total housing programme compared to 72 per cent. this year.

When investment financed by net capital receipts is taken into account, the programme will allow for gross capital investment next year of £720 million, which is an increase of £82 million over the planned level of £638 million in 1986–87. I have made significant extra provision available for the Housing Corporation, the Scottish Special Housing Association and the new towns. I am also pleased to be able to recognise in a tangible way the importance of preserving our heritage by increasing the resources available for historic building grants by 80 per cent. next year and by even more thereafter. [Interruption.]

The fact that the Government have been able to announce these substantial increases while continuing to reduce public spending as a proportion of national income is a tribute to the success of our control of the economy since we came to office.

Following are the allocations:

in 1986–87. If we apply the inflation factor, we need £8,079 million to stand still. We are getting £7,957 million. The shortfall in real terms is £122 million [Interruption.] Hon. Gentlemen opposite mock. I ask whether it is not perfectly reasonable to look at what the Government say will be spent in 1986–87. If we look at what they offer for 1987–88, we will see, applying the Government's own inflation factor, that there is to be a cut of £122 million.

Does the Secretary of State accept that we have done very badly compared with certain other Departments, particularly territorial Departments? According to the autumn statement figures, Wales got plus £15 million in real terms. Northern Ireland got plus £110 million, and we have this shortfall. I ask the Secretary of State to confirm to me what I think he said on television in my presence, that the reason for that is that he deliberately under-claimed on local authority expenditure in the coming year and that he regards the differential in the figures in favour of Wales as justifiable, because he supports it as a means of closing the gap between public spending in Wales and in Scotland. That is what he said. I should like him to confirm it in the House.

I shall briefly refer to the mixed news on individual spending totals. Some is not so good, some is bad and some is downright awful. In regard to the Health Service, the right hon. and learned Gentleman said that there is a 2.5 per cent. increase over inflation. It is difficult for me to comment on that statement because, in the annotated figures that he produced, he has put health and social work together. He has not given separate figures. That is unfortunate. In any event, the increase in real terms in the health and social work budget is £47 million, according to my calculations. Although I welcome that increase, it is less than 2 per cent. I predict that it will be inadequate in Health Service terms when we consider what happened to the hospital prices index over the past few years.

The Secretary of State said that there will be an increase of £214 million on education. I repeat the calculation I made. If we take the expected outturn figure for 1986–87, it is £1,945 million. Next year, he will give £1,956 million, a cash increase of only £11 million. To stand still, he would have had to give another £63 million.

Of course, there is an additional complicating factor. If the rejected teachers' pay package offered by the Secretary of State is implemented, it will involve another £60 million of local authority expenditure in 1987–88. The shortfall is £123 million. There is certainly no comfort for parents, who properly are worried and anxious about the decline in educational standards under this Government.

One important area is industry. It is brave to talk about a £25 million increase or an increase of 10.8 per cent. My heart rose when I saw that figure. Then I looked at the actual figures. We must use a translation code. We have an estimated outturn figure for 1986–87 of £344 million, and the 10.8 per cent. increase means that the Government will spend £257 million, a drop in cash terms from £344 million.

Will the Secretary of State confirm that the increase is merely a reduction in an expenditure cut that he previously predicted? It is little consolation to be told that it was planned to cut industry to £232 million. There has been some remission. The new total of £257 million is still well below what was spent for this year—£344 million. Applying the inflator, that is a reduction of £100 million in real terms. That shows how much special pleading and presentation has gone into the matter.

Will the Secretary of State comment on housing? I welcome an increase in real terms of £38 million but, as the statement itself says, some of it—I am told about £23 million—is going towards meeting the home improvement backlog, which is already a legal commitment of local authorities. This is the important point. The commentary that the Secretary of State's own Department produced in February this year shows, from 1980–81 to 1986–87, a decline in housing expenditure from £1,005 million in real terms to £588 million. Today's announcement, when measured against the scale of the crisis created by the right hon. and learned Gentleman's own Government, is totally and hopelessly inadequate.

Mr. Rifkind

The hon. Gentleman compares unfavourably with Oliver Twist. Oliver Twist asked only for more. The hon. Gentleman implies that today he has not even heard about the substantial increases in expenditure in the areas to which I referred. The hon. Gentleman has sought to give one of the most misleading presentations that I have heard from him for a long time. He began by implying that the figures announced represented £122 million less than would have been required to maintain publicexpenditure—

Mr. Dewar

On outturn.

Mr. Rifkind

Indeed. I refer the hon. Gentleman to outturn figures, which are not necessarily the correct base, because we do not know what the outturn for 1987–88 will be. But, even on outturn figures, the Scottish block will be 6 per cent. higher next year than on outturn for 1986–87, and in real terms that is still an increase of 2.3 per cent. What the hon. Gentleman was trying to do was mislead, because he did not take into account, or was totally unaware of, the fact that one of the reductions in the figures announced today is a reduction in the external financing limit for the electricity boards because Torness is completed. It may surprise the hon. Gentleman, but we shall not need to spend a further £150 million on Torness when the matter has been dealt with already.

The hon. Gentleman tried to compare Scottish expenditure with that of other territorial Departments. The figures that I announced today should confirm, if any confirmation is required, that the provision made available for Scotland is fully in line with the formula that has been applied over the years, with one qualification, which has been announced already, and the hon. Gentleman is well aware of it. I deliberately did not seek to apply the full local authority current expenditure provision because, if I had done so, not only would that have enabled local authorities to spend far more in Scotland than in England but it would have been an additional burden on Scottish ratepayers. Therefore, in no way do I wish to apologise for that. However, in every other respect the announcement made today follows the full formula entitlement.

The hon. Gentleman made a comparison with Wales, which gave us an astonishing example of the new egalitarian Socialist spirit in the Labour party. As the hon. Gentleman is aware, the fact is that public expenditure in Scotland now is £2,210 per head, compared with £1,927 per head in Wales. If the hon. Gentleman is objecting to the fact that the Welsh are seeking to move towards a level of public expenditure comparable with that in Scotland, he shows a meanness of spirit of which I did not believe him capable.

On health expenditure, the hon. Gentleman again was carping and critical in his comments. I have to say to him that, irrespective of the social work aspect, the health programme will have resources that are 2.5 per cent. above inflation. That represents real growth in the health budget, which the hon. Gentleman should welcome rather than comment on as he did.

Likewise on education and housing, there are major increases in expenditure, which I announced. The hon. Gentleman knows that the increase in capital that I announced for housing expenditure next year—which, indeed, follows similar increases last year—compares favourably with the massive cuts in housing capital that the Labour Government announced in their latter term in office.

One of the saddest comments by the hon. Gentleman was about the industry programme, because he is approximately one year out of date. He chooses to forget the fact that the industry programme resources were announced a year ago, for the likely level of expenditure in 1987–88. Today I have announced an increase of some £25 million compared with what was previously planned for industry expenditure in 1987–88. That will be used for regional development grants. Once again, the hon. Gentleman finds himself unable to accept or welcome increases, and chooses to misrepresent what the announcements will achieve in Scotland in the next 12 months.

Sir Hector Monro (Dumfries)

May I ask my right hon. and learned Friend to buy the hon. Member for Glasgow, Garscadden (Mr. Dewar) a box of matches to help him with his calculations? May I warmly congratulate my right hon. and learned Friend on the additional expenditure, particularly in health, education and local authority capital expenditure? Will he confirm that, within the expenditure announced today, there are adequate resources to complete the scheduled improvements to the A75 from Gretna to Stranraer?

Mr. Rifkind

I thank my hon. Friend for his comments. I can confirm that the improvements to the A75 remain a high priority for the Government. Those projects will be going ahead.

Sir Russell Johnston (Inverness, Nairn and Lochaber)

Is the Secretary of State aware that more is certainly better than less, but also definitely not enough? May I specifically ask him whether he considered meeting the Main proposals on teachers' salaries within his budget, as there appears to have been enough money to do so, or was that decision not within his responsibility, but made in the Department of Education and Science? Does the extra cash for service development in the Health Service mean that there will be more provision to meet the AIDS crisis, despite the Victorian—or perhaps it should be described as pre-Christian—morality of the former Minister responsible for health, the hon. Member for Argyll and Bute (Mr. MacKay)? What is the logic in the Secretary of State providing extra money to produce more jobs and simultaneously cutting the budget of the Highlands and Islands Development Board?

Mr. Rifkind

On the last point, I am not sure what the hon. Gentleman refers to. No announcements have been made today about the budget of the HIDB. Those discussions are continuing at present. However, I expect that the gross spending ability of the HIDB next year will be greater than this year, so the hon. Gentleman should not jump to conclusions.

The Government's position on the Main committee is well known. I took the view, as did my colleagues, that it would be inappropriate, when an increase of 16.4 per cent. was being offered—given that it was four times the current rate of inflation—that the increase should be other than phased, comparable to phasing that has been accepted by other groups in the community, which are receiving smaller increases in their salaries.

Discussions on AIDS are taking place at present. It is not possible to identify what expenditure may be appropriate in either the social work or health spheres, but the hon. Gentleman can be assured that the Government attach considerable priority to dealing with that problem. That will be borne in mind when conclusions are reached.

Mr. Alex Fletcher (Edinburgh, Central)

I congratulate my right hon. and learned Friend on this positive contribution to public services in Scotland. Is he aware that, among other things, my constituents will warmly welcome the increased housing allocation, but will he bear it in mind that Edinburgh district council does not give top priority to clearing the backlog of housing improvement grants—a matter raised by the hon. Member for Glasgow, Garscadden (Mr. Dewar)? Will my right hon. and learned Friend use every power available to him to direct Edinburgh district council to use the money to clear up the backlog of housing improvement grants?

Mr. Rifkind

I appreciate the point made by my hon. Friend. In determining a very substantial increase in non-RHA allocation for housing expenditure, the Government have been conscious of the need to deal with the serious backlog of improvement grants that exists in Edinburgh and elsewhere. My hon. Friend can be assured that when individual allocations are determined for specific local authorities, we shall give consideration to ensuring that the resources provided will be used for the purposes intended.

Mr. Bruce Milan (Glasgow, Govan)

The Secretary of State said that the figure for public expenditure total for 1987–88 would be £7,957 million. He made a comparison between that and the figure for 1986–87 which was in the original public expenditure White Paper. Is not the real comparison with the estimated outturn for 1986–87? According to the Government's autumn statement, published only about a fortnight ago, the figure for 1986–87 will be £7,810 million. That gives an increase next year on these figures of £147 million, which is less than 2 per cent. in cash terms and therefore a reduction in real terms. Those are the Government's figures. I am quoting from today's statement and from the autumn statement. Are those figures accurate?

Mr. Rifkind

The right hon. Gentleman makes the same mistake as the hon. Member for Glasgow, Garscadden (Mr. Dewar). He is not dealing with a real basis of comparison. I must repeat what I said to the hon. Member for Glasgow, Garscadden: if one wishes to compare outturn, the provision I announced today for the Scottish block is 6 per cent. higher in cash terms and 2.3 per cent. higher in real terms. If we make a comparison with the Scottish block provision announced last year, it is an 8.7 per cent. increase in cash and a 5 per cent. increase in real terms. Those are the figures and the House should be aware of them.

Mr. John Corrie (Cunninghame, North)

I warmly congratulate my right hon. and learned Friend on his statement. I welcome especially the extra expenditure for the National Health Service. Will it cover the refurbishing of older hospitals as well as new build? I also welcome the £750,000 for the agricultural advisory services, which will be extremely welcome in agricultural areas. How does my right hon. and learned Friend see his statement helping in the rural areas?

Mr. Rifkind

I thank my hon. Friend. On capital investment in the National Health Service, we have seen the completion of 44 major new hospital developments since 1979. In future, I intend to keep capital spending at about the same cash level as this year. That should enable us to complete a further 36 major developments now under construction or in the course of being commissioned. They will provide more than 6,000 new beds. That will be a major impact of the sort that my hon. Friend has called for.

On the agricultural advisory services, my hon. Friend will be aware that there was anxiety that the transitional arrangements were placing too high a burden on them. The Government have responded to representations from the agricultural community by making available in each of the next three years an additional £750,000 for that purpose.

Mr. Norman Hogg (Cumbernauld and Kilsyth)

Does the Secretary of State appreciate that the additional allocations for housebuilding in the new towns is woefully inadequate and represents about 1,400 houses spread over five new towns in the next three years? Those figures fall far short of the figures which were supplied to the Under-Secretary of State for Scotland, the hon. Member for Galloway and Upper Nithsdale (Mr. Lang), by the Scottish Local Authorities with New Towns Forum? Will he pay attention to the people who run the new towns and act on the proper information he gets from them and not listen to his civil servants, who seem to be filling his head with nonsense?

Mr. Rifkind

The hon. Gentleman is usually an Opposition Member who is slightly more courteous and responsive when he hears good news. He will be aware that the new towns have been asking for a lift on the moratorium on general needs housebuilding. I have announced such an ending to the moratorium and I have also made provision for the new towns that will enable them to complete a proportion of the general needs housing that they require. I should have thought that the hon. Gentleman might at least have thanked me for that.

Mr. Nicholas Fairbairn (Perth and Kinross)

Does my right hon. and learned Friend appreciate the gratitude expressed by myself on behalf of the people of Scotland for this munificent enlargement of the budget of Scotland for the coming year? Does he also appreciate that when the hon. Member for Glasgow, Garscadden (Mr. Dewar), who never stops asking for bread, is given cake, he describes it as stone? Does he appreciate that at this time of Christmas the Labour party would describe the birth of Christ as a breach of the Licensed Inn Holders Act? Does he accept that the huge funds that he obtained, especially for agriculture and for the increase in the restoration of our buildings and heritage, will do much to enhance what the Government have already done for Scotland in that direction?

Mr. Rifkind

I am grateful to my hon. and learned Friend. The increase for the Historic Buildings Council for Scotland represents a substantial improvement of approximately £2.7 million in the resources that will be available to it. We wish to make a major contribution towards ensuring that Scotland's built heritage is properly maintained and restored, as it is clearly in the interests of the Scottish community as a whole that that should be achieved.

Mr. Gordon Wilson (Dundee, East)

Surely the Secretary of State is aware that the Scottish people will not be deceived by his latest piece of creative accounting? Is it not the usual Scottish Office statement—long on figures but short on cash? Will the Secretary of State tell the House why he was beaten in Cabinet once more and was unable to get the same amount of money in broad terms as is available to the Secretaries of State for Wales and for Northern Ireland? On independence, which is the only solution for Scotland, will he say that unemployment is now so serious that the amount of money produced by the Secretary of State under the statement is insufficient to deal with the problem?

Mr. Rifkind

The hon. Gentleman must make up his mind. He knows perfectly well that expenditure per head of the Scottish population is substantially higher than expenditure in England or Wales. Yet at the same time he chooses to carp and complain at the amount that is provided. What I have announced today is not cosmetic or playing with figures. It will allow the housing associations, the Health Service and educational provision in Scotland to improve in a real and substantive form. The hon. Gentleman can comment if he likes on whether the increases are large enough or insufficiently large. What he cannot question, if he wishes to be honest to the House, is that what I have announced today represents substantial improvements in each of the areas on which I have commented.

Mr. Allan Stewart (Eastwood)

I congratulate my right hon. and learned Friend on rejecting the desperate and despairing criticisms — the scrabbling around for criticisms — that we have heard from Opposition Members. What he said in relation to police establishments will be warmly welcomed by law-abiding citizens in Eastwood and no doubt elsewhere. Is he aware that in the past the Labour group on Strathclyde regional council has pursued a policy of keeping police establishments below authorised establishments? Would it not be an outrage if the new provision that he has announced was not used for law and order in Strathclyde?

Mr. Rifkind

Yes, indeed. I agree with my hon. Friend. If the new provision is not used for law and order in Strathclyde, the regional council, as the police authority, would have to take responsibility for it. With regard to the attitude of the Opposition on overall public expenditure, I say to my hon. Friend that if I had announced a doubling of public expenditure, the hon. Member for Glasgow, Garscadden (Mr. Dewar) would have described it as a concealed cut.

Mr. William McKelvey (Kilmarnock and Loudoun)

I almost greeted those figures with joy. I was about to congratulate the Minister until his figures were exposed by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) and my right hon. Friend the Member for Glasgow, Govan (Mr. Milian). However, that does not stop me from congratulating the Secretary of State for Scotland on taking a step in the right direction. I congratulate him on taking some of the advice that I have been offering him during the past few years.

I understand that six local authorities will receive additional rate funds. I do not know which six, but I know that Kilmarnock and Loudoun is not among them. I wonder why, when one considers its genuine efforts to keep its expenditure to a reasonable level while at the same time maintaining necessary services. Will the Secretary of State reconsider the plight of Kilmarnock and Loudoun and perhaps add it to the six?

Mr. Rifkind

We examined carefully the representations from each of the local authorities. Naturally, if any new matters are put before us that we have not previously considered, they will be taken into account. I welcome very much the hon. Gentleman's opening comments and look forward to the day when he will be shadow Secretary of State for Scotland.

Several Hon. Members

rose—

Mr. Speaker

Order. I remind the House that we have an important Scottish Bill after this statement and that many of the hon. Members who wish to speak now will also wish to take part in that debate. I ask for brief questions.

Mr. Albert McQuarrie (Banff and Buchan)

I congratulate my right hon. and learned Friend on the extra £750,000 that will be given to the advisory services in 1987, 1988 and 1989. It will certainly be welcomed in rural areas. Is it his intention to encourage local authorities in rural areas to give some of the extra money to the sheltered installation projects for the elderly and infirm? There are many such projects in my constituency and others which should be developed.

Finally, may I welcome my right hon. and learned Friend's statement that 126 new prison officers will be recruited next year, and about the provision of the new prison at Peterhead? Is it still his intention to ensure that work on the new Peterhead prison commences in March 1987, which would be greatly welcomed by the prison officers in my constituency?

Mr. Rifkind

We certainly hope to make maximum progress with the improvements at Peterhead. The resources that I announced today will help us to achieve that. I thank my hon. Friend for his other comments. On housing, I greatly appreciate the strong welcome that was given to our proposal by the Scottish Federation of Housing Associations, which acknowledges that the increases being given to housing associations in Scotland meet the requirements that they have identified.

Mr. Gavin Strang (Edinburgh, East)

I listened to what the Secretary of State said about AIDS. Does he recognise that Edinburgh has a tragic and unique problem and that within a year we shall be confronted with up to 100 cases? Will he assure the House that we shall have an early announcement of an additional allocation for Lothian health board to deal with the problem?

Mr. Rifkind

Naturally, the provision that I have announced today represents a substantial increase in the overall resources for health boards in Scotland. The individual allocations will be determined subsequently and the SHARE formula will be applied as it has been applied in the past. I have no doubt that Lothian health board will receive a full proportion of the increased resources available.

Mr. Barry Henderson (Fife, North-East)

Will my right hon. and learned Friend put into perspective the gripes of Labour Members? The Labour Government who claimed to care cut the hospital building programme in Scotland by 30 per cent. when they were in office. Will he accept my congratulations on introducing proposals that will benefit several areas of Scottish life, especially health, education and housing? Does he recognise that perhaps the most valuable encouragement lies in the figures which he gave for support for industry? They suggest that investment in Scottish private industry is extremely buoyant. That is where the money will come from to pay for all these good things.

Mr. Rifkind

I am grateful to my hon. Friend. During the next three years, capital expenditure in the Health Service will total about £370 million. That will enable us to maintain a full progammme of improvements.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

Will the Secretary of State give us his working estimate of how many new jobs will be created in the Scottish economy by the effects of his statement? In which areas of employment will those jobs appear?

Mr. Rifkind

It is impossible to give a precise calculation, but the substantial increases in housing and health expenditure are bound to have some implications for employment. We do not believe that expenditure by itself can solve the problems of unemployment. They will be resolved in other ways. We have tried to identify areas of the Scottish economy where improvements must be made. They can be identified in the Health Service, housing and the other areas that I mentioned. The general growth in the economy has enabled us to increase public expenditure while the overall proportion of the national income that goes towards public expenditure nevertheless continues to decline. That is a satisfactory outcome, which would not have been possible without a robust economic policy during the past few years.

Mr. Michael Forsyth (Stirling)

Will my right hon. and learned Friend confirm that average incomes in Scotland are the highest in the United Kingdom, with the exception of the south-east of England, and that public expenditure on roads, housing and health is 25 per cent. to 30 per cent. more per head than the United Kingdom average? Does that not nail the lie from Labour Members that the Government do not give priority to Scotland? Will he confirm that this arises from a formula? How does he think the formula for funding would be affected if we had a Scottish Assembly?

Mr. Rifkind

There is no doubt that a Scottish Assembly with additional tax-raising powers, as proposed by the Opposition, would mean that Scotland was the most heavily taxed part of the United Kingdom. That would be an enormous disincentive to industry contemplating investment in Scotland.

I agree with my hon. Friend that Scotland has received a higher proportion of public expenditure. We should realise that there are powerful arguments as to why that is appropriate. Although Scotland has only 10 per cent. of the population, it has about 40 per cent. of the land area, so the provision of roads, transport, schools, hospitals and other facilities must take into account those major geographical problems as well as the island communities and sparsley populated rural communities. Scotland has substantially greater needs, but my hon. Friend is correct to say that the Government have fully identified and responded to those needs.

Mr. Tam Dalyell (Linlithgow)

Does the Secretary of State recollect the representations that he received from me, my hon. Friend the Member for Livingston (Mr. Cook), West Lothian district health council and Lothian health board on the difficult problems of phase 2 of the new general hospital at Livingston? When he refers to 36 projects, does this mean that phase 2 is on time? When he talks about the upgrading of the NHS estate, can he say whether some of those funds will be made available for the existing Bangour hospital, which is likely to be used for many years but where repairs are creating great problems?

Mr. Rifkind

I understand that we have just approved phase 2 of the project. The hon. Gentleman's other points are more detailed matters with which the health board will deal.

Mr. Eric Forth (Mid-Worcestershire)

My right hon. and learned Friend confirmed several times that public expenditure per head in Scotland is far in excess of that in England. He will also confirm that the increases announced today will widen the gap even further? He has tried to explain the reasons for it, but will he give me an undertaking that he will fight in Cabinet to bring the expenditure figures in the west midlands close to those in Scotland?

Mr. Rifkind

The increased provision that I announced today follows directly from the application of the formula that has been used for many years in determining the Scottish proportion of expenditure as compared with that of England. There will be no widening of any gap. The formula has not been changed in either direction. Some parts of the United Kingdom clearly have needs which are greater than those of other parts. It must be for my hon. Friend to argue the case for the west midlands, which I am sure he will do eloquently.

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

In the light of the huge number of redundancies announced a few days ago by Scott Lithgow, will the Secretary of State sanction increased financial support to the Inverclyde initiative, which is proceeding slowly? Will he give assistance to solve the serious housing needs in Inverclyde? Will he meet Sir Simpson Stevenson, the provost of Inverclyde, in the next few days?

Mr. Rifkind

At present, I am not likely to meet Sir Simpson Stevenson. The allocations to housing authorities are yet to be determined, but the overall resources available for housing have been increased significantly. The Government strongly support the Inverclyde initiative. The increased jobs which it is seeking to identify are likely to be achieved on the basis of the programme that it has put forward. It has already identified projects that would meet about half the target number of jobs that was identified when the project began.

Mr. Michael Hirst (Strathkelvin and Bearsden)

Does my right hon. and learned Friend agree that his announcement of extra public spending, without associated extra taxation and borrowing, arises because of the success of the Government's economic policy in recent years? Will he confirm that the most welcome increase in industrial investment reflects expected higher industrial investment and that there will be no compensating adjustment in industrial support to the Scottish Development Agency and the Highlands and Islands Development Board?

Mr. Rifkind

These matters are still under consideration but I would not expect any problems of the kind to which my hon. Friend referred.

Mr. John Home Robertson (East Lothian)

How many Scots will still be waiting for houses and how many Scots will still be out of work during the period covered by the statement? Has the Secretary of State paid any heed to the exhortation of the Moderator of the General Assembly of the Church of Scotland last week, when he called on the Government to make Scotland into one nation again?

Mr. Rifkind

The hon. Gentleman must be aware that, as his political party's whole ideology is based on a class concept of society, he should not be lecturing others about the need to achieve one nation.

Mr. Alexander Pollock (Moray)

I would like to give a particular welcome to the extra funding that is being made available to the work of the Housing Corporation in Scotland. Can my right hon. and learned Friend confirm that the corporation makes a significant contribution to resolving the problem of Scotland's homeless, in many cases giving 100 per cent. funding to the work of local housing associations in my constituency? Does he agree that today's news will be of particular benefit and help to the elderly and single homeless, for whom the housing association work offers the only realistic prospect, in the foreseeable future, of rehousing?

Mr. Rifkind

I could not agree more with my hon. Friend. Ever since we came into office in 1979, the Government have given an enormous priority to the housing association movement. The figures announced by my hon. Friend the Under-Secretary of State on Friday reveal a provision for the housing association movement in Scotland of £123 million, and the federation itself has paid a glowing tribute to my hon. Friend's announcement.

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

Will not the Secretary of State confess that he let the cat out of the bag at the end of his statement, when he claimed that on the one hand he was increasing money spent on public services and at the same time cutting public expenditure? Was not the whole of the right hon. and learned Gentleman's presentation today a conjuring trick and an illusion?

Let us test the Secretary of State. Will the urban aid cuts be restored? Will the cuts in provision to the children's panels be restored? Will the staff at Auchincruive college, currently being laid off, be given their jobs back? Will the factories that the people in Cumnock and Doon Valley wish to be built in the area actually be built? That will be the test of who is telling the truth.

Mr. Rifkind

The hon. Gentleman's grasp of economics is almost as profound as his grasp of international relations.

Mr. Foulkes

Thank you. I take that as a compliment.

Mr. Rilkind

It is precisely because the economy is growing under this Government that we are able to increase public expenditure while seeing public expenditure represent a smaller proportion of national income.

Mr. Michael Fallon (Darlington)

rose—

Mr. Speaker

Order. I will call the hon. Member for Darlington if he was present at the beginning of the statement.

Mr. Fallon

indicated dissent.