HC Deb 15 December 1986 vol 107 cc958-70 4.11 am
Mr. Donald Stewart (Western Isles)

The Montgomery report deals with the islands of the Orkneys and Shetlands, represented by my hon. Friend the Member for Orkney and Shetland (Mr. Wallace), and the Western Isles, which I represent. The report was commissioned by the former Secretary of State for Scotland, was laid on the shelf and has not previously been debated in the House. I accept that the report is hardly a burning issue with other hon. Members, even Scottish Members, but it can be read by all Members with some regard for grass roots democracy.

My hon. Friend the Member for Orkney and Shetland has made valiant efforts to secure a debate on the report but has been defeated by the luck of the draw or, as happened a fortnight last Friday, by the first debate taking up the full time. So he will share my satisfaction that, even at this hour, we can make our views known on the Montgomery report.

The creation of the islands councils as all-purpose authorities has been a great success, even more marked in the Western Isles, which until the reorganisation of local government in the 1970s had been, unlike Orkney and Shetland—which enjoyed county council status since 1929—an adjunct of Ross and Cromarty and Inverness county councils. As a county councillor who had to travel to Dingwall on the Scottish mainland for meetings, and subsequently as a Member of Parliament who had to deal with both Dingwall and Inverness on local government affairs pertaining to my constituency, independence for the Western Isles was certainly a welcome development for me as well as a satisfaction as an islander in making our own decisions in local government.

The Secretary of State for Scotland at the time of the reorganisation did not allow the Western Isles island council to start in business with clear books. It inherited burdens unknown to other authorities and, despite the manifest improvements, the financial strains have severely curbed developments in the outer isles. One appalling burden was caused by the shameful neglect of Inverness county council to give a fair deal to the islands when they were under its jurisdiction. Had that council done its duty by the islands, the problems for the new council would have been substantially reduced.

The Montgomery report was one of the most useful submissions made on Scotland. I have been involved with one or two similar submissions in local government and in Parliament, and several of them have related to my constituency, but this is one of the best reports that I have seen. Even this long period after the report was issued, I again congratulate Sir David Montgomery and his colleagues on doing the job thoroughly and on producing recommendations that combine fairness, practicality and good sense.

I fully support the recommendation, that there should be no reduction in the powers of the islands councils and that the opportunity should he taken wherever possible to consolidate, develop and extend these powers. I also support the recommendation that the Secretary of State should recognise, the direct interest of the islands councils in the welfare of the fishing industry in their areas, and they should be included in any local managment arrangements. Recent events make that course even more desirable.

The record and local experience of the councils are sufficient guarantee that the vital needs of their fishermen and fishing communities would be administered in fairness for their economy and the conservation of stocks of fish. On cultural development, I welcome the backing of the report for adequate financial support to be made available to the Western Isles islands council to ensure that its efforts to promote the Gaelic language may continue.

I take issue with my council on the question of health boards. It wished to take over the responsibility, which the report rejected. Although there is substance in the council's contention that the Secretary of State controls the health board's priorities, it seems to me better to have a health authority fighting its corner on a special remit than to deal with health matters among the conflicting demands on council priorities and the financial restraints placed on them by central Government.

I am glad that the report recommended that the present system of attendance allowances should be replaced by a form of salary or a fixed annual sum. I took that view at the inception of the reorganisation legislation. It is clear that the time and travel involved restricts the numbers who can offer themselves as councillors, and that cannot be democratic.

It should be acknowledged that, since the report, the Scottish Office has taken action on some of the issues raised, such as teachers, houses and support for the Gaelic language—the latter, however, on a Scottish rather than an islands council basis. I support the submission of Western Isles islands council to the committee that there should be consultation about the purposes and contents of new legislation. So often schemes tailored for urban populations do not make sense in an island community. Accordingly, I support the committee's recommendation that there may be circumstances in which Acts of Parliament should include a provision to allow the Secretary of State to vary their application to the island areas.

On the frequency of elections, I disagree with the committee. More frequent elections would allow communities to register their views on the performance of councillors in a more accountable way. At present, in my island council, all 30-odd councillors come out at the same time. It would be unlikely that all would be defeated, although they could be on some issues, such as the closing of the schools, which arose two or three years ago. People from the different communities were up in arms against the local councillors. We might have had the strange position whereby the bulk of the councillors would have been removed and entirely new people, green to local government, would have replaced them. I think it desirable that the old system should apply, which meant that the old borough councils' section of the councillors stood for election from time to time.

The report wisely states: We would not want our conclusions to be regarded as final, nor should they necessarily apply for more than a relatively short period. That is a statesmanlike observation that recognises the speed of change, even on the islands. The worthwhile labours of the Montgomery committee should be seen and duly rewarded by a plan for the Scottish Office to develop and extend the powers of the councils, which have amply demonstrated their ability to act responsibly with forward-looking initiatives for the people of the islands of Scotland.

4.20 am
Mr. James Wallace (Orkney and Shetland)

I congratulate the right hon. Member for Western Isles (Mr. Stewart) on his good fortune in securing the debate, albeit at a somewhat early hour of the morning. His fortune is certainly better than my own, having twice drawn second place in the ballot for private Members' motions on a Friday only to find the first motion being debated until 2.30 pm.

It is to be welcomed that we can debate the Montgomery committee's report even at this late stage. As the right hon. Gentleman has said, much hard work went into producing it. It is the result of a good examination of the issues facing local government in the islands and it contains a number of worthwhile recommendations. I take up one of the conclusions to which the right hon. Gentleman referred, which is that the creation of the islands councils as all-purpose authorities has been a success. That is widely accepted on the islands and throughout Scotland. It is somewhat difficult to believe that the Royal Commission, under the chairmanship of Lord Wheatley, proposed that Orkney and Shetland should be the second or district tier of a highlands and islands region. In retrospect, that was an appalling and insensitive proposal. It is to the credit of the Administration of the right hon. Member for Old Bexley and Sidcup (Mr. Heath) that they listened to the views of those who sought an all-purpose authority for each of the island groups. That alteration to the Wheatley recommendation has been proven valid by its operation.

Under a two-tier system it is clear that the islands would have felt remote, as the right hon. Member for Western Isles will recall from his experience as a county councillor on the old Ross and Cromarty county council. Oil development took place in my constituency in the 1970s and if planning had been a regional function, direction from Inverness would not have resulted in the degree of control or sensitivity that was necessary at such a time.

Having declared the island councils a success, the Montgomery committee observed that the opportunity should be taken wherever possible to consolidate, develop and extend their powers. There was a feeling after the Montgomery committee had reported that possibly it had missed an opportunity to do just that. Those who sit on such committees are aware of the track record of similar reports—it is true that they often tend to gather dust on a Government Department shelf—and it may be that by putting forward some modest and practical proposals the members of the committee were hoping that some of them stood a chance of being implemented. If that were the position, I venture to suggest that their optimism was slightly misplaced.

The Government's response was negative on the whole and inadequate, but I have no doubt that the Minister will inform the House that the Government accepted 37 of the 49 recommendations and had implemented two of them by the time that they came to publish their response. The alteration to the law relating to the sale of teachers' houses was forced upon the Government by those in another place, and was subsequently accepted. Most of the recommendations that were accepted were negative ones that reaffirmed the status quo, or otherwise were couched in general terms that did not require much initiative to develop other than simply to agree to them. The Government appeared to reject the more substantial recommendations. Like all local authorities, islands councils have experienced the increasing level of centralisation that has take place in recent years. It has diminished the scope for local initiative. Local decision making is important. Decisions are better if they are taken with sensitivity to local needs and considerations. Very often, they are better if they are one's own decisions. There is a concern that many local circumstances, particularly in the islands, are unique and cannot always adequately be provided for or, sometimes, foreseen when the House passes legislation that perhaps, is directed principally to problems arising in a more urban context.

There is also a fear that many problems and circumstances of islands communities are not fully appreciated by central Government. The sale of local education authority housing was a case in point. In the Green Paper entitled "Paying for Local Government", the Government acknowledged that the islands councils of Orkney and Shetland required special consideration. When the Bill was published there was no clear sign of that special consideration. It has been explained that, as long as indexation of the non-domestic rate takes place, that will be taken care of. As the Government move towards their clear intention of introducing a uniform business rate, more detailed special arrangements will be required.

I understand that last week a meeting took place between councillors and officials of Shetland islands council and Scottish Office officials. Discussions are also to take place with representatives from the other islands councils. These direct talks between islands councils and the Scottish office are welcome. One of the Committee's recommendations was that the Scottish Office should consider whether there might be grounds for asking for a separate islands council view.

In his response, the former Secretary of State, the right hon. Member for Ayr (Mr. Younger), thought that the Convention of Scottish Authorities was the best channel for such communication. He said: The procedures for consultation will be reviewed with the Committee's recommendation in mind. There have been recent examples of that. Perhaps the Minister will say more about how that has developed, since the Secretary of State has demonstrated a willingness to review the procedure.

The Committee's fourth recommendation related to circumstances in which legislation might be varied in its application to the islands. The right hon. Member for Western Isles referred to that matter. That recommendation was generally accepted. I would much rather the Committee had gone further and agreed to one of the proposals that had been put—that there should be an islands desk or unit within the Scottish Office, at least at first on an experimental basis. One may ask why island areas should be treated any differently. For a start they are unique in that they have single-tier local authorities. The very fact that they are islands makes their circumstances different. For example, on the application of milk quotas, in my own constituency, in Shetland and in Orkney the problems varied between the two sets of islands. But because of the very fact that they were islands problems existed in relation to the application of the legislation which did not pertain in other parts of Scotland.

As the Minister is probably well aware from his visit to my constituency earlier this year, transport links to, from and within the islands are special to the islands communities. There are special circumstances relating to the islands. A desk or unit at the Scottish Office could usefully safeguard the interests of the islands and keep a watching brief on matters that affect the islands. It could build an expertise on islands issues. That would help towards better, and, sometimes quicker, decisions.

The committee dealt with the finances of the local authorities in detail. First, it recommended that capital expenditure consents should be in a single block allocation. That was rejected in the Secretary of State's response, but I am pleased to say that there has been a change of heart in the Scottish Office and that that recommendation has now been agreed to. When it was put to the Minister at a COSLA meeting, he responded that there had not been any demand for change. The report in my local newspaper suggested that he was corrected quickly on that point by the convenor of Orkney islands council, who referred to the committee's recommendation, and the evidence presented to it. It is welcome that control will be lifted as from April next. It gives greater freedom for local authorities to determine local priorities, albeit on restricted budgets.

The second financial issue relates to section 83 of the Local Government (Scotland) Act 1973, which gives each local authority the power to spend up to the product of a 2p rate on purposes in the general interest of their area. A problem arises for the islands authorities. In mainland Scotland there is a two-tier system of local government, so the product for spending on the general interest of the areas comes from region and district, and is therefore twice as much as can be raised in a single-tier authority.

The committee recommended that there should be a change—that it should be double the amount in the islands authorities—but the Secretary of State deferred the decision until the report of the Widdicombe committee. That committee recommends that there should be a change in the basis of raising money and that there should be a population-based ceiling, although it admits that it would lower significantly the ceiling for expenditure for the Scottish islands councils. However, it goes so far as to say that there should be a double rate for single-tier authorities.

If the Government intend to legislate on the basis of the Widdicombe committee, having received representations made to them, I would ask that the position of the islands councils be kept in mind. I ask the Minister to say what the effect of the abolition of domestic rates will be on the provision, pending any legislation on the basis of Widdicombe.

The third financial issue relates to the standing consent that Shetland islands council sought for capital expenditure out of its oil reserve fund. That was rejected in the Government's response. The former Secretary of State said that there were fundamental objections in terms of our wider objectives for public expenditure. The right hon. Gentleman said that, if he had allowed that standing consent, he would have had to hold back the equivalent sum in the normal capital consents. That is taking the Government's public expenditure control just a step too far. It is implausible that the Chancellor could manage to fine-tune the economy so much that the £7 million at the most that Shetland islands council could get in any one year from the reserve fund could have a major effect on the nation's economy.

The money is wanted for proposed industrial development and investment, building up alternative sources of employment, developing the infrastructure and providing services, particularly in the remoter parts of the Shetland islands area. It would be used to try to make sure that the islands were put on a secure basis for the day when the oil income diminishes. The amount involved may be relatively small in national terms, but it is significant for developments in Shetland. It is paternalistic for the Scottish Office to say that the Shetland islands council must go cap in hand for consent to spend the money that it has managed to accrue in its oil reserve fund.

The right hon. Member for Western Isles referred to the important issue of fisheries management. The islands are close to major fishing grounds. There is an important industry in the catching sector and in related onshore work in all three groups of islands. The fishing industry is vital to those three local economies. Rightly, the local authorities take a clear interest in it, as the Montgomery committee acknowledged. The committee accepted the arguments for greater regional management of fisheries and said that there should be opportunities for the local fleet to fish in local waters and ensure that fishing did not endanger stocks. The committee recommended that the local authority should play a role in local management arrangements. Regrettably, the Government rejected that recommendation.

Even since the Montgomery committee took evidence, there have been incidents in which local authorities, which have a considerable involvement in this issue, have not been properly consulted and involved in major decisions affecting fisheries—for example, the licensing of vessels engaged in catching certain pressure stocks and, more importantly in the past two years, the implementation of the Government's inshore fishing legislation. Clear proposals by the Orkney and Shetland councils, backed by fishing associations in the two sets of islands, were not given proper attention before the orders were laid before the House. I believe that that lack of consultation aggravated the councils as much as the fact that the proposals were not implemented. I hope that the Government will recognise the great need for the local authorities in Orkney and Shetland to be much more involved in a more regional structure of management of fisheries.

The local authorities do not have sole control over the protective services—the police and fire services—in their areas, but joint boards exist. The arrangements are not entirely satisfactory, because of the domination by the Highland region. I think that the Under-Secretary of State—the hon. Member for Edinburgh, South (Mr. Ancram)—will recall the early months of 1985 when we were batting on the same side and it appeared that the Highland regional council was trying to solve its budgetry problems by passing on cuts to the police committee. The effects were being felt in my constituency, with the threatened closure of police stations. That issue was eventually resolved, but there clearly has been continued dissatisfaction with the way in which the joint boards are financed. The amounts paid bear no relationship to the services provided.

Although I do not underestimate the difficulties involved in reforming the system, I agree with the committee's recommendation that apportionment of the cost of the police and fire services based on actual cost should be discussed by the boards, the local authorities and the Secretary of State. The Secretary of State did not shut the door on that possibility in his response. I hope that the Under-Secretary of State will have an open mind on this subject and announce any discussions that he has had to find better financial arrangements for the protective services.

It has been recommended that council employees should not be allowed to stand for election to local authority councils. That recommendation caused considerable disappointment. A single-tier authority means that there is no opportunity for council employees—for example, teachers—to take an elected part in local government, unlike teachers employed by the regional authority, who can stand for election to district authority positions.

Paragraph 6.34 of the Widdicombe report said: A more general ban on twin-tracking would deprive 3 million people of the right to be a councillor. This would not only reduce their rights as individual citizens, but would reduce the representativeness of council membership. I hope that the Scottish Office in particular, in responding to the Widdicombe report, will bear in mind the particular problems caused by single-tier authorities on the islands and will consider whether there is any way in which those people who are effectively debarred from taking an elected post can seek election to such office.

In the past seven years the Government have increasingly centralised power through their actions on local government finance and in the past fortnight even in education. That is very much against the trend that we wish to see in the islands, where we believe that local democracy should be enhanced by greater powers. The Montgomery committee said: the opportunity should be taken wherever possible to consolidate, develop and extend the powers. The Government gave general approval to the report and specific approval to that recommendation, but unfortunately their actions have not always matched up to their words. We look forward to much more willingness on the part of the Government to promote greater and healthier local democracy in the islands areas of Scotland.

4.40 am
Mr. John Home Robertson (East Lothian)

I certainly endorse the final comments of the hon. Member for Orkney and Shetland (Mr. Wallace). The trend towards centralisation must be specially alarming to those who represent the remoter island areas of Scotland.

It is customary on these occasions to begin by congratulating the hon. Member who has raised the subject on his good fortune in obtaining the opportunity to do so. With the clock showing 4.40 am, I am not sure that the right hon. Member for Western Isles (Mr. Stewart) will regard it as particularly good fortune, but I congratulate him on his persistence, which has made it possible to debate this subject on this occasion. The right hon. Gentleman is held in great affection in all parts of the House, but the very fact that at this stage of his career he finds it necessary to raise the affairs of his constituency at this time of the morning in a Consolidated Fund debate graphically illustrates the rather forlorn position of a Scottish National party Member. Not even the charm and talent of the of the right hon. Gentleman can overcome the built-in handicap of being a member of Scotland's equivalent of the Flat Earth Society. With the best will in the world, it is very difficult to take the SNP seriously. The right hon. Gentleman has held the Western Isles seat on loan from the Labour party for a number of years. When he begins his well-earned and, I hope, long and happy retirement next year I look forward to working with Calum MacDonald, the future Labour Member, who will have a very direct influence over the policies of the next Labour Government towards the island areas of Scotland.

As has been pointed out, the Montgomery report is not the most radical or exciting document to see the light of day in recent years. As it contains no fewer than 27 recommendations for "no change", it is perhaps not surprising that the Government have accepted 37 of the 49 recommendations. Although it is not the most thrilling document, it addresses a number of fundamental problems, particularly the fact that in a single-tier local authority a large section of the population of the area is debarred from standing for election to that authority. That seems to restrict the scope of democracy in the area and something ought to be done about it.

In recent years I have visited all three islands areas and I fully recognise the very special circumstances and problems that they face. I went to the Orkney and Shetland islands initially as a member of the Select Committee on Scottish Affairs when we were investigating rural transport and ferries. More recently, I had the opportunity to visit the Western Isles and to meet representatives of the various islands councils. It is self-evident that the islands areas are different from the mainland areas in very many ways. They have a strong case for special arrangements. Some exist, but there may be a case for extending them.

During my recent visits to the islands areas I have found that talk has concentrated on a range of subjects which would be of relatively little interest to people in mainland areas, which illustrates the point that the circumstances are different. People have been talking about the Crown Estates Commissioners' policies on rents for moorings and fish farm sites. We would not expect people in other parts of Scotland or England to express much interest in that.

The hon. Member for Orkney and Shetland talked of local fishing management, and there are also the questions of land, the European integrated development programme and the vexed question of financing ferries and the road equivalent tariff which is complicated enough for a mainlander, without hearing people in the Shetlands saying one thing about it and people in the Western Isles saying something rather different.

It is well known that the Labour party has a strong commitment to helping and developing all of Scotland's rural areas, and to recognising the special circumstances of the islands. It was a Labour Government who set up the Highlands and Islands Development Board, and we recognise that there may be a case for developing the principle of it, possibly by extending the scope of islands councils in respect of economic development. I believe that that merits consideration.

We shall publish next month a document on agriculture policy. I hope that it will make it clear that we see ways in which to assist and protect agriculture in all parts of Scotland.

Mr. Wallace

Can the hon. Gentleman foreshadow what will be in that document? Will it propose the rating of agricultural land? If so, will he explain to many of my farming constituents, who are finding it difficult to make ends meet, how that will benefit them and the rural community?

Mr. Home Robertson

The hon. Gentleman must not encourage me to betray confidences and break embargos. As for bringing agriculture into the rating system, I am astonished that hon. Members who represent island areas should, of all people, defend the barley barons of my constituency and East Anglia from contributing to the cost of local services. It palpably would not make sense to levy a rate on the agricultural element of a crofter's business, and I hope that that is well understood by all concerned.

Our policies are in marked contrast to those of the Government. The free market theory of life makes little sense in England, but it is patently absurd in Scotland's island areas. A business in Barra or Unst cannot possible compete on an equal footing in an artificial free market with mainland-based enterprises. The policies of privatisation have been at best irrelevant and possibly downright harmful to the interests of the islands.

I shall skate over the rather sordid story of the privatisation of MacBrayne Haulage and consider British Gas. As for the advertisements featuring a rather implausible Hebridean Sid—

Mr. Donald Stewart

What has this to do with Montgomery?

Mr. Home Robertson

—how many Sids are there in the islands areas? How many constituents of the right hon. Member for Western Isles are gas consumers and can take advantage of the preferential share issue? I wonder whether the commercial approach of privatised industries is likely to make it more difficult to extend the services of such industries into remoter areas.

The hon. Member for Orkney and Shetland referred to the poll tax. It is abundantly clear that it cannot distinguish between those who have and those who do not have access to local services. How can that be appropriate, particularly to local government in the islands areas?

The Montgomery report is certainly a useful document and it reflects the diversity of ideas about the future of the islands. We are convinced that all areas of Scotland, including the islands, would benefit from a more accountable, accessible, autonomous administration based in Edinburgh, along the lines of our proposal for a Scottish assembly. The islands have the good fortune of a single tier local government system—a pattern which could well be developed in other parts of Scotland. We would do well to study that.

I have resisted the temptation to go into great detail on the report, but I have listened with care to what was said about the specific recommendations in the report. In conclusion, we recognise the special problems of the islands areas. As remote parts of a remote nation within the union they clearly merit special attention. They will benefit from a Labour Government who will not have the inhibitions of the present Government about interfering in the economy to develop remote areas, and from the constitutional changes that we are planning to improve the responsiveness of all levels of government in Scotland.

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

With the leave of the House, I shall respond to the debate.

I congratulate the right hon. Member for Western Isles (Mr. Stewart) on securing the opportunity to raise matters which are clearly of great importance to his constituents. I was amazed by the speech of the hon. Member for East Lothian (Mr. Home Robertson) and can only think that he fell into the Minch on his way to the Western Isles and found himself out of his depth, because his speech bore no relation to the genuine problems raised by the right hon. Gentleman. It was a sort of party political broadcast and I suspect that when it is read in the Western Isles the wretched gentleman whose name he mentioned as the Labour candidate will find that his chances have gone for ever.

Obviously, there are some matters on which I can wholeheartedly agree with the right hon. Gentleman and others on which we shall have to agree to disagree. I agree entirely with the right hon. Gentleman and the hon. Member for Orkney and Shetland (Mr. Wallace) that the creation of the islands councils has been a success. That is certainly the Government's view, as was made clear by my right hon. Friend the then Secretary of State in his response to the Montgomery committee's report in July 1985. Indeed, my right hon. and learned Friend was equally positive towards the committee's recommendation that the opportunity should be taken to consolidate, develop and build on that success.

I shall deal in greater detail with some of the steps that the Government have taken to implement certain specific recommendations. I can accept that the Montgomery committee also did a useful job in pointing up areas of contact between central and local government where changes could be beneficial to local government generally, not just in the islands. The Government have responded positively by accepting a number of the recommendations. The hon. Member for Orkney and Shetland cannot use that fact in support of his argument that the Government's response to the report has been "negative". If, of the 37 recommendations accepted, only a modest number are distinctive to the islands, that means that the balance of those accepted have been beneficial to local government generally. That is a plus rather than a minus, and illustrates the Government's positive attitude towards local government and central government relations.

I know that the hon. Gentleman claimed to be disappointed by the Government's response to the report. Obviously, people do not get everything that they want, but that natural reaction should not be allowed to obscure the fact that worthwhile recommendations were made and accepted, and that changes have resulted. It was alleged that most of the committee's recommendations were in favour of the status quo, and that those were the only recommendations accepted. In fact, only 11 of 49 recommendations expressed the committee's view that some changes which had been proposed should not be made. In all 37 recommendations were accepted.

The first five recommendations were about constitutional issues. In view of the proposals that it received in evidence for what amounted to constitutional change, the committee decided to proceed by examining the relationship between the islands and the rest of the country. Having done that, it was not disposed to favour any change that might weaken existing ties. It concluded that future developments should be built on the present structure of local government.

The Government entirely agreed with that conclusion. In accepting the recommendations, however, my right hon. Friend also accepted the need for a review of consultation procedures and the need to ensure that statutory provisions are applicable in the islands in a way that accords with their special circumstances. We have taken action to ensure that every official in the Scottish Office is fully aware of these needs when developing proposals to put to Ministers or undertaking consultation on our behalf that may affect the islands. Direct contact with council officials has tended to increase because of new procedures within the Scottish Office to ensure that the islands are fully taken into consideration. Consultations are taking place at the moment on the longer-term proposals for local government finance reform. That again is very much within the spirit of what has been suggested.

A number of financial recommendations were raised by the right hon. Gentleman and the hon. Member for Orkney and Shetland. The first of these relates to capital consent, where the recommendation was that it should be given to the islands councils in the form of a single block allocation. At the time that the original response was given, there was only a limited use of the existing 10 per cent. flexibility and that was what was meant by demand. However, following further consultations with COSLA, it was decided that we should accept the recommendation not only for the islands but for all councils excluding the housing blocks for district councils.

Several recommendations were raised and question marks placed against them. Recommendation 11 deals with section 83 of the Local Government (Scotland) Act 1973. The point is that the single-tier islands councils may each spend up to the product of a 2p rate under this provision, whereas on the mainland both district and regional councils may do so. The Government have not rejected this recommendation. Since discretionary spending powers were being reviewed by the Widdicombe committee, it seemed sensible to wait until it had reported before contemplating any change. The committee has now reported, and, in considering its recommendations, we shall bear in mind the earlier one made by the Montgomery committee. In the meantime, revaluation—perhaps coincidentally—has more than doubled the amount of expenditure that councils may incur under section 83. For the present, I suspect that the councils are able, if they so wish, to achieve what they were seeking in the first place.

Recommendation 12 was raised, and has been the subject of some misunderstanding. The hon. Member for Orkney and Shetland said that there could not be such a degree of fine tuning and that an expenditure of £7 million could affect public expenditure. We work within a cash limit on the amount of capital expenditure that all Scottish local authorities may incur. Capital expenditure by local authorities is a significant proportion of public expenditure in Scotland. Within that cash limit, and working within that limit, a transfer would have had to be made had the recommendation been allowed. In all the circumstances, it was felt that that was not the right way to proceed. Part of the misunderstanding was that there were those on the islands who felt that they were not being allowed to use the revenues that they had received from oil. In practice, had the money not been present, the local authorities would have had to borrow, so a direct benefit has been achieved by the islands in the use of those resources.

Mr. Wallace

Although I appreciate that the policy of the Government, whether one agrees with it or not, is one of cash limits and the control of public expenditure, surely part of the argument put forward is that public expenditure has to be raised and the Government usually argue that it has to be raised from the taxpayer. However, in this case, the money is already there. It has accrued from the oil companies. It is not as if there has to be additional taxation.

Mr. Ancram

I am afraid that the hon. Gentleman's grasp of general economies is not perhaps as strong as it should be. There is a great difference between the public sector borrowing requirement, which is what the Government have to raise other than through taxes; money that the Government self-spend, and public expenditure control, which is the totality of spending in public by the nation. It is the second that has major macro-economic effects and upon which any Government have to keep a firm control unless they are to find that certain unpleasant macro-economic results occur.

The question of fishing was raised by the right hon. Member for Western Isles. My right hon. and learned Friend the Secretary of State willingly acknowledged the interest that the islands councils have in the welfare of the fishing industry in their areas. Given the complex national and international considerations that apply to the management of the industry, it was our view that it was not realistic to think that substantial powers could be devolved to local authorities. It is understood that the islands have an interest in fishing and obviously that is recognised by my right hon. and learned Friend.

The hon. Member for Orkney and Shetland mentioned the question of transport and internal ferry services. As the hon. Gentleman knows, I visited Orkney this summer to see what the problem was. The recommendation made by the Montgomery committee was that the Orkney islands council should take over responsibility for internal ferry services in its area. Significant progress has been made in that matter, with agreement reached on the timing of the handover and the financial arrangements to reflect the transfer of responsibility. There are still a number of matters connected with the handover that are under discussion and I would hope that they would be resolved in the reasonably near future.

Mr. Wallace

Is the Minister in a position to say when a decision will be announced with regard to the type of vessel that might be used for the north isles shipping in Orkney?

Mr. Ancram

I can say only that I hope that we shall be in a position to announce that reasonably soon. Obviously there were major considerations involved and the hon. Gentleman knows that on my visit I looked closely at the situation, not just in consultation with islands councils, but out on the sea, seeing some of the problems that exist in terms of inter-island transport.

The hon. Member for Orkney and Shetland also raised the matter of recommendations 31 and 32 that relate to the Gaelic language. They could not be wholly accepted as they stood. However, regulations that became effective on 1 April 1986 have allowed specific grants to be made for Gaelic language education. Grants for the current financial year have been paid and applications for next year are being considered. I think that that represents a major step towards the objectives of those recommendations.

There is less progress to report on recommendation 35, which was about the apportionment of the costs of police and fire services. It is the Secretary of State's view, in not rejecting the recommendation, that it is not really for the Government to impose the arrangements for the apportionment of costs in the absence of evidence that a different system could be made to work at a reasonable cost without reducing efficiency or in a way that would significantly alter the present apportionment of costs. I know that that has been a matter of discussion between the various councils and we are awaiting proposals. However, it is a matter that must be resolved by the councils themselves and not by imposition from the Government.

The right hon. Member for Western Isles raised the matter of recommendation 46, which was that the present system of attendance allowances for councillors should be replaced by a form of salary. I have two things to say about that. The first is that it remains our view that, on the balance of the arguments, there is insufficient justification for treating the islands as a special case. The second, perhaps more relevantly, is that this question is to be reviewed in relation to all local authorities in the light of the Widdicombe committee's recommendations.

Whatever the hon. Member for Orkney and Shetland and the right hon. Member for Western Isles may say, the truth is that all the proposals that were advanced on behalf of the island communities were thoroughly and impartially examined by the Montgomery committee. Indeed, the right hon. Gentleman welcomed that committee's work. Its conclusions were realistic and sensible. Although the Government were unable to accept all of them, it would be misleading to suggest that the special interests of the islanders have in any way been disregarded. On the contrary, they have been carefully considered and the Government will continue to take account of their interests.