HC Deb 23 July 1986 vol 102 cc351-61 4.10 pm
The Secretary of State for Scotland (Mr. Malcolm Rifkind)

With permission, Mr. Speaker, I wish to make an announcement about local authority expenditure and rate support grant in Scotland.

I would first like to deal with 1987–88. For that year I propose to set the level of provision for local authority relevant current expenditure in Scotland at £3,277 million. This figure is 3.75 per cent. above local authorities' adjusted budgets for 1986–87 and is a reasonable assessment of what they are likely to spend, given the level of inflation and their past pattern of spending. It recognises the efforts made by increasing numbers of authorities to budget at or below guideline.

I propose to set aggregate Exchequer grant for 1987–88 at £2,160 million. This will maintain, on present estimates of loans charges and other financing items, the present grant percentage of 56.1 per cent.

I consider that my proposals on provision and grant represent a fair and realistic settlement for next year. In making these proposals I have taken careful account of the points made to me by the Convention of Scottish Local Authorities. I met the convention on 18 July when we discussed expenditure prospects for next year. My hon. Friend the Minister for Local Government and the Environment met the convention this morning to outline these proposals to them.

Given this realistic settlement, there is no reason for rate increases next year, unless local authorities increase their spending next year above inflation or fail to bring their spending to guideline in the current year. I very much hope that local authorities will, in the interests of their ratepayers, respond positively to these proposals.

I turn now to 1986–87. Scottish local authorities have budgeted for 1986–87 to spend £118 million, or 3.9 per cent. more than the current expenditure guidelines which were issued to them. Authorities were given ample warning that the penalties for exceeding guidelines would again be severe. I have therefore decided, having consulted the Convention of Scottish Local Authorities on my proposals last week, to impose grant penalties for 1986–87 totalling £125 million. I will be laying the necessary rate support grant order shortly and grant reductions will start on 30 July. Copies of the report on the order showing how the penalties will affect each local authority are available in the Vote Office. Letters of notification are being posted to authorities today.

Penalties will again be calculated using a tariff which relates the penalty to the level of excess over guideline. The tariff will, to a greater extent than last year, concentrate the penalties on the highest overspenders. In particular, the four authorities which are responsible for 90 per cent. of the overspending will all have a penalty which is larger than in 1985–86.

Local authorities as a whole are increasingly budgeting within guidelines. In 1986–87, 40 out of the 65 authorities budgeted within guidelines and will suffer no penalty. I hope that the 25 remaining authorities which are responsible for the overspending in 1986–87 will make every effort to reduce their expenditure at outturn and thus recover the grant penalty which I have just announced. There are considerable benefits to authorities in doing so. In 1985–86, local authorities responded to penalties by bringing down their overspend from £91 million to £47 million and penalties will correspondingly be reduced from £126 million to £57 million. The advantages of spending within guideline are considerable and I hope that in 1986–87 there will again be many authorities modifying their spending to be within guideline at outturn.

Mr. Donald Dewar (Glasgow, Garscadden)

I am glad to see any sign of repentance on the Government Front Bench and I take some satisfaction from the fact that the sustained campaign in defence of local services has forced the Scottish Office to pause and, hopefully, to think about what it has done in previous years. I offer a very sober and qualified welcome to part of this announcement. Undoubtedly the figures are better than those for last year. It is remarkable how entering the fourth year of a Parliament concentrates the minds of Ministers on survival.

The Government claim that the 1987–88 announcement amounts to a standstill. Typically, a status quo is the height of the right hon. and learned Gentleman's ambitions, but will he take note of our doubts about the adequacy of the inflation factor? He knows that manual workers in Scottish local authorities have rejected an offer of 6 per cent., that clerical and administrative staff have rejected an offer of 5.9 per cent. and that 55 per cent. of regional council budgets is spent on wages and salaries? Against that background, an inflation figure of 3.75 per cent. seems to me to be highly suspect. The right hon. and learned Gentleman will be aware that COSLA estimates that there will have to be an increase of £70 million over and above the relevant expenditure figure that has been announced today in order to have a standstill budget.

Will the Secretary of State say a word or two about the 3.75 per cent. and how it was formulated? He will be aware that his right hon. Friend the Secretary of State for Wales announced an inflation factor of 4.75 per cent. in the Principality and suggested that this was some sort of reward, because he felt that Welsh local authorities had performed reasonably well. Will the Secretary of State confirm that the inflation factor should be an attempt genuinely to estimate what the rise in prices in terms of Scottish local authority expenditure is likely to be? Does he accept that an inflation factor of 3.75 per cent. is inadequate?

The formula for the 1986–87 penalties has been varied. The penalty is less steep, despite what the Secretary of State said. However, there is no cause for celebration. Although the figures give the impression that concessions have been made, the clawback of £125 million is almost exactly the same as it was in the previous year. Furthermore, well over half the population of Scotland —not just four authorities; that is misleading—will be penalised on what I believe to be an unjust and unjustifiable basis.

How does the Secretary of State expect Strathclyde to find £76 million in the remainder of this financial year? If it is such a reasonable system, why is Lothian being penalised by £25 million on a budget that was formulated by his political friends in the Tory administration? Will the Secretary of State also comment on the fact that, as far as I can see — although I am open to correction — no account at all has been taken of the agreement that has been reached with Edinburgh to reduce its expenditure by £6.5 million and to re-rate to that effect? That factor has been completely ignored. If it were taken into account. the penalty of well over £10 million would be well under half that amount. Does that not illustrate the arbitrary nature of the system and the extraordinary way that it is operated? Why should Edinburgh have to lie out of this money, causing extra expense to its ratepayers, when an agreement has been reached between the right hon. and learned Gentleman and the district council?

Finally, on rates, will the Secretary of State note that everything depends upon the distribution formula? I hope that he will give help and lend a sympathetic ear to those authorities that face very real problems and that are genuinely struggling to meet guidelines. I hope that he will not use the increased aggregate Exchequer grant as a reward for cynical political purposes to help those who are already comfortably placed. Does he accept that, to any impartial observer, it is perfectly clear that this Government's strategy has been based upon hostility to local government — an assumption about irresponsible and profligate expenditure that cannot be justified—and that no account has been taken of the strain that has been placed on basic and essential services?

Although this announcement is better than some that we have had to endure in the past, it will do nothing to remove the pressures on many authorities in 1987–88. Although the settlement represents progress, it is very slow and grudging. I was taught very early in life to recognise that one should be thankful for small mercies, but this announcement will do nothing to undo the damage that has been done to local democracy since the right hon. and learned Gentleman's party hijacked the Scottish Office seven years ago.

Mr. Rifkind

I thank the hon. Gentleman for the general welcome that he has given to my announcement. I acknowledge the predictable qualifications that he felt it was appropriate to add to his general welcome. Nevertheless, it would be right to interpret his response as congratulating the Government on the provision that they have made for Scottish local authorities, and I am happy to accept it on that basis.

The hon. Gentleman asked for an explanation of the generous provision that we are making. There are two factors that he ought to bear in mind. For the first time, this year's settlement, in volume terms, is slightly below what it was in 1979. In addition, the budgets of two thirds of Scottish local authorities are now either at or below guideline. Therefore, it seemed to me and to my colleagues that it was right and proper that that should be reflected in the provision that we are making available. That is the explanation for that factor.

The hon. Gentleman took issue with the inflation projection. He will be aware that we have taken inflation into account at a projected rate of 3.75 per cent. for the purposes of determining provision. He is correct to say that local authorities are assuming a higher rate of inflation, but he cannot expect the taxpayer to fund any pay settlement that local authorities might choose to make. He gave the House information about pay claims made by various groups of local authority employees. We are well aware that bids and offers can be made, but it is right for local authorities to take into account the national rate of inflation and to expect their employees to take it into account. The figure of 3.75 per cent. is perfectly realistic for that purpose.

The hon. Gentleman asked about Strathclyde and about the penalties announced for the current year. Strathclyde also had a heavy penalty last year, but during that year—perhaps because of the penalty—we saw a substantial reduction in expenditure at outturn. There is no reason of which I am aware why we should not anticipate a similar reduction in expenditure by Strathclyde this year. I suspect it was anticipating a much higher penalty than has been announced, and it should find no difficulty whatever in achieving significant reductions during the financial year.

The hon. Gentleman was correct when he said that the voluntary reduction in Edinburgh district council's proposed expenditure has not affected the way in which the penalty is distributed. Edinburgh will at outturn receive repayment of rate support grant to take account of the expenditure at the end of the day. Edinburgh district council may be reducing its budget as a result of direct pressure from the Scottish Office and the threat of parliamentary action. Other local authorities may also be revising their budgets and it would be quite wrong to single out one authority that has acted on a voluntary basis to avoid the proposed penalty. If at outturn the figures for original budgets have been reduced, as we hope they will be, then the penalty based on the original budget will be revised and local authorities will receive any grant that they had forfeited.

Sir Hector Monro (Dumfries)

I welcome the statement by my right hon. and learned Friend. It should help prudent local authorities to keep down their rates and propose no increase for next year. When he makes the settlement, can he ensure that it is weighted in favour of authorities that have behaved prudently in the past and have kept their rates down? Will he bear it in mind that rural areas had some catching up to do after revaluation and see that they get priority in the settlement?

Mr. Rifkind

I thank my hon. Friend for welcoming the announcement. As he knows, in recent years the whole system of penalties has been changed to ensure that those local authorities which budget at or below guideline run no risk of forfeiting any rate support grant. Therefore, the £125 million that I have announced will not in any way affect my hon. Friend's regional council which has budgeted within the guideline.

Sir Russell Johnston (Inverness, Nairn and Lochaber)

The Minister has said that this settlement is based on the past pattern of spending. Is it not plain that, despite falling school rolls, it will prevent education authorities improving education provision and will compel the closure of still more rural schools? How on earth the teachers' pay settlement will be dealt with is a mystery. Local authorities will be unable to make better provision through their social work departments, despite the enormous pressure upon them to do so.

Mr. Rifkind

I find the hon. Gentleman's intervention incomprehensible. We are all aware that in recent years pupil rolls have fallen by about 18 per cent. in Scotland. That enables local authorities to concentrate their education provision on a smaller number of pupils. That should enable them to make better provision.

The hon. Gentleman asked about the teachers' pay settlement. In determining provision for next year, account has been taken, and is incorporated in these figures, of the settlement that local authorities have reached with the teaching unions. For that reason, that part of the hon. Gentleman's question is superfluous.

Mr. Albert McQuarrie (Banff and Buchan)

I congratulate my right hon. and learned Friend on his excellent statement. Is it to be expected that anything that my right hon. and learned Friend produces will be sour grapes to the Opposition. This statement will be of considerable benefit to local authorities in Scotland, where 40 out of the 65 local authorities have met their deadline. That is a great credit to Government measures. My hon. Friend the Member for Dumfries (Sir H. Monro) made a plea on behalf of rural areas. I support that, because rural areas have to maintain an infrastructure in order to try to retain the rural population and avoid depopulation.

Mr. Rifkind

My hon. Friend should not be too upset by the carping comments of the Opposition. By the standards of the Labour party, what they said was a compliment to the Government and we can take that into account. We bear in mind the developmental needs of specific areas when determining capital allocations and provisions. The needs of each local authority are given intense scrutiny.

Mr. Norman Hogg (Cumbernauld and Kilsyth)

The Minister's statement is a continuation of the punitive policy that the Government have pursued against local government in Scotland. Is it not the case that the guidelines are unrealistic and unworkable? Instead of inventing poll taxes, the Secretary of State would do far better to set about establishing a proper working relationship with the local authorities so that they may be properly funded.

Mr. Rifkind

If the guidelines are unrealistic, it is surprising that some two thirds of Scottish local authorities have been able to budget within them.

Mr. Donald Stewart (Western Isles)

Is the right hon. and learned Gentleman aware that the Scottish share of United Kingdom expenditure has been falling? There will be no great celebrations because the rate support grant has been kept static. [Interruption.] I am dealing with facts. One of the authorities omitted from the list of those which kept within the guidelines is the local authority in my constituency, the Western Isles islands council. Is the right hon. and learned Gentleman aware that all its essential services have been cut to the bone and that it has to make a drastic effort to keep to the levels to which it is tied? How will it fare if it cannot get any advance on the funds that have been available?

Mr. Rifkind

As the right hon. Gentleman acknowledges, his own islands council has felt able to budget within guidelines, and, contrary to what the right hon. Gentleman suggests, that is a factor to bear in mind. The provision that I have announced will enable that council to continue a level of expenditure consistent with that position.

Mr. Alexander Pollock (Moray)

Now that the Government seem to recognise the virtue of supporting local authorities by holding public expenditure constant, can my right hon. and learned Friend tell me the implications for the capital consent programme, bids for which are clue a little later this year? Will he consider especially the problem facing Grampian region? It has a road building programme that will need substantial additional capital consents. Those roads are needed to give proper support to the timber industry in that region, given the expansion at Dalcross and the other efforts by timber growers there.

Mr. Rifkind

I am aware that the timber industry in Grampian and Dumfries and Galloway is relevant to the capital allocations. No doubt there are other authorities in a similar position. We have invited regional councils to tell us the details of their requirements so that we can take them into account when capital allocations are determined.

Mr. David Lambie (Cunninghame, South)

Is the right hon. and learned Gentleman aware that, after six years of serious cuts in local government grants and attacks on local government services, even this standstill settlement, although it is set at a low level, makes us all feel like cheering? In order to show his good faith and to remove the suspicion that this might be a pre-election settlement, is the right hon. and learned Gentleman prepared to look again at the clawback of the £76 million penalty that he has imposed on Strathclyde and the £50,000 penalty that he has imposed on Cunninghame district?

Mr. Rifkind

The hon. Gentleman, who is always a fair man, will—[Interruption.] I think so, even if Labour Members apparently do not. I certainly acknowledge that the hon. Gentleman is a fair man and he will know that reductions in local authority provision did not begin seven years ago but some 10 years ago under a Government whom the hon. Gentleman consistently voted against whenever the rate support grant was announced. I seem to remember that he has been consistent in each of the past 10 years in voting against local authority provision, irrespective of who proposed it.

The hon. Gentleman will be aware that, over the past year, certainly Strathclyde, and I suspect Cunninghame, have been able to reduce their expenditure on outturn and that has enabled significant amounts of grant to be returned. The very fact that we have imposed the heaviest penalties at the upper end of overspending will give that much greater incentive for reductions in expenditure.

Mr. Robert Maclennan (Caithness and Sutherland)

Will the Secretary of State clarify what he said in response to an earlier question about the impact of the settlement of the teachers' dispute in Scotland? He gave the impression that the settlement had taken that into account and would in some way act as a ceiling upon the deliberations of Professor Main.

Mr. Rifkind

No; I think that the hon. Gentleman has misunderstood what I said. In determining provision for local authorities for 1987–88, we have taken into account not only the budgets that they fixed but the pay settlement that was reached after the budgets had been fixed with the teaching unions, because clearly that must be added to the budgets in order to achieve a realistic figure.

Mr. John Corrie (Cunninghame, North)

I warmly welcome the fact that the rate support grant has not been cut again this year, as that inevitably leads to increases in rates, although it helps to control expenditure. May I take it from the statement that, with only a few exceptions, we are now reaching the sort of expediture levels that my right hon. and learned Friend wants to see in councils in Scotland?

Mr. Rifkind

The latter part of my hon. Friend's question must be taken into account. It is true that 40 out of 65 authorities have budgeted either at or below guideline and that a number of other individual authorities are at a level only marginally above. But my hon. Friend will recall my comment earlier that four local authorities are responsible for 90 per cent. of the excess, and that is a matter for severe concern.

Mr. James Hamilton (Motherwell, North)

What comfort will this give to Strathclyde regional council in its efforts to eliminate composite classes in primary schools, when one in three primary schools have composite classes? In addition, what comfort will it give to Motherwell district council, bearing in mind the terrible unemployment there? Do not mention the food park, because that is not labour-intensive.

Mr. Rifkind

If the hon. Gentleman has discussions with either Strathclyde region or Motherwell district, he will find that it will tell him, privately if not publicly, that this provision is substantially greater than it had anticipated.

Mr. Barry Henderson (Fife, North-East)

Will my right hon. and learned Friend accept that this welcome statement, which gives encouragement to Scottish ratepayers to expect a similar or lower rate bill in the coming year, owes much to the Government's success in persuading more Socialist authorities to budget at or near guidelines? Will he make further efforts to see that the track record of prudent local government management will be rewarded in rate support grant settlements?

Mr. Rifkind

My hon. Friend is correct. It is worth pointing out that local authorities are spending in volume terms for all practical purposes the same as in 1979. It has taken a number of years to reach that position, and it is good that they have now done so.

Mr. Jim Craigen (Glasgow, Maryhill)

The impression is being created that this is a less worse settlement for ratepayers in the coming year. Is this the first sign of the advice that the Government have given to the inquiry committee on teachers' pay and of the settlement that he expects, or can local authorities expect a supplement to the rate support grant if the teachers' settlement is higher?

Mr. Rifkind

The Government's evidence to the Main inquiry has been published and is available for the hon. Gentleman to study if he so wishes. We have not yet even received the recommendations of the Main report and obviously I cannot comment at this stage on what our response will be to recommendations of which neither we, the unions nor the local authorities are aware.

Mr. Michael J. Martin (Glasgow, Springburn)

The Minister stated that he is looking for more cuts from authorities such as Strathclyde and Glasgow district. The Minister must know that, in communities such as my own, youth unemployment is very high and that the only people who seem to be trying to tackle that serious problem are the local authorities. [HON. MEMBERS: "No."] Hon. members say no, but I know of no private employer who is trying to get the young people off the street in the way that Glasgow district council is by attempting to get apprenticeships and by taking the Manpower Services Commission—

Mr. Rifkind

That is Government money.

Mr. Martin

It is not the Government's money. It is the taxpayers' money. [HON. MEMBERS: "Hear, hear."]

The Minister asked local authorities to participate in the MSC schemes. He knows that Strathclyde region and Glasgow district have not only participated but have tried to make permanent work for the young people in those schemes. The Minister knows that he is endangering the prospects of young people in our communities.

The Minister may know that a deputation was received from the people in the Barrmulloch area because the local authority intended to close down the community centres at the weekend. What chance is there of cutting down vandalism if the community centres are not open?

Mr. Rifkind

The hon. Gentleman should appreciate that it is not just Glasgow district and Strathclyde region that are participating in the youth training scheme and using, as he correctly says, taxpayers' money to help employment in their locality. Virtually all 65 authorities are participating in the scheme. If 40 out of those 65 can participate in the youth training scheme and still have budgets at or below guideline, there is no particular reason why Glasgow district and Strathclyde region cannot do so as well.

Mr. Michael Forsyth (Stirling)

Can my right hon. and learned Friend confirm that, within the additional resources that he has made available to local authorities in Scotland, there is ample scope for them to use their powers to give discretionary rate reductions to amateur sports clubs in Scotland? What was the result of discussions with the Convention of Scottish Local Authorities on that issue? Can we now expect local authorities which said that if they had these resources they would act to do so?

Mr. Rifkind

My hon. Friend makes a fair point. Already, a number of Scottish local authorities are giving discretionary rate relief to sports clubs. A number are not, and have sought to suggest that Government restrictions prevented them from being more generous. As my announcement today represents an increase in aggregate Exchequer grant of 7.5 per cent., or £152 million, my hon. Friend is correct to say that, if that is all that was stopping them using their discretion, as the 100 per cent. rates relief for sports clubs has been estimated to be about £3 million or £4 million, and as no one expects or would wish to see such a high level of rate relief, there can be no excuse now for any authority that wants to use its discretion not feeling free to do so.

Mr. Dick Douglas (Dunfermline, West)

Will the Secretary of State concede that we are all rather bemused by his and the Secretary of State for the Environment's exercise in raiding the contingency fund just prior to an anticipated general election in a year or so? Why is local government expenditure profligate when the Exchequer has to support it to the tune of 60 per cent. or over, while it is an exercise in probity when the Exchequer has to support it at 56.5 per cent., as is the case today? When has a regional council such as Fife embarked on excessive expenditure? Can he identify any expenditure in Fife that commands the penalties that he seeks to impose? Where, against the background of increasing unemployment and the increasing devastation of our industrial base, is any wasteful expenditure to be found?

Mr. Rifkind

As I understand it, Fife regional council was able, during last year, to reduce its expenditure by some £7 million, which suggests that the original budget was not the bare minimum that it could afford. The hon. Gentleman should ask himself why so many Scottish local authorities have been able to spend either at or below guideline—[AN HON. MEMBER: "They have not enjoyed it."' It is not a question of whether they have enjoyed doing so. There is no evidence that, in the two thirds of local authorities that are spending within guideline, services to the community are significantly different from those in areas that are overspending. Therefore, the hon. Gentleman should inquire about the reasons for that.

Mr. William McKelvey (Kilmarnock and Loudoun)

There is nothing cheerful about the figures for Kilmarnock and Loudoun for they have been mallied. Kilmarnock and Loudoun is kind but not extravagant. Its only crime was to protect jobs and services. The authority must knock approximately £500,000 off the intended expenditure. That means several hundred jobs lost in an area which already has almost 20 per cent. unemployment. Would the Secretary of State care to tell me, so that I can tell the lads in Kilmarnock, how the authority can cut that expenditure without job losses?

Mr. Rifkind

Ayrshire Labour Members appear to be deeply divided about their proper response to my announcement. One wants to cheer and the other is worried.

Mr. McKelvey

My hon. Friend the Member for Cunninghame, South (Mr. Lambie) said "jeering", not "cheering".

Mr. Rifkind

That is not what I heard.

When the hon. Gentleman discusses the announcement with his district council he will discover that it considers the provision generous and considerably higher than it expected. The provision will enable the council to plan expenditure for next year on a realistic basis.

Mr. Bill Walker (Tayside, North)

Does my right hon. and learned Friend agree that the rate support grant which he has announced today shows clearly how far Britain has recovered from the day when the Labour Administration went to the International Monetary Fund? That followed many years when Britain had to be careful about taxpayers' money, borrowing and expenditure. Does he also agree that the best way to deal with the frivolous expenditure of local authorities, especially on such items as nuclear-free zones and conferences, is to ensure that others, such as those who run caravan sites which are an important part of the tourist industry, and who are concerned about the differences between their rates and the rates paid in England and Wales, are protected by continuing with the policy that we have been pursuing for years, which is to see that ratepayers get value for money?

Mr. Rifkind

It can only be in the interests of the local community if local authorities confine themselves to matters for which they clearly have responsibility.

Mr. Tam Dalyell (Linlithgow)

May I return to the answer given to the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston)? The Secretary of State talked about concentrating educational provision and mentioned an 18 per cent. drop in the number of pupils. Is the entire package conditional upon the closure of schools? [HoN. MEMBERS: "No."] If it is not, the right hon. and learned Gentleman had better make the position clear. What did the answer given to the hon. Member for Inverness, Nairn and Lochaber mean if it was not the closure of schools?

Is not the real answer to do something about class sizes, not least in the light of last night's vote? We have an opportunity to achieve better and more favourable class ratios, which are much required in the light of last night's vote. Will the right hon. and learned Gentleman address himself to the question put by my hon. Friend the Member for Glasgow, Springburn (Mr. Martin), which inadvertently he did not answer, as to whether it makes sense for community centres to have to close at weekends because of a shortage of money? Those places were built in the 1950s and 1960s at enormous expense, and socially it is highly desirable that they should remain open at the weekend.

Mr. Rifkind

That is a matter to be determined according to the priorities of the local authority. The hon. Gentleman will agree with me that Glasgow and Strathclyde region has sufficient resources to do what it thinks appropriate about community centres, given the overall resources available to it. But my announcement today is not conditional on anything. It represents a significant increase in resources for local authorities—an extra £152 million of cash through the rate support grant system. The hon. Gentleman should appreciate that that is a fair and realistic basis for local authority expenditure next year.

Mr. Michael Hirst (Strathkelvin and Bearsden)

Does my right hon. and learned Friend agree that most people in Scotland will greatly welcome the announcement of extra resources today, and that it will be welcomed especially by local authorities which have shown prudence in their spending? Does he accept that most ratepayers in Scotland will welcome his assurance that there need be no increase in rates next year as a result of today's announcement? Will he give an undertaking that, despite all the huffing and puffing that we have heard from local authorities, he will continue to impose penalties where there is evidence of overspending?

Mr. Rifkind

I can give my hon. Friend that assurance. It is because the majority of Scottish local authorities are now budgeting responsibly and constructively that lit is possible and desirable for the Government to respond in a similar fashion.

Mr. Tom Clarke (Monklands, West)

When the Secretary of State met the Convention of Scottish Local Authorities, did he explain how he had managed to obtain from his Cabinet colleagues a protected inflation rate of 1 per cent. less than Wales, despite Wales' dynamic Secretary of State? Did the right hon. and learned Gentleman give COSLA the reasons for that difference? Did COSLA endorse the Government's proposals?

Mr. Rifkind

I do not recall COSLA being terribly interested in Welsh rate support grant provision but perhaps that will change. The level of local government expenditure in Wales has been, up to this year, dramatically lower than in either England or Scotland. Welsh authorities have kept within guidelines to a much greater extent than authorities in Scotland or England. I am sure that those factors were taken into account by my right hon. Friend the Secretary of State for Wales in determining what provision to make.

Mr. John Home Robertson (East Lothian)

rose—

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

rose—

Mr. Speaker

Mr. Foulkes.

Mr. Foulkes

I had expected to take on my hereditary position of sweeper, but I hand it over to my hon. Friend the Member for East Lothian (Mr. Home Robertson).

Two things are clear about the settlement from an initial consideration of the statistics. First, it is clearly political—[Interruption.]—party political—and there is an election approaching. For example, Argyll and Bute —one does not have to look far from the hon. Member who represents that area—gets an initial needs payment of £2.6 million, whereas East Kilbride and East Lothian receive about £900,000. Will the Secretary of State explain that?

Secondly, it is clear that the guidelines are completely arbitrary. Cumnock and Doon Valley is faced with a punitive penalty of 110 per cent. Can the Secretary of State explain to the local authority with the highest unemployment how it can cut its expenditure? It has the smallest administrative overheads. Should it close leisure facilities available to the unemployed? Should it stop advance factory building? Will the Secretary of State say exactly where the cuts can be made in an area such as Cumnock and Doon Valley?

Mr. Rifkind

First, my announcement today does not show the amounts going to any local authority. That is a matter which is determined by distribution principles, and nothing has been determined yet. Today I simply announced the global amounts. I hope that the hon. Gentleman appreciates that.

If Cumnock and Doon Valley wants to achieve economies, it might usefully take advice from the two thirds of Scottish local authorities which have found it possible to budget within guidelines.

Mr. Home Robertson

If I could sweep up the Secretary of State, I would be a happy man. He has been emphasising some rather contrived good news, but will he say something more about the bad news which he has tried to conceal? What about the £25.34 million which he proposes to impose by way of penalty on his constituents and mine, in Lothian region? What scope is there for cutting the services available to the people of Edinburgh, Pentlands or of East Lothian under Brian Meeks' Tory budget? Will the Minister tell us more about that? Will he also pay tribute to the fine tuning of East Lothian district council? Will its penalty of £1,762 cover the administrative costs of this absurd system of penalties and guidelines?

Mr. Rifkind

I have no doubt that, if the penalty is so small, East Lothian district council can ensure that there is no penalty at all. Even the hon. Gentleman will agree that that should not be beyond its wit and imagination. Lothian regional council is, indeed, one of the high overspending authorities and it is right and proper that we should have a system that imposes penalties only on those that are responsible for the excess. That is much fairer than the old system, when penalties were imposed on local authorities as a whole. That took no account of whether they had overspent. That was the system which the Labour Government seemed to prefer.