Rate Rebate (Scotland)

HC Deb 18 February 1987 vol 110 cc1007-30 10.14 pm

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

I beg to move, That the Revaluation Rate Rebate (Scotland) Order 1986, dated 17th December 1986, a copy of which was laid before this House on 19th December, be approved.

With the leave of the House, I think that it would be for the convenience of the House if we were to debate at the same time the second motion, That the Rate Support Grant (Scotland) Order 1987, dated 2nd February 1987, a copy of which was laid before this House on 4th February, be approved.

As hon. Members will realise, the rate support grant order is a replacement order for that originally tabled in December 1986, and subsequently withdrawn. This is the main rate support grant order for 1987–88, and, when it was originally tabled, the teachers' pay dispute was still unresolved. Happily, a settlement of that dispute has now been reached. Therefore, it is appropriate to release and distribute the additional grant that was promised, as the Government's share of that settlement. It is clearly convenient for local authorities to know precisely where they stand on this as soon as possible, and we thought that it would also be for the convenience of the House to wrap the whole matter up in the single Order. The Rate Support Grant (Scotland) Order repeats the provisions of the earlier draft order but also includes the extra grant for teachers' pay for 1986–87 and for 1987–88.

The Revaluation Rate Rebate, (Scotland) Order 1986 continues revaluation rate rebates to give a third year of relief to those most affected by revaluation.

I do not propose to detain the House with a long statement of general policy, but the background to our policy on local authority expenditure is relevant. In 1978–79, immediately before we took office, the volume of local authority expenditure increased by 6.6 per cent. It was not simply a question of inflation, but of significant expansion in services, in addition to the effects of a high rate of inflation at that time. No responsible Government could have stood aside in the face of that trend. Indeed, the previous Labour Government certainly did not, when the late Mr. Anthony Crosland told local authorities in 1976 "the party's over". — [Interruption.] Opposition Members do not like to be reminded that there was a time when they were in office and when they were responsible about local authority expenditure. It might be better for Scotland if they were returned to a sense of responsibility about such matters.

The effect on the wider economy of such a substantial increase in public expenditure — if it were to have continued—would have been insupportable. The effect on the narrower local economies of vastly increasing rating burdens on domestic payers and on business and commerce, would equally have been disastrous. Thus, one of our major objectives since that time has been to restrain local authority expenditure, in the interests of the local ratepayers, and also with the wider objective of reducing public expenditure generally, as a proportion of gross domestic product.

Some authorities have co-operated well in bringing expenditure under control. However, others, particularly some that account for a large proportion of local authority current expenditure in Scotland, have not. The overall volume of local authority expenditure continued to increase in every year up to and including 1984–85. The House is familiar with the steps we have had to take to exercise pressure on local authorities in this respect, through reductions in rate support grant and, in some cases, in the rates of individual authorities. That pressure, and a recognition of the broader underlying reasons for the Government's policy, has begun to bear fruit, and in 1986–87 authorities budgeted for a slightly lower volume of expenditure than they had in 1978–79. No fewer than 40 out of the 65 Scottish authorities budgeted at, or below, their expenditure guidelines.

This evidence of greater realism by local authorities is welcome news for all of us, especially ratepayers. The greater responsiveness of local authorities has allowed the Government to respond positively with the substantial increases in expenditure provision and aggregate Exchequer grant for 1987–88, which were announced last summer and which are reflected in tonight's order. My right hon. and learned Friend the Secretary of State announced on 23 July last year that expenditure provision for 1987–88 would be £3,277 million, and aggregate Exchequer grant £2,160 million. The total provision, distributed to local authorities in the form of their expenditure guidelines, represented a substantial increase of £285 million over that for the previous year, and was 3.75 per cent. over the local authorities' own budgets for 1986–87, taking account of adjustments to those budgets for the interim teachers' pay award implemented in April 1986. This provision was adequate to maintain the 1986–87 volume of expenditure into 1987–88, on the basis of the Government's inflation assumptions. The aggregate Exchequer grant was increased by £151 million over the 1986–87 figure, to a level adequate to maintain grant, again on the basis of the assumptions we were able to make in July 1986, at the existing percentage.

Expenditure provision and grant were increased in December by £1.96 million to reflect the transfer of financial responsibility for Leith nautical college, the Orkney internal ferry services and the transfer of list D schools. There is also a further increase for 1987–88 of £60 million in provision and £30 million in grant to meet the costs in that year of the final teachers' pay settlement.

Although I welcome the fact that 1986–87 budgets were for the first time, in volume terms, below spending in 1978–79, it remains the case that some authorities are spending too much.

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

What does the Minister mean by "too much"?

Mr. Ancram

The simplest answer is that they were spending over the guidelines given to them by the Government and, on that basis, the Government consider that they are spending too much.

Mr. Foulkes

Will the Minister give way?

Mr. Ancram

No. I have given way to the hon. Gentleman. This is a short debate and I shall not give way again. The hon. Gentleman can make his own speech if he is lucky enough to catch your eye, Mr. Deputy Speaker.

Mr. Foulkes

rose—

Mr. Deputy Speaker (Mr. Ernest Armstrong)

Order. The Minister has said that he is not giving way again.

Mr. Ancram

A number of authorities have, therefore, once again incurred heavy grant penalties, and selective action was taken under section 5 of the Local Government (Scotland) Act 1966 to reduce Edinburgh district council's rate. Those authorities which have incurred grant penalties stand to have the grant returned to them if their final outturn expenditure for the year has been reduced. I hope that the authorities concerned will have adjusted their budgets accordingly. The important point for us tonight, however, is that there is no excuse for overspending in relation to guidelines in the coming financial year 1987–88. The generous provision for that year should make it possible for all authorities to budget within guidelines, and their ratepayers will be looking to them to do precisely this. I give notice tonight that, especially in the light of the generous guidelines that have been issued, we will take a very serious view of budget plans for overspending next year, and substantial grant penalties will again be imposed where necessary. Equally, careful consideration will be given to selective action in individual cases, if that seems justified.

The Government's concern for adequate provision is reflected in individual services. In education, we have made available for the first time a special unallocated margin of £50 million for distribution to education authorities. This recognises the reality of their high spending in relation to assessed need, and provides room for the new educational developments that are in prospect—for example, the introduction of standard grade.

It is estimated that about £295 million out of aggregate Exchequer grant will be paid in grants for specific services. The remainder will be rate support grants. In 1985–86, domestic rate relief was increased from the equivalent of 1p to 8p to mitigate the effects of revaluation on the domestic sector. This high relief was reduced for 1986–87 to 7p in the pound. We have decided that it should be maintained at 7p for 1987–88. The cost of this relief is £91 million. The ratio of resources element to needs element for 1986–87 was 1:8. I have proposed to maintain that ratio for 1987–88, giving a resources element of £197 million.

The rest of aggregate Exchequer grant, and by far the largest part of it, forms the needs element. The client group method of needs assessment continues to be the basis of needs element distribution.

Mr. James Wallace (Orkney and Shetland)

I am sure that the Minister is aware that the amounts given to the two local authorities in my constituency do not come close to the needs element. As the orders under consideration also provide for some relief for businesses in the amount given back because of revaluation, will he accept that the Government came much closer to giving Orkney and Shetland islands councils the full amount to which they are entitled under the client group method? That would be of more significance in helping businesses in Orkney and Shetland than the amount given under the orders before US.

Mr. Ancram

Before the transfers for teachers's pay there is an increase in the needs element for 1987–88 of 6.2 per cent., which is above the rate of inflation for both the Orkney islands and the Shetland islands. I would have thought that the hon. Gentleman would agree that that was generous.

However, as in past years it has seemed prudent to limit the impact of sudden changes in the grant entitlements of individual authorities by setting maxima for grant gains and losses. No authority has been given less grant than in the equivalent order for 1986–87 and grant increases are subject to a maximum of 12 per cent. Last year we received representations from a number of authorities, mainly small rural districts, which were worried that full implementation of the client group method would mean their losing all entitlement to needs element. The hon. Member for Glasgow, Garscadden (Mr. Dewar) will remember pressing us on this point in the debate on an earlier rate support grant order, on 24 January 1985, and I am sure he will welcome the steps I am now taking, for a second year, to meet his concern on behalf of those districts.

Mr. Wallace

rose—

Mr. Ancram

I have already given way to the hon. Gentleman. This is a short debate and I wish to get on because other hon. Members will want to take part.

In response to the concern of the hon. Member for Glasgow, Garscadden, a minimum grant entitlement of £11 per head was set. We have decided to increase that to £11.50 a head, roughly in line with inflation. As in previous years Orkney and Shetland have been treated as special cases because of their high rating resources.

Mr. Wallace

Will the Minister say how much it would benefit domestic, commercial and industrial ratepayers in Orkney and Shetland if the full amount were paid under the client group method? What would it mean in pence per pound on the rates?

Mr. Ancram

The hon. Gentleman knows that there have been special arrangements for Orkney and Shetland precisely because they have high rating resources related to the development of the oil industry. He knows full well that the benefits of that in terms of rate poundages in those two areas have been considerable in comparison to the Scottish mainland. They have been given the average grant increase over what they received in the present year.

During our debate last year the hon. Member for Cunninghame, South (Mr. Lambie) asked what interest rates had been assumed in the calculation. I hope that I may save him the trouble of making a speech tonight if I tell him that the interest rate assumed was 10.4 per cent. Any variation from that, whether up or down, will be matched by a change in the total of rate support grants.

I mentioned earlier that there were three additions to be made to the figures that I announced in July to reflect transfers of responsibility. The final instalment of the list D transfer is £100,000 and this has been distributed according to pupil numbers. Orkney's grant has been increased by £1,070,000 for the transfer of Orkney internal ferry services. Leith nautical college is to be transferred to Lothian region from 1 August 1987. The part year effect of this transfer is £790,000. This has been apportioned using the estimated regional breakdown of students. The extra £30 million in grant for teachers' pay has been distributed among the regional and islands authorities proportionally to their needs assessments for teaching staff costs, including the so-called circular 991 teachers. All of these detailed apportionments have been discussed and agreed with COSLA. Details of the needs element entitlements of authorities after these adjustments are given in the final column of the table in appendix E to the report.

The order also contains adjustments for back years and I should like to explain those briefly. For 1986–87 there was to have been a reduction in rate support grants of £7.9 million because interest rates are now estimated at 10.6 per cent. rather than the 11 per cent. used in the main order. This has now been offset by an increase of £8 million for teachers' pay. Grant penalties for 1986–87 will be revised once provisional outturn expenditure returns are available. I hope that those returns will show a reduction in overspending so that grant penalties can be returned to authorities to the benefit of their ratepayers. Budgets for 1985–86 showed a planned overspend of £91 million and that led to penalties of £127 million. Provisional outturns showed a £43 million fall in overspending and penalties were reduced by £69 million. I am glad to say that final outturns for 1985–86 show a further reduction in overspend from £47.2 million at provisional outturn to £43.2 million and a further £7.4 million of grant is accordingly being returned.

I am sure that hon. Members find these long, complicated rate support grant orders as arduous as I do. They will be relieved to know that next year's main rate support grant order will be the last of its kind. For 1989–90 and subsequent years the Abolition of Domestic Rates Bill will replace them with revenue support grant orders. I promise the House that those will be both shorter and simpler.

The Revaluation Rate Rebate (Scotland) Order 1986 is by comparison a straightforward document. The 1985 revaluation increased the rateable values of some domestic and commercial subjects by much more than the average change. The Government introduced special relief under the Rating (Revaluation Rebates) (Scotland) Act 1985 for domestic and commercial ratepayers whose rateable values increased more than threefold. In the first year that relief was paid at 100 per cent. of the cost of having an increase in rateable value of more than threefold. This year relief is being paid at 75 per cent. The order provides for 50 per cent. relief in 1987–88. The relief is, as before, subject to a maximum and this is to be £5,000 for any one property. The cost of the relief will be about £15 million compared with £20 million this year and £26 million last year.

Finally, hon. Members will expect me to say something about the early indications now emanating from local authorities of their proposed rates increases for 1987–88. We hear tales of a 35 per cent. increase from one authority, and several others not far behind. We will not be in a position to comment authoritatively on those reports until local authorities have notified us of their budgets. That does not normally happen until March. We then need to study carefully the planned levels of expenditure. What I will say now is that in general in the light of the generous settlement that I have described this evening — notification of which has been available to local authorities for some considerable time — there is no excuse for that kind of behaviour by local authorities.

Mr. John Home Robertson (East Lothian)

rose—

Mr. Jim Craigen (Glasgow, Maryhill)

rose—

Mr. Ancram

I give way to the hon. Member for Glasgow, Maryhill (Mr. Craigen).

Mr. Craigen

Given the rate support order that the Minister is introducing tonight, what level of increase in rate poundage does the Scottish Office estimate?

Mr. Ancram

When my right hon. and learned Friend the Secretary of State announced the aggregate Exchequer grant he made clear that he believed that on the basis of that grant and the basis on the provision, Scottish local authorities would not need to increase their rates. Obviously an element of increase will result from the settlement of the teachers' pay dispute, but that increase is reckoned to be marginal—about 1 p in the pound.

With regard to the rate support grant order, provided that local authorities do what the Government require through guidelines and penalties there will be no rate increases in Scotland as a whole.

On the matter of rate increases, we will, as I have said, need to examine the full detail of budgets, once they are submitted. But let me emphasise that the responsibility for substantial rate increases, where these are imposed, will rest firmly with the local authority concerned, and ratepayers in Scotland should not be fooled or misled about that. Lothian is a particular case in point, where press reports indicate a rate increase of around 17p or 18p—an increase of 35 per cent. We are already hearing from Lothian spokesmen that this increase is inevitable and inexorable and is to be blamed on Government. I suspect that that is what the hon. Member for East Lothian (Mr. Home Robertson) is trying to tell me.

Mr. Home Robertson

The Minister is supposed to be a Lothian spokesman as well, although I sometimes wonder. Will he explain why he virtually rigged the rate support grant formula deliberately to penalise his constituents and mine in Lothian region? Will he acknowledge the fact that of the suggested rate increase, 30 per cent. is totally outwith the control of the regional council?

Mr. Ancram

I shall come to that shortly — [Interruption.] I intend to answer the question. I wonder whether the hon. Member for East Lothian has found out whether the Convention of Scottish Local Authorities would support him in his view about the way in which the distribution formula operates. It has been evident that Lothian has taken a view that is inconsistent with that taken by other local authorities in Scotland, precisely because the formula this year has operated marginally against the position in Lothian but to the benefit of other authorities in Scotland. The hon. Gentleman will have to ask himself and his hon. Friends on the Opposition Front Bench whether they believe that the formula, which is agreed with COSLA, should be changed in the way in which he seems to be suggesting.

This touches on the second point made by the hon. Member for East Lothian; we have looked at the figures in Lothian. I discovered that the effect of the teachers' pay settlement will add about 1.7p to Lothian's poundage in the coming year and that the effect of the rate support grant settlement, in which, as the hon. Member for East Lothian said, Lothian's assessed needs were in some respects reduced, will add about 1.1 p to the rates of Lothian ratepayers. That is the total extent of the Government's responsibility for what Lothian is now proposing—an increase of less than 3p out of the total reported increase of around 18p. All I can say is that Lothian ratepayers will be well able to draw their own conclusions as to who is responsible for the rest of the increase.

These orders provide a firm financial basis for local authorities next year. Expenditure provision for next year has been set at local authority budgets plus inflation. The increase in aggregate Exchequer grant is double the rate of inflation. The Government have done their part to keep rate increases down next year, and I hope that the local authorities will do theirs.

I commend both these orders to the House.

10.37 pm

Mr. Donald Dewar (Glasgow, Garscadden)

The hon. Member for Edinburgh, South (Mr. Ancram) has a remarkable ability to reduce any audience to a combination of irritated disenchantment and, I am afraid, galloping apathy. He has managed to induce a state of enthusiasm among his own supporters and my hon. Friends which I suspect is rather akin to the atmosphere at Hampden Park at the final whistle tonight. I found only one thing that he said the least bit encouraging and I ought to concede that. If he manages to survive in his present job for any length of time and does introduce the poll tax, the fact that it will shorten his speeches is the only persuasive argument that I have heard for that measure.

I believe in making a concession when a concession is justified and worth making and, of course, the rate support grant settlement is better this year than it has been in some recent years and we would not want to hide that from the House. Indeed, I think that COSLA and individual local authorities would be prepared to concede that. It would be wrong to say otherwise. However, it is still profoundly unsatisfactory when viewed against the backcloth of what has been happening to local government finance in recent years. I am glad that the Minister made the point that, whatever may have happened to aggrevate current expenditure and aggreage Exchequer grant, the truth is that if one takes a global view, aggregate current expenditure is only some 3.75 per cent. over budget in 1986–87.

In a horrid aside the Minister suggested that in a sense that was satisfactory and would fully cover local authority costs. All the figures, and the experience and projections given to me suggest that the amount will be inadequate and that there will be a further shortfall. Perhaps it will not be on the scale of recent years, but it will still be a worsening of a situation that is profoundly discouraging and that has done substantial and serious damage to the level of service provided by local government in Scotland.

We are looking at a long history of fiscal pillage by the Government of local authority expenditure. The only fair and sensible way to look at this is in volume terms, and if one does that one sees that the whole punitive expedition, the atmosphere of crisis that has undoubtedly been engendered and the wrecking of almost any sort of reasonable relationship between local and central Government have meant that in volume terms local government expenditure is still significantly below what it was in 1978–79.

We have seen mounting pressure upon the services provided for people. They have had to pay more and more, largely because of the grant reductions that have so marked the policy of the hon. Gentleman and his hon. Friends. Not only are people being asked to pay more to compensate for the Treasury cuts, but local authorities are being asked consistently, year after year, to take on additional statutory duties and to fund them from a budget which in real terms is sharply declining.

I have one prospective item to add to that list, because, as the Minister and my long suffering hon. Friends who served on the Committee well know, the poll tax will introduce substantial extra administrative charges. A figure in excess of £20 million is mentioned in the financial memorandum to the Bill. That will deepen the difficulties that are undoubtedly faced by local government.

The Minister will know that there is little comfort in the figures for the coming year. In education, for example, current levels of spending will have to be cut by just over 5 per cent. to bring them into line with the provision that the Minister proposes for 1987–88. In social work, the figure is perhaps less dramatic, but it is still 2.3 per cent. on the calculations that have been offered to me. Across the board it is about 4.2 per cent.

If we are to fall into line with this so-called reasonable provision that the Minister paraded in the last 20 minutes or so, we will be faced with substantial cuts in present levels of expenditure. That is the information given to me, and I am not in a mood to mislead the House. I have conceded that the figures are not as bad as in previous years, but they are still open to that inescapable interpretation.

That is the overall picture, but of course there are real problems for some authorities. There has been some stability in the block expenditure. For example, there has been an increase in the needs element of about 6.2 per cent. after limitation for both district councils and regions, but for individual authorities the variations within the totals are very large. The Minister knows that. In the regions, the increase in the needs elements varies from 7.8 per cent. to 1.6 per cent. For district concils, the percentage is much more dramatic, varying from no increase to one dramatic increase of 60 per cent. or just over 60 per cent.

Over the years, the Minister has made a great virtue of agreeing with COSLA. I accept that there has been agreement about the client group approach and its introduction, but we are still in a rather strange and artificial world. As the Minister knows, about 29 district councils would not, on the client group approach, have had an increase at all this year, but they have got the £11.50 per capita fee which the Minister introduced. I think this amounts to about £22 million in total. The effects are sometimes arbitrary and, as the Minister has conceded in the case of Lothian, some authorities will undoubtedly be left with a considerable grievance and considerable problems.

The needs grant, at about £1.4 billion, dwarfs other parts of the package. I say in passing, because I do riot wish to dwell upon it, that I found the Minister's casually announced decision about the help for those who suffered particularly badly in the revaluation remarkably callous when remembered against the background of the razzmatazz and the unveiling of the great financial package by the right hon. Member for Ayr (Mr. Younger) at the Conservative party's conference two or perhaps three years ago.

Hon. Members may remember that we were told with great eclat that the help would be a £50 million package. It was discovered on examination that the £50 million, because of the extraordinarily narrowly drawn terms of reference of the scheme, was never going to be spent. So that help was confined to that part of the rate poundage and that part of the increase above 300 per cent. The figure came to about £26 million or £27 million. That was the extent of the Government's generosity to those who they felt had been so wronged.

We then had a 100 per cent. relief for that small proportion of rateable value. That was then reduced to 75 per cent. Now it is reduced to 50 per cent. Obviously the Government's charity has run out very rapidly as they come to the political judgment that they can get away with retreating from the rather minimal amount of help that they were prepared to give.

Mr. Michael Forsyth (Stirling)

I am sure that the whole House shares the hon. Gentleman's sympathy with the position of people who have suffered from revaluation, but will he confirm that the Labour party's policy is one of having regular revaluations for the domestic ratepayer without any support whatsoever?

Mr. Dewar

I am sure that the hon. Gentleman, who may be wrong-headed but is not foolish, at least in a narrow technical sense, will accept that one of the problems of the revaluation was that the normal date had been allowed to slip, so the period was especially long and the adjustments therefore especially painful. I am glad that he is still worried and concerned about his constituents who may be caught in that position. I hope that his concern will run to voting with us tonight in protest against the way in which the help has been cut back.

We have had threats from the Minister. I recognise that he is entitled to cut a figure while he can at the Dispatch Box because time is running out. Nevertheless, he has threatened fire and brimstone for a large number of authorities or for any authority that he regards as having spent excessively unreasonably. There was a little bit of skirmishing and a little bit of skirting around the problems facing the Lothian region. The Minister did some calculations. He said that he thought that only 3p of the present rate increase could be laid at his door. That was a reference to the fact that the needs element for Lothian, if I remember rightly, has gone up by only 1.6 per cent. Not even the optimism of the Minister could present that as an adequate compensation for inflation costs.

I, too, am not in a position to talk authoritatively, as he puts it, about the Lothian budget which has not, I understand, been finalised, but I say to the Minister in a preliminary sense that any idea that the problems of the Lothian region are only marginally the fault of the Conservative party is taking rather a narrow view of that organisation. While undoubtedly a large number of the problems are a direct result of the policies that were followed by the Conservative Administration who were in office immediately before Labour won power—

Mr. Ancram

They brought the rates down.

Mr. Dewar

Ah, they brought the rates down, the Minister says, as if that were some particular talisman. However, he is right. They brought the rates down, but they did it by the sort of fiscal manoeuvring, the sort of accountancy that I would have thought would have brought a round condemnation from the Minister. Perhaps we shall get that. I am told that they raided the last of the reserves for £13.75 million. That is revenue that cannot be replaced from the same source and will therefore have to be found by the ratepayer. They knew what they were doing.

Under that Administration, in that last election year, for the first time ever, the transport deficit of £5.3 million was not funded but was allowed to be carried forward to the next year and, therefore, must be funded in this year's budget. There was also the £14.7 million deficit from the clawback. There is a figure of some £31 million for inflation, about which £12 million was for the teachers' pay settlement.

Knowing the Minister's vindictive approach, there may be, although I hope that there will not be, opportunities to debate this in more detail later on if he goes for a section 5 order, or tries some selective clawback. If that happens, we shall deal with the matter in some detail. It is clear that there was an element of opportunism and expediency about the way in which the last Conservative budget for Lothian region was put together, which inevitably invited a price when more responsible people had to look at the situation and pick up the bills in the coming year.

Mr. Foulkes

Is my hon. Friend aware that the convenor of the Lothian region, who was responsible for that fiscal fiddle, is now the principal political adviser to the Secretary of State for Scotland?

Mr. Dewar

I was not aware of that. Perhaps the Secretary of State would like to confirm or deny it. It is a matter of passing interest. Rumour had reached me that the Secretary of State had been turned down by the gentleman in question. I do not know whether that is true—it may be just tittle-tattle. It would raise him in my estimation, but that is a matter between the Secretary of State and Councillor Meek.

The vast majority of the problems faced fall into the categories to which I have referred. No doubt we shall have arguments later as to whether it is legitimate to spend a small proportion of the increase in the rate poundage on such matters as free bus passes for pensioners or an additional 400 home helps. It is not the black and white picture that the Minister sought to paint.

The extraordinary situation in Lothian, is that the guidelines have gone up substantially, perhaps even generously, but now stand £32 million above the needs assessment. Even if Lothian were to spend exactly to the Government's guidelines, that would involve it in a rates increase of about 20 per cent. That shows what a topsy-turvy artificial world of local government finance the Minister is constructing. In 1987–88, it looks as if there will be an excess over guidelines of 9 per cent. in Lothian, but Councillor Brian Meek's Conservative administration had an excess of 6.6 per cent. and the Minister did not mount the same attack on it.

I recognise that these are highly technical, and no doubt for some hon. Members, unimportant matters, but they are fundamental to the service needs in Scotland and the way that we run our society and make choices in essential matters such as health care and education. This is not just a political game. The mark of the Minister's administration has been the way in which he has hunted local government, ruthlessly criticised it and brought a partisan approach to it that I regret.

The Minister knows that today I have been commenting on some letters that he sent, on 27 January, to Councillor Brian Meek and Councillor Jean Armstrong, who are the Conservative group leaders on the Strathclyde and Lothian councils.[Interruption] I hear my hon. Friend the Member for Cumbernauld and Kilsyth (Mr. Hogg) express surprise that anyone can call himself a group leader on the Strathclyde council. It is a marginal distinction—one among few.

Some of the things that the Minister has been saying in his correspondence show the attitude that he has been taking. For example, he said: Lothian says that it cannot avoid a huge rates increase because the Government is giving too much money to Strathclyde while the latter whines in the opposite direction. The Minister should not, in his official capacity, be accusing local authorities of "whining", or, as he does later in the letter, of "moaning'. He should not be ascribing to them points of view that I am assured by both councils have never been espoused or put forward. It does nothing for the dignity of his office, or that of the Scottish Information Office, which was asked to distribute this in the form of a press release. I have drawn that matter to the attention of the Comptroller and Auditor General. [Interruption.] I thought that it was worth doing, given the rather irritable way in which the Minister combs through local government affairs, looking for things about which he can cavil and complain. That type of partisan, political campaigning should not be done, at least under the colours of the Scottish Office.

We firmly believe that we should protect local services. Councils should be allowed to get on with the job. The people who live in the areas that we represent deserve decent education services, decent social services, and decent housing services. They are threatened by the parsimony, inefficiency and malice with which the Government have conducted their local government policy over the past few years.

10.56 pm

Mr. Allan Stewart (Eastwood)

There is a certain ritualistic air about the annual rate support grant debates. At least the hon. Member for Glasgow, Garscadden (Mr. Dewar) gave us a good laugh with his reference to the Comptroller and Auditor General. My hon. Friend the Minister sought to forestall one regular feature of debates such as this when he said that he hoped that his answer on interest rates would mean that the hon. Member for Cunninghame, South (Mr. Lambie) would not feel the need to speak. I hope that that aspiration is not realised. One of the admirable features of these debates is the ringing tone in which the hon. Member for Cunninghame, South denounces the rate support grant, whether it is under a Conservative Government or a Labour Government.

The hon. Member for Garscadden was a little short of ammunition. Indeed, from the Labour party's point of view, this rate support grant settlement, is a little difficult to attack. Current expenditure provision has been increased by 9.5 per cent. and the aggregate Exchequer grant by 7.5 per cent. That is double the rate of inflation. The hon. Gentleman scraped the barrel when he spent some time alleging that, next year, because of the introduction of the community charge, local authorities will somehow face great increases in expenditure against a total expenditure of £3.4 billion.

What was interesting about the speech by the hon. Member for Garscadden was what he did not say in answer to my hon. Friend the Member for Stirling (Mr. Forsyth), who asked him about the Labour party's policy on revaluation. For the information of the hon. Member for Garscadden, the hon. Member for Glasgow, Cathcart (Mr. Maxton), as I understood his speeches in Committee, made the Labour party's policy quite clear. There will be a domestic rate revaluation in Scotland in 1990 if, by any mischance, the Labour party is returned to office at the next election. I hope that that point will be confirmed if Opposition Members on the Labour Front Bench speak during the debate.

I congratulate my hon. Friend the Under-Secretary of State on listening to the objective representations from me and many others about the minimum grant entitlement. I was delighted that my right hon. and learned Friend the Secretary of State has continued the minimum grant entitlement and increased it to £11.50 per head. There were representations from Labour Members also about this matter. It was outrageous for COSLA to attack the minimum grant entitlement, as indeed did its leadership representing the great battalions of Glasgow and elsewhere. It is a perfectly reasonable measure for my right hon. and learned Friend to take. It helps not only Eastwood but smaller councils such as Inverness, Badenoch and Strathspey, Roxburgh and Berwickshire, as well as Labour councils such as East Kilbride. I hope that the Labour party will make it clear whether it supports what the Government have done in relation to the minimum entitlement.

My hon. Friend said that, of course, it will be some time before we know what the local authorities' rate decisions are for next year. I am happy to be able to tell him tonight that the recommendation that will go before Eastwood district council will be for an unchanged rate in 1987–88. That is because of financial prudence, modest and sensible real growth and a well considered rate support grant settlement.

I wish that I could say the same about Strathclyde. However, it appears that despite an increase in its needs element of 9.1 per cent. under this settlement, Strathclyde intends to impose a rate increase of 20 per cent. The leader of the council has admitted in public that this will cost jobs, particularly jobs in small businesses, in Strathclyde. A rate increase of that magnitude is unjustified and outrageous. The finance convenor of Strathclyde said at a consultation meeting with non-domestic ratepayers that the opposition to that rate increase was paralysed. Yes, the opposition is paralysed by the enormity of a 20 per cent. rates increase by Strathclyde.

Why is such a huge rate increase being proposed? I put it to my right hon. and learned Friend the Secretary of State for Scotland that there are three reasons for it. First, it is a straight "payola" through the urban programme. A very large number of urban programme projects is being taken on by Strathclyde. There are a few well justified urban programme projects—for example, the Dunterlie children's centre in my constituency—but many others cannot be justified.

Secondly, Strathclyde is increasing the rates by that amount because there is a general election in the offing and it hopes that the Government will take some of the flak.

Thirdly, I hope that my right hon. and learned Friend will consider very carefully the fact that Strathclyde and other regional councils are increasing the base line for non-domestic rates ahead of the implementation of the Abolition of Domestic Rates etc. (Scotland) Bill. When that Bill has been passed, the increase in rates for non-domestic ratepayers will be held by central Government to the rate of inflation. The rate proposal is wholly unjustified and outrageous.

I congratulate my hon. Friend the Under-Secretary of State for Scotland on the way in which he introduced the two orders and I urge him to be very tough, if necessary, about the proposals of certain regional councils.

11.2 pm

Sir Russell Johnston (Inverness, Nairn and Lochaber)

These rate support grant debates are rather repetitive occasions. As always, the Minister opened with an oration that bore some comparison to a magician casting a spell, to judge by the increasingly glazed expressions on the faces of all hon. Members. The length of the debate is not related to its complexity, and it is difficult to deal with the subject extensively.

The Minister said that everything would be much simpler next year. Perhaps he meant that personally—that next year he will not have to wrestle with all these complex matters because they will be in the hands of others. Even if they fall into the hands of others, I am doubtful whether everything will be all that much more simple. Experience thus far has shown that nobody has been able to make things much simpler.

In the short time that is available to me, I shall make a few points and ask some questions. First, the Minister said that there should be no rate increases next year. To take as an example the Highland region, about which I know a little, the rate will be 56p in the pound. If the rate support grant had remained at its real 1979–80 level, the rate would be 33p — [HON. MEMBERS: "Pence."] Yes. [Interruption.] The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) has a very—

Mr. Deputy Speaker

Order. We cannot have private conversations.

Sir Russell Johnston

I was simply referring, Mr. Deputy Speaker, to the hon. Member for Carrick, Cumnock and Doon Valley, who interrupted me in a somewhat vulgar fashion. I was trying to respond to that vulgarity with dignity.

If the RSG had remained at its 1983–84 level, this year's rate would have been 44p in the pound. My point is that although the Minister says that there should be no rate increases, the reality is, as the hon. Member for Glasgow, Garscadden (Mr. Dewar) put it most effectively when he referred to "fiscal pillage"—an expression with which I would agree—as the Minister is aware, that there has been a steady reduction in Government support, and that has resulted in a reduction in the quality and the extent of service.

The increases from 1986–87 and 1987–88 average out at about 12.4 per cent. overall, but the variations within the regions are considerable. The figures range from 23 per cent. in Strathclyde to 6.38 per cent. in the Highlands with variations in between of 9.4 per cent. in the Borders and 8–7 per cent. in the Grampian region.

Secondly, it would appear that the new formula may be operating against the rural areas. I wonder whether that is a reflection on COSLA's urban dominance or whether it is Government policy. I am not arguing against the considerable increases in Strathclyde and Lothian, but I wonder whether since, as the Minister and the hon. Member for Garscadden have explained, the teachers' settlement is a significant part of the demand on the RSG increase the allocations to the more rural areas are not insufficient.

Thirdly I want to repeat a simple point that has already been made well by the hon. Member for Garscadden. There is no doubt whatever that the pattern of more and more central control is embodied once more in the orders.

I want the Minister to answer two particular points. As the Minister knows, there is special provision for road gritting and clearance. We are in the middle of a rather cold winter which, although it has not been too bad so far, might get worse. As I understand it, there is a triggering mechanism which is not unlike the triggering mechanism for the cold weather allowance. The mechanism for road gritting is triggered from the meteorlogical measuring points on the coast. As there is an obligation on regional authorities to maintain certain roads clear, irrespective of the population in the area, I do not believe that that is a very good system.

If my next point is not directly relevant, either you, Mr. Deputy Speaker or the Minister will tell me so, but I am certain that all hon. Members would be interested to know whether the Minister has made any progress against the background of the RSG orders in settling the problem of the rating of sports clubs in Scotland. That problem continues to have an adverse effect on some very desirable enterprises.

This debate maintains a pattern. Rate support grant rose prior to the election in 1979, it rose again prior to the 1983 election and it is rising yet again. Clearly, any increase is welcome, but the pattern makes me somewhat cynical.

11.10 pm

Mr. Michael Forsyth (Stirling)

I welcome the orders, because they will provide some protection for the hard-pressed ratepayer. There is compensation for those who have suffered the effects of revaluation. It is extraordinary to hear Opposition Members complaining about the tediousness of these debates when they all support the continuation of the rating system.

Mr. David Lambie (Cunninghame, South)

That is not true.

Mr. Forsyth

The hon. Gentleman is an honourable exception. Apart from referring to himself he might have been referring to members of the so-called alliance, who have continued to seek to persuade the Scottish people that they are against the rating system and in favour of something else. They have so far proved singularly unable to produce any workable system despite the many hours that have been spent in this place discussing the issue.

Labour-controlled councils throughout Scotland have continued to pursue their narrow ideology, against ratepayers' interests. They have acted against the interests of those whom they are supposed to represent while complaining about the effect on services of the orders. These Labour-controlled councils have shown that their true allegiance is to the promotion of Socialism and the Labour party rather than representing the interests of local people.

The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) was astute enough to speak of the importance of road gritting and the problems that are faced in providing that service at this time of year. In his crusades in favour of local democracy, the hon. Gentleman should take account of the effect of the Labour party dominating an authority such as the Central regional council, which covers my constituency. The comrades decided after a mild December that they would no longer grit minor roads on the ground that they had run out of money because the Government had cut their resources. The same comrades found £40,000 to pay for a women's committee. They argued that they had run out of money and could not grit the roads on the first occasion when there was a call on the budget. It was only after howls of protest had been made that they reinstated the previous policy.

That which is happening in local government is happening in the Chamber this evening. We are seeing the posturing of the Labour party. Labour Members are pretending to represent the interests of the old and those who are trapped in their homes because of winter conditions and ungritted roads, but the reality is that they are playing politics. Given power in local government in Scotland, their preference is to cut sensitive services and to blame the Government for having to do so to make a political point. When it comes to sacrificing the people to bash the Government, Labour Members are all too ready to do so. They would take the same view if ever we were unfortunate enough to find them in power.

Mr. Home Robertson

The hon. Gentleman is talking about local authorities making political points. Does he accept that a political point was made by the people of Lothian region last year, for example, when they voted overwhelmingly for the Labour party and elected a Labour council, which is seeking to carry out its mandate and is being pilloried by the Government for doing so?

Mr. Forsyth

I would take more account of lectures on accountability and democracy from the hon. Gentleman if he had not wiled away many hours in Committee explaining to us why he is against the system that would allow those who have the ability to consume local government services to make a contribution towards the cost of providing them.

Mr. Bill Walker (Tayside. North)

Does my hon. Friend agree that it is incredible that Labour authorities that have complained that they are short of funds can arrange conferences costing thousands of pounds on issues such as apartheid in South Africa, which has little, if anything, to do with local government? I understand that there is to be a conference in Glasgow tomorrow, and thousands of pounds will be spent sending delegates to it.

Mr. Forsyth

My hon. Friend is right. I am constantly amazed by the local authority in my constituency, which can find the funds to provide chauffeur-driven cars to ferry the relatives of councillors to their meetings or to do their shopping — apparently this is in the interests of local democracy as it makes it easier for individuals to become involved in local government—while complaining that it is unable to effect simple repairs to my constituents' houses.

The single thread that runs through the Opposition's complaints year after year is that somehow there is a connection between the quality of services and the amount that is spent. The examples south of the border, where more progressive councils have introduced efficiency audits and put services out to competitive tender—

Mr. Foulkes

Tell us by how much you have lined your pockets with privatisation.

Mr. Deputy Speaker

Order. The hon. Gentleman must not make accusations against me.

Mr. Forsyth

The hon. Gentleman—

Mr. Foulkes

On a point of order, Mr. Deputy Speaker. May I, unreservedly, make it clear that I did not impute in any way anything against you? I was pointing out that the hon. Member for Stirling (Mr. Forsyth) had lined his pockets with privatisation.

Mr. Forsyth

You are honoured, Mr. Deputy Speaker, if you have been excluded from the insults rained by the hon. Gentleman on this day alone on everyone from the President of the United States to the Secretary of State for Scotland. I am happy to join that company.

The single flaw to which I was trying to allude, which permeates these points made by the Opposition, is the belief that the level of expenditure in services is equated with quality. If local authorities that are controlled by the Labour party were to look to efficiency audits and to putting services out to competitive tender and were able to get value for money, they might have some credibility—

Mr. Foulkes

Look for the beam in the hon. Gentleman's eye.

Mr. Forsyth

The hon. 'Gentleman keeps intervening because he does not want to hear. The Labour party has become the party of protest in Scotland. It is the party which is long on slogans and short on solutions. I would say to the hon. Gentleman who continues to interrupt from a sedentary position, that the people of Scotland should recognise that the Labour party is now the reactionary party which stands four square behind the rating system, which wishes to have regular revaluations, and to remove all controls on expenditure by local authorities and which would return us to the days of high-spending local government with high rates, destroying businesses and jobs. For the Labour party to say that it is the champion of local democracy, when it is committed to policies which would destroy jobs and local government, is an outrage.

I hope that behind all the accusations against the Government, and behind all the complaints about the rate support grant, the people of Scotland will realise what the Labour party is about — paying off its bosses in the trade union movement and using ratepayers' cash to do so.

11.14 pm

Mr. David Lambie (Cunninghame, South)

I did not intend to intervene in the debate because last week I spoke on the Housing Support Grant (Scotland) Order. Usually, the Rate Support Grant (Scotland) Order and the Housing Support Grant (Scotland) Order are taken on the same night. Usually, the same speech does for both. Having been challenged by the hon. Member for Eastwood (Mr. Stewart), who hoped that I would not miss out this year, especially as it is a general election year, I thought that I would accept his challenge.

I hope that this is the last Rate Support Grant (Scotland) Order that I shall need to vote against. Within three months of a general election, which I hope will result in a Labour Government introducing—

Mr. Michael Hirst (Strathkelvin and Bearsden)

Would the hon. Gentleman care to put his own £5 on that?

Mr. Lambie

The Gentleman is one of the hon. Members who will not be here after the next election. Instead of challenging people, the hon. Gentleman should be in Bearsden looking after the people who have suffered from the flooding. He should not waste his time writing a speech about another matter.

I hope that, after the election, when we have a Labour Government, we shall have a Scottish Parliament which will deal with local affairs and take control over local government. I hope that the Labour Government will reorganise local government and set up a one-tier authority system. I hope also—I have to convince my Front-Bench colleagues of the rightness of this—that we shall then abolish the rating system and introduce 100 per cent. Government grants. Local democracy will depend on local people, through their elected representatives, determining how that 100 per cent. grant is spent.

We shall be able to do that because Scotland is a small country. There would seldom be differences between the political complexions of the local councils and the Scottish Government in Edinburgh. The Scottish people are Labour. We would have Labour local authorities in most of the region and a Labour Government dealing with local affairs. There would not be conflict.

Mr. Deputy Speaker

Order. I have allowed the hon. Member considerable latitude, but he should return to the orders.

Mr. Lambie

It is strange that Front-Benchers can speak about the abolition of the rating system, but when the hon. Member for Cunninghame, South speaks about his system, you rule me out of order, Mr. Deputy Speaker. I was making a point about the conflict that exists between Labour-controlled authorities in Scotland and a Tory Government in the United Kingdom who are not representative of the Scottish people and do not speak for them. That is why we are here tonight.

My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said that these orders were not as bad as those in previous years. That is understandable, because, within three months of a general election, it would be stupid for the Government to antagonise the Scottish people more than they have. Since 1979–80, rate support grant as a proportion of relevant expenditure fell from 70 per cent. to 56 per cent. last year. I have not heard from the Labour Front Bench or from the Government what the percentage is this year. After a reduction from 70 per cent. to 56 per cent., one cannot go any further, especially within three months of a general election, without antagonising the ratepayers of Scotland. I do not accept that the Government have changed their mind or that they are beginning to help local authorities. This change in attitude is because of the forthcoming general election.

This is a black night for the Scottish people. This is another attack on the Scottish ratepayers through rate support grant. Tonight, the Scottish football team has lost the match against the Republic of Ireland by one goal to nil. It looks as though we are out of the European cup. We need not only a change of Government in Scotland but a change in the management of the Scottish Football Association. Both the Government and the Scottish Football Association are disasters for the Scottish people.

I was very disappointed that the hon. Member for Eastwood criticised the Strathclyde region for diverting a lot of money into the urban aid programme. He made it clear that he was thanking Strathclyde region for taking over the main urban aid project in his constituency.

Mr. Allan Stewart

One.

Mr. Lambie

The main one. Every Strathclyde Member made representations not only to the Government but to Strathclyde region for extra urban aid money for projects in their constituencies. I am grateful to Strathclyde region for taking over the main urban aid project in my constituency—the Redburn centre in Irvine. Every third man in the area is unemployed. If we cannot get money from the Conservative Government, I am grateful that Strathclyde region found the necessary money through the rates to keep the various urban aid programmes going. The hon. Member for Eastwood should apologise to the House and congratulate Strathclyde region for giving him the money to keep his own project going.

Mr. Allan Stewart

I am most grateful to the hon. Gentleman. However, he should recognise that, although I certainly said that one project in my constituency is worthwhile, I am totally opposed to the unemployed workers' centre in Barrhead, which is a straight Labour party payola.

Mr. Lambie

The hon. Gentleman cannot have it both ways. He cannot congratulate the Labour-controlled Strathclyde region on giving money to one project and then say that is it is wrong for it to give money to a similar project in another town.

Mr. Stewart

It is not similar.

Mr. Lambie

Sometimes one may think that our debates have no influence on Government policy. However, I cannot complain about my own Cunninghame district council because it will not impose any increase in rates this year and will have a stand-still budget. I am taking the credit for that. I have continually challenged Ministers until they have come to realise the problems facing the district council and they have given the council extra money so that it can balance its books this year. However, the greatest increases in rates for the ratepayers in my constituency are the regional rates in Strathclyde, which will increase by 19 per cent. this year.

I appeal to the Minister to recognise that Strathclyde is one of the most deprived regions in Europe. Because of pressure from Members of Parliament and from local people, the local council has been forced to try to maintain vital local government services. At the same time it has been subjected to substantial reductions in the rates through the rate support grant by the Government since 1979.

The Minister stated that the increases proposed by Strathclyde were not justified. However, he did not mention that one of the most important elements in those increases was the fact that the council is trying to recoup the penalty and the clawback that was imposed on it because it did not keep to the guidelines last year.

The Minister appears to be in a reasonable mood tonight. Therefore, I appeal to him to agree to wipe the slate clean on last year's penalty and give Strathclyde the opportunity to start afresh. If the Minister does that, Strathclyde will have the opportunity to reconsider its budget. However, while he continues to be vindictive towards Strathclyde for maintaining the services that every Member of Parliament, councillor and ratepayer demands, he cannot expect Strathclyde to go against the majority of opinion in the region. I appeal to the Minister to allow Strathclyde to reconsider its budget without having to finance the clawback that the Government imposed because of its overspending last year, when it did not meet the guidelines.

I have great pleasure tonight in maintaining the tradition that I have upheld since entering Parliament of voting against rate support grant orders. Attacks have always been made against local authorities in the House. These orders continue that. Therefore, I hope that we shall get a Government in Scotland to deal with Scottish affairs so that the farce of the Tories in England determining how we, in Scotland, spend our money will end, and the Scottish people will spend their own money according to their priorities.

11.29 pm

Mr. Jim Craigen (Glasgow, Maryhill)

This is not a generous rate support grant settlement, but we have seen worse in previous years. The Minister seemed to suggest that he is adopting a more relaxed view which, as my hon. Friend the Member for Cunninghame, South (Mr. Lambie) observed, is understandable in the run-up to a general election. How realistic, I wondered, was his reply that he expects a standstill in rate poundage plus 1 p to accommodate some extras? Why was there a delay in the discussions with COSLA over the settlement on approved expenditure? The order, moreover, seems to have been introduced a bit later than is normal.

As education represents about half of the estimated rated expenditure, will the Minister tell us a little more about the cost of the teachers' settlement, the brunt of which will he borne by education authorities? Given the Government's wish almost totally to control the settlement of pay and conditions in education, I am surprised that they did not try to take education outwith the rating system altogether and make it a direct charge on central Government, perhaps by introducing a new educational support grant. Bearing in mind the proposed community charge, and this order for 1987, will the Minister give us some details about the final cost of the teachers' pay settlement?

Are the Government being realistic about the inbuilt figures for prices and pay? We are already seeing evidence that the Government's only achievement — reducing inflation—is starting to slip from their grasp. The retail price index, which will be adjusted next month with a new system of weightings, will continue in an upward trend towards the summer. Has proper account been taken of inflation and the pay settlements that may be expected in the local government sector? The Paymaster-General has been making ominous noises about the break-up of collective bargaining as we know it, which would have serious implications for local authority staff. I do not expect the Minister to answer the point tonight, but I hope that he can comment on the pay settlement, which represents a large proportion of local authority expenditure.

The Minister mentioned all the things that the Government have done over the years. Why has there been an 11 per cent. drop in real terms since the Conservative Government came to office in the rate support grant per head of population in Scotland? I quote from figures given to me by the Minister in a recent parliamentary answer to my request for details of the rate support grant per head of population in 1979–80 and in the year for which the most recent figures are available. The Government intend to move towards a new system of revenue support grant based on a per capita approach to the disbursement of rate support grant, so perhaps the Minister can deal with the point tonight.

What does the Minister have in mind for the unallocated margin of £73.6 million? He referred earlier to some unallocated expenditure in the education budget. Why has he chosen the figure that is in the order?

The Minister anticipated the speech of my hon. Friend the Member for Cunninghame, South by saying that it was assumed that loan charges would be 10.4 per cent. Is that realistic? We are in the run-up to a Budget and a general election. The Chancellor would like to reduce interest rates. Certainly that would help those who have to pay mortgages, but it is often forgotten that it has a considerable impact on the expenditure of local authorities. No doubt the Minister will tell me that an order can be introduced later to take account of the change. I have noted that, when interest rates go up, it is some time before the variation order is produced, but when they go down the Government are very quick to take advantage of the shortfall.

On the rate revaluation rebate order, will the Minister tell us how much it will cost to administer the scheme? When the scheme was announced with a great hullabaloo at the Perth conference of the Scottish Tories, we were to get £50 million. Nearly half that figure was taken back by the Chancellor because it could not be taken up under the scheme as drafted. Will it cost more to administer the scheme this year even though less money will be claimed under it because of the changes that the Government are making in the variation order?

It does not seem that the document is as straightforward, as the Minister said. The order may be repetitious, as the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) suggested, although we have to watch the orders that come up year after year because it is amazing how the Government manage to distort the picture. The hon. Gentleman, who managed to set a box of matches alight at Holyrood palace, according to an article in The House Magazine, has to be watched. Although year after year these orders look the same, their make-up depends on the Minister and the political approach of the Government of the day. I hope the Minister will answer all these question.

10.37 pm

Mr. Ancram

The hon. Member for Glasgow, Maryhill (Mr. Craigen) is, I think, the only hon. Member who has asked specific questions. I hope to be able to answer at least some of them.

I was puzzled by the hon. Gentleman's suggestion that there had been some delay in our discussions with COSLA and in laying the order. There was no delay in our discussions with COSLA which took place on the usual timetable. There was a delay in laying the order, as I explained in my original remarks, because we decieded to wait until the teachers' settlement results could be fed into it. I think it was for the convenience of the House and of local authorities that there should be one order dealing with the rate support grant package for this year. Following many times when the hon. Gentleman asked for the figures to be produced earlier, the announcement of the aggregate Exchequer grant was made in July, which is earlier than usual, so I was puzzled by that question.

The hon. Gentleman asked for the additional cost of the main settlement over and above the interim cost of the April 1986 settlement. The cost was £14 million in 1986–87 and £60 million in 1987–88. There is no disagreement from COSLA on these figures. It was on the basis of these that additional provision was made—the £30 million in rate support grant which is in the order which we are discussing and also £8 million to deal with the costs for the current financial year.

The hon. Member also mentioned the unallocated margin to which I referred earlier. We set aside £50 million for education over and above the provision necessary to meet national standards in an undoubtedly important service. That £50 million has been distributed to education authorities in addition to their guidelines, calculated in the normal way. All education authorities, except one, have guidelines above assessed need next year — that one authority has a guideline 8.9 per cent. above its present budget. I believe that authorities have been given ample provision for education in this year. The hon. Gentleman asked about interest rates and he is correct, interest rates are taken into account after an order is laid and adjustments can be made at a later date. In the order that we are discussing tonight adjustment has been made for previous years for precisely that reason.

Turning to the general debate, I believe that my hon. Friend the Member for Stirling (Mr. Forsyth) put his finger on an important point that is often forgotten when we discuss local authority expenditure — the fact that there are areas within local expenditure where savings can still be made by greater efficiency, avoiding duplication and, where necessary, ensuring that a most efficient service is obtained by putting those services out to tender. I have tried to persuade Scottish local authorities to do that for a long time. It is important that we remember that aspect when we discuss local government expenditure.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) made a predictable speech. It was rather longer than mine—

Mr. Dewar

It was five minutes shorter.

Mr. Ancram

I apologise. Certainly it was much shorter on information. The hon. Gentleman made the usual remarks about cuts in rate support grant. I do not know whether he noticed an answer given in the Official Report to his hon. Friend the Member for Dagenham (Mr. Gould) on 15 December 1986. It set out the changes in real terms in the needs element between 1978–79 and 1987–88. Those changes were discussed in real terms, which is the world in which everybody has to live. If the hon. Gentleman studies that answer he will discover that the needs element in rate support grant went down in real terms by 0.1 per cent. over that period.

The hon. Member for Garscadden uses the phrase "volume terms" because he believes that it is better for his argument. He made an extraordinary assertion, if I heard him right, that local government spending was still below the 1978–79 levels. If he had listened to my earlier remarks, he would have heard me say that at last, after seven years, we have got local government spending, in real terms, below 1978–79 level. During that period we had tried to reduce that level by the various methods available to us. It was precisely because we achieved that objective that, this year, we were able to take a more relaxed view in terms of both the provision and the rate support grant that was made available.

My hon. Friend the Member for Eastwood (Mr. Stewart) mentioned the minimum grant and welcomed the fact that it had been made available again in this year's order. He took credit for that and I certainly pay tribute to him for the representations that he made. However, the real credit must go to the hon. Member for Garscadden, who in 1985, made pleas on behalf of the councils of North-East Fife, Nithsdale, Ettrick and Lauderdale, Banff and Buchan, Eastwood, Angus and Gordon. He made a great deal of the fact that he felt that they were suffering and said: Their needs element has come down from £130 million to £94.5 million."— that is the district councils. This substantial cut has led to a substantial crisis for many smaller district councils. They will suffer massive reductions in rate support grant settlement. He went on to say to the then Secretary of State: he must think again about what he is doing to many district councils and local authorities generally."—[Official Report, 24 January 1985; Vol. 71, c. 1179.] My right hon. and learned Friend and I have listened to the hon. Gentleman. It is strange for the hon. Gentleman to complain about the distribution under this rate support grant order in the light of his previous remarks.

Question put:—

The House divided: Ayes 168, Noes 96.

Division No. 96]	[11.44 pm
AYES
Alexander, Richard	Carttiss, Michael
Amess, David	Cash, William
Ancram, Michael	Chope, Christopher
Arnold, Tom	Clarke, Rt Hon K. (Rushcliffe)
Ashby, David	Colvin, Michael
Atkinson, David (B'm'th E)	Coombs, Simon
Baker, Nicholas (Dorset N)	Cope, John
Baldry, Tony	Corrie, John
Batiste, Spencer	Couchman, James
Bellingham, Henry	Cranborne, Viscount
Benyon, William	Currie, Mrs Edwina
Best, Keith	Dorrell, Stephen
Blackburn, John	Durant, Tony
Blaker, Rt Hon Sir Peter	Dykes, Hugh
Bonsor, Sir Nicholas	Eggar, Tim
Boscawen, Hon Robert	Evennett, David
Bottomley, Peter	Fallon, Michael
Bowden, Gerald (Dulwich)	Farr, Sir John
Bright, Graham	Favell, Anthony
Brinton, Tim	Fletcher, Sir Alexander
Brooke, Hon Peter	Forsyth, Michael (Stirling)
Brown, M. (Brigg & Cl'thpes)	Forth, Eric
Browne, John	Fox, Sir Marcus
Bruinvels, Peter	Franks, Cecil
Buck, Sir Antony	Fraser, Peter (Angus East)
Burt, Alistair	Freeman, Roger
Butler, Rt Hon Sir Adam	Galley, Roy
Butterfill, John	Garel-Jones, Tristan
Carlisle, John (Luton N)	Goodlad, Alastair
Carlisle, Rt Hon M. (W'ton S)	Gow, Ian

Gregory, Conal	Robinson, Mark (N'port W)
Griffiths, Peter (Portsm'th N)	Roe, Mrs Marion
Ground, Patrick	Rowe, Andrew
Hamilton, Hon A. (Epsom)	Ryder, Richard
Hamilton, Neil (Tatton)	Sackville, Hon Thomas
Hampson, Dr Keith	Sainsbury, Hon Timothy
Hanley, Jeremy	Sayeed, Jonathan
Hannam, John	Shaw, Sir Michael (Scarb')
Hargreaves, Kenneth	Shelton, William (Streatham)
Harvey, Robert	Shepherd, Colin (Hereford)
Hawksley, Warren	Shersby, Michael
Hayes, J.	Silvester, Fred
Hayward, Robert	Sims, Roger
Heathcoat-Amory, David	Skeet, Sir Trevor
Heddle, John	Smith, Tim (Beaconsfield)
Henderson, Barry	Speller, Tony
Hickmet, Richard	Spencer, Derek
Hind, Kenneth	Spicer, Jim (Dorset W)
Hirst, Michael	Spicer, Michael (S Worcs)
Hogg, Hon Douglas (Gr'th'm)	Stanbrook, Ivor
Holland, Sir Philip (Gedling)	Steen, Anthony
Holt, Richard	Stern, Michael
Howard, Michael	Stevens, Lewis (Nuneaton)
Howarth, Alan (Stratf'd-on-A)	Stewart, Allan (Eastwood)
Howarth, Gerald (Cannock)	Stewart, Andrew (Sherwood)
Hubbard-Miles, Peter	Stewart, Ian (Hertf'dshire N)
Hunt, David (Wirral W)	Stradling Thomas, Sir John
Hunt, John (Ravensbourne)	Taylor, John (Solihull)
Jones, Gwilym (Cardiff N)	Temple-Morris, Peter
Jones, Robert (Herts W)	Terlezki, Stefan
Knight, Greg (Derby N)	Thomas, Rt Hon Peter
Knight, Dame Jill (Edgbaston)	Thompson, Donald (Calder V)
Lamont, Rt Hon Norman	Thompson, Patrick (N'ich N)
Lang, Ian	Thornton, Malcolm
Lawler, Geoffrey	Thurnham, Peter
Lennox-Boyd, Hon Mark	Townend, John (Bridlington)
Lloyd, Peter (Fareham)	Twinn, Dr Ian
Lord, Michael	Waddington, Rt Hon David
McCurley, Mrs Anna	Walden, George
MacKay, John (Argyll & Bute)	Waller, Gary
McLoughlin, Patrick	Ward, John
Mather, Sir Carol	Warren, Kenneth
Merchant, Piers	Watson, John
Montgomery, Sir Fergus	Watts, John
Morris, M. (N'hampton S)	Wells, Bowen (Hertford)
Moynihan, Hon C.	Wells, Sir John (Maidstone)
Neale, Gerrard	Wheeler, John
Nicholls, Patrick	Wiggin, Jerry
Osborn, Sir John	Wilkinson, John
Pawsey, James	Winterton, Mrs Ann
Pollock, Alexander	Winterton, Nicholas
Portillo, Michael	Yeo, Tim
Proctor, K. Harvey
Rhys Williams, Sir Brandon	Tellers for the Ayes:
Rifkind, Rt Hon Malcolm	Mr. Michael Neubert and
Roberts, Wyn (Conwy)	Mr. David Lightbown.

NOES
Ashdown, Paddy	Brown, Ron (E'burgh, Leith)
Ashton, Joe	Bruce, Malcolm
Atkinson, N. (Tottenham)	Buchan, Norman
Barron, Kevin	Callaghan, Jim (Heyw'd & M)
Beckett, Mrs Margaret	Canavan, Dennis
Beith, A. J.	Carlile, Alexander (Montg'y)
Bermingham, Gerald	Clark, Dr David (S Shields)
Blair, Anthony	Clarke, Thomas
Boyes, Roland	Clay, Robert
Brown, Gordon (D'f'mline E)	Clelland, David Gordon
Brown, Hugh D. (Provan)	Cocks, Rt Hon M. (Bristol S)
Brown, N. (N'c'tle-u-Tyne E)	Cook, Robin F. (Livingston)

Corbyn, Jeremy	Lloyd, Tony (Stretford)
Craigen, J. M.	Loyden, Edward
Cunliffe, Lawrence	McKay, Allen (Penistone)
Dalyell, Tam	MacKenzie, Rt Hon Gregor
Davies, Ronald (Caerphilly)	McWilliam, John
Davis, Terry (B'ham, H'ge H'l)	Madden, Max
Deakins, Eric	Marek, Dr John
Dewar, Donald	Martin, Michael
Dixon, Donald	Maxton, John
Dormand, Jack	Michie, William
Dubs, Alfred	Millan, Rt Hon Bruce
Duffy, A. E. P.	Nellist, David
Eadie, Alex	Oakes, Rt Hon Gordon
Eastham, Ken	O'Neill, Martin
Fatchett, Derek	Patchett, Terry
Field, Frank (Birkenhead)	Pendry, Tom
Fields, T. (L'pool Broad Gn)	Pike, Peter
Fisher, Mark	Powell, Raymond (Ogmore)
Foster, Derek	Redmond, Martin
Foulkes, George	Robertson, George
Godman, Dr Norman	Ross, Ernest (Dundee W)
Golding, Mrs Llin	Skinner, Dennis
Hamilton, James (M'well N)	Smith, Rt Hon J. (M'ds E)
Hamilton, W. W. (Fife Central)	Soley, Clive
Hardy, Peter	Spearing, Nigel
Hart, Rt Hon Dame Judith	Steel, Rt Hon David
Haynes, Frank	Stott, Roger
Hogg, N. (C'nauld & Kilsyth)	Strang, Gavin
Home Robertson, John	Thompson, J. (Wansbeck)
Howarth, George (Knowsley, N)	Wallace, James
Hughes, Robert (Aberdeen N)	Welsh, Michael
Hughes, Sean (Knowsley S)	Wilson, Gordon
Hughes, Simon (Southwark)	Winnick, David
Johnston, Sir Russell	Young, David (Bolton SE)
Kirkwood, Archy
Lambie, David	Tellers for the Noes:
Lamond, James	Mr. Allen Adams and
Lewis, Terence (Worsley)	Mr. Chris Smith.

Question accordingly agreed to.

Resolved, That the Revaluation Rate Rebate (Scotland) Order 1986, dated 17th December 1986, a copy of which was laid before this House on 19th December, be approved.

c1030
1. RATE SUPPORT GRANT (SCOTLAND) 28 words