HC Deb 08 December 1993 vol 234 cc311-23 3.30 pm
The Secretary of State for Scotland (Mr. Ian Lang)

With permission, Madam Speaker, I wish to make a statement about public expenditure in Scotland. Copies of my statement will be available in the Vote Office when I sit down.

In his Budget statement my right hon. and learned Friend the Chancellor of the Exchequer announced the Government's overall expenditure plans. The same day I announced my decisions for local authority spending: both Government-supported expenditure and aggregate external finance. I am now able to announce how I propose to allocate the resources available for all my programmes. As usual, a table summarising my decisions will appear in the Official Report and full details will be included in my departmental report, which will be published in March.

The Government have made it clear for some time that the overall public expenditure totals announced last year for 1994–95 and 1995–96 would not be breached. Firm control of public expenditure is an essential discipline and one we are determined to maintain. Against that background this year's public expenditure settlement for the Scottish Office is fair and realistic. The net resources available to me for allocation next year exceed £14 billion—more than 4 per cent. higher than the corresponding plans for the present year. This amounts to £2,743 per head—over £50 a week for every man, woman or child in Scotland.

My plans provide for over £3 billion each year in gross capital expenditure. Of that, over £2 billion will be on the construction of new physical assets by central Government, local authorities and other bodies.

In addition to those plans for public expenditure, I expect the private sector to participate in many important projects. The Skye bridge is a good example of what can be achieved on top of the public investment programme. I plan to announce early next year the outcome of the feasibility studies on the Setting Forth proposals.

My right hon. and learned Friend the Chancellor announced in his Budget statement that we plan to introduce new contracts under which the private sector will design, build, finance and operate roads. I shall be examining our programme urgently to maximise that opportunity. The early success of the private finance initiative in Scotland is widely recognised and it confirms our reputation for enterprise and innovation. I am determined to build on this success in the years ahead.

I now turn to individual programmes. These reflect my judgment of priorities for the year ahead.

We are committed to increasing year by year the resources of the health service in Scotland, over and above the rise in inflation. Despite the many other pressures on my programme, I will meet fully that commitment. In 1994–95, net expenditure on health in Scotland will be nearly £4 billion, which is almost £200 million more than the plans for the current year and an increase of more than 5 per cent. And by next year, expenditure on the NHS in Scotland will have increased, after allowing for inflation, to half as much again as it was when this Government came into office.

My plans maintain and accelerate the Government's investment in Scotland's economic development and in training, in partnership with the private sector. To this end, I have allocated £452 million to the Scottish Enterprise network next year to pursue its key objectives, £12 million more than previously planned. It will also enable Scottish Enterprise to take over responsibilities from the new towns for meeting inward investors' needs as the new towns are wound up.

After taking account of the transfer of some responsibilities to the Scottish Tourist Board, I have allocated to Highlands and Islands Enterprise an increase of £1.3 million over the current year. In addition, our success in securing objective 1 status for them means that the highlands and islands can look forward to increasing levels of EC structural fund investment. Overall my plans include provision for almost £390 million of grants from the European regional development fund over the next three years.

In recognition of the importance of investment in infrastructure for the Scottish economy, I have chosen to use the flexibility available to me under the Scottish block arrangements to give particular priority to investment in roads and transport. I have been able not simply to maintain previously planned investment in roads and transport but to increase it to a total of £427 million next year, £20 million more than this year's expenditure. The total over the next three years will be around £1.3 billion. We shall thus be able to maintain the momentum of the trunk road and motorway construction and upgrading programme so important to our economic progress. During the next three years we will start all the remaining schemes needed to complete the A74 upgrading programme and there will be major improvement schemes for other main routes, including the M8 and the A1.

Investment in education is vital. The education budget of the Scottish Office Education Department, at £1.3 billion, will be over £130 million more next year than this year's plans. This growth reflects, among other things, the continuing increase in the uptake of higher and further education, with more students than ever before at Scottish institutions.

Expenditure on the arts will also rise next year, to £71 million. That includes provision for the Scottish Arts Council of almost £24 million and should help it to a good start under my sponsorship.

Local authorities account for 45 per cent. of all Scottish Office expenditure and cannot be excluded from the restraint necessary in overall public expenditure. I announced on Budget day my decisions on Government supported expenditure of local authorities and on aggregate external finance. Government support for local authority current expenditure, including provision for community care, will increase by 2.4 per cent. Provided local authorities adopt the approach to pay restraint and productivity required across the public sector, these resources are sufficient to maintain services and meet new responsibilities. In total my plans allow for local authority expenditure of well over £20 per week for every inhabitant of Scotland.

I have also made specific additional provision of £23 million for the funding of the new local authorities in the year before they take up formally their responsibilities. This will enable them to plan for a smooth transition.

I have increased the allocation to environmental programmes to £366 million, £6 million more than the present year. Of that, £40 million is for Scottish Natural Heritage—a 10.5 per cent. increase in the provision available to it this year, to assist it to take forward the implementation of European Community directives and the reports of the working parties, including those on the Cairngorms and Loch Lomond. Capital investment in the water and sewerage industry will be maintained at more than £240 million a year, with the additional provisions to cover the costs of the restructuring of the industry.

On housing, the total net provision shows an increase over 1993–94 plans to £679 million. Within this total I have given priority to capital expenditure, boosting provision for local authority investment in its own housing by 5.5 per cent. I have asked local authorities to give priority to care in the community and to tackling the problems of homelessness, housing below the tolerable standard, and dampness and condensation. The resources I am making available will enable them to do this. Scottish Homes' net provision will increase by 5.8 per cent. to £323 million.

The maintenance of law and order and the protection of the citizen are key elements of the Government's

£million
1993–94 1993–94 1994–95 1995–96 1996–97
Estimated outturn Planned provision Planned provision Planned provision Planned provision
Gross Net Gross Net Gross Net Gross Net Gross Net
Central Government expenditure2 and local authority capital expenditure2
Agriculture, fisheries and food 457 448 447 439 519 512 569 562 579 572
Industry, enterprise and training 643 557 629 544 646 599 658 610 666 617
Roads and transport 408 408 406 406 427 427 430 430 440 440
Housing4 1,021 665 1,021 665 1,029 679 1,014 675 990 661
Other environmental services4 488 364 484 360 496 366 503 379 492 382
Law, order and protective services 476 454 476 453 491 466 499 472 501 472
Education5 1,202 1,202 1,172 1,172 1,306 1,306 1,359 1,359 1,383 1,383
Arts and libraries 54 54 54 54 77 77 77 77 74 74
Health 3,917 3,795 3,888 3,766 4,089 3,961 4,245 4,114 4,365 4,231
Social Work services 63 63 63 63 67 67 69 69 70 70
Other public services 220 180 220 180 225 184 227 185 224 183
Total central Government and local authority capital 8,948 8,189 8,860 8,102 9,371 8,643 9,649 8,931 9,784 9,086
Provision to match receipts from the European regional development fund — 116 — 120 — 124 — 128 — 137
Central Government support to local authorities' current expenditure35 — 5,235 — 5,190 — 5,275 — 5,392 — 5,482
Nationalised industries financing limits — 35 — 35 — 22 — 22 — 23
Total expenditure within the Secretary of State's responsibility1 — 13,574 — 13,447 — 14,021 — 14,428 — 14,728
1 The totals shown differ from those in the Financial Statement and Budget report. The figures in that document included provision for the Forestry Commission. Provision for the Commission is £94 million in 1993–94, £95 million in 1994–95 and £94 million in each of 1995–96 and 1996–97.
2 Including public corporations other than nationalised industries. Also includes grants to local authorities for the technical and vocational education initiative (TVEI).
3 Central Government support to local authorities comprises income from non-domestic rates, revenue support grant, and grants to local authorities for specific purposes apart from grants for TVEI.
4 Figures for 1995–96 and 1996–97 reflect the timing of wind up of New Town Development Corporations.
5 From 1994–95, the careers service (£13.6 million a year) is included in the Education line. Prior to that it was local authority expenditure.
6 Figures may not add due to rounding.
Mr. George Robertson (Hamilton)

We have just seen from the Secretary of State the same confidence trick that we saw last week from the Chancellor of the Exchequer with his Budget. When we look behind the figures, expose the creative accountancy and blow away the blizzard of hype, the truth is a whole lot different and much nastier.

The statement is part of and in addition to the Budget which will cost every family in Scotland an extra £10 a week in tax from next October and £16 a week from the programme. I have reflected that priority by providing £466 million for the programme in 1994–95, an increase of about £13 million. That level of provision, together with the substantial resources I am allocating for local authority expenditure, will allow for the continued progress in those essential services which the public will rightly expect to see.

In making the allocations I have announced today I have had to take tough decisions. I make no apologies for that. The need to pursue sound money policies makes that essential. But what the taxpayer puts into the programmes is only the start. What matters most is what is bought with these very substantial resources of more than £14 billion. My colleagues and I will continue to seek for maximum value for money; and I expect all those involved in implementing these plans, in local authorities and in other bodies as well as in my own Departments, to do the same. The taxpayer and every consumer of public services in Scotland deserve no less. I commend the plans to the House

Following is the table:

following April—the biggest tax hike in British history —and now we are to have massive real cuts in public expenditure as well.

The Secretary of State for Scotland spoke about taking tough decisions. I suggest that the easiest decision that the Government took was to break their election promises with such enthusiasm. The truth is that after an election in which they promised low tax and more spending, the Scottish people will pay more and get a lot less for it—more tax and less spending. It is no wonder that, apparently, the Secretary of State for Scotland is unwilling to go on television this evening to debate the figures. I certainly would be reluctant to do so if I were putting forward such a case.

The basis of this statistical juggling act is hidden in the Chancellor's own Budget Red Book. On page 17 of the Red Book on the unified Budget, the Government admit that they expect inflation to go up next year by 3.25 per cent. The Government freeze people's pay, but still expect them to bear the brunt of an inflation rate of 3.25 per cent.

Only those who believe that inflation will not affect Government spending will believe the figures and the gloss we have just had from the Secretary of State.

The Secretary of State said just one thing with which I agree. Local authorities account for almost half Scottish Office expenditure. In real terms, in addition to the 3.25 per cent. inflation that the Chancellor is predicting, in the next three years Scottish local councils will get £330 million less than they get now—a huge and damaging cut to their budgets which must mean fewer jobs, poorer services and, inevitably, a massive hike in council tax bills.

As if that were not bad enough, we have what can be described only as a deception on the course of local government reorganisation. In March this year, the Secretary of State's highly expensive consultants Touche Ross forecast that the costs and savings of the reorganisation would balance out. Of course, that was to be discredited and abandoned within days of publication.

Two weeks ago, at this very Dispatch Box, the Secretary of State for Scotland accepted a figure of £200 million as the cost of reorganisation to the taxpayer. It is there on the record; it is in Hansard for even the Minister for Local Government to try to read and understand. He said that only two weeks ago, but today's statement tells us that it will cost £70 million, not a penny of which will be in the budgets which he is now going to slash by £350 million over the next three years.

The only explanation for that is that there will be big bills for council tax payers as a consequence of reorganisation; and the higher the band, the bigger the bill. Who would buy a used calculator from this bunch of Ministers? When one looks at the figures in the various areas that the Secretary of State for Scotland outlined in his long statement, the glossy picture looks very different from the reality. On law and order, the Conservative party, which claims a special reputation on law and order but which has governed during an explosion in the Scottish crime rate, proposes that budgets be slashed by 1.3 per cent. in real terms in the next year alone.

On housing, where there are problems of homelessness and housing dampness, which even the Secretary of State acknowledges in his statement to be serious, and in respect of which every Member of the House knows that our constituents face real and increasing problems, budgets will be slashed over the next year by 1.8 per cent. in real terms.

On education, again the Secretary of State claims that he has specially given protection, but we know from the Chancellor's Budget statement last week that students in every university and college will have their grants cut next year and that the threat of students having to pay a proportion in tuition fees is more real than any Minister is presently prepared to admit.

Even on health, the Government boast about their record, but the Secretary of State for Scotland published a report yesterday that shows how seriously different the problems of health are in Scotland. He knows—as do the House and the country—that costs rise faster than inflation, yet for the health service in Scotland next year he is providing a miserable increase of 0.4 per cent. in real terms.

In the light of the tough decisions that the Secretary of State for Scotland says that he has had to take, and in the light of his exhortation about value for money, will he explain why the budget for the Department of Agriculture, Fisheries and Food will increase by 15 per cent. in cash terms—£64 million—in the next year? It will be interesting to know why, because if it was good news I should have thought that it would be in his statement.

This year's unified Budget, of which this expenditure statement is a part, has been a disaster for Scotland and Britain. Nineteen in every 20 families will be hit by its tax increases. The unemployed and the sick will be specially targeted for penalty. The cost of living in Scotland will rise sharply and all our public services—housing, law and order and everything that is provided by local councils —will be cut substantially. It is in the light of that reality that today's glossy fiction will be judged, and it will be judged harshly indeed.

Mr. Lang

The hon. Member for Hamilton (Mr. Robertson) started talking about a confidence trick. Confidence? Yes, because I believe that that is the right pattern of expenditure and it is a substantial sum of resources for Scotland. But trick? No. It is the hon. Gentleman who is playing tricks, because some of his figures bear no relation to reality.

The hon. Gentleman talked about massive real-term cuts. Perhaps he would like to identify precisely where they are. Inflation is currently running at 1.7 per cent. It may well rise from that figure before the end of 1994–95, but the Chancellor indicated in his Budget speech that he expected it to be around the lower level of 1 to 4 per cent.

As to going on television this evening, I was under the impression that I was going to spend quite some considerable time on television after this, and I look forward to the occasion. [Interruption.] I shall debate with the hon. Gentleman any time he likes. I am debating with him now and am scoring rather a lot of points off him. If he can contain his soul in patience, I have a good many more points to score.

The hon. Member for Hamilton talked about local authorities and claimed that we were contemplating a cut in real terms. He had to stretch his expectation over a three-year period to do that, but he knows as well as I do that the figures for years two and three in the survey are provisional. For next year, the increase is 3.41 per cent., and if one removes the net additional items for local authority activity, it is still an increase of 2.23 per cent. in Government-aided expenditure.

As to the cost of reform, the hon. Gentleman is now accusing me of arguing in favour of £200 million. I said in the debate that I would accept the figure of £200 million of the hon. Member for Fife, Central (Mr. McLeish) if he would accept what that meant. Clearly, he is not willing to do that as, while his hon. Friend has gone down to a figure of £70 million to £80 million, as reported in today's Glasgow Herald, the hon. Gentleman has gone up to over £600 million. Let me try to help the hon. Gentleman through it, as it might be worth spending a little time on it.

We are making provision next year for costs of £5 million for local authorities to begin to prepare for reform. The year after that, we are providing an extra £25 million, plus £23 million for the shadow authorities. The year after that, in 1996–97, it will be £55 million. By then, we shall have savings of £40 million coming through, giving a net cost of £15 million. That means over the three-year period a net cost of £45 million, but the savings thereafter will go on year after year, to the benefit of local council tax payers in Scotland.

The hon. Gentleman spoke of the explosion in crime, but he cannot have looked at the Scottish figures recently. If he had, he would have found that they show crime having fallen right across the board for a considerable period. Nevertheless, we are planning an increase in the spend on police from £37.7 million to £39.8 million. That is a rise of 5.6 per cent., which is an increase even by the hon. Gentleman's pessimistic anticipation of inflation levels. I can understand why the Labour party expects inflation to be high. After all, inflation averaged 15 per cent. throughout its period in office from 1974 to 1979.

The hon. Gentleman spoke of cuts in education, but we are increasing education expenditure by no less than 11.4 per cent. That is a substantial increase which will cover the expansion in higher and further education.

On health, the hon. Gentleman argued that we were going for a real terms increase of only 0.4 per cent. The gross figure is 5.2 per cent. but, in real terms, even at the pessimistic inflation figure of 4 per cent., that would still be an increase of 1.1 per cent., nearly three times the figure estimated by the hon. Gentleman.

The hon. Gentleman accused me of concealing good news about agriculture. I am never one to do that, so I will happily tell the House that the agriculture programme is going up from £439.3 million to £511.7 million—a substantial increase of around 16 per cent., reflecting the reform of the common agricultural policy.

Those programmes and proposals for the year ahead represent a realistic and relevant planning of the disposition of finances in Scotland to help to continue the economic recovery and the improvement in social conditions.

Several hon. Members

rose—

Madam Speaker

Order. Now that we have got through the initial exchanges, let me caution the House. We are not in the middle of a debate. The Secretary of State is here to answer questions. I am sure that he will do so directly, and I am sure that the Back Benchers whom I call will put their questions briskly.

Mr. Bill Walker (Tayside, North)

Is my right hon. Friend aware that, in the economic circumstances of Europe today, where many Europeans are looking forward to spending three weeks out of four on the dole, particularly in Germany, his budget for spending in Scotland will come as a surprise to those people but be welcomed in Scotland?

Mr. Lang

I am grateful to my hon. Friend. It is the more creditable that we have secured those resources for Scotland against a background of public expenditure overall being brought under control and the public sector borrowing requirement being brought down sharply, thus increasing confidence and the prospect of continuing economic recovery, out of which will come further resources in due course to continue to sustain the development of our programmes.

Mr. James Wallace (Orkney and Shetland)

As the Secretary of State said that he had exercised his judgment about priorities, we may judge whether his priorities are fair and realistic. Given that we have been told so often of the importance of substantial increases in investment in water and sewerage in a short time scale, how can he justify the fact that there is to be no increase in such investments by saying that they are not a priority? How does he perceive it as fair and realistic to expect a fireman or policeman to increase productivity? To what extent will the squeeze on local government expenditure allow local authorities to meet the Prime Minister's priority of expanding nursery education?

With regard to the agriculture and fisheries budget, how much has been taken out of the less favoured areas by cuts in hill livestock compensatory allowances and farm conservation grants? Will he confirm that funds will still be available for decommissioning the Scottish fishing fleet next year?

Mr. Lang

I am not sure which of those questions to answer, but, given your stricture, Madam Speaker, I shall have to be brief.

The figures for water and sewerage are increasing from £237 million to £243.7 million. The hon. Gentleman will understand that, as there is no longer a base line figure in the English and Welsh expenditure programmes on which the formula can operate, the capacity to increase resources under that heading is limited. That is why I looked to the private sector to increase resources in due course. Nevertheless, the resources enable 19 new suppliers, 91 improvement schemes to be developed, 56 major sewerage schemes and 69 new or improved treatment works over the next 18 months. That is a substantial commitment.

The hon. Gentleman will also no doubt be pleased to know that our commitment to continuing to increase the resources for the tariff rebate subsidy will increase next year by 25 per cent. over the current year's plans.

Sir Nicholas Fairbairn (Perth and Kinross)

May I congratulate my right hon. Friend on his statement? Does he agree that the greatest costs that we suffer are because of those people who are unnecessarily employed by local government, and is not it time that we did something about it? The Opposition should stop complaining that local government provides employment. It does not. It merely provides people with an income.

Mr. Lang

My hon. and learned Friend is absolutely right. Local authority expenditure accounts for a substantial proportion of Scottish Office resources. I looked back at figures for previous years and discovered that, despite their continuing claims of lack of resources, local authorities have continued to expand their numbers of personnel by no fewer than 9,000 in the past five years. Available resources have continued to increase year by year in real terms. We are right to look to local authorities to run a tight ship and to deliver services effectively and efficiently over the next few years.

Mr. Dennis Canavan (Falkirk, West)

If the Secretary of State is serious about saving public money, why is he so hell bent on foisting on the Scottish people an expensive and unwanted reorganisation of local government that even the Government admit in their own White Paper will mean transitional costs of up to £196 million? Even in the long term in some parts of Scotland such as the Central region there will be no long-term savings at all. Will the Secretary of State abandon his expensive, gerrymandering proposals and refer the entire matter of Scottish local government reorganisation to an independent commission?

Mr. Lang

I am afraid that the hon. Gentleman did not listen to my answer to an earlier question. Although the costs of reform may reach the level that he said, they will be offset rapidly by substantial savings that could be as high as £60 million a year. It is significant that the Labour-controlled council of Dundee has estimated savings for its council tax payers from the single-tier structure of more than £14 per household. I have no doubt that the hon. Gentleman's new authority, when it is established, will estimate similar savings.

Mr. Raymond S. Robertson (Aberdeen, South)

Will my right hon. Friend cut through the tripe that we are hearing from Opposition Members and confirm that the public spending that he announced today represents the highest single sum available to any Secretary of State in Scotland's history and represents a figure of £50 per week for every man, woman and child living in Scotland?

Mr. Lang

My hon. Friend is absolutely right; it is a substantial increase. What matters is that we get value for money for the taxpayer who provides those resources. That is why I am looking to all those who are responsible for spending those resources to achieve the maximum in efficiency and investment that will yield good returns in the delivery of the services that they provide.

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

On the trunk roads programme that he has announced, the Secretary of State mentioned the M74, the M8 and the A1, but not the long overdue A77-M77 link. Is that link included and, if not, why not?

Mr. Lang

The full roads programme has not yet been decided and announced. I hope that it will be possible for that scheme to get under way. There are certainly resources available.

Mr. George Kynoch (Kincardine and Deeside)

I welcome my right hon. Friend's statement. Is he aware that my constituents will welcome the real increases in health spending that is now 50 per cent. greater than in 1979, as well as the increased spending in agriculture? May I suggest that he may find the solution to the figures of the hon. Member for Hamilton (Mr. Robertson) in the fact that he is talking about second-hand calculators that he has perhaps bought from the hon. Member for Fife, Central (Mr. McLeish) and that perhaps the hon. Member for Hamilton should buy a new calculator?

Mr. Lang

I am grateful to my hon. Friend. The figures for health expenditure are certainly substantial—an increase in cash approaching £200 million. That will enable a 2.5 per cent. increase in patient activity to take place and a building programme of some £156 million.

Mr. Norman Hogg (Cumbernauld and Kilsyth)

Will the Secretary of State say something more about the roads programme? When will his Department's procedures in relation to the extension of the M80 between Stepps and Haggs be concluded, and what is the likely date of the commencement of the work?

Mr. Lang

I cannot give the hon. Gentleman the answer to that question today, but I can tell him that there are 14 major projects currently under construction in Scotland and that the resources I have announced today will allow 11 new starts in the next three years.

Mr. Phil Gallie (Ayr)

Unlike the hon. Member for Hamilton (Mr. Robertson), who seemed to revel in doom and gloom, albeit somewhat inaccurately, may I express my welcome for my right hon. Friend's statement and especially for the further drive towards the equalisation of the uniform business rate? Is there an estimate of when the uniform business rate across the United Kingdom will finally be arrived at?

Mr. Lang

I am most grateful to my hon. Friend. The need to harmonise business rates in Scotland arises from the high spending records of mainly Labour-controlled local authorities over the years. However, the £60 million that we have injected into the problem for the forthcoming year brings to £440 million the total of Government resources that have gone into bringing down business rates in Scotland. That is a substantial sum. We are now getting close to harmony with England and Wales, which I hope will be achieved in the next year or two.

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

Will the Secretary of State confirm that the Scottish Office is to continue to fund the mental illness specific grant? May I point out that a relatively small sum of money will be needed over the next three or four years but that such funding is especially important to those who suffer from traumatic brain injuries? May I go further and ask for an increase in the grant so that the rehabilitation needs of our fellow citizens suffering from such injuries can be advanced? It is a relatively small sum of money, but it is badly needed by the traumatic brain injury units.

Mr. Lang

I agree with the hon. Gentleman. I can not only reassure him of the survival of the mental illness specific grant but tell him of a proposed increase from £7 million to £10 million. That is an increase of about 40 per cent. I hope that the hon. Gentleman will recognise that that meets his concern.

Mr. Tony Worthington (Clydebank and Milngavie)

Will the Secretary of State confirm that, when inflation is officially estimated to run at 3.5 per cent. next year, it is his policy and that of Chancellors to expect every public service worker in Scotland to have no increase in pay for the next three years and that he will judge his policy to be a success if he cuts workers' wages in that way?

Mr. Lang

First, I wish that the hon. Gentleman would not be so gloomy about the rate of inflation. I know that the Opposition are not familiar with low inflation, but inflation is low and, as has been clearly proved by my right hon. and learned Friend the Chancellor, shows every sign of staying so. The Scottish Office provision for direct running costs next year is zero. I expect the Scottish Office to achieve any increases in running costs through efficiency savings. If we are prepared to do that in Government Departments, we can expect local authorities and others to achieve the same efficiency savings.

Mr. Sam Galbraith (Strathkelvin and Bearsden)

Will the Secretary of State assure the House that the miserly increase in health expenditure, which, incidentally, is not adequate to cope with demographic shifts or increased technology, will not be spent on more managers with large, fast cars paid for at the expense of patient care? If public sector and health service workers are to have a pay freeze for the next three years, will there also be a freeze on managerial wages, fast cars and perks?

Mr. Lang

The hon. Gentleman was here for Scottish questions, so he will be aware of the fact that hospital trusts are now delivering patient care treatments more quickly and successfully than was the case before the trusts were established. It is in anticipation of the need to deliver more patient treatments that we are increasing the resources of the health service.

The hon. Gentleman talks of "miserly" expenditure, but I recall what happened under the previous Labour Government when health service budgets, capital spending and nurses' wages were cut by 30 per cent. After allowing for inflation, we have increased health spending by 50 per cent.

Mr. Alex Salmond (Banff and Buchan)

Is the Secretary of State aware that the Library estimates that, after allowing for changed responsibilities, the Government's support expenditure for local authorities will fall during each of the next three years? Does the right hon. Gentleman deny that? Is he further aware that the Library estimates that in the year 1996–97 Welsh Office spending will rise by 3.5 per cent. more than Scottish Office spending? Does that mean that the Secretary of State for Wales is competent, or that the Secretary of State for Scotland is incompetent?

Mr. Lang

I am not responsible for expenditure levels in Wales. The settlement achieved by the Scottish Office is well up in the range of Government departmental settlements. As for expenditure levels in local government, the grant-aided expenditure will rise to £5,260 million, which is an increase of 2.23 per cent. net of the items being added to the authorities' responsibilities. As to overall expenditure, in Scotland it is some 30 per cent. higher per head than in England or Wales.

Mr. Calum Macdonald (Western Isles)

Given the apparently large increase in spending on agriculture, can the Secretary of State explain why support for crofters and hill farmers in less-favoured areas in the highlands and islands is to be cut next year? Surely those are the most marginal and hard pressed of the farming communities.

Mr. Lang

I am sure that the hon. Gentleman shares my satisfaction that the incomes of hill farmers, particularly in the beef and sheep sectors, have risen very substantially in the last year or two. Support for them has also increased. The suckler cow premium will be up £14 million and the sheep annual premium will be up £28 million. Against that background, it is not unrealistic that the hill livestock compensatory allowance should be reduced by £9.5 million. There are many other demands on taxpayers' resources, but it is estimated that the agricultural programme in general will be substantially increased next year by more than 16 per cent.

Mr. David Marshall (Glasgow, Shettleston)

The Secretary of State made no reference in his statement to community-based housing associations, which do a good job in Scotland, particularly in the inner city areas. Will he clarify what his statement means for those associations? Will they receive an increase or a decrease and, if so, of how much? Will they be able to continue their essential work of housing rehabilitation, or will they be restricted to new building in conjunction with the private sector?

Mr. Lang

There will certainly be continuity of our commitment to housing associations. When I tell the hon. Gentleman that the Scottish Homes budget will go up by 8.5 per cent. net, he will realise that the resources for housing generally next year are very substantial.

Mr. Thomas Graham (Renfrew, West and Inverclyde)

Is the Secretary of State aware that there will be no merry Christmas for the thousands of people who are homeless in Scotland? The last time we debated the issue, my constituency ended up with two more houses. Thousands of homeless people come to see every hon. Member. When will the Secretary of State give the people hope? When will houses that people can rent and afford to buy be built? When will the Secretary of State stop playing Scrooge and give our constituents a happy Christmas?

Mr. Lang

I am happy to oblige the hon. Gentleman now, even though it is a little early. Perhaps I should give him a new tie for Christmas, in view of the one that he is wearing.

The net capital programme for housing will be up by £25 million, or 4.3 per cent., next year. The local authorities' net capital programme on their home stock will be up 5.5 per cent. Those are substantial increases by any standard.

Mr. Malcolm Chisholm (Edinburgh, Leith)

Given that the overall United Kingdom public spending settlement this year is the most savage and draconian of any in the lifetime of the Government, with overall cuts in real terms of 1.3 per cent. and cuts in the public sector capital investment of more than 10 per cent., will the Secretary of State say whether he has bucked that trend or merely concealed it? Will he tell us in simple terms the percentage change in overall expenditure, comparing this year's outturn expenditure with next year's planned expenditure? Will he tell us the percentage change in public sector capital investment, given the crucial nature of that for both employment and economic activity in general?

Mr. Lang

We do not know what the current year's outturn will be, because we are still in the middle of the year. I can tell the hon. Gentleman, however, that the £14 billion overall programme represents a 4.3 per cent. cash increase. Our capital gross spend will be over £3 billion, which represents a 5 per cent. increase.

Mr. John Home Robertson (East Lothian)

Is the Secretary of State aware that, if we had proper railway services in Lothian and Fife, there would be no need to contemplate spending millions of pounds of public money on a second dual carriageway and a second road bridge over the Firth of Forth? The A1 dual carriageway clearly needs to be extended, and I welcome that part of the right hon. Gentleman's statement, but it would be helpful if he could give us an idea of the completion date for the extension of the dual carriageway towards Haddington and Dunbar.

Mr. Lang

I hope that it will be possible to make a start on the Tranent-to-Haddington section of the A1 in 1994–95. As for the railways, let me point out that huge expenditure went into upgrading the east coast line, which is of great interest to the hon. Gentleman and his constituents. Moreover, we propose to develop the west coast main line using private sector finance. Private sector finance should enable us to build still further on the progress that we are making with public resources in developing our transport infrastructure.

Mr. John McAllion (Dundee, East)

Will the Secretary of State confirm that, although the figures that he announced for housing spend may represent an increase on the planned spend for next year, when they are compared to the housing expenditure outturn for this year—and when the real level of inflation is taken into account for next year —they will almost certainly represent a cut in the Scottish housing budget?

According to the Department's own figures, over the 18 months to June this year Scottish local authorities were forced to sell just under 28,000 council houses to sitting tenants, while being able to complete fewer than 1,000. That represents a net shortfall of 27,000 council houses. How can the right hon. Gentleman possibly justify a cut in the housing budget at a time of record homelessness, and record dampness and condensation in the Scottish public sector housing stock?

Mr. Lang

The hon. Gentleman seems determined to try to confuse matters by comparing outturn with planned expenditure. If the outturn figures are different from the planned figures for 1993–94, it is equally likely that the outturn figures for 1994–95 will be different. I think that the hon. Gentleman will agree that the sensible comparison is between planned figures for 1993–94 and planned figures for 1994–95. On that basic, the resources for housing should be more than sufficient to meet the needs.