HC Deb 15 July 1996 vol 281 cc915-24

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Burns.]

11.46 pm
Mr. Malcolm Bruce (Gordon)

My contention in this debate is to assert and demonstrate that councils in north-east Scotland are being unfairly treated in relation to the rest of Scotland. North-east councils are delivering vital services to a growing population with fewer resources than the Scottish average. North-east councils account for 9.74 per cent. of the population of Scotland—that is growing rapidly—while the Government's support for north-east councils represents only 9.05 per cent. of the total to Scottish councils, a figure that is falling.

In the circumstances, I find it gratuitous and insulting that inexperienced Ministers should attack north-east councils for profligacy, when, year on year for many years, those councils proved themselves the most efficient, not only in Scotland, but throughout the United Kingdom.

The Under-Secretary of State for Scotland, the hon. Member for Kincardine and Deeside (Mr. Kynoch)—who is to reply to the debate—has criticised Grampian region, the main predecessor council. May I remind him—and the other Under-Secretary of State for Scotland, the hon. Member for Aberdeen, South (Mr. Robertson)—that Grampian regional council was assessed as the best council in the UK for its efficiency and value for money? PA Management Consultants, on behalf of the Society of Local Authority Chief Executives, gave it the prize throughout the United Kingdom for its total quality management performance. That is a record of which it has every reason to be proud, and I believe that Ministers ought to give the council credit rather than make gratuitous criticism.

The new councils have had very little time to prove themselves. In spite of that, Aberdeen city council has the lowest council tax of the four cities in Scotland, and Aberdeenshire and Moray have respectively the third and fourth lowest council tax rates on the mainland. In fact, the three lowest rates of council tax on the mainland are in the three councils with Liberal Democrats in the administration—Borders, Dumfries and Galloway, and Aberdeenshire. Yet, in spite of low council taxes, north-east councils have continued to support and develop local services. That is, until now. This year, as a direct result of the Government's miscalculation of the cost of reorganisation and the inadequate real funding that they have made available, most developments have come to a halt, vital services are being cut, and charges are being hiked.

Councillors and council officials, who are rightly proud of their record in providing good-quality, value-for-money services to their local communities, are angry and frustrated at what they are having to do, because the Government have failed to provide adequate money to maintain services. All the councils are seeking and finding substantial efficiency savings, but they go nowhere near meeting the budget reductions, and many of them are short term and will lead to long-term damage of the services they offer.

Based on what was spent last year, councils have had to cut expenditure by an average of nearly 10 per cent in cash terms, and, in the present economic climate of low inflation, that sort of cut means cutting through the red meat and well into the bone. If the Ministers have questions about that, I can give some detail as to exactly what it means for their constituents as well as mine, although they show rather less concern for the impact than I do.

In Aberdeenshire, the financial settlement and the grant-aided expenditure required a spending reduction on last year's budget of £25.565 million or 9.8 per cent. The city of Aberdeen recorded a reduction of £24.5 million. The situation between the city and the rural authorities was aggravated by a transfer by mismatch, which will mean that it will be worse for the city of Aberdeen next year, and the authorities are already expressing concern about the implications.

Aberdeenshire council has said that, simply to meet the capital budget, it will have to find assets to sell of £7.85 million, because it will be allowed to retain only 75 per cent. of the proceeds, and £5.9 million is the realisable, usable, capital receipt it needs.

On the budget of £235 million, the capital commitment left is £3.564 million, which is totally and hopelessly unrealistic for an organisation of that size. Indeed, it is barely sufficient to meet the council's legal obligations, such as fire precaution works, social work institutions, cemetery extensions, accommodation of overcrowded schools and other mandatory grants. It puts beyond any reasonable calculation for the foreseeable future the provision of a Garioch academy, which our growing school rolls necessitate and for which the outgoing council had the good sense to acquire a site.

The city of Aberdeen has identified cuts. First, on administration, it has rationalised staffing structures at a cost of £2.8 million. It has cut the funding for supplies to schools by £1.9 million, which is a substantial amount. It has reviewed the eligibility for school transport above the statutory minimum requirement—I will return to that—introduced charges for the use of leisure and recreation facilities, additional charges for music tuition and charges for the use of educational establishments, and has increased the cost of school meals by four times the rate of inflation. It has also put up the cost of meals on wheels.

The Parliamentary Under-Secretary of State for Scotland (Mr. Raymond S. Robertson)

That was the council's decision—it was disgraceful.

Mr. Bruce

The hon. Gentleman is not replying to the debate or taking part in it, and I should be grateful if he would let me develop my argument in my own way. Indeed, if he interrupts, he will intrude on the time of his colleague the other Under-Secretary of State, who wants to reply to the debat.

I am demonstrating that there have been real cuts in real services used by real people, who voted for those services and have had them for many years. Those cuts are not being implemented by councillors who were elected to make them or who believe in them. They are being forced to do it. No one is denying that councils can always review what they do and find savings—councils have done. However, it is absurd for Ministers to suggest that the scale of the shortfall can be anywhere near met by efficiency savings.

In Aberdeenshire, the education budget accounts for more than half of council expenditure. Non-exam swimming has had to be cut altogether, which is controversial and the council does not wish to do it. There has been a reduction in supply staff. [Interruption.] That the hon. Member for Aberdeen, South should find that funny is a fair indication of just how callous a Minister he is and how uncaring he is about the services that his constituents require and for which they voted.

Supply staff have been cut, which increases pressure on permanent teachers. Transport above the statutory minimum for travel to schools has had to be reviewed. A complete halt has been proposed on staff and curriculum development, which should have concerned the hon. Gentleman as Minister responsible for education.

School meals charges have been raised. Some community education centres have been closed, while others have had their hours restricted at exactly the times when community groups are likely to want to use them. There has been a reduction in funding for schoolchildren to travel out of their schools and reduced support for playgroups, and no new nurseries have been opened.

It is a little rich that local Members of Parliament who are Ministers should turn up to support demonstrations on issues that arise out of those cuts. I saw the hon. Member for Aberdeen, South standing among a group of parents demonstrating about the travel-to-school reduction. He chose to champion those people. It is understandable that those people feel the way they do; I have no problem with that. He refuses to accept any responsibility for his Government's policy of reducing the funding, miscalculating the reorganisation costs and forcing councils to review services that they developed and that were not required by statute.

The same applies to the hon. Member for Kincardine and Deeside in respect of his support for the opening of a nursery school in Newtonhill. No one would like that nursery to open more than me—except perhaps the parents of Alford, which was ahead of Newtonhill in the objective assessment of need. It is ridiculous for a Minister not to acknowledge that councils in these circumstances have to stop all new developments to protect the core services they already provide.

It was because the council had a policy of development that, when the new school in Newtonhill had to be rebuilt because of subsidence, it decided to incorporate a nursery class. It wished to ensure the continued development of nursery education. Unfortunately, it was unable to fund that, because the local Member of Parliament became the Minister responsible for local government, and provided the council with funding inadequate to carry out the project. He knows that to be true.

The record of Grampian regional council in developing nursery education is second to none in Scotland. It was only when the Conservatives were removed from office that the policy of developing nursery schools took off. Nursery school development was consistently frozen while the Conservatives were in control of the council. They never believed in it, funded it or provided it.

Other controversial cuts have been made. The council has shown that it is responsive to local pressures on matters such as the pool at Stonehaven. It has given the community an opportunity to find other ways of funding it. It has reviewed the warden charges in sheltered housing because of concern about those affected by it. Nevertheless, it is cutting home helps, and cutting voluntary services across the board. It is cutting a variety of services that the entire community regards as essential.

In such circumstances, Ministers would serve their constituents better if they were prepared to turn up and fight constructively for the resources the services need, and recognise that we have cost-effective councils that have delivered those services efficiently over many years. The councils would like constructive engagement about improving efficiency, if Ministers have constructive ideas. They do not want megaphone abuse that does not tie in with their records. Those Members should fight in government for their constituents to get a fair crack of the whip. Instead of fighting for their own communities, they are the very instrument of savaging the quality services built up over recent years. What is the point of having local Members of Parliament in government if this is the way in which they behave?

I refute the Government's claims that this year's settlement is adequate. Almost all the extra money was eaten up by reorganisation costs, which were underestimated, by care in the community transfers and by priority allocations for police, fire and the courts. On the Government's own calculation, the provision for roads, environmental services, planning, leisure, recreation and the urban programme was cut. The Government cut the allocation to them, and presumably wanted those services to be cut, but they have never owned up to it in any publicly acknowledged way. The cuts were based on a miscalculation of what was actually spent, and they are even deeper in reality than was at first thought.

The situation will get worse unless the Government rethink their policy. Ministers talk of local government as if it was a thing apart. In fact, councils deliver services that most people use every week, and on the whole they do it well. It is the Government's own mismanagement that is to blame, as is the fact that they have removed councils' independent financing in order to put the bite on them.

Local services efficiently and cost-effectively delivered, which Ministers' and my constituents voted for, valued and until now enjoyed, are now under threat. I contend that those local services are not safe in Tory hands. The voters know that. That is why there are no Tory councils in Scotland and very few Tory councillors.

Now, we need fewer Tory Members of Parliament and no Tory Government, because it is clear, unless the Minister changes his tune in reply to the debate, that a recognition of what people want and have voted for and the requirement that those services be properly delivered requires a rethink of the way in which the Government fund local authorities. They must give them more access to their own finance, and a more realistic financial settlement. Otherwise, good-quality services will continue to be cut, and something that has been built up over the years, of which the north-east people are proud, and which people move to the north-east for, will be put at risk.

I hope that the Minister can give me a reply tonight that will assure me that that will not be the case.

12.1 am

The Parliamentary Under-Secretary of State for Scotland (Mr. George Kynoch)

Let me start by congratulating the hon. Member for Gordon (Mr. Bruce) on his success in securing this debate. As he said, I have a dual interest in the topic of tonight's debate; not only as the Scottish Office Minister with responsibility for local government, but, like the hon. Gentleman, as a Member of Parliament with a constituency in the north-east of Scotland.

I am delighted to see tonight the Under-Secretary of State for Scotland, my hon. Friend the Member for Aberdeen, South (Mr. Robertson), in his place to show his interest on behalf of his constituency in the debate tonight, and the hon. Member for Moray (Mrs. Ewing) in her place.

The hon. Member for Gordon has been very vocal, both tonight and in the past few months, in his criticism of the Government over the financial position facing the three new councils in the north-east, and particularly the position of Aberdeenshire, within which my constituency and his lie. That shows his total lack of understanding of local government finance, but that is something that I would expect of the hon. Gentleman, who seems more interested these days in matters south, rather than north, of the border. I reject his criticism, and during the next 10 minutes or so, I shall try to explain why.

I start by reminding the House of the key features of the overall 1996–97 local government finance settlement. This year's overall settlement provided, first, for an increase of 2.3 per cent. in the level of Government-supported expenditure, which is the Government's view of what authorities need to spend to pay debt charges and to deliver services. This increase of 2.3 per cent. is before any account is taken of the scope for efficiency savings.

Secondly, the settlement provided for an increase of 3.6 per cent. in the level of Government support. This increase of 3.6 per cent. compares with 2.8 per cent. for England and 2.7 per cent. for Wales. In cash terms, the increase in the level of Government support for Scottish authorities is more than £186 million, which is almost £65 million more than the formula consequences of the English settlement.

As a result of this generous settlement, the level of Government-supported expenditure for Scottish authorities is now 30 per cent. higher per head of population than the comparable amount for English authorities, and the level of Government support for Scottish authorities is no less than 44 per cent. higher than that for English authorities.

If Scottish local authorities ever found themselves in the unfortunate position advocated by the hon. Member for Gordon, of looking to a Scottish Parliament for their financial support, it is most unlikely that they would ever receive a settlement which was £65 million more than the Barnett formula consequences of the English settlement. That is the measure of the extent to which this year's settlement was, in fact, an extremely generous one.

I shall be specific about what the 1996–97 settlement has meant for the three councils formed out of the former Grampian region area. For Aberdeen city council, the settlement permitted an increase in expenditure of £8.8 million, or 4.35 per cent., over its notional 1995–96 budget. But that, it said, was inadequate: it wanted to increase expenditure by around £33 million, or more than 16 per cent.

For Aberdeenshire council, the settlement permitted an increase of £14.8 million, or 7.34 per cent., over its notional 1995–96 budget. Again, it said that that was inadequate: it wanted to increase spending by £40 million, or nearly 19 per cent. That is despite the fact that senior officials, in the past 10 days, have confirmed to my officials that the notional budget figure was a fair starting point. For Moray council, the settlement permitted an increase of £4.3 million, or 5.06 per cent., over its notional 1995–96 budget. Once more, we were told that that was not enough: it wanted to increase spending by £12 million, or 14 per cent.

At a time when inflation is expected to remain below 3 per cent. throughout this year and local authorities are expected—like the rest of the public sector—to fund any pay increases from efficiency savings, those three councils claim that they needed to increase expenditure by 16, 19 and 14 per cent. I find that absolutely astonishing, and I suspect that council tax payers throughout the area are greatly relieved that my right hon. Friend the Secretary of State for Scotland, notwithstanding his general desire to devolve power to local authorities, decided to retain his power to cap local authorities.

The hon. Member for Gordon referred to Newtonhill nursery in my constituency. He seems to be more concerned about matters in my constituency than in his own. If he is not worrying about Stonehaven hospital, he is worrying about Newtonhill nursery. That nursery has been built and equipped, but, sadly, not opened. That, we are told, is one of the consequences of Aberdeenshire council having to cut its education budget by £11.5 million.

I note, however, from the council's own leaflet that it has increased its education budget by virtually £2 million over last year's level, from roughly £108 million to £110 million. I take it that, if the council had not made cuts of £11.5 million, it would have pitched its education budget £11.5 million higher—an increase of 12.5 per cent. [Interruption.] The hon. Gentleman is making comments from a sedentary position. He shows his total lack of understanding of financial matters, but I would expect that from the Liberal Democrats. I find it astonishing that any council would dare to suggest that it needed to increase spending by 12.5 per cent. at a time when inflation is below 3 per cent.

The council might have been better advised to spend the £26,000 that it spent this year on producing a new logo on opening the new nursery class at Newtonhill. I suspect that the children in the nursery would have been only too happy, and able, to design the council's new logo for it.

Given the generosity of the settlement and the specific assistance for particular areas, one might be excused for wondering why there has been so much talk of councils having to make cuts in their level of service provision. I can assure the House that it is not because we made an inadequate settlement, nor is it a direct result of reorganisation per se. It is wholly due to the irresponsible actions of the outgoing councils over the past couple of years, and particularly during their last year of tenure.

It has been clear since the old councils across Scotland set their last budgets, in March 1995, that they were storing up problems for their successors. They budgeted to spend some £140 million from balances rather than fund pay rises from efficiency savings. At that time, the new councils stood to inherit balances totalling £45 million.

However, the enormity of the old councils' disregard for the plight of the new councils has become clearer as time has passed. It now appears that the old councils went far further even than they had planned. The new councils have inherited a collective deficit of £11.5 million. So, having set out to spend £140 million from balances last year, the outgoing councils actually spent about £200 million. In so doing, they have handed over the legacy of an artificially high level of expenditure. It is artificial in the sense that it could not possibly be sustained by the new councils, even with an extremely generous settlement.

Further confirmation of the irresponsibility of the old councils is now available. Provisional outturn expenditure figures for the outgoing councils demonstrate that they spent some £143 million more during 1995–96 than they budgeted to spend at the start of the year.

I concede that budgeting is not, and cannot be, a precise exercise. However, when I examined the figures for the past 10 years, I found that the local authorities had never overrun their budgets by more than 0.9 per cent. Indeed, they underspent on several occasions by between 1 and 2 per cent. Last year's overspend of £143 million represents an overspend of 2.5 per cent., and is some £100 million more than the 'worst overspend in the past 10 years.

Therefore, the difficulties that the new councils face are the fault of the outgoing councils, not of the Government. There is absolutely no doubt that the difficulties that Aberdeenshire—[Interruption.] If the hon. Gentleman would shut up and listen for a moment—

Madam Deputy Speaker (Dame Janet Fookes)

Order. The hour may be late, but I still expect certain standards of courtesy and we are falling below them.

Mr. Kynoch

If the hon. Gentleman will be a little more patient and listen, he will hear what I have to say about the north-east. There is absolutely no doubt that the difficulties that Aberdeenshire and the other new councils in the north-east have faced over their revenue budgets are a direct result of irresponsible action by Grampian regional council.

I suppose that one could suggest that we should have some sympathy for the new councils—and I concede that I might feel that way in certain circumstances. However, that is certainly not the case when—as with Aberdeenshire--the new administration comes from the same stable as the old. This is where the hon. Gentleman, as a Liberal Democrat, gets slightly embarrassed.

Grampian region was controlled by a Liberal Democrat alliance, and so is the new council. Senior officials in the new council also served in the Grampian region. Both councillors and officials knew that they were taking action last year that was bound to have an adverse impact on Aberdeenshire council—the phrase "chickens coming home to roost" springs to mind. That experience of extravagant prodigality by local authorities—

Mr. Malcolm Bruce

rose—

Mr. Kynoch

No, I will not give way.

Extravagant prodigality by local authorities controlled by the Opposition parties is one of the reasons—

Mr. Bruce

On a point of order, Madam Deputy Speaker. The Minister is attacking officials who have no right of reply. Is that in order? Would he do it to his own civil servants?

Madam Deputy Speaker

That is not a point of order for the Chair.

Mr. Kynoch

Thank you, Madam Deputy Speaker.

That experience of extravagant prodigality by local authorities controlled by the Opposition parties is one reason why we on Conservative Benches oppose a tax-raising Scottish Parliament. It would become a focus for the same high-taxing, high-spending aberrations as we have seen in local government—many of its members would almost certainly be drawn from the ranks of Opposition councillors. With a weapon such as the tartan tax at its disposal, it would wreak havoc upon Scottish taxpayers, jobs and the economy.

If the hon. Gentleman has complaints about the funding of the new councils—particularly Aberdeenshire—he should direct them not at the Government, but at the members of his party who were part of the administration of Grampian regional council that took totally irresponsible action last year in relation to current expenditure.

The hon. Gentleman referred to capital expenditure. As he will be aware, last year local authorities were entitled to make forward commitments totalling some 70 per cent. of the 1995–96 allocations. Authorities in the Grampian area made commitments far in excess of that, and now face a major problem in having to account for how they will recover from that over-allocation. Last year, they over-committed by 75 per cent. on the 70 per cent. allocation.

Mrs. Margaret Ewing (Moray)

Show us the figures.

Mr. Kynoch

I shall give the hon. Lady the figures. At the end of last year, the new councils said that they would inherit commitments from Grampian of just under £16 million. Three or four months later, according to the new councils' figures, they had inherited commitments of £35 million. My right hon. Friend had guaranteed to meet £20 million. It is clear that, in the last few months of its existence, Grampian chose to place its successors in a position of having to meet commitments which it knew that my right hon. Friend could not meet. I do not think that that was responsible financial management by the outgoing councillors.

Underlying the debate on local government expenditure is a more fundamental issue. The Opposition parties have never come to terms with accountability for spending what they inaccurately call "public money". As we on Conservative Benches have often pointed out, and will continue to reiterate, there is no such thing as "public money". There is only taxpayers' money. The stewardship of taxpayers' money is a moral responsibility.

Unfortunately for taxpayers in Aberdeenshire and the rest of Scotland, the Opposition parties have not yet matured sufficiently to replace a propensity to squander with a culture of stewardship. Unless and until they embrace that culture of stewardship, they will remain unfit to govern locally or nationally. The Government will continue to fight for the taxpayers' and for Scotland's interests by pursuing policies of responsible financial stewardship based on respect for the rights of our citizens, whose money we have a duty to manage with punctilious care.

The hon. Gentleman has shown that he totally misunderstands the situation in the north-east of Scotland. Central taxation funding, which comes through Government support, has been greater than ever before. The hon. Gentleman cannot accept that his party in the local authority of Aberdeenshire has, in the years when it was in Grampian region, been unable to budget and spend as much as it told the electorate it was budgeting for. It has overspent, used up resources, sold assets, sold the family silver, so that it could keep the council tax at such a level that his party could face its electorate.

Now chickens are coming home to roost. The Liberal Democrats have to account to their electorate, because they now control the new local authority, and they now have to make cuts from a wish list that they had in the past. Had they had their house in order over the past few years, they would have been able to manage without making cuts. Had they got their priorities right and not frittered some of the expenses which they have, on issues such as cycle paths or new logos, I believe that they would have been able to open nurseries, or to maintain transport for pupils to learn to swim.

Those are issues that the Liberal Democrats in particular have shown that they are totally incapable of managing in local government. I believe that the Government have done their bit to smooth the path for the local authorities, to try to ensure, by giving them significantly more than what flows through from the English settlement—

The motion having been made after Ten o'clock, and the debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at sixteen minutes past Twelve midnight.