Local Government Finance (Scotland)

HC Deb 11 February 1999 vol 325 cc518-82

4 pm

The Parliamentary Under-Secretary of State for Scotland (Mr. Calum Macdonald)

I beg to move, That the Local Government Finance (Scotland) Order 1999, dated 28th January, a copy of which was laid before this House on 1st February, be approved.

Mr. Deputy Speaker (Sir Alan Haselhurst)

With this it will be convenient to discuss the following motion: That the draft Housing Support Grant (Scotland) Order 1999, which was laid before this House on 28th January, be approved.

Mr. Macdonald

The orders set the framework for local authority funding and housing support for the year ahead. In future, they will be the business of the Scottish Parliament. Before I introduce them, I have a few words on the general background.

The local government order delivers the most generous financial settlement for local authorities for seven years. It underlines our commitment in the comprehensive spending review to invest in quality local services. Councils will be able to increase spending by almost 5 per cent. next year. Much of that increase will be targeted at the Government's priorities, which are shared with Scottish local government, of education, social work and the police and fire services. On top of that, the three-year spending plans that we announced last July after the CSR provide further real-terms increases over the following two years. The firm three-year plans offer councils long-term stability and should help them to plan their service delivery over a sensible period. In turn, that should deliver better value for money.

Next year alone, council spending is set to increase by more than £300 million. By the third year of the CSR, Scottish local authorities will have an extra £840 million per year to spend on front-line services. Those are significant real-terms increases, and as local authorities deliver the efficiency gains to which they and we are fully committed through best value, their real spending power will be even greater.

Overall, the settlement represents a major boost to local government spending power, providing councils with the means to make real progress in improving the quality of front-line services. This is a fresh start for the local government and reverses several years of tight spending controls made necessary by the economic mismanagement of the previous Government.

Councils must be rigorous in their continuing efforts to improve efficiency. Keeping council tax rises down is a key objective. Council tax payers expect and deserve no less. We have, as promised, scrapped crude and universal capping, but it remains important that councils budget prudently. We have therefore introduced a new system of expenditure guidelines to inform council budgeting rounds.

Mr. Donald Gorrie (Edinburgh, West)

Can the Minister clarify what the difference, if any, is between the guidelines and the crude universal capping that he is so much against?

Mr. Macdonald

Yes. The expenditure guidelines will let councils know the level of spending that we think is prudent, but they are indicative rather than firm caps. It will be up to councils to decide at what level to set their council tax. If councils heed the guidelines, council tax rises should average no more than 5 per cent. next year. We have provided local authorities with significant increases in funding, and we do not expect councils to have to budget above guideline. However, if we are faced with excessive budget increases, we have the existing capping powers in reserve.

Mr. Alex Salmond (Banff and Buchan)

The Minister argues in principle against the rigid capping of previous years, in which I support him. The Scottish Office—in future, the Scottish Parliament—tightly controls the revenue flow to local authorities: 90 per cent. or more of the money available to local authorities will come from central Government, whether through the Scottish Office or the Scottish Parliament. In principle, what is the need to have further guidelines, even indicative ones? If the revenue is being controlled, cannot local authorities at least be trusted to distribute their expenditure?

Mr. Macdonald

The hon. Gentleman knows that we must also have regard to the interests of council tax payers. This is a significant step forward to providing data flexibility and discretion for local authorities, but it is prudent to keep the existing capping powers in reserve. I hope and trust that there will be no occasion to use them.

It is not only council tax payers who are hit if council tax rises are excessive. Large hikes also affect national taxpayers, and the assigned budget through increased council tax benefit subsidy payments. The White Paper, "Scotland's Parliament" signalled arrangements to ensure that any resultant extra cost would have to be found by the Scottish Parliament. We have therefore put in place subsidy limitation arrangements to ensure that councils themselves bear the responsibility for the benefit costs associated with high spending increases.

Sir Robert Smith (West Aberdeenshire and Kincardine)

On the new method of controlling local government spending, is the guideline figure at or below the grant-aided expenditure figure for the councils?

Mr. Macdonald

The guideline figure is the GAE figure. If councils spend considerably above that, or increase council taxes considerably above the expected 5 per cent. on average, the reserve powers are available to deal with the situation. We hope that that will not happen. The signs so far for next year suggest that the reserve powers will not prove necessary, but they will remain in reserve.

Dr. Liam Fox (Woodspring)

To help the debate, can the Minister say what he means by "considerably", and give councils in Scotland an idea of what that means in practice?

Mr. Macdonald

If the guideline, which at £6.5 billion for next year is pretty generous, or the expected average council tax increase of about 5 per cent. is breached, we would consider the situation in the individual local authority. We would examine why it had happened and assess each situation as it arose. That is the point of moving away from the crude and universal, automatic approach to one where we allow more discretion. That is sensible and right, but it is prudent to keep the other powers in reserve. It is a matter of assessing each local authority's situation individually.

Mr. Salmond

My understanding from the Convention of Scottish Local Authorities is that planned expenditure for Scottish local authorities collectively is some £300 million above the GAE assessment for next year. Given that situation, does the Minister intend to act? If not, or if he thinks that the expenditure planned by local authorities is unreasonable, what would he cut from the £300 million to bring the figures into line? The Minister for Home Affairs and Devolution shakes his head, but COSLA argues that planned expenditure is £300 million more than the GAE assessment. Either the planned expenditure or the assessment is wrong. It argues that the assessment is wrong.

Mr. Macdonald

Perhaps I inadvertently misled the hon. Gentleman. I said that it was about £6.5 billion next year; I think that the figure is actually £6.9 billion. That is the figure that we will take as a guideline. We will assess whether local authorities are spending way above that guideline figure.

Mr. Salmond

So that is another £400 million?

Mr. Macdonald

No. There is no sense of the sort of squeeze that the hon. Gentleman fears. We do not expect any local authority to exceed the guideline in the coming year, certainly not by any significant amount.

Mr. Tam Dalyell (Linlithgow)

Will my hon. Friend comment on part of COSLA's case, that application of convergence criteria with the implicit aim, over time, of regarding each council's grant-aided expenditure as its spending guideline is strongly opposed? What is the Government's view?

Mr. Macdonald

There is nothing new in that. The notion that expenditure by councils should be more in line with the assessment of councils' needs is one that has been advanced for many years by different Governments. COSLA' s case is nothing new—that has always been its argument. The importance of the new procedures and the new expenditure guidelines is that they represent a far less rigid approach to achieving convergence than the old crude and universal capping procedures, so there is now greater flexibility than there was previously.

Mr. Oliver Letwin (West Dorset)

The Minister is being most generous in giving way, but will he finally clarify the position regarding the guidelines? He mentioned total guidelined expenditure of £6.9 billion, compared with grant-aided expenditure of £5.7 billion. From where did he get the extra £1.2 billion; that is, how did he calculate that the guidelines ought to give headroom of £1.2 billion over the grant-aided expenditure figure?

Mr. Macdonald

The guideline figure is £6.9 billion. Some local authorities spend in excess of the GAE figure: because council tax increases in past years have been larger than previous Governments thought that they should be, the amount of actual expenditure has been rising above the GAE figure. There is nothing new in that gap between actual expenditure and GAE, so there is nothing about which the hon. Gentleman should be surprised or puzzled.

Mr. Letwin

Does the Minister agree that, if councils raised their expenditure to the guideline level this year, that would involve, given his aggregate external financing, a rise in their local tax of about 5 per cent.?

Mr. Macdonald

Our assumption is that, if councils meet the expenditure guideline, the average council tax increase will be about 5 per cent., so the hon. Gentleman is absolutely correct.

On the detail of the orders, the Local Government Finance (Scotland) Order 1999 sets out the amounts of revenue support grant and non-domestic rate income that will be payable to each authority in 1999–2000. It also redetermines the amount of revenue support grant payable for 1998–99. The order is accompanied by a report that sets out in detail the background to the figures in the order. The detailed calculations set out therein have been subject to consultation with COSLA, with which we enjoy a constructive working relationship on issues of distribution. We have been faced with some difficult issues in that respect and the strength of our relationship with COSLA has helped in handling them.

Overall, the settlement is a generous one that will enable councils, for the first time in many years, to deliver real increases in the scope and level of their services. However, with that extra spending power comes a requirement for greater financial responsibility: we expect local authorities to seek best value in all their activities and to budget prudently.

The second document under consideration is the Housing Support Grant (Scotland) Order 1999. The Government attach considerable priority to housing and that has been reflected in the decisions we have taken since entering office. We added £66 million to the housing budget for the first two years, which was the first increase after years of cuts in housing expenditure under the previous Government, owing to the budgetary consequences of their management of the economy. Following the CSR, we announced an additional £300 million to be spent on housing and regeneration over the next three years. That means that, by the end of 2002, Scottish Office funding for housing will be about £640 million—an increase of nearly 40 per cent. on the level of funding we inherited from the previous Administration. Our key housing initiative—[Interruption.]

Mr. Letwin

rose—

Mr. Deputy Speaker

Order. I am sorry to interrupt the Minister. If the hon. Member for West Dorset (Mr. Letwin) wants the Minister to give way, he should make his wishes known audibly, otherwise we have two hon. Members on their feet simultaneously.

Mr. Letwin

Will the Minister give way?

Mr. Macdonald

I shall happily give way to the hon. Gentleman.

Mr. Letwin

I am grateful to the Minister and sorry for not having drawn his attention to my desire to intervene earlier. Given his comments about the previous Government's mismanagement and its effects, will the Minister tell us what effects the recession being generated by the current Government will have on next year's settlement?

Mr. Macdonald

It is precisely because of our prudent approach to public finances that we shall be able to deliver, on plan and on schedule, the public spending increases we have already announced.

Our key housing initiative is to develop new housing partnerships, which bring together councils, tenants and the wider community in a way that gives tenants a direct say in the ownership and management of their houses. The public funds being made available from new housing partnerships are intended to be used to lever in private finance to meet the need to repair and modernise much of our public sector housing. Some £45 million has already been allocated to councils throughout Scotland to develop new housing partnerships to provide improved and, of course, affordable houses.

In August, councils were invited to bid for new housing partnership resources amounting to £278 million over the next three years. In setting in motion that new bidding round, I made it known that we intended to give priority to funding proposals for community ownership that both promoted tenant empowerment and brought in private finance.

Sir Robert Smith

Will the Minister attempt some discussions with the Treasury about how the accounting rules work, so that where tenants want to have the council as their landlord, it will still be possible for investment to be put into the council houses and for the houses still to be run by the council on behalf of the tenants, as is the wish of many tenants in my constituency?

Mr. Macdonald

The hon. Gentleman must accept that, where houses remain in the public sector, the debt attached to those houses must be counted within the public sector debt. The Treasury and my right hon. Friend the Chancellor have to evaluate and handle such debt in the same way as any other part of the public sector debt portfolio.

Sir Robert Smith

That is where the Treasury has not improved its accounting practices in line with much of continental Europe. When one invests in a house that is guaranteed to earn rental income, the debt is totally different from that which is incurred by investment in expenditure, where there is no return on capital.

Mr. Macdonald

The parallel cannot be drawn. Where local authorities demolish houses that they have built through public sector borrowing, the debt outstanding on those demolished houses is not, or ought not to be, paid off by tenants, but is transferred to the general fund and the general taxpayer. The Treasury has to take into account any consequences in terms of public sector debt. If the objective is to lever in private sector investment, which we think is a sensible objective, the approach I outlined of community ownership has the merit of achieving both that and tenant participation and empowerment. That is no great price to pay, but is a great virtue and merit of the approach we have chosen.

Mr. Salmond

I hope the Minister will forgive me for pointing out that he has not directly answered the question. It is technically possible to retire, reschedule, write off or transfer to the general fund debt relating to stock that remains in the public sector: for example, 18 months ago, we rescheduled some of the water debt in Scotland, yet the water industry remains in the public sector. The Minister's answer was that it is desirable to get the housing stock out of the public sector, but why should not the same financial incentives be available for housing stock that chooses to remain within the public sector as for that which is transferred out of the public sector? Why are the Government giving financial incentives to transfer stock out, but not offering the same financial encouragement to improve stock that remains within the public sector?

Mr. Macdonald

The point is quite simple. As long as the stock remains in the public sector, that sector will have certain obligations and liabilities concerning that stock and the financial consequences of managing it. Therefore, it is absolutely right, sensible and prudent for those liabilities to be accounted for in public sector debt. When the Treasury assesses the amount of debt and liability for next year and years ahead, it includes those houses for which it is responsible as part of the public sector.

Mr. Ian Davidson (Glasgow, Pollok)

Given that the Minister is well known for being both strongly pro-European and less hostile to the Liberals than many others on the Labour Benches, could not he combine both his hobbies and agree to accept the proposal of the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith)?

Mr. Macdonald

I am very keen on matters European. Sweden, for example, has long developed community-based and tenant-driven housing models which I would recommend to both local authorities and hon. Members. The virtue of community ownership is not just that it levers in private finance to complement the public investment that we are making, but it provides new powers and a new role for tenants. That makes it a very desirable way forward.

The bids for new housing partnerships are being assessed by a group which includes representatives of COSLA, Scottish Homes, the Scottish Federation of Housing Associations and the Chartered Institute of Housing. We shall be announcing the outcome of that bidding round later this month.

The order provides for a total amount payable in 1999–2000 of £10.6 million. That comprises £6.8 million that is payable to Highland, Shetland Islands and Western Isles councils in respect of their mainstream housing costs, and £3.8 million that is payable to 19 other authorities as a contribution towards the running costs of hostels for the homeless.

The grant calculations are based on assumed rental income of £41.76 per house a week, and assumed management and maintenance expenditure of £885 per house per annum—an increase of 3 per cent. over last year's figures. I should emphasise that those figures are neither guidelines nor recommendations, but are used for the purpose of the formula only. The assumptions are uprated annually as part of the well-established formula calculations.

Housing support grant, as a deficit subsidy, continues to decline primarily because loan-charge expenditure next year is estimated to be substantially lower than this year. However, to cushion the effect of a substantial reduction in entitlement, we have again activated the grant loss limitation mechanism, which restricts the reduction in grant to £110 a house. Without the grant loss limitation mechanism, housing support grant in 1999–2000 would have been further reduced to less than £9 million.

Housing support grant is now, of course, a relatively minor component in local authority housing finance. I remind the House again that, over the next three years, an additional £278 million will be made available to the new housing partnership initiative. No doubt, there will be further comment on that in the debate. I hope that that explanation of the two orders has been helpful to hon. Members, and I commend them and the reports to the House.

4.24 pm

Dr. Liam Fox (Woodspring)

I acknowledge at the outset that although I have not been one of the hon. Members known to say the most flattering things about devolution and the forthcoming Scottish Parliament, one of the Scottish Parliament's most useful functions will be to provide a decent amount of time for the scrutiny of this sort of information, which simply has not been possible in the House. I for one very much welcome that better accountability and scrutiny. I say that in a spirit of utter magnanimity—perhaps that is as far as it will go.

It is useful to point out that the real-terms increase in central Government support is in fact 1.71 per cent. I know that Governments will always talk of a cash-terms increase, so the figure is worth putting in context, especially as the economy slows down. On a day when the Bank of England predicts growth for the first half of the year of nothing to 0.5 per cent., it is a bit rich for Ministers to talk about previous financial mismanagement. Five councils—Falkirk, Orkney Islands, Inverclyde, Shetland Islands and Western Isles—all face a real-term cuts in aggregate external finance. Therefore, to say that the settlement is one of the most generous on record will hardly come as any great comfort.

I do not make any party political point, but it is interesting to note that, of the five councils that receive the most favourable increases in aggregate external finance, four—East Renfrewshire, East Dunbartonshire, South Ayrshire and Stirling—are politically marginal, over which Labour gained control in 1995, and will be defending in 1999. On the fifth council—South Lanarkshire—the Labour party has lost a number of so-called safe seats to the Scottish National party in recent times. I imagine that there is no political pattern, and that really there just appears to one in the tables.

It is interesting to hear the Minister say that council tax will increase by an average of 5 per cent. That is at least what the Government have worked out, and how the gap in the different sets of figures, which my hon. Friend the Member for West Dorset (Mr. Letwin) pointed out, arises. If previous trends are reflected, there will be tremendous variation from that average, as I am sure the Minister would accept that. Last year's average of 5.6 per cent. resulted from figures ranging from zero in Renfrewshire to 15.5 per cent. in Orkney. That relates to our earlier point about what merits "considerable variation", to which I shall return.

The figures do not, of course, include other precepts, such as the cost of discretionary business relief, council tax benefits subsidy, and so on. The Government have also heaped new costs on councils. Pensions contributions have increased because of the Government's decision to abolish advance corporation tax, councils will be expected to meet the cost of the teachers' pay deal, and the minimum wage will have implications. That adds up to a back-door tax rise.

Given that the Minister has said that this is such a generous settlement, it is worth citing an example of its effect. Most of the increased resources are ring-fenced for new responsibilities. In Edinburgh, for example, 60 per cent. of the AEF increase is to meet new responsibilities in education, child care and care in the community. Only 40 per cent. of the increase is available for existing services, and increased salaries must be met from that amount. The settlement suddenly becomes a much less generous one.

Mrs. Rosemary McKenna (Cumbernauld and Kilsyth)

Is the hon. Gentleman aware that, through COSLA, local authorities have agreed with the Government on priorities in the settlement?

Dr. Fox

I do not for a minute suggest that the priorities are right or wrong. However, when one strips what is ring-fenced, the settlement is much less generous than it might appear, especially from the Minister's presentation.

Edinburgh may not be able to maintain all existing services as a result of this settlement. It has said that there will have to be restricted library access, a cut in the books budget for libraries, a scaling back of the street cleaning service, fewer home helps and a cut in road and pavement repairs. Those are comments of people who are involved in local government in Edinburgh, and I am not one to argue.

Mr. Nigel Griffiths (Edinburgh, South)

rose—

Dr. Fox

Perhaps the hon. Gentleman will want to argue the point.

Mr. Griffiths

Certainly. Given that when the hon. Gentleman's party ran Edinburgh in coalition with the Liberals, 1,000 teaching posts were axed, his comments are a little rich. From this August, schools in Edinburgh and Edinburgh's excellent Labour authority will be delivering a nursery place not just to every four-year-old, but to every three-year-old—ahead of the promises that we made during the election campaign. The hon. Gentleman mentioned home helps. Labour's work contrasts with the massive cuts in the number of home helps when his party was in control of that self-same council.

Dr. Fox

It is not for me to determine the priorities of any council. I have always been a great believer in the fact that they should determine their own. We shall see how well Edinburgh performs in the coming year within the settlement. That can be judged by the electors later on. It is certainly not for me to try to second-guess any council. People who work in local government in Edinburgh say that they may not be able to maintain their services, and I would rather accept their view than that of a Minister.

When the Government talk about ending crude and universal capping, they put an interesting case before us because it will mean that councils will not know in advance how much they are able to spend. It will also enable the Government to decide the capping criteria that they will eventually use on the basis of which councils they choose to be affected, in order, no doubt, to avoid potential embarrassment at having to a cap many Labour-controlled authorities. They are replacing crude and universal capping with arbitrary and retrospective capping. That further blurs accountability in local government and reduces, rather than increases, transparency.

The Minister refers to cases in which the guidelines are breached by a considerable amount. For guidance, will he give us an example of council tax rises last year that would have breached guidelines by what he terms "a considerable amount"? For example, would last year's limit of 5.6 per cent. have been breached considerably by Glasgow's 9.4 per cent. increase, Aberdeen's 11.5 per cent. increase or Orkney's 15.5 per cent. increase? Which of those figures would have amounted to a breach?

Mrs. McKenna

rose—

Dr. Fox

I am sure that the Minister for Home Affairs and Devolution could answer the question and he should do so in his winding-up speech. The Under-Secretary gave us the Government's definition when he said that they did not want guidelines to be breached considerably. The House and councils have a right to know what that means in practice. That is not an unreasonable question for the House to ask. I look forward to the Minister giving us the information that we require.

Another problem is the transfer of responsibility for council tax benefit. That means that if a local authority increased council tax above a certain level, council tax payers would have to pay even more to subsidise some of the cost of CTB. That will be a disproportionate cost to council tax payers in less-well-off areas, where an above average proportion of residents are in receipt of benefit.

The Minister for Home Affairs and Devolution, Scottish Office (Mr. Henry McLeish)

Did I hear the hon. Gentleman refer to CCTV?

Dr. Fox

No, to CTB—council tax benefit. I have obviously been away from Scotland too long. The Minister has trouble understanding the Somerset inflection that I have developed.

I should like the Minister, in his winding-up speech, to give us his view on uncollected taxes. The latest figures that we have for the levels of uncollected council tax and community charge reveal that the total value of unpaid bills as at 30 September 1998–that does not include the figures for 1998–99–had increased by nearly £50 million. That follows an increase of almost £150 million last year. I have sympathy with Ministers because it is interesting that the increase has occurred in spite of the fact that the previous Government and this Government issued grants to local authorities to improve their current and past collection rates.

I am sure that the Minister will accept that the trend is worrying because in Glasgow, the amount of uncollected local taxes is 18.6 per cent. of the amount billed. In West Dunbartonshire, the figure is 12.2 per cent., and in South Lanarkshire, it is 8.6 per cent.

Mrs. McKenna

Does the hon. Gentleman agree that uncollected taxes are a direct result of the poll tax imposed by his Government? Furthermore, is he advocating that there should be no capping at all?

Dr. Fox

I am absolutely puzzled as to how an increase in uncollected taxes in the past year can be due to the poll tax, when it is clearly due to the amount of council tax that has not been collected in the past year. Of course there is a hangover from uncollected community charge, but there has been an increase in the past year of the amount that is outstanding. That is worrying, especially when central Government are giving grants, and it is due to the fact that local government is not carrying out its tax collection duties properly.

One of the worries is that those who are not paying their council tax are causing a higher increase for law-abiding citizens who do pay their council tax. That is the moral reason why the Government should redouble their efforts to try to make sure that the system works.

A secondary problem is council debt in Scotland. The cost of servicing debt is huge. For example, in Glasgow the cost of servicing the debt is £245 million and in Edinburgh it is £117 million. Those are high figures. One of the advantages of the Scottish Parliament having more time to consider these measures is that it will be better able to hold central and local government to account.

Such mismanagement in local government finance definitely needs to be checked. It was only in late January this year that Labour-controlled North Ayrshire council said that it would have to raise the average council tax bill by £37 to cover a £4.2 million budget deficit. Earlier in January, the Labour-run City of Glasgow council said that it would not impose a rise in council tax, but that would be at the expense of a budget cut of £21 million and 400 job losses. That is despite the fact that Glasgow had over £200 million of uncollected taxes. Last December, it was announced that the former Labour-run Strathclyde regional council bequeathed a closing deficit of £78.5 million.

The report by the Controller of Audit, Robert Black, on the performance of councils' direct labour organisations and direct service organisations for 1998, found that half of Scotland's councils had incurred deficits in at least one of their DLOs or DSOs. That is well detailed in the Scottish Office note. Those are important issues.

I hope that the Scottish Parliament will take seriously its duties in accountability and scrutiny. It is a great pity that the House has not had more time to consider the figures. They are very complicated and many Members want to take part in this important debate. I hope that those who go to the Scottish Parliament will take seriously their duties. I wish them well in what will be a difficult task.

4.36 pm

Mr. Nigel Griffiths (Edinburgh, South)

We have just heard a very poor analysis by the Opposition of the figures in the settlement. The Opposition spokesperson, the hon. Member for Woodspring (Dr. Fox), has the real story in front of him, and that reveals that on top of the comprehensive spending review settlement, which guarantees a real-terms increase of 6.8 per cent. over the next three years in spending on vital public services in Scotland, today's announcement is particularly welcome.

We welcome the Government-supported expenditure increase of £301 million, which increases spending by 4.8 per cent.—well above inflation—to £6.5 billion. We welcome the grant-aided expenditure increase of £265 million, which increases spending also by 4.8 per cent. to £5.8 billion. For the third pillar of local government finance which supports our council-run public services in Scotland, the aggregate external finance figure of £5.5 billion has also increased by £219 million, which is 4.1 per cent. Those are the important figures, but what the money does is more important still.

Last year, we spent over £500 million of public money in Scotland on housing. The comprehensive spending review provides an extra £300 million for housing and area regeneration. I want tenants to be given more say about their housing and more resources to carry out vital works because we have inherited a shameful legacy.

Shelter tells me that until 1995, we were spending far less on housing as a percentage of gross domestic product than comparable European countries. Our spending was well below the European Union average. Shelter says that that has condemned 362,000 Scottish children and 119,000 Scottish senior citizens to living in damp houses. My hon. Friends will visit them in their homes and hear their problems at their constituency advice sessions every week. Shelter estimates that nine out of 10 houses in Scotland fail to meet modern energy efficiency standards, which is an absolute disgrace. Since the election, it has been our priority to tackle those poor standards in 50,000 homes with £9 million of new money.

Before Christmas, I visited Shanter way in my constituency to find out how that money was being spent directly on cavity wall insulation, roof insulation and draft excluders on doors and windows, which transformed the life of a young family, one of whom was disabled.

Energy Action Scotland is doing a terrific job in co-ordinating that work throughout Scotland. None of it would have been possible without Energy Action Scotland and without the money made available by the Government, and the money that we levied from the utilities to fund the new deal, which was opposed root and branch by the Conservative party.

I spoke to one of the new dealers in Shanter way, a young man who had been unemployed and is now getting training. He praised the scheme. He is getting double the basic £70 and will be taken on permanently. He told me how that had transformed his life and the lives of 16 other youngsters working for the same firm.

I am pleased that the Minister for Home Affairs and Devolution is giving the rough sleepers initiative a boost of an extra £30 million to help people with no roof over their heads. We feel a great sympathy and compassion for their plight, and that initiative will make a real difference. As one of the founders of The Big Issue in Scotland, I pay tribute to my hon. Friend's work.

Education is, of course, the Government's priority. I welcome the real growth in spending of 15.3 per cent. over the period of the comprehensive spending review—an extra £1.3 billion, which is far more than the Liberals pledged. We got off to a flying start with an extra 5.1 per cent. in Labour's first year, which meant an extra £200 per pupil.

We are keeping our promise to provide nursery education for all three and four-year-olds with the extra £40 million. We welcome the increase of £112 million for pre-school education, which will allow many more three and four-year-olds in Scotland to attend nursery school. As a result of this settlement and other financial help given by the Government, 100,000 children will receive grant-funded pre-school education in the next school session.

It is vital that we honour our commitment to cut class sizes. That is being done for the crucial ages in primary 1, primary 2 and primary 3, to ensure that no pupil is taught in a class of more than 30. Of the 18 primary schools in my constituency, some have already achieved that and others—particularly Sciennes school and James Gillespie's primary, where there are pressures on numbers—will welcome that commitment and the extra resources made available today.

That money will be spent, in contrast to the shameful neglect of education by Lothian regional council when the Conservatives and Liberals ran it in coalition. At that time 1,000 teaching posts were axed from Edinburgh schools, including such vital extra teachers as specialist music teachers and drama therapists. Therefore we do not take lectures from other parties about how we are running education in Edinburgh, nor should my hon. Friend take any lectures from them on his spending plans and stewardship in Scotland.

As my hon. Friends know, I took an interest in social work before coming to the House of Commons. I welcome the 4.9 per cent. increase—the extra £51 million, with a significant extra component going to community care. During the Tory years, steps were taken to empty a hospital in my constituency without alternative provision having been made. Now, people's needs are realistically assessed and tangible support is offered when care in the community is provided. That is not cheap, so the extra money is vital.

The fire services are to get an extra £8 million—a welcome above-inflation increase—and there is an extra £24 million for the police services. Throughout the range of public services, a great start has been made. We can hold our heads high.

There is a clear message from the Labour Government: we value local government and local government services. We pay tribute to the many hard-working local councillors and dedicated council staff. We are providing an extra 4.9 per cent. in overall extra expenditure. This year, next year and the year after, the people of Scotland can look forward to getting value for money in a range of vital services, instead of what they experienced in the past decade—swingeing cuts, reduced services and, in many councils, the disappearance of vital services.

Dr. Fox

On a point of order, Mr. Deputy Speaker. You will have been made aware that the Government are to make a statement on Kosovo at 7 pm. Have you been informed by Ministers why that could not have been made earlier, when more hon. Members were around the Palace of Westminster.

Mr. Deputy Speaker

I am afraid that I have had no messages. It is entirely a matter for the Government when they decide to make statements to the House.

4.46 pm

Mr. Donald Gorrie (Edinburgh, West)

We will give one feeble cheer for the local government settlement. It certainly does not deserve two cheers.

There is a real-terms increase of about £64 million this year, allowing for inflation. However, we must look further than one year. Last year, there was a cut of £83 million, and the year before there was a cut of £260 million. If we look back over five years and project the Labour Government's plans for the next five years, and compare the last five years of the Conservative Government with the first five years of the Labour Government, we find that the Labour Government will have supported local government to the extent of £460 million less per annum than the Tories.

The hon. Member for Edinburgh, South (Mr. Griffiths), whom I am happy to follow, deserves a job in the Labour party's spin department. I do not recognise the situation that he depicted. He referred several times to an alleged coalition in Lothian regional council, which never existed. The Liberal Democrats at that time helped to save a great many services that would have been cut. The Labour party did nothing to help. The hon. Gentleman is good at rewriting history and painting the present in false colours, so he deserves a job in the relevant part of the Government.

Over the past two years, there has been a net cut in local government funding—a slight increase this year and a bigger decrease last year. The councils that have suffered most are, in order of severity, Aberdeen, Inverclyde, Shetland, Argyll and Bute, Dundee, Moray, West Dunbartonshire, Stirling, Glasgow and Falkirk.

Mrs. McKenna

How does the hon. Gentleman square that with the comment of the hon. Member for Woodspring (Dr. Fox) that Stirling was one of the areas that was gaining because it was a Labour marginal at the general election?

Mr. Gorrie

I am not questioning any motives. I have not checked, but I suspect that Stirling may have done well this year, but particularly badly the previous year. I think that my figures are correct over the two years.

I should like the Minister to answer several questions. First, will the Government guarantee the finance for councils to fund their programme for modernising education, which involves related teachers' pay increases? The Government, COSLA and the councils are keen to improve and modernise education. Will the Government be sufficiently flexible and allow finance to enable any necessary pay increases and other improvements to be made?

Secondly, when will the Government remove local authority self-financed expenditure from the public sector borrowing requirement? That is the single biggest constraint, and it could be a constraint on the Scottish Parliament, depending on what are the rules. It is essential that that constraint is removed. The current position is ludicrous. The British are out of step with the continental countries, and we should change the rules smartly.

Thirdly, why did the Scottish Office remove community care as a line in the Budget? In recent years, there has been a line for community care, but, this year, it comes under social work. The figures may be a bit damning; when I asked for figures on community care I was given figures on social work, less youth activities. That shows that, despite councils being asked to do much more, they were receiving an increase of only 0.25 per cent. two years ago and last year. They are receiving no increase this year, so the money for community care is simply not there.

I should have thought, with respect, that if the Government are serious about joined-up budgeting and joined-up government, community care should involve social work, housing and health. Pre-eminently, the budget should stand alone and draw on those three, rather than be lost in a morass of social work funding.

Fourthly, will the Government make best value less bureaucratic? Most people would sign on to the concept of best value, but others will have had an experience similar to mine when I visited the chief executive of the council of the area that I have the honour to serve. He produced a huge wodge of papers, which related to one little bit of best value. The initiative is hugely bureaucratic and takes up enormous amounts of the time of council senior management. The idea is good, but surely we can carry it out in a more humane, sensible and less bureaucratic way.

Fifthly, the Under-Secretary, who spoke in his usual charming style, said that the Government were keen to keep the council tax down. Actions speak louder than words. This year, continuing from previous years, the Government have made aggregate external finance diverge further from grant-aided expenditure. The aggregate external finance of GAE was 84.7 per cent., but it is down to 84.2 per cent and they have diverged more and more year by year. The more that they diverge, the more that has to be cut, or the council tax has to go up disproportionately, to make up the difference.

Contrary to that divergence, the issue of convergence concerns COSLA, and the hon. Member for Linlithgow (Mr. Dalyell), greatly. The councils are afraid that the Government are forcing them gradually to bring their budgets in line with the Government's estimates rather than the reality and what the councils, in past years, have determined.

The next issue is funding of pay increases, which does not happen. The Government, like the previous Government, pretend that pay increases can be paid for through efficiency, which is a complete falsehood. That is just not possible and there is merely a hidden cut. It would be more honest of the Government to fund the pay increases in full. If a budget is not enough to pay for everything, the Government say that there has to be a cut in something, but if affairs are being run in an honourable manner, people do not pretend that pay increases can be funded without increased moneys. The figures provided by COSLA show that the councils have had to produce at least an extra £550 million over the past six years.

One of the issues that we have been asked to cover this afternoon is housing. The Minister spoke warmly of the amount of money that the Government will put into housing under partnerships and regeneration. He did not stress, however, that this is a "pistol to the head" approach. Councils are being told that they must transfer their stock or they will not get the money. When challenged on that policy by councillors, the Minister said, "It's a free country. You can either agree to go along with this or not." If councils do not go along with it, they get no money. Surely it is possible to put money into councils without having the compulsion to which my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir R. Smith) referred. If councils run things well and tenants are happy with what they are doing, they should be given the money without having a pistol at their head.

There has been a steep decline in housing repairs funded from the public purse, particularly repairs to our city tenements. Last year, Glasgow spent about one sixth of what it had spent on average in the previous nine years on repairs and grants for repairs to tenements, with the aid of grants from the Government. In Edinburgh, the decline is to one thirteenth of the average in the previous nine years. There is almost a total standstill in the repairs to tenements. The Government should deal with that huge problem.

The Government may claim, quite fairly, that they removed the ring fence around this money, and that it is now up to the councils. If councils are tightly squeezed on all financial fronts, they will take money from wherever they can get it, and they have taken money from that source. If the Government are serious, they must either ring-fence those funds again or do something to ensure that cities continue to repair their tenements.

The result of the Government focusing their modest increases on particular spheres is that other spheres of activity have continuing cuts. Although the cuts may seem quite small, they come after many years of Tory cuts. There are cuts in councils' care for the environment, and severe cuts in their support for sport. The Sports Council has estimated that the support that councils give to sport has decreased by half over the past five years. There is a huge decrease in the support of voluntary organisations, many of which have collapsed or have had to make severe cuts. Citizens advice bureaux have had to reduce or lay off staff, or open less. There has been a reduction in funding for social work, road repairs, community education and help for young people and youth activity, which would prevent many of the problems in our communities.

The Government are perpetuating that death by a thousand cuts in the fabric of our society. They are dismantling our communities. It is a gradual rather than a dramatic decline each year. Our communities are in much worse shape than they used to be, and it is disappointing that the Government have not put in more money to help them.

We must have a rational review of local government finance. The whole business of 85 per cent. coming from the central purse with councils raising only 15 per cent., together with the controls that the Government feel are necessary, is not acceptable. I hope that the Minister will agree that the Scottish Parliament should, at an early stage, have a thorough review of local government finance, so that, in a few years' time, we can lay the foundations of a more rational system. This is not a rational system: it is profoundly unsatisfactory. We are disappointed that the Government have turned the ship around so little. After two years of large cuts following the Tories' budget, there is now a modest increase. That is disappointing, because many parts of local government are suffering severely.

4.59 pm

Mr. James Wray (Glasgow, Baillieston)

This subject is dear to my heart. I have listened to the facts and figures that hon. Members from both sides of the House have given. I know how badly the previous Government did on housing. At the time, I was a councillor, and the houses in my area were rotten with damp, there were rats and, every day of the week, the council received claims for compensation due to the damage caused to household effects. People were living about 500 to the acre, although the number was subsequently reduced to 150.

When I speak of housing expenditure, I refer to Glasgow, but also to Scotland as a whole. It is a damn shame that, between 1991 and 1992, the housing support grant was cut from £101 million to nil in a city where those statistics have hardly ever changed. Under the last Government, some 7.1 per cent. of houses were empty, and 5.8 per cent. are still empty. Moreover, additional expenditure has been necessary because of the damp and the cuts—problems that arose under the last Government. In 1993, 1,300 houses were pulled down in Philadelphia; meanwhile, some 2,335 were demolished in Glasgow.

Hon. Members have read facts and figures from pieces of paper. They have mentioned housing expenditure of £643 million in 1995–96, and of £700 million-odd in 1996–97. In 1977, the figure was £464 million; and in 1978, it was about £498 million. That represents an increase of 6 per cent.—an increase of £30 million—but, when we examine the figures closely, we see that there is a shortfall of £479 million. The Minister says that £300 million will be invested over three years, but that falls short of what is needed.

Glasgow contains about 103,000 houses, and owes 90 per cent. of the debt to the Public Loans Board—£1.1 million. Given the need for repairs and renovations, an investment of some £1.7 million is needed. Glasgow is trying to offload houses on to anyone who will take them, and I am a little concerned about some of the organisations that are interested. I am particularly worried about the private finance initiative. If the Government write off the debt, as they should, they should not saddle the Scottish Parliament with that £1.1 million. If they want a successful Scottish Parliament, they should take that into account.

Mining—there are between 800 and 900 shafts—has caused Glasgow a number of problems over the years. Furthermore, because of the neglect for which Tory landlords were responsible, people were living five or 10 to a house in slums. When those houses began to decay and fall down, the landlords ran for their lives, offering the houses two a penny to whoever would buy them to avoid the responsibility of a demolition order. That is the problem that Glasgow has inherited. I have spent 15 years in Glasgow, and, every minute, Iandlords who had been charging extortionate rents were trying to give away their properties.

The last Government had plenty of time to do something about that. They certainly increased housing expenditure in Scotland and, indeed, in Great Britain, but no one knows where the money went. Would the city of Glasgow still be in chaos if all those millions of pounds were invested in housing? In 1993, unemployment there was about 15.4 per cent.—the fourth highest in Britain. We had all those problems. There was not much money. How the hell could the previous Government cut the support grant and give those people nothing?

Under the Housing (Scotland) Act 1966, claims could be made if household effects were damaged through no fault of the tenant. In one year, about 800 claims were made to Glasgow council. That cost it hundreds of thousands of pounds. It is still burdened with that, and with all the dampness problems. Unless a Government invest the money that is needed, nothing can be done about the problem. That is why Glasgow councillors are saying that they cannot cope. There is no money to cope.

For years, houses were demolished out of the housing revenue account. Under new rules, if people demolish houses and the land is then made available to the council for other purposes—Lothian, Edinburgh and Dundee councils have operated the system—the expenditure can be transferred to the general fund. That is how Glasgow will have a £22 million surplus this year, but, with that state of affairs, it was sad that the previous Government did not inform local authorities of the responsibilities, and what their entitlement was.

Therefore, I hope that, when we add up the figures, we do not try to hoodwink people. Expenditure was £749 million in 1995–96. It was £643 million in 1996–97. In the current year, it is £464 million, which is the lowest expenditure of any Government over the years. Then they say that we have a 6 per cent. increase by raising that expenditure to £494 million. Obviously, people can add up. They can do their sums. Where I came from, we were taught to do our sums. I do not need to look at papers; I can add it all up in my head like a check machine. All I am saying is: be honest, be fair and get rid of that problem. For decades, people have suffered. A total of 23,700 houses are unfit for human habitation and should be repaired.

As long as the matter is neglected and the money is not invested, we are creating a big problem. About £1 billion of housing benefit is being paid to landlords, hotels and so on. That creates health problems, putting a burden on the health bill. Let us have a real look and a review of all the various Departments to find out where the money is going because, in 1995–96, the money certainly did not go on housing.

5.8 pm

Mr. Alex Salmond (Banff and Buchan)

I agreed with just about everything that was said by the Liberal Democrat spokesperson, the hon. Member for Edinburgh, West (Mr. Gorrie), so in the interests of helping other hon. Members to get into the debate, I will not repeat it all. However, I did not agree with his assessment of the speech by the hon. Member for Edinburgh, South (Mr. Griffiths).

At a superficial level, that speech might have been seen as a fawning attempt to get the hon. Gentleman's job back, but at a deeper level, it was profoundly subversive. As I listened to it, I suddenly realised that he was impersonating Harry Enfield impersonating the Prime Minister as the Vicar of St. Albion. By wit and irony, he was exposing the fallacy behind new Labour's presentation of its economics.

Mr. Nigel Griffiths

Will the hon. Gentleman give way?

Mr. Salmond

The hon. Gentleman might allow me to tease him without—

Mr. Griffiths

Will the hon. Gentleman give way?

Mr. Salmond

Oh, very well.

Mr. Griffiths

The hon. Gentleman should not be allowed to divert the House from the abysmal record of Scottish National party councils. The Scottish nationalists promised to give senior citizens a £10 Christmas bonus, then repudiated the promise. They increased concessionary fares for senior citizens by 2,000 per cent. when they took over one council. Those are the facts. That is why we have to take countermeasures against abysmal SNP councils.

Mr. Salmond

Presumably that is why, in last year's survey of almost 30 local authorities in mainland Scotland, the three SNP councils came first, second and third—gold, silver and bronze—for the services that they provide to constituents. The three bottom places and three wooden spoons were taken by three Labour councils. I am sure that many Labour Members recognise the councils that fell down so badly in those ratings.

Perhaps I was crediting the hon. Gentleman with too much sophistication. As I listened to him, I believed that he was exposing the fallacy behind new Labour's presentation. The Tory Front Benchers are so incompetent that they did not compare the spending levels for Scottish local government during the Tory years with those for the five years covered by the comprehensive spending review. As the hon. Member for Edinburgh, West said, those figures show a sharp real-terms fall in local government expenditure in Scotland. The Tories were probably embarrassed to make that point, thinking that they would look profligate.

When the right hon. Member for Hamilton, South (Mr. Robertson) considered the 1994–95 settlement for Scottish local authorities from the Opposition Front Bench, he did not say that it was profligate, open-handed or generous. He said that it was niggardly and that the Conservatives should be ashamed of it. If that settlement were applied to the years covered by the comprehensive spending review, there would be more than £1 billion extra for Scottish local government to spend.

We should deal in realities. This settlement is certainly greater than last year's or that for the year before in real terms, but a comparison of the last five years of the Tory Government with the years covered by the comprehensive spending review shows, as the hon. Member for Edinburgh, West rightly said, that there is less money available for Scottish local government.

I am sure that the Minister for Home Affairs and Devolution is not too distressed that this is the last time that he will be responsible for taking us through the complexities of Scottish local government finance.

Mr. Malcolm Savidge (Aberdeen, North)

rose—

Mr. Salmond

Forgive me, but I want to help others to get into the debate.

I salute the unfailing courtesy of the hon. Member for Western Isles (Mr. Macdonald). The local government Minister in the new Scottish Parliament, from whichever party, could do a lot worse than present his or her case with the same courtesy. I hope that that salute is not too embarrassing for the hon. Gentleman.

I should like to pursue one point that arose from our earlier exchanges. There was some debate about where the figures came from for the Convention of Scottish Local Authorities' argument that convergence would reduce expenditure in Scottish local government by £300 million compared with Government-supported expenditure. The COSLA brief talks of the move to use those guidelines as a means to constrain expenditure so that eventually overall expenditure reduces by £300 million to converge with Government Supported Expenditure. Accountability should rest with councils in terms of justifying, to their electorate, their expenditure decisions". If central Government are controlling the revenue available to Scottish local authorities, at least the expenditure decisions should be for the councils to make, so that the electorate can judge them on those decisions.

The strongest point made by the hon. Member for Edinburgh, West was that even self-financing expenditure is counted on the public sector borrowing requirement and could be used to reduce the Scottish block. Even if Councillor David Begg found a method of extorting £10,000 from every motorist going into Edinburgh—who knows, that may not be beyond the bounds of possibility—such self-financing public expenditure that was invested by the council would hit the Scottish block under the current terms of the PSBR and the evaluation of public sector finance.

The dangers for the Scottish Parliament are all too clear. Unless the definition is changed, the Scottish Parliament will be driven to increasingly draconian measures on controlling expenditure levels, because it will be frightened of the implications to the Scottish block of even self-financing expenditure being run at local level. That is an important point and I hope that the Minister will respond to it in his reply to the debate.

I hope that the Minister is aware of the considerable concern about the structure of new housing partnerships. I doubt whether any hon. Member would not agree that in certain circumstances it would be a good thing if communities took over the running of estates. No one is against that. However, people are against the idea that people should be bludgeoned, blackmailed, bribed or disadvantaged if they choose to remain as council tenants. Of course some councils in Scotland have bad records of running council stock. However, other councils have very good records. Over the years, various ballots have shown council ownership to be a popular option.

When we debated new town housing, tenants argued with hon. Members—and at the time they were supported by the then Opposition—that council ownership should be an option in the ballot process. It is not good enough for the Minister to tell us that nothing can be done to help councils with housing finance as long as housing remains in the public sector. There have been many write-offs and reschedulings and transfers of debt across a range of industries within the public sector, and we are entitled to demand equal and even-handed treatment. Whatever incentives and finance is being applied to housing finance in Scotland, it should not discriminate against the social rented sector and various councils.

Mr. Douglas Alexander (Paisley, South)

In the light of what he has just said, can the hon. Gentleman assure the House that in the coming weeks and months his party's spokesman on housing will not use terms such as "privatisation" to describe community ownership?

Mr. Salmond

Privatisation is quite an interesting description. Brian Weddell, Edinburgh's housing convener, said: the ruling Labour administration is opposed to the wholesale privatisation of Edinburgh's council housing … It is one thing to advise people of their options—it is another to hold a gun to their head". I support those comments. Perhaps the hon. Gentleman should speak to his hon. Friends before he makes any further interventions.

Of course partnership could well be an option for certain communities, but it is not reasonable to disadvantage communities and council tenants who wish to remain in the public sector. I hope that the local government Minister has analysed the points made by Shelter about new housing partnerships. Shelter feels that they will offer less rent protection, less secure tenancies, no statutory duty to house homeless people, and insufficient guarantees for future improvement of the stock. Those are real points that need to be addressed if we are to help people.

This year's local government settlement for Scotland is better than those of the past two years, which were the most disgraceful settlements in a decade. It cannot be argued that this year's settlement represents an open-handed new deal for Scottish local government. It is a continuation of real-terms decreases in public expenditure in Scotland, and should be exposed as such.

5.18 pm

Mr. Oliver Letwin (West Dorset)

We have had an interesting debate concentrating on three key points. First, there has been a great deal of discussion as to whether or not this year's settlement is a generous one. We heard the revivalism of the hon. Member for Edinburgh, South (Mr. Griffiths) in a speech which I very much enjoyed. As is the wont of the present Government, he added together the figures for three years, subtracted an inflation rate for the next three years—with a prescience that the Chancellor of the Exchequer does not share—and produced what he described as a splendidly generous settlement. We were then treated to some doses of the truth by the hon. Members for Edinburgh, West (Mr. Gorrie), for Glasgow, Baillieston (Mr. Wray) and for Banff and Buchan (Mr. Salmond).

This is not a generous settlement. That is not surprising, because there is no such thing as a generous settlement. When the Government spend, or allow other people to spend, taxpayers' money, that is not an open-handed form of moral generosity but merely a means of transferring money from one pocket to another.

That may be good or bad, but it is certainly not generous to do more of it; nor have the Government done more of it. As we have heard repeatedly today, they have done rather less of it, overall, even than the previous Government. If they were honest, they would explain clearly and honourably that they have reasons for controlling public expenditure, but they do not want to do that because they want to gull themselves and their electors into believing that they are being generous. That has already begun to catch up with them today, and when the hon. Member for Banff and Buchan rises as a ghastly phoenix from the ashes of the Secretary of State's policy, they will know what they have done.

The lack of that so-called generosity means that local taxpayers will pay considerably more this year. As the Minister admitted, their tax rises will be around 5 per cent. on average. As my hon. Friend the Member for Woodspring (Dr. Fox) said, some local tax rises will be considerably higher, which will not be greeted with great joy, as it would not be anywhere in the country.

Local government in Scotland and in the rest of the United Kingdom faces the greatest uncertainty that it has ever faced, as a result of Government policies. Here we enter a terrain of great seriousness. My hon. Friend the Member for Woodspring correctly described the Government's replacement for what they called crude and universal capping as a system of arbitrary and retrospective capping.

In an interesting speech, the hon. Member for Edinburgh, West, supported by the hon. Member for Banff and Buchan, argued that self-financed expenditure should be removed from the public sector borrowing requirement. That is a long-running call from local government. I remember such calls in the late 1970s and there has been a running discussion ever since.

There has also been huge objection to universal capping, and perhaps such capping, and the constraints of PSBR accounting, are crude—I accept that, as anyone who has been involved in local government is bound to do—but at least the old system had clarity. Through the present arrangement, the Government consciously underfund the total expenditure that they believe to be appropriate for local government—that is the difference between the grant-aided expenditure and the guideline spending—and then tell local authorities that they cannot and will not let them know at which point they are spending too much.

That is an extraordinary way of conducting public policy and government. If it were done in relation to the private sector, I have no doubt that it would lead Ministers to be subject to judicial review. It would be regarded as an arbitrary action to tell a private individual that he would be informed only after he had acted whether his actions were proper in the light of the law. That is exactly what the Government are telling local authorities in Scotland: that they will not tell them what will ex post facto be judged to be wrong behaviour.

When the Government begin to see what happens and get the reaction that will undoubtedly come from some Labour councils, they will reverse the policy, because not only Scotland but the government of the whole kingdom will founder on such a policy.

5.24 pm

The Minister for Home Affairs and Devolution, Scottish Office (Mr. Henry McLeish)

I will very much welcome being in the Scottish Parliament after 1 July, if I am elected, so that we can hear a Conservative Opposition who know something about them speaking up on Scottish issues. Conservative Members have shown breathtaking brass neck and breathtaking ignorance of what is happening in local government. After 19 years of neglect, we have a Government who are addressing the substantial issues in Scottish life.

During 2001–02, an extra £840 million will be provided, including additional resources for pre-school education. That will mean that we start to tackle the issues that matter to ordinary people, including education. We will look at service delivery, and the Government are committed to improving public services after that period of total neglect.

The hon. Member for Woodspring (Dr. Fox) referred to council tax collection levels, and said that £50 million was added in the last year. I remind the hon. Gentleman that £810 million was added from 1979 to 1997, when the Tories were thrown out by the Scottish people. If one thing contributed to the culture of non-payment, it was the most monumental piece of stupidity called the poll tax. That is the charge that the Conservatives cannot defend.

We are starting to reverse the situation in Scotland with the support of all local authorities, who take this issue seriously. That includes Scottish National party, Labour and independent councils. We think that people should pay their debts to local authorities—something that was never taken seriously by the Conservative Government, and certainly has not been taken seriously by the Conservative Opposition. The Conservatives now want to be spending more after a period of neglect. That is dishonest in relation to Scots who want extra investment. The Labour Government are now pushing forward investment.

The hon. Member for Edinburgh, West (Mr. Gorrie) berated the Government for their lack of investment, but he grudgingly conceded that there had been some improvement. We cannot turn around 19 years of neglect in the space of two years. However, we are putting in substantial investment and we are making a start, and the services that he addressed are the focus for the Government.

My hon. Friend the Member for Edinburgh, South (Mr. Griffiths) made the point that in terms of the foundation years of pre-school education, the Government are delivering. That should be welcomed by families in the constituency of the hon. Member for Edinburgh, West. I hope that he would concede that that is happening throughout the country.

Mrs. McKenna

This is an historic occasion, since it is the last time that there will be a Scottish local government finance debate in this House. It is important to recognise that, and to congratulate Ministers on the work that they have done on local government. Despite what all the opposition parties have said, all local authorities and the Convention of Scottish Local Authorities have welcomed the real-terms increase in the settlement. It is important to put that on the record.

Mr. McLeish

My hon. Friend makes a good point. It has been acknowledged by all organisations in Scotland—especially those representing the 290,000 local government workers, and the electors—that the job has been started on investment and that we are making sufficient progress.

There were many good points in the debate, but it would not be appropriate in the short time available to address all of them. As a matter of courtesy, I can say that the points that have been raised will be the subject of detailed correspondence. I repeat what my hon. Friend the Member for Western Isles (Mr. Macdonald) said at the outset. We look forward to having more time in the Scottish Parliament to debate these important issues. If we can do that, we will serve local government and every constituent in the country well.

Question put:—

The House divided: Ayes 291, Noes 19.

Division No. 66]	[5.29 pm
AYES
Abbott, Ms Diane	Cook, Frank (Stockton N)
Ainger, Nick	Cooper, Yvette
Alexander, Douglas	Corston, Ms Jean
Allen, Graham	Cousins, Jim
Anderson, Donald (Swansea E)	Cranston, Ross
Armstrong, Ms Hilary	Crausby, David
Ashton, Joe	Cryer, Mrs Ann (Keighley)
Austin, John	Cryer, John (Hornchurch)
Barnes, Harry	Cummings, John
Barron, Kevin	Cunliffe, Lawrence
Battle, John	Dalyell, Tam
Beard, Nigel	Darvill, Keith
Beckett, Rt Hon Mrs Margaret	Davey, Valerie (Bristol W)
Begg, Miss Anne	Davidson, Ian
Bell, Martin (Tatton)	Davies, Rt Hon Denzil (Llanelli)
Benn, Rt Hon Tony	Davies, Geraint (Croydon C)
Bennett, Andrew F	Davis, Terry (B'ham Hodge H)
Bermingham, Gerald	Dawson, Hilton
Berry, Roger	Dean, Mrs Janet
Best, Harold	Denham, John
Betts, Clive	Dewar, Rt Hon Donald
Blackman, Liz	Dismore, Andrew
Blears, Ms Hazel	Dobbin, Jim
Blizzard, Bob	Donohoe, Brian H
Borrow, David	Doran, Frank
Bradley, Keith (Withington)	Dowd, Jim
Bradley, Peter (The Wrekin)	Drew, David
Bradshaw, Ben	Drown, Ms Julia
Brinton, Mrs Helen	Eagle, Maria (L'pool Garston)
Brown, Rt Hon Nick (Newcastle E)	Ennis, Jeff
Brown, Russell (Dumfries)	Etherington, Bill
Browne, Desmond	Field, Rt Hon Frank
Buck, Ms Karen	Fisher, Mark
Burden, Richard	Fitzpatrick, Jim
Burgon, Colin	Fitzsimons, Lorna
Butler, Mrs Christine	Flint, Caroline
Campbell, Mrs Anne (C'bridge)	Flynn, Paul
Campbell, Ronnie (Blyth V)	Follett, Barbara
Canavan, Dennis	Foster, Michael Jabez (Hastings)
Cann, Jamie	Foster, Michael J (Worcester)
Caplin, Ivor	Foulkes, George
Caton, Martin	Galloway, George
Cawsey, Ian	Gapes, Mike
Chapman, Ben (Wirral S)	Gardiner, Barry
Chaytor, David	George, Bruce (Walsall S)
Chisholm, Malcolm	Gerrard, Neil
Clapham, Michael	Gibson, Dr Ian
Clark, Paul (Gillingham)	Gilroy, Mrs Linda
Clarke, Rt Hon Tom (Coatbridge)	Godman, Dr Norman A
Clarke, Tony (Northampton S)	Godsiff, Roger
Clwyd, Ann	Gordon, Mrs Eileen
Coleman, Iain	Griffiths, Jane (Reading E)
Colman, Tony	Griffiths, Nigel (Edinburgh S)
Connarty, Michael	Griffiths, Win (Bridgend)

Grocott, Bruce	McGuire, Mrs Anne
Grogan, John	McIsaac, Shona
Hall, Mike (Weaver Vale)	McKenna, Mrs Rosemary
Hanson, David	Mackinlay, Andrew
Heal, Mrs Sylvia	McLeish, Henry
Healey, John	McNulty, Tony
Henderson, Doug (Newcastle N)	Mactaggart, Fiona
Henderson, Ivan (Harwich)	McWalter, Tony
Hepburn, Stephen	Mahon, Mrs Alice
Heppell, John	Mallaber, Judy
Hesford, Stephen	Marsden, Gordon (Blackpool S)
Hewitt, Ms Patricia	Marsden, Paul (Shrewsbury)
Hill, Keith	Marshall, David (Shettleston)
Hodge, Ms Margaret	Marshall, Jim (Leicester S)
Hood, Jimmy	Marshall-Andrews, Robert
Hope, Phil	Maxton, John
Hopkins, Kelvin	Meale, Alan
Howarth, Alan (Newport E)	Merron, Gillian
Howarth, George (Knowsley N)	Michie, Bill (Shef'ld Heeley)
Hughes, Ms Beverley (Stretford)	Miller, Andrew
Humble, Mrs Joan	Mitchell, Austin
Hurst, Alan	Moffatt, Laura
Iddon, Dr Brian	Moonie, Dr Lewis
Illsley, Eric	Moran, Ms Margaret
Jackson, Ms Glenda (Hampstead)	Morgan, Ms Julie (Cardiff N)
Jackson, Helen (Hillsborough)	Morley, Elliot
Jenkins, Brian	Morris, Ms Estelle (B'ham Yardley)
Johnson, Alan (Hull W & Hessle)	Mullin, Chris
Johnson, Miss Melanie	Murphy, Denis (Wansbeck)
(Welwyn Hatfield)	Naysmith, Dr Doug
Jones, Barry (Alyn & Deeside)	Norris, Dan
Jones, Helen (Warrington N)	O'Brien, Bill (Normanton)
Jones, Ms Jenny	O'Brien, Mike (N Warks)
(Wolverh'ton SW)	O'Hara, Eddie
Jones, Jon Owen (Cardiff C)	O'Neill, Martin
Jones, Martyn (Clwyd S)	Organ, Mrs Diana
Kaufman, Rt Hon Gerald	Palmer, Dr Nick
Keeble, Ms Sally	Pearson, Ian
Keen, Alan (Feltham & Heston)	Perham, Ms Linda
Keen, Ann (Brentford & Isleworth)	Pickthall, Colin
Kemp, Fraser	Plaskitt, James
Khabra, Piara S	Pollard, Kerry
King, Ms Oona (Bethnal Green)	Pope, Greg
Kingham, Ms Tess	Pound, Stephen
Kumar, Dr Ashok	Powell, Sir Raymond
Lawrence, Ms Jackie	Prentice, Ms Bridget (Lewisham E)
Laxton, Bob	Prentice, Gordon (Pendle)
Lepper, David	Prosser, Gwyn
Leslie, Christopher	Purchase, Ken
Levitt, Tom	Quinn, Lawrie
Lewis, Ivan (Bury S)	Radice, Giles
Linton, Martin	Rammell, Bill
Livingstone, Ken	Rapson, Syd
Lloyd, Tony (Manchester C)	Raynsford, Nick
Love, Andrew	Reed, Andrew (Loughborough)
McAllion, John	Reid, Rt Hon Dr John (Hamilton N)
McAvoy, Thomas	Roche, Mrs Barbara
McCabe, Steve	Rooker, Jeff
McCafferty, Ms Chris	Rooney, Terry
McCartney, Ian (Makerfield)	Ross, Ernie (Dundee W)
McDonagh, Siobhain	Rowlands, Ted
Macdonald, Calum	Roy, Frank

Ruane, Chris	Temple-Morris, Peter
Russell, Ms Christine (Chester)	Thomas, Gareth (Clwyd W)
Ryan, Ms Joan	Thomas, Gareth R (Harrow W)
Salter, Martin	Tipping, Paddy
Savidge, Malcolm	Touhig, Don
Sawford, Phil	Trickett, Jon
Sedgemore, Brian	Truswell, Paul
Shaw, Jonathan	Turner, Dennis (Wolverh'ton SE)
Sheerman, Barry	Turner, Dr Desmond (Kemptown)
Sheldon, Rt Hon Robert	Turner, Dr George (NW Norfolk)
Shipley, Ms Debra	Twigg, Derek (Halton)
Skinner, Dennis	Twigg, Stephen (Enfield)
Smith, Angela (Basildon)	Vaz, Keith
Smith, Miss Geraldine	Vis, Dr Rudi
(Morecambe & Lunesdale)	Walley, Ms Joan
Smith, Jacqui (Redditch)	Wareing, Robert N
Smith, John (Glamorgan)	Watts, David
Smith, Llew (Blaenau Gwent)	Whitehead, DrAlan
Soley, Clive	Wicks, Malcolm
Southworth, Ms Helen	Williams, Alan W (E Carmarthen)
Squire, Ms Rachel	Wills, Michael
Stevenson, George	Winnick, David
Stewart, David (Inverness E)	Winterton, Ms Rosie (Doncaster C)
Stewart, Ian (Eccles)	Wise, Audrey
Stinchcombe, Paul	Wood, Mike
Stoate, Dr Howard	Worthington, Tony
Stott, Roger	Wray, James
Strang, Rt Hon Dr Gavin	Wright, Anthony D (Gt Yarmouth)
Stringer, Graham	Wright, Dr Tony (Cannock)
Stuart, Ms Gisela	Wyatt, Derek
Sutcliffe, Gerry	Tellers for the Ayes:
Taylor, Rt Hon Mrs Ann	Jane Kennedy and Mr. David Jamieson.
(Dewsbury)

NOES
Ballard, Jackie	Hughes, Simon (Southwark N)
Breed, Colin	Michie, Mrs Ray (Argyll & Bute)
Bruce, Malcolm (Gordon)	Öpik, Lembit
Burstow, Paul	Rendel, David
Campbell, Menzies (NE Fife)	Russell, Bob (Colchester)
Cotter, Brian	Sanders, Adrian
Davey, Edward (Kingston)	Smith, Sir Robert (W Ab'd'ns)
Foster, Don (Bath)	Tonge, Dr Jenny
Hancock, Mike	Tellers for the Noes:
Harris, Dr Evan	Mr. Donald Gorrie and Mr. Phil Willis.
Heath, David (Somerton & Frome)

Question accordingly agreed to.

Resolved, That the Local Government Finance (Scotland) Order 1999, dated 28th January, a copy of which was laid before this House on 1st February, be approved.

cc542-3
1. HOUSING SUPPORT GRANT (SCOTLAND) ORDER 1999 21 words
cc543-65
2. Constitutional Law 11,068 words
c564
1. SCOTLAND ACT 1998 (TRANSITORY AND TRANSITIONAL PROVISIONS) (FINANCE) ORDER 1999 25 words
c564
2. SOCIAL SECURITY CONTRIBUTIONS (TRANSFER OF FUNCTIONS, ETC.) BILL [LORDS] 38 words
cc564-5
3. FOOD STANDARDS 29 words
cc565-76
3. Kosovo 5,637 words
cc576-82
4. N. J. Hyam 3,106 words