§ 4.50 p.m.
§ The Minister of State, Scottish Office (Lord Gray of Contin)My Lords, with the leave of the House, I shall now repeat a Statement being made in another place 368 by my right honourable friend the Secretary of State for Scotland, but before doing so, and in the knowledge that my noble friend Lord Boyd-Carpenter will express the congratulations of the House to my noble friend Lord Brabazon of Tara, perhaps I may be permitted to offer my personal congratulations to my noble friend and say how much I enjoyed his maiden speech.
The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a Statement about the rate support grant settlement for Scotland for 1984–85. This amplifies the information given to the House on 12th December in answer to a Question by my honourable friend, the Member for North East Fife.
"I have completed my consultations with the Convention of Scottish Local Authorities about the rate support grant settlement and I shall lay before the House in due course the Rate Support Grant Order and Report for the financial year 1984–85. This provides for a total relevant expenditure figure of £3,205.9 million and aggregate grants of £1,930 million. The provision for current expenditure within the total is £2,736.6 million, slightly above the provisional figure which I announced on 27th July, reflecting mainly technical adjustments. The rate of grant derived from these figures is 60.2 per cent. compared with 61.7 per cent. in the present year.
"The provision for relevant expenditure represents a cash increase of 3.8 per cent. over the provision for 1983–84 once account is taken of the reduction in the national insurance surcharge. It is also some £60 million above the provision for 1984–85 indicated in the Public Expenditure White Paper, Cmnd. 8789. For 1984–85 £75 million will not be allocated to services in recognition that authorities are likely to spend more than the Government consider appropriate. Current expenditure guidelines were issued to all authorities on 18th November 1983 in Finance Circular 13/1983, a copy of which is in the Library of the House. Guidelines for 1984–85 include the provision not allocated to services and have been constructed to take account of the relative spending needs of authorities.
"In 1984–85 the needs element (which accounts for 87 per cent. of rate support grant) will be distributed on the same basis as that on which guidelines are constructed, namely the client group. Although COSLA officially asked that this change should be deferred until 1985–86, there is a wide measure of agreement that this method offers a much more systematic approach to distribution, and I did not wish to make the change coincide with the general property revaluation of April 1985. It will mean changes in the amount of grant paid to a number of authorities. In order to dampen the effects, I propose transitional arrangements which will limit the grant loss to authorities to the equivalent of a 2½p rate at regional level and a 1p rate at district level. All authorities have been told in Finance Circular 14/1983 issued on 14th December of the amounts of grant they will receive in 1984–85 if the House approves the Rate Support Grant Order. A copy of 369 this circuar has been placed in the Library of the House.
"The rating effects of the settlement will depend mainly on the expenditure decisions of authorities. I urge them to get their spending into line with expenditure provision. If they do, there could be, on average, a decrease in rates, although I accept that the individual circumstances of authorities will produce variations round the average.
"I consider this to be a very fair settlement. There is no need for rates to go up if authorities reduce their expenditure, and I have been urging them to do so since 1979. If authorities overspend, I will take appropriate action but I very much hope that authorities will make that unnecessary."
My Lords, that concludes the Statement.
§ Lord Carmichael of KelvingroveMy Lords, first may I thank the noble Lord for repeating the Statement. Despite what is said towards the end of the Statement, I am sure that the noble Lord is fully conscious that this is extremely bad news for Scotland. So far as I have been able to examine the figures which the noble Lord read out, it seems that the Government have dealt a double blow at Scottish local authorities and Scottish ratepayers. Not only has the level of rate support again been reduced but the figure for relevant expenditure has also been cut in real terms.
Since the noble Lord's Government came to power the rate support grant figure has been cut by a full eight points, from 68.5 per cent. of relevant expenditure in 1978–79 to 61.7 per cent. last year and to 60.2 per cent. this year, an overall reduction of between 9 and 10 per cent. in five years. If last year's figure of £ 1,924 million had been increased by 5 per cent. to take account of inflation, and if there had been no cut in the level of rate support, the new growth figure for Scottish local authorities from the Exchequer would have been £85 million more than the figure of £1,930 million which has been announced today. And £85 million would have been of great help to the very hard pressed local services and to Scottish ratepayers. Does the Minister realise that Strathclyde alone have lost by this formula about £32 million, the equivalent of a 6p or 7p rate?
To refer to the cutbacks, can the noble Lord tell the House where he and his honourable and right honourable friends think that cuts of this magnitude can be made in local authority services, taking into account those which have already been made? Did COSLA agree to any of these figures, or was COSLA's role merely reluctantly to accept the figures which had been decided by the Treasury?
Finally, is the Minister aware that the Statement means that all local authorities in Scotland—Labour, Tory and Independent, from the large authorities like Lothian and Strathclyde to the smallest ones—are faced with both increasing their rates and severely cutting the essential services which they provide to their ratepayers? The position of local councillors is now very serious. They are seen by their ratepayers as having the responsibility to operate local government but they are not being given the help from central Government which they need in order to do their job properly.
370 As was said in another place yesterday when the English rate support grant was announced, local authority power is being steadily undermined. This criticism came from all sides of the House. I believe that this is another sad day for local government and for local democracy.
§ Lord Gray of ContinMy Lords—
§ Lord Mackie of BenshieMy Lords, there is another party; the noble Lord must understand these matters. But he is so accustomed to ignoring my party that he leaps to his feet. I, too, for some extraordinary reason, am expected to welcome the fact that the noble Lord has repeated this rather disastrous Statement, and in conformity with the rules of the House of course I do so. But it is a quite extraordinary Statement. It begins—at this point I echo the words of the noble Lord, Lord Carmichael of Kelvingrove—by saying that the Secretary of State has completed his consultations about the rate support grant settlement. Would the noble Lord clarify whether this is an agreed settlement or whether it has been imposed upon Scottish local authorities? I strongly suspect that it is an imposition. I object strongly to the hypocrisy—perhaps I ought not to use that word and should say instead the device of saying, for example:
The provision for current expenditure within the total is £2,7366 million, slightly above the provisional figure which I announced on 27th July".The Secretary of State's Statement continues in this vein. It is all very well to say that the figure is above the initially proposed figure. The Secretary of State could appear to be a devil of a fellow if he set a very low figure and then doubled it. The real position is accurately described when he says that the figure of 60.2 per cent. has to be compared with the figure of 61.7 per cent. In other words, it is down by 1.5 per cent., which is a lot of money in present circumstances. It does bear very hard on local government in Scotland.We accept completely that the Government are entitled to try to induce economy. But, in a nutshell, economy is all very well but this is a bit much. Also, I want to go into the question of the figures. Clearly, when the noble Lord says that the imposition of the new client group guidelines—and I am not quite sure what that means, and perhaps the noble Lord can give the House a further explanation—will limit the grant loss to a 2¾ per cent. rate at regional level and 1 per cent. at district level, even that appears to me to be a fairly heavy imposition.
As regards democracy, and local democracy in local government, what are the Government trying to do? We had a case of an overspending authority in Lothian who were replaced by the electorate at an election, and then a modified budget was introduced, saving a great deal of money. The Government then imposed—and "imposed" is the correct word—through the local Tory group the figures they wanted. If you want local democracy, and if you believe in it at all, the Government really must acknowledge that they have to allow the ratepayers to decide whether they are going to bear the rates, if they think they are worth paying.
371 The last sentences of the Statement show up the totally authoritarian attitude that exists, when they say:
There is no need for rates to go up if authorities reduce their expenditure, and I have been urging them to do so since 1979. If authorities overspend, I"—the great panjandrum—will take appropriate action".That is a complete negation of democracy in local authorities.If the electors want to elect people who are overspending, they will do so. It is not up to the Government to say that the Government will decide whether the electors are right or wrong. If the financial imposition is there, then the Government should leave it at that. If the Government feel—and I am sure this old argument will be trotted out—that many of the ratepayers are not representative, then it is up to the Government to do something about that. The Statement gives very little pleasure to me, and certainly it gives no pleasure to the local authorities.
§ 5.3 p.m.
§ Lord Gray of ContinMy Lords, perhaps I may first apologise to the noble Lord, Lord Mackie of Benshie, because I had no intention of slighting him or his party; I can assure him of that. May I extend my warm congratulations to the noble Lord who spoke for the official Opposition on his first occasion at the Dispatch Box? We all welcome very much what he had to say; perhaps not exactly the words he chose, but he did fulfil the objective of an Opposition—and that is, to criticise and be constructive. We are grateful to the noble Lord for the part he played.
Both noble Lords who spoke mentioned that the percentage of the rate support grant has been cut and is now at 60 per cent. That is true and I make no apology for it. The percentage has been cut, and that is in line with what has happened in previous years. If I may go back to the years when the official Opposition were in government, there were occasions when they made cuts in the total amount of rate support grant. The difference is that the cuts which have been effected by this Government have been made because we genuinely believe it is imperative that the amount of public expenditure is cut. We are doing that on a voluntary basis. We are not doing it at the hand of the International Monetary Fund, which is why it was done when our opponents were in Government.
Therefore, if our action does not meet with the full approval of the Opposition, I am sorry—but they must agree that the reason for the cuts is that local authorities have been overspending. Indeed, in the early years of the present Government my right honourable friend in another place did not cut—and the result was that local authorities continued to overspend, and to overspend to an even greater amount.
As far as Strathclyde is concerned, it was suggested by the noble Lord that Strathclyde's rates might go up by something like 7p as a result of the grant cuts. As I indicated in my earlier remarks, there is certainly no need for local authority rates to go up by as much as 7p. I cannot forecast what will happen in an individual case, but certainly there is no need for a rate increase 372 of that level if expenditure is reduced. The noble Lord also asked me to make some suggestions. I could make many suggestions, but that is not what I am here to do. It is the job of the local authorities to make suggestions, and it would he wrong of us to interfere with their list of priorities.
§ Lord Gray of ContinTo suggest, my Lords, that no cuts can he made by local authorities is very far from reality. Cuts can be made, and we will see that cuts will be made.
§ Lord Gray of ContinYes—and I say that because I am confident that local authorities will make cuts, my Lords. Indeed, more than 20 local authorities in Scotland made substantial cuts over the past year and they have not found any great difficulty in doing so. They have accepted the financial disciplines which local authorities have to accept in the same way that national authorities have to accept them.
§ Lord Mackie of BenshieMy Lords, if the noble Lord the Minister will allow me, can he tell the House whether the cuts they made were, in the main, on capital expenditure?
§ Lord Gray of ContinI cannot without notice give an answer to that question, my Lords, I was saying that more than 20 local authorities managed to make substantial cuts. I do not believe that any of their ratepayers are worse off for those cuts; in due course, the ratepayers will probably be very much better off.
Another question about Scotland was also raised. While it was not directly indicated, it was suggested that this was a very bad day for Scotland. I believe it is far from being a had day for Scotland. Since 1978–79, current spending by Scottish local authorities has increased by 97 per cent. compared with 85 per cent. in England and 73 per cent. for prices. In that same period, rates have increased by 128 per cent. and the Scottish grant has gone up nearly in line with prices and substantially more than the English grant.
My right honourable friend's generosity over grant has just led to higher overspending—and that is what has happened. Scottish local authorities have to be realistic in this matter. I thank both noble Lords for the comments they have made, and I will now allow the House to move on.
§ 5.8 p.m.
§ Lord Wilson of LangsideMy Lords, may I ask the noble Lord the Minister two questions? First, how does he meet the charge levelled by the Convention of Scottish Local Authorities that the cuts in rate support grant expose the hypocrisy of the Government in relation to rates? The Government present themselves as the champions of the ratepayers on the one hand; on the other, they pursue policies which put pressure on councils to increase their rates.
My second question is, I believe, more important. Does the noble Lord not acknowledge that it was perhaps something of a misjudgment on his part that 373 he should seek to gloss over this situation by exchanging party points with the noble Lord, Lord Carmichael of Kelvingrove, in his references to the circumstances in which the Labour Government took powers to control public expenditure as long ago as 1976? Does the noble Lord not acknowledge that a policy of repeated reductions in rate support grant will add a new dimension to the conflict between local government and central Government, which is perhaps one of the most damaging features of political life today—particularly in Scotland?
§ Lord Gray of ContinMy Lords, I would say to the noble and learned Lord that I consider that the action which the Government are taking confirms this Government in their endeavour to be the champion of the ratepayers. At the end of the day I genuinely believe that if local authority expenditure is disciplined and kept within reason the ratepayer must obviously be the beneficiary.
The second point made by the noble Lord concerned my making one or two party points. I see no reason why party points should not be made in debate if they are genuine, and I believe the points I raised were genuine. Indeed, I have certainly received many party points across the floor from the noble Lord who normally speaks for Scotland in this House and I have no doubt that I shall from the noble Lord, Lord Carmichael of Kelvingrove, as well.
The third point is one which I do not accept. I do not believe there is any need for this rate support grant decision to lead to any further conflict with local authorities. It is true that there are many members of COSLA who would like to be able to spend a great deal more, but we believe that it is not in the national interest that they should. I do not see why that should lead to conflict. It will unquestionably lead to argument, but the noble and learned Lord will agree that argument is healthy.
§ Lord KirkhillMy Lords, it goes without saying that this most recent percentage cut in the rate support grant is seen as mean-minded on the Scottish scene. How does the Minister justify his earlier assertion that rate increases will not, therefore, flow from this decision if he bears in mind that, as he should know, almost all local authority expenditure is centrally imposed, either in the form of wage negotiations which must be carried out or through the various other statutes which are carried out by local authorities on behalf of central Government?
§ Lord Gray of ContinMy Lords, I answer the noble Lord quite simply. I do not accept that cuts cannot be made in local authority expenditure. To suggest that local authorities have made all the possible cuts which they can is to my mind simply not accurate. There are still many cuts which can be made and I believe that many local authorities will think very seriously about them and will find ways of making cuts to meet this.
§ Lord KirkhillWith further job losses to follow, my Lords.
§ Lord Taylor of GryfeMy Lords, will the Minister accept that demands on local authority expenditure 374 are substantially a result of the economic situation in Scotland, which is the responsibility of the Government? Will he further accept—I know that he is a kindly man—that this kind of cut, if one forgets the statistics, will probably mean the reduction of services, of home helps, and the assistance of people in very serious need at this Christmas time?
§ Lord Gray of ContinNo, my Lords, I do not accept that that is the case. I think we must accept that there are occasions when it is necessary to make cuts. It is not the case that local authorities are totally efficient in every way. While I respect local authorities, I do not think they are above criticism. Local authority expenditure has not fallen to the extent that it should have done. Indeed, the 8th report of the Commission on Local Authority Accounts includes details of shortcomings in financial and tendering control procedures. It concludes a great deal more, but that is just one of its criticisms. That is an area which I believe could be examined and possibly savings could come as a result. That is only one and there are others. I believe local authorities will find them and act upon them.
§ Lord HughesMy Lords, for a successive number of years the Government have said that it is still possible for more cuts to be made. The Minister says that it is still possible to cut expenditure. For how many more years does he think it will be possible to do that? Is he going to the ultimate conclusion where he suggests that local authorities should shut up shop altogether so that there will be no need for Exchequer equalisation grants or for rates to be levied?
§ Lord Gray of ContinMy Lords, I am certainly not making that suggestion. I believe there is still a reasonable amount of fat in local authority expenditure which can be cut off and saved. I am confident that such savings can be made.