Local Government etc. (Scotland) Act 1994: Costs (Hansard, 18 January 1995)

§ The Minister of State, Scottish Office (Lord Fraser of Carmyllie)
My Lords, in his 1995 public expenditure plans my right honourable friend the Secretary of State for Scotland made provision for local government reorganisation costs of £41 million in 1995–96; net costs of £40 million in 1996–97; and net savings of £20 million in 1997–98. 645 The costs of water reconstruction in 1995–96 are estimated to be £11.4 million.

§ Lord Hughes
My Lords, given that the figures for the estimated costs given by CoSLA range between £124 million and £199 million, does the Minister agree that the figure likely to arise will be at the very best somewhere between the £41 million that the Government are allowing and the minimum £124 million stated by CoSLA? If that is the position, what do the Government intend? Will they make an additional payment if it becomes obvious that £41 million is inadequate; or will they expect the shadow authority to go into business a year later on borrowed money?

§ Lord Fraser of Carmyllie
My Lords, I do not for a moment accept the figures that CoSLA has put forward. I shall explain very simply. For example, in Tayside, where there are to be three unitary authorities—Dundee, which the noble Lord once headed; Perthshire; and Angus—each of those unitary authorities estimate that they will be able to perform the task more cheaply than Tayside Region, covering the whole, can at present. I therefore do not accept CoSLA's figures. CoSLA allowed for a quite extraordinary number of redundancies and early retirements. It would be foolish and impractical if it were to follow that course.
I can tell the noble Lord, and I announce today, that the provision for the cost of local government reorganisation in 1995–96 includes £36 million for the funding of shadow councils. When my right honourable friend announced the provision on 13th December he said that he was still considering whether the funding would be provided by grant or by borrowing consent, as allowed for in Section 25 of the Act. I am glad to announce today that my right honourable friend has now decided that the shadow councils should be funded by grant—which was of course the option preferred by CoSLA.

§ Lord Hughes
My Lords, I am grateful to the Minister for the last part of that Answer.

§ Lord Renton
My Lords, is it not a fact that the cost of the changes to local government in Scotland would be much greater if some of the amendments that were proposed on the other side of this House had been accepted? Is it not also a fact that, in the long run, the ratepayers of Scotland will have benefited from these changes?

§ Lord Fraser of Carmyllie
My Lords, I have no doubt that after the third year—that is to say 1997–98—the council tax payers of Scotland will find that there are net savings to be achieved. What we cannot predict accurately is just how responsibly local councils, left to their own independence, will react. There is absolutely no reason why they should not achieve that saving by the third year. About £500 million to £600 million should be saved over the next 15 years.

§ Lord Ewing of Kirkford
My Lords, if, as the noble Lord, Lord Renton, says, there will be tremendous savings to the Government and to taxpayers in Scotland as a result of local government reform in Scotland, can 646 the Minister explain why, if all those savings are about to accrue, the Government have decided not to proceed with local government reorganisation in England?
Can the Minister also comment on the disappointment that was felt by people throughout Scotland today on reading the press headline in the Scotsman that Lang had entered the race for the presidency of France—only to discover that it was not Ian Lang but Jack Lang, the former socialist environment Minister?

§ Lord Fraser of Carmyllie
My Lords, I am bound to say that when I read that headline this morning it caused me a tremor of concern as well. However, I was pleased to see that it was Jack.
So far as Scotland is concerned, we are confident that if local authorities behave responsibly these very substantial savings will be achieved. A very real tremor of concern will have been felt throughout the business industry in Scotland at the announcement by the shadow Secretary of State, Mr. Frank Dobson, that if there were to be a Labour government he proposed to reintroduce business rates at local level. I cannot think that a single small business in Scotland will welcome that threat.

§ Baroness Carnegy of Lour
My Lords, I am sure that everybody in Scotland will be delighted to hear that the cost of shadow councils' changeover period is to be met by central government grant rather than being added to the council tax.
Can my noble friend say whether local councils are now co-operating one with another in order to achieve a cost-effective and smooth hand-over from the old system to the new?

§ Lord Fraser of Carmyllie
My Lords, I am grateful to my noble friend for her welcome to my announcement. Since the Bill received Royal Assent there has been a sea change in attitude in Scotland and that is to be welcomed. Now that the councils know that £36 million is to come by way of grant rather than be imposed on them by way of borrowing, I hope that their enthusiasm for achieving a smooth transition will be that much greater.

§ Lord Carmichael of Kelvingrove
My Lords, will the Minister accept that he made a very good announcement and we could not possibly cavil at it? Can he say whether there will be some kind of guarantee to local authorities that they will not inherit debts from other local authorities? If they do inherit such debts, will there be any likelihood of the Government rate-capping those local authorities who try to get out of the mess that the quite unnecessary Bill, whether or not he likes it, will land him with? He did not mention the cost of the joint committees that will be set up in order to make Scottish local government work, even with the terrible Bill that was passed a few months ago in this House.

§ Lord Fraser of Carmyllie
My Lords, I am grateful to the noble Lord for the welcome he gave to my announcement. Clearly there will be successor authorities taking on the liabilities of their predecessors; but I emphasise again that if they act responsibly in this 647 matter the additional costs from the first two years will latterly be wholly overcome by the net savings that will be achieved in year three and thereafter.