§ Mr. Allan StewartTo ask the Secretary of State for Scotland what action he proposes to take in the light of local authorities' budgets and rates for 1988–89; and if he will make a statement.
§ Mr. Malcolm Rifkind[pursuant to his reply, 3 May 1988, c. 383]: I have now completed my consideration of the planned expenditure of district councils. I do not propose to take selective action to reduce the rate of any of these councils.
In order to encourage all authorities with planned overspends to reconsider their budgets in the course of the year, I have decided after consultation with the Convention of Scottish Local Authorities that there will be grant penalties for overspending on a tariff starting at zero and rising to 10 per cent, for a 2 per cent, overspend, 60 per cent for a 4 per cent, overspend and 110 per cent, for an overspend of 5 per cent, or more. The rate of increase between each of these points is even (linear). On the basis of planned expenditure the total penalty will be £140 million, the approximate level by which authorities are planning to overspend.
Penalties will subsequently be adjusted in the light of actual expenditure. In 1987–88 many authorities reduced their expenditure in the course of the year and as a result will recover £89 million in grant in respect of that year. I hope the same will happen in 1988–89.
I am laying the necessary rate support grant order today to allow repayments of grant in respect of 1987–88 and to give effect to grant penalties for 1988–89.