Scotland (General Grant)

Oral Answers to Questions — Employment – in the House of Commons at 12:00 am on 16th December 1963.

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9.59 p.m.

Photo of Lady  Grant of Monymusk Lady Grant of Monymusk , Aberdeen South

I beg to move, That the General Grant (Increase) (Scotland) Order 1963, dated 26th November, 1963, a copy of which was laid before this House on 28th November, be approved. Perhaps I should say that, of course, this subject, as hon. Members will know, lay within the responsibilities of my hon. Friend the Member for Rutherglen (Mr. Brooman-White), and it is only because of his most unfortunate illness and the fact that he has had to resign as a Minister at the Scottish Office that I have been asked to take on this duty tonight. I feel sure that everyone would like to wish him a steady and a sure recovery to health.

This Order under Section 1(5) of this Local Government and Miscellaneous Financial Provisions (Scotland) Act, 1958, as applied by Section 2(2), must be accompanied by an Explanatory Report. In the present case this was published as a House of Commons Paper, No. 16, and laid at the same time as the Order itself on 28th November. As hon. Members will be aware, general grant increase Orders have come before the House with some regularity, and the procedure for dealing with them has now become well established.

It became apparent this year that increases in costs arising in the main out of salary awards would impose a considerable unforeseen extra new burden on local authorities during the third grant period covering the years 1963–65 and that an increase in general grant would be justified. The local authority associations formally gave notice of claim for increased grant in the spring and later submitted details of the extra expenditure they expected to meet. Discussions between representatives of the local authority associations and the Scottish Departments followed, and these ended in a meeting with my noble Friend the Minister of State on 11thNovember. As a result, agreement has now been reached both as regards the increased costs which can be taken into account for the two years 1963–64 and 1964–65 and also as regards the additional amount of general grant which should be provided in respect of this additional expenditure.

The General Grant Order, 1962, which was approved by the House almost a year ago, provided that the aggregate amount of the general grants payable to Scottish towns and counties for the year beginning 16th May, 1963, would total £66 million, and for the year beginning 16th May, 1964, the sum of £69 million. The Order now before the House provides for raising those amounts to £70·5 million and £73· 3 million respectively. In short, the Order proposes increases of £4·5 million for 1963–64 and £4·3 million for 1964–65.

The Report accompanying the Order sets out the main factors giving rise to the Order. The major item is salary and wage awards to various categories of local authority staffs since the General Grant Order was approved last December. Among those awards that to teachers is by far the largest in terms of extra expenditure to be incurred by the local authorities. Other pay awards relate to nursing and allied staff, manual workers, medical and general officers, etcetera. Increased costs other than in respect of pay arise out of higher National Insurance contributions, improvements in school bursaries, higher allowances now payable by local authorities in respect of boarded-out children, higher telephone and postal charges. The main item which, although relatively small, perhaps merits special mention, is the increase in the cost of child welfare services, which are likely to arise under the Children and Young Persons Act, 1963. The best estimate that can be made at the present time is that in the year 1964–65 the extra expenditure on this grant will be £50,000, while in the current year it will be £12,000.

In view of the comparative lateness of the hour, I do not think it really necessary for me to go into any fuller explanation. There is a good Explanatory Report on this Order. Naturally, I shall be glad to try to answer the various questions which I am sure hon. Members will wish to put.

I would just add that, as hon. Members will recall, a General Grant (Increase) Order for England and Wales was approved by the House about a week ago, and this Order is the corresponding Scottish one and I commend it to the House.

Photo of Mr Jo Grimond Mr Jo Grimond , Orkney and Shetland

Did the noble Lady say that this was agreed with the local authority representatives? Does it mean that they have accepted these figures?

10.6 p.m.

Photo of Dr Dickson Mabon Dr Dickson Mabon , Greenock

The most regrettable thing about the Order is that it does not take us any further with regard to rating relief. I appreciate that the Bill applies only to England and Wales. The House has not been formally notified of what the intentions are except in an indirect way, in a Written Answer to an inspired Question by the hon. Member for South Angus (Sir J. Duncan).

I join the noble Lady in hoping that her hon. Friend the Member for Ruther-glen (Mr. Brooman-White) will soon get better. Nevertheless, the noble Lady, who has taken over his responsibilities here, must face up to some of the serious points which cause us some doubt.

The English Bill speaks of the award being in 1964–65. The Order covers that period. Are we to assume that there will be no comparable provision for Scotland because the Order makes none? I have in mind what has been said about rating relief for old persons. I understand that the Secretary of State has tried to defend the situation in public by saying that Scottish local authorities have provision in law, unlike English local authorities, for making such relief. But it is asking a bit much to turn to our hard-pressed local authorities and say, "You have legislative power to do it but we will not give you the money." England has been given a very large sum of money under a Bill which may have its Second Reading this week. We are discussing a Scottish Order which has its parallel in a previous Order which will be supplemented by the Bill to be considered later this week.

The noble Lady ought, on behalf of the Secretary of State, to make it clear why this Order is not being withdrawn and replaced by one which seeks to bring the position in Scotland up to date. I will be fair about this. The Order was printed on 28th November. The statement by the Minister of Housing and Local Government was made on 9th December, and the Secretary of State's Answer to the Written Question was on 10th December. Consequently, I can see that there are reasons why what I have mentioned is not contained in the Order. But that is a strong argument for withdrawing the Order. I hope that some of my hon. Friends, my hon. Friend the Member for Kilmarnock (Mr. Ross) in particular, will return to this point, which is very important.

I turn now to some of the other items. I accept that part of the reason for having to ask the House of Commons to expand and add to the Order is wage awards, but many of those awards were initiated by the employees themselves. Some have not appeared here because they were never granted but were held up by the Minister—in our case, the Secretary of State for Scotland, and in the case of England, the Minister of Health, and in some cases by the Chancellor of the Exchequer, by their reckless interference in arbitration machinery. I concede that some have been granted, and appear in this Order, but why are the Government not anticipating a higher expenditure on salaries? Even though they may not be aware of any of the applications for salary increases that have gone in already, why do not the Government themselves, without awaiting the initiative of the trade unions or professional associations concerned, offer larger salaries for a number of persons employed by local authorities and within the Government service?

Take, for example, almoners in the hospital service. We are short of almoners—why is no effort being made to raise their salaries? Must we wait for the almoners themselves to get an Ernie Bevin before we give them more? The same thing applies to the local health service. When we were approving the Order last year, the Secretary of State said that the reason for that amount of money for the health services was to meet the advancing programme of local authorities to provide mental health facilities. The increase shown here for this next year is so small as to be farcical, when one recollects that in 1964–65 the local authorities in Scotland are supposed to be implementing a programme that ought to be four or five years ahead of what was intended in the Mental Health (Scotland) Act, 1960.

We criticised then the whole idea of the general grant. We criticised its general principle. We pointed out that local authorities would suffer by the general grant procedure, particularly in relation to the provisions for mental health. If we look at what was done last year by local authorities in mental health and what was intended in this year, simply in monetary terms it is obvious that not much is to be done.

I ask the noble Lady to justify the intention to increase the amount provided for the local health service by such a small sum. Perhaps she will tell us, and it may be of some comfort, that in 1965–66 it is the intention to have a very sudden large increase in general grant expenditure. That may be part of the plan, but I should like the Under-secretary to tell us that. If she cannot say so, we can only assume that the rate of development of the health service, the responsibility for which lies with the local authorities, will not be as vast as it should be.

I should like to deal with a number of other points, but I know that my hon. Friends are anxious to mention them. I hope that the noble Lady will answer my general point about rating interim relief, and also about the money spent on local health services.

10.14 p.m.

Photo of Mr Peter Doig Mr Peter Doig , Dundee West

In 1959 the Government started this new system of general grant, or, as it had previously been known, the block grant. The amount fixed for Scotland was based on the amount previously given under the old percentage grant system. The local authorities objected to it at that time, and I think that the noble Lady is wrong in saying that they have accepted this amount. They only accepted it under protest—because I was at the meeting. Unless another meeting has been held since I became a Member for this House, I can say that the local authorities did not accept this figure.

Ever since 1959 they have regularly objected that under this system any supplementary grant given—certainly welcome, but never enough—would, under the old system, have been much more, as we would then have got the amount from the time of any wage increase whereas, under this system, we are always two years behind the times. Various increases take place during that period, but we never catch up with them. They are always that bit behind. There is this time-lag of increased expenditure which local authorities have to bear. It is not the 40 per cent. on education which they used to bear, but the 100 per cent. which they have to bear until the Government decide, if they do, to give a supplementary grant.

These supplementary grants only partly cover the costs of the local authorities. In addition, local authorities consider that this method prevents careful and fair consideration of the increases in expenditure which occur from time to time. The local authorities have a longstanding grievance in respect of the rapidly expanding fire service. They have to pay the full costs of any expansion that takes place until such time as the supplementary grant catches up with it. The fire service, at 25 per cent., is far too low, and under the old system could at any time have been subject to negotiation to increase this percentage. After all, what is the difference between the fire service and the police force in this respect? There is no difference, but the local authorities get 25 per cent. for one, and 50 per cent. for the other. There is therefore a strong case for the fire service being calculated on a 50 per cent. basis, but under this system it is much more difficult.

The local authorities are very suspicious about the total percentage of the expenditure for Scotland that is borne by general grant. This is the point on which they fell out with the former Secretary of State. When this first started in 1962, it was 62 per cent. It has dropped to 60 per cent., and the local authorities suspect that it will go lower still. This was one reason why they did not agree, and in fact why they agreed to disagree.

Local authorities have the expense of further education, and so on, but they get no allowance for developing services. If they expand services which were formerly dealt with on a percentage basis, they do not now get the full benefit of the additional expenditure they have incurred by developing those services which the Government want them to develop. The cost of developing these services is shared among all the local authorities, which means that those who do the job they should be doing, and which the Government want them to do, suffer financially because their share is divided among all the local authorities, including the laggard ones which have done nothing for it. Tremendous anomalies arise because of that. Translating the general grant to rate poundage, in some local authorities it is as low as 7s. 10d., and in others it is as high as £3 19s. 11d. This means that the laggard ones benefit, while those which do the job they are supposed to do suffer.

I deal next with teachers' salaries, Most local authorities now feel that these should be reimbursed 100 per cent. This expenditure should be borne by the Government, because it places far too big a strain on the finances of local authorities. We believe that there is only one solution to this problem to satisfy local, authorities, and that is to reintroduce the old percentage grant basis.

10.19 p.m.

Photo of Mr William Ross Mr William Ross , Kilmarnock

I am surprised that no one from the benches opposite has told us of the generosity of the Government and their speed in meeting the claims of Scottish local authorities. I thought it surprising that no one drew attention to the fact that exactly a year ago we dealt with the introduction of the two-year grant which today we are increasing.

The hon. Lady the Under-Secretary of State will remember that she said that the first claim from Scottish local authorities went in in the spring. Such is the stability of our finances, and such is the control which the Government have over inflation, that although we fixed the grant for a two-year period in December, 1962, within two or three months local authorities were knocking at the door saying that they needed more money because wages, salaries, and the cost of everything else had risen.

We are dealing tonight—I am glad that my hon. Friend the Member for Dundee, West (Mr. Doig) made the point—with retrospective hardship in respect of local authorities to the extent of almost a 6 per cent. increase in costs. This is not finished yet. When we had this argument last year as to whether the original general grant was sufficient, it was pointed out that the Government had already whittled down the estimates of the local authorities in respect of what they thought would be their expenditure over these two years.

My hon. Friend the Member for Dundee, West was quite right when he said that there was no agreement between the Government and the local authorities and that what was eventually reached was a compromise settlement. I think that it was made perfectly clear by the late Mr. Gilmour Leburn that in the long run the man who decided the general grant was the Secretary of State for Scotland, and I am surprised that the right hon. Gentleman is not here tonight. This is not a job for a substitute. We are dealing with £70 million. In the second year it is a matter of £73½million. It is not fair to Scottish local authorities or to Scottish Members that we have a Secretary of State for Scotland dealing silently, in answer to a stooge Written Question, with a very important matter, three days before a by-election, dangling £1 million before Scottish local authorities. It must be the most expensive by-election that we have had in history.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Two hundred pounds a vote.

Photo of Mr William Ross Mr William Ross , Kilmarnock

It was more per vote than the Government expected. There are some very relevant questions to be asked. I am perfectly sure that we shall have the deputy Chief Whip sending for the Scottish Secretary of State to defend this important Order.

The fact is that we cannot but be dissatisfied with what we have got. I want to read what was said by the Secretary of State for Scotland in that Written Answer. He was asked: What steps he proposes to take to relieve hardship caused by increasing rates. One of the ways in which he can relieve hardship caused by increasing rates is to introduce such an Order as we have tonight. The Secretary of State said: Scottish local authorities have power to remit rates on the grounds of poverty or in ability to pay. The impact of rates on house-holders is being considered by the Allen Committee and will be a factor in the review of local government finance. whenever that may be.

He added: Meanwhile, in parallel with interim measures for Exchequer assistance which are being introduced by my right hon. Friend, the Minister of Housing and Local Government, in the Rating (Interim Relief) Bill published today"— that is 9th December— I propose to provide temporary assistance to Scottish local authorities. This will take the form of an addition of £1 million to the general grant at the beginning of the next general grant period in 1965. This additional sum will be distributed in the usual way to all towns and county councils."—[Official Report, 9th December, 1963; Vol. 686, c. 37.] So there is hardship today, and so the Secretary of State will introduce interim and temporary measures with the expedition and urgency that we associate with the party opposite—nothing this year; nothing next year, but in 1955–56 an addition of £1 million to the general grant. To what it will be added we do not know. We want an explanation. If the Secretary of State says that he will take action in parallel with the interim measures he should be doing so in this Order. I have read through the Rating (Interim Relief) Bill. It says that it will start in 1964–65. It is hardly taking parallel action to do something in 1965–66 when the person whose action one is supposed to be following in parallel has taken action a year before.

The pertinent point is that the second increase referred to in the Order is for the year when the action will be taken in England and Wales. I want to know why no action will be taken until then. At least the Government could have legislated for that. I do not see their being able to legislate for anything at all in 1965–66 because they will not be here. The usually silent noble Earl, the hon. Member for Edinburgh, North (The Earl of Dalkeith), around whose estates I did a little electioneering last week, should know from the results of the election that there is not much chance of his being here.

This is a very serious point. If there is hardship now it is hardly satisfactory to suggest that it should be dealt with in 1965–66, and to tell us that we shall be adding £1 million to something that we know nothing about. The whole thing is just a fraud.

Photo of Mr William Ross Mr William Ross , Kilmarnock

Not a cheap trick—a very expensive one.

Photo of Mr William Ross Mr William Ross , Kilmarnock

I have no doubt that the noble Lady will tell us that we could not do it; the law does not allow us to do it, in that case, does the law allow her to do it in 1965? If she looks at the original Statute she will find that the general grant is related to relevant expenditures outlined in one of the Schedules.

Photo of Mr William Ross Mr William Ross , Kilmarnock

He would be worse. He is away looking for tugboats, trying to pull Scotland a wee bit nearer London. According to him that is the solution to all our problems. It is no wonder that the Tories at the pooling booths were wishing the Labour candidate in Dumfries the best of luck.

The relevant expenditures are even listed in the White Paper that explains the Order now before us—and relief of rates is not one of them. Referring back to the 1947 Act—and everything hinges around this—we find that the rates are levied in respect of statutory functions laid down in various enactments right through time. It is a disgrace that the Secretary of State for Scotland is not here to explain to us this piece of financial wizardry that does not mean a thing.

Let us look at the Order. What we are being asked to do is to meet in part the needs of Scottish local authorities in respect of increased costs. These are the only matters which can be dealt with in an increase Order. We must ask why, in respect of this Order, the Government are prepared to meet the costs of local authorities only in exactly the same proportion as in the original grant. I have worked out the percentages and have found that they are almost identical.

The amusing thing is that when we discussed this last year we drew attention to the fact that in the first Order the Government met the relevant total expenditure of local authorities in Scotland to the tune of 62·4 per cent. That has fallen now to just over 60 per cent. In the current year it was 59·84 per cent. Every 1 per cent. means over £1 million up or down. When they talk about returning to the original percentage they mean a return to Scottish local authorities of over £2 million. We were given a pledge last year. This is another reason why the Secretary of State should have been here. We asked about the percentage and we were given a pledge by the Secretary of State that when we had any general Order or increase Order the proportion would be examined. My hon. Friend the Member for Edinburgh, Leith (Mr. Hoy) will remember this; he led for the Opposition in the debate.

I think that the least we should have had tonight, when we have another increase Order, was an explanation of what happened under that examination. I feel that no examination of the proportion has taken place at all but that the Secretary of State, in his customary way, fobbed us off. It is easier to answer Written Questions than to appear at the Box and defend statements which he made a year before.

What is happening in Scotland is also happening in England. Let English hon. Members appreciate that we have had full revaluation at current values since 1961. If we have hardship for particular persons and particular areas, then attention has been drawn to it over the last two years and it exists now. Every increase of expenditure which is not fully and adequately met by the Government increases that hardship. All over Scotland we have rising rates on the narrow basis of the rating system which was changed in Scotland under the Valuation and Rating (Scotland) Act, 1956, when all the burden was placed on the occupiers. The Government have failed to meet this hardship. This is not only fraudulent; it is cruelty in this year to accept the existence of hardship, to say that it will be dealt with in the year starting 1955–56 and to do it in an unexplained way.

In 1962–63 the total rate burden left on Scottish local authorities after the payment of the block general grant was £39½ million. In 1963℃64 it was expected to be £42·282 million. Instead of that it will be £47 million. Next year it will be £48·294 million. In two years we have a jump of nearly £9 million to be met out of Scottish rates.

The unfairness of the rating system is that assessments are fixed over a period of five years. In relation to national taxation we have an annual budget and taxation is fixed and related year by year to a growing or expanding economy—expanding through growth or through inflation. With every increase in expenditure that is passed on to the local authorities in this way there is growing hardship; and everyone accepts this but the Government, who fail to meet the need. What do the Government now propose to do about this matter?

Teachers' salaries are a case in point. I will not embarrass the hon. Lady the Under-Secretary by quoting some of the things she said when she was on the back benches. Instead I will quote what the Secretary of State said. He said: …I agree that the question of ratio of grant to expenditure should be examined again before any further Order or increase Order is made. It is also interesting to note what was said in the debate that day by the then Under-Secretary. He said: …there is no particular sanctity about any particular percentage, because in the end of the day it is the responsibility of the Secretary of State to fix the amount of general grant."—[Official Report, 19th December, 1962; Vol. 669, c. 1341℃74.] Thus he undertook to examine the matter before the next Order. That time is now, for we have such an Order before us. What do the Government intend to do to meet this hardship? Compared with their 1963℃64 estimate, Scottish local authorities will have to spend on relevant expenditure an additional £7,451,000 in 1963℃64 and £11,312,000 in 1964℃65, a total of over £18 million. What will this mean to the ratepayers?

In this connection, the total relevant expenditure this year will be £117 million and of that figure the education service will cost £100 million. We are also faced with an increase within this sum of about £5·8 million for awards to teachers. Have the Government considered the suggestion that the whole of teachers' salaries should be transferred for payment to the National Exchequer?

A study of the Report on Scottish local government finance presented to Parliament by the Secretary of State shows that the cost of the child welfare services under the 1963 Act will be £12,000 and that next year it will be £50,000. Who will spend the money? Like my hon. Friend the Member for Dundee, West I am convinced that only some local authorities will participate in this work. The finances are arranged in such a way that everyone will get their share according to weighted population, miles of road and the rest of the formula. Even those local authorities that spend nothing on this valuable service will get the benefit of expenditure by other local authorities. Despite this, how will the money be spent and by which local authorities?

In fact, the money is not very much in relation to the new burden which has been placed on local authorities. We can anticipate the Under-Secretary's answer—that the work is just starting. However, Parliament has placed the burden of looking after families and trying to keep children from becoming delinquents on local authorities and their expenditure on this work must be considered. These represent the only items of new expenditure, and it would be interesting to know why the amount devoted to road safety, which was £32,000 last year—an amount which was criticised last year—remains at £32,000. There is no further explanation here. Evidently there is some insulation from inflation in the case of road safety, as also for police traffic controls and physical training and recreation, for there is to be no additional expenditure on these items. I should be glad to have an answer on this point and also on the point rightly raised by my hon. Friend the Member for Dundee, West on whether or not there was agreement about these additional sums or whether it was a case of consultation and compromise and the local authorities, although they disagreed, had to accept.

10.41 p.m.

Photo of Lady  Grant of Monymusk Lady Grant of Monymusk , Aberdeen South

We have had a short and interesting debate and one which has been very much to the point. I should like to deal first with questions put to me on the same point by the hon. Member for Greenock (Dr. Dickson Mabon) and the hon. Member for Kilmarnock (Mr. Ross) about the difference between the Rating (Interim Relief) Bill which is to apply to England and Wales and the £1 million which is to be part of the next General Grant Order. The hon. Member for Greenock asked why we could not withdraw this Order tonight, and the hon. Member for Kilmarnock asked whether we could not have legislation instead of it.

We are advised that Section 2(2) of the 1958 Act does not enable us to include the £1 million in the current increase Order—which I think was recognised by the hon. Member for Kilmarnock—and therefore make the money available in 1964℃65. This is why it has to wait for a General Grant Order.

Photo of Mr William Ross Mr William Ross , Kilmarnock

The noble Lady has as much right to make this provision in this Order as she had in the original General Grant Order. Would she explain how she could make it in the original Order?

Photo of Lady  Grant of Monymusk Lady Grant of Monymusk , Aberdeen South

As I understand the 1958 Act, and I am sure that the hon. Member for Kilmarnock knows it very well, under section 2(1,a) the Secretary of State, with the consent of the Treasury, takes into account any expenditure of a description in respect of which no grant has been paid for in the period ending 16th March, 1959. There- fore it gives him that freedom to put a new service under the general grant.

Photo of Mr William Ross Mr William Ross , Kilmarnock

It is not a new service.

Photo of Lady  Grant of Monymusk Lady Grant of Monymusk , Aberdeen South

That is true, but under Section 2(2) nothing can be part of an increase Order except an unforeseen rise in costs, in prices and in pay awards. This is why the £1 million comes under a general grant Order.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

Is the noble Lady saying in effect that new legislation will be required to bring the £1 million extra in 1965℃66 or whatever year the Government intend to introduce it? Why is it not included in the English Bill?

Photo of Lady  Grant of Monymusk Lady Grant of Monymusk , Aberdeen South

I am coming to legislation and the question why we do not have a United Kingdom Bill or possibly a Scottish Bill. The Rating (Interim Relief) Bill has been introduced to deal with what is a specific English ratepayers' problem in advance of the Allen Committee's Report. [Hon. Members: "Oh."] Although the Scottish revaluation in 1961℃62 did not raise comparable problems, the Government felt that it was right that broadly equivalent relief should be given to Scottish ratepayers.

The best way of giving this relief appeared to be to add £1 million, which is the Scottish equivalent of the sum that is broadly estimated will accrue to the English authorities, and to do this through the general grant. The legal advice is that this cannot be done in an increase Order and it must wait until we have the next main grant to be made in a year's time, for 1965℃66 and 1966℃67. It will be possible for the Secretary of State to direct that this £1 million should be distributed at the beginning of 1965℃66. Since the English local authorities will receive only part of their grant under the Bill—that in respect of the over 65s—in 1964·65, and most of the balance, that in respect of the remission of rates, in 1965℃66—the two countries will be receiving broadly comparable treatment.

Photo of Lady  Grant of Monymusk Lady Grant of Monymusk , Aberdeen South

It is, because if a grant similar to that under the English Bill in respect of the over 65s were brought in, it would bring a disproportionately small return to Scotland—I understand less than £300,000 compared with the £6¼ million. This is because of the small number of older people in Scotland.

The hon. Member for Greenock also asked if I would say something about mental health—

Photo of Dr Dickson Mabon Dr Dickson Mabon , Greenock

Before the hon. Lady leaves that point, may I ask her this question? Why cannot the Government introduce a Bill to amend the Section of the 1958 Act to allow us to put through this new temporary relief? Is it not possible to get a one-Clause Bill to do this and withdraw this Order tonight, so that we can pass the Bill which will allow us to introduce an Order to take this factor into account? I am sorry to put the hon. Lady on the spot like this, but why cannot we have a promise that we will get not just £1 million in 1965 but £2 million to make up for the one year that we are going to miss?

Photo of Lady  Grant of Monymusk Lady Grant of Monymusk , Aberdeen South

It is always possible, with the agreement of both sides of the House, to introduce a one Clause Bill at any time, but we think that we should not do that, for this reason. As all hon. Members know, first of all the Allen Committee's Report is expected next year. Afterwards it may well be that we shall have to look at the question in a much wider way, but I want to come to that when I refer again to the fundamental questions which were raised by the hon. Member for Kilmarnock about the whole working of the general grant.

I should now like to reply to the hon. Member for Greenock who asked me about the Mental Health Act. He asked why more has not been provided in this Order. There is provision for mental health expenditure in the general grant for the present grant period. When the estimates for the next period are discussed, the scale of expenditure proposed by the local authorities will have to be gone into again because we had hoped to encourage local authorities to spend more in this direction, and therefore I think one can say that when their proposals do come forward there will be no obstacle put in their way by the Secretary of State.

It is nice to hear the hon. Member for Dundee, West (Mr. Doig) speaking, because I remember that we had a contest together at the last General Election, and I think I am right in saying that this is his second speech since his maiden speech. As Treasurer of the City of Dundee, he should find this a very apposite subject on which to speak. He asked about the question of teachers' salaries. Indeed, so also did the hon. Member for Kilmarnock. They asked if we were going to consider the very important question whether any part of the enormous expenditure on the education services should or should not be borne in the future by the central Government rather than by local government.

In this connection, it is perhaps interesting to note that the actual proportion for the education service over the last two grant periods has remained at almost exactly the same—86·4 per cent in 1959℃60, 86·8 per cent. in 1962℃63 and 86·8 per cent. in 1963℃64.

Photo of Mr Harry Gourlay Mr Harry Gourlay , Kirkcaldy District of Burghs

Does this 86 per cent. include the 100 per cent. grant paid for school meals? We understood that the specific grant in respect of education was 60 per cent.

Photo of Lady  Grant of Monymusk Lady Grant of Monymusk , Aberdeen South

No, it does not include the school meals service, which is the subject of a 100 per cent. grant.

I wish to refer to this proportion because the proportion of grant to relevant expenditure is 61 per cent. and not 60 per cent. as the hon. Member for Kilmarnock suggested. It has remained the same this year. I have all the figures here.

Photo of Mr William Ross Mr William Ross , Kilmarnock

I want to take up the point about the 86·8 per cent. The noble Lady will appreciate that we have had increases in expenditure. We have a new one in this increase Order. Before that, we had mental health. Now we have children and young persons. The fact that the percentage remains the same in relation to an increased aggregate shows exactly how overwhelming is the case in respect of total expenditure.

Photo of Lady  Grant of Monymusk Lady Grant of Monymusk , Aberdeen South

It is a very large expenditure indeed, much the biggest; and one has to remember that, once the Allen Committee has reported, and once we have the review of local government which is now the subject of such controversy in Scotland, then will be the time to discuss together whether there should be some fundamental change in the relation between central and local government.

The hon. Member for Dundee, West said that this particular increase Order was not agreed. He told the House that he had attended a meeting and he was quite certain that this was not agreed. He will, I am sure, accept that he did not attend the last meeting, which was the important one which took place between my noble Friend the Minister of State and the local authorities on 11th November, when they discussed all the various factors which were then still in dispute. The hon. Member for Kilmarnock asked whether this was a compromise or really an agreement. In the end, all these things are in the nature of compromise—there is give and take on both sides—but it was accepted by the local authorities, and the figures agreed were the £4·5 million and the £4·3 million.

I gathered that the hon. Member for Kilmarnock was quite convinced that the proportion today was not 61 per cent. of grant but 60 per cent. I have here the figures which will show that it was 61·1 per cent. The increases in expenditure in 1963℃64 were estimated at £7·40 million, and in 1964℃65 at £6·99 million. The grant of 61.1 per cent., on both heads was £4·52 million and £4·27 million, rounded to £4·5 million and £4·3 million, to make the total for the two years of £8·8 million.

The hon. Member for Kilmarnock referred in particular to the speech which was made by my right hon. Friend the Secretary of State in the last debate, which, of course, I have read. The hon. Gentleman suggested that my right hon. Friend should have been here tonight. As the hon. Gentleman knows, this is not the main General Grant Order; it is an increase Order. I understand that it is customary for the Secretary of State always to be present for the main General Grant Order, but, just as for the English Order last week which was handled by the Parliamentary Secretary to the Ministry of Housing and Local Government, I am present to assist the House on this Order and my right hon. Friend, is not here.

Photo of Mr William Ross Mr William Ross , Kilmarnock

Does not the noble Lady realise that the Secretary of State said that, when we had another increase Order, he would give attention to a particular proportion? We have got the increase but we have not got the Secretary of State.

Photo of Lady  Grant of Monymusk Lady Grant of Monymusk , Aberdeen South

No, but on his behalf I have made plain, I hope, that we have the same proportion, which was the 61 per cent. This was the main point. It is when we get to the general grant that we shall have to examine the whole matter.

Hon. Members will realise that as these figures have been accepted and agreed by the local authorities—

Photo of Mr Thomas Fraser Mr Thomas Fraser , Hamilton

They had no choice.

Photo of Lady  Grant of Monymusk Lady Grant of Monymusk , Aberdeen South

—the Order is one which we should pass tonight. I should, however, like to say, on the major question of the distribution formula, which will also be in hon. Members' minds when they talk of the percentage and also the ratio, that the Local Government Finance Working Party is examining the question of the Scottish general grant distribution formula in the terms of Section 8 of the Local Government (Financial Provisions) (Scotland) Act, 1963. As hon. Members know, this enables the definition of weighted population to be modified.

With possible changes in Scottish local government, it is clear that the whole of the financial arrangements for local authorities would have to be thoroughly reviewed at the same time. Such a general review was proposed by my right hon. Friend the Chief Secretary to the Treasury when the Report of the Allen Committee on the impact of the rate burden has been received. It is, therefore, likely that these present considerations which are going on will be followed by wider and much more far-reaching investigations which might, in the end, involve legislation. Other small changes which involve legislation should, therefore, also be possible. Naturally, in those circumstances, the local authorities would certainly be brought into consultation. No one has spoken against the Order and, therefore, I commend it to the House.

Question put and agreed to.

Resolved,That the General Grant (Increase) (Scotland) Order, 1963, dated 26th November, 1963, a copy of which was laid before this House on 28th November, be approved.