With your permission, Mr. Speaker, I wish to make a statement on the Report of the Royal Commission on Local Government in Scotland, which was published, together with a short version, on 25th September.

Hon. Members have by now had an opportunity to study the Report, and will have been impressed by the comprehensive treatment which the Commission has given to this important and complex subject. Lord Wheatley and his colleagues have already been thanked by the Government for their work, and I am sure that this House will also wish to acknowledge its great indebtedness to them.

The structure of Scottish local government has evolved over many centuries. The earliest of the burghs received their royal charters in the first half of the 12th century; and since then the system has developed and expanded in piecemeal fashion as population increased and local authorities were given responsibility for the provision of new services. Reorganisation Acts of 1889 and 1929 laid the foundation of the present structure, and few would claim that it can now deal adequately with all the demands which are made upon it.

The Report proposes to replace the present system by a two-level structure, consisting of seven regional and 37 district authorities: these 44 authorities would assume the functions of the existing 430 county, town and district councils. This proposal is made in order to satisfy two essential requirements: first, the need for authorities with sufficient resources and power to enable them to provide services effectively; and secondly, the need for local people to understand and to feel involved in the operation of the democratic process.

The Commission recommends that the regional authorities should exercise the major functions with the heavy expenditure, including strategic planning, transportation and roads, housing, education, the personal social services, and the police and fire services; and that the main responsibility of the district authorities should be to plan and develop the local environment.

It proposes also that, at a more local level, communities which so wish should be able to form community councils to express local opinion and to provide certain local facilities.

On the major principles the Commission is unanimous. Two Commissioners, the hon. Members for Renfrew, East (Miss Harvie Anderson) and Inverness (Mr. Russell Johnston), dissent from the Majority recommendation about district authorities. They believe that local planning should be the responsibility of the regional, and not the district authorities, and that if this were accepted there could be many more than 37 second-level authorities. There are also reservations about the status to be given to Shetland, Orkney and the Western Isles.

The Government welcome the Commission's fundamental approach to the problems and the broad objectives for local government which it has stated. They accept that major rationalisation of local government in Scotland is necessary; that this must involve a radical reduction in the number of authorities with executive powers; and that the Division between town and country should be brought to an end. We agree with the Commission that it is vital that Scottish local government should enjoy greater status and responsibility than it does now, and that it should be so reformed as to enable central Government to give local authorities more freedom and power.

What the final pattern should be cannot be settled without further consultation. I have already invited comments from all interested bodies. The process of consultation will be thorough, although we appreciate the importance of keeping the period of uncertainty to a minimum.

Our objective is to introduce comprehensive legislation as soon as possible. It is our aim to complete in the early part of next year our consultations on the Commission's proposals for the basic structure and division of functions. We intend to announce decisions on these basic questions before proceeding to the further consultations that will be necessary on the more detailed recommendations, concerning, for instance, the safeguarding of staff interests and the precise definition of boundaries.

Proposals for the reorganisation of local government have now been made for Wales, England and Scotland. There are differences between these proposals. This is not unexpected because of the differences between the three countries, for example, in their history, geography and distribution of population, and the Government's final decisions in each case will have full regard to the particular circumstances of the country to which they relate.

The Royal Commission's Report presents us with a unique opportunity to shape a large part of Scotland's future. It is an opportunity which the Government, for their part, welcome and accept.

We are all indebted to the Chairman and members of the Wheatley Commission for the thorough and comprehensive way in which they have tackled an enormous task. The Report is clearly the start of an important public debate in Scotland.

There are two points on which I have questions to put to the Secretary of State. The first—and he did not touch on this in his statement—is that there is a recommendation in the Report that there should be a special inquiry on the finances of local government. This is urgent, and we regret that nothing has been done so far on this. What steps is the Secretary of State taking to get this special inquiry into finances under way?

Second, it is plain, from its reception in Scotland, during the past three weeks, that this is a controversial Report. Will the Secretary of State guarantee adequate time for full consideration of the recommendations and for the expression of views, and undertake net to adopt the attitude he took over the amalgamation of water authorities in the Water (Scotland) Act, when he bulldozed it through without allowing any change in the recommendations of an advisory committee?

We are already at work on the question of finances, and possible alternatives to, and improvements in, the rating system are already being examined. As to timing, we must get the balance right. We have had presented to us three years' work by a Royal Commission. The Report is very full. We do not want either to stifle discussion or to let things drag on where one wants to limit as far as possible the time of unrest and upheaval.

I have asked the local authority associations and others to let me have their written comments by the end of January. I shall thereafter go ahead with further consultations necessary for decisions on functions and structure—to deal with just those two points and get them clear first in a white paper and then to go on to the other matters. I think that that is fair enough.

As part and parcel of the consultations my right hon. Friend proposes, will he make arrangements for those proposals to be fully discussed by Scottish Members, either in the House or in the Scottish Grand Committee?

We can have a look at that.

May I press the right hon. Gentleman a little on the question of finance? Do I gather from his answer to the hon. Member for Moray and Nairn (Mr. Gordon Campbell) that the Government do not intend to set up a separate committee? Does he consider it possible to implement the functional and structural changes in local government without necessarily at the same time proceeding with any financial changes?

Anyone who has read both this Report and the Sorn Report will appreciate that the eventual structural change will have a bearing on viability, which, in turn, will have a bearing on finance. We have been looking at the question of a financial review from the point of view of urgency and immediacy. I do not think that it requires a separate commission to go over this for another three years. I think that the hon. Gentleman will recollect that the Sorn Committee looked into this when it looked into rating, so there is quite a lot to draw upon in the information we already have.

How wide are the terms of reference of any committee or commission looking into possible financial arrangements of the new authorities? Does my right hon. Friend intend to marry, in the timetable, the proposals of that committee or commission with the functional operations of the new proposed authorities? Which Minister will be responsible for handling these negotiations? Is he in Another place?

No special commission has been set up for this purpose, so we are wide-ranging. We also have certain guidance from the Royal Commission. I am asking my noble Friend Lord Hughes, the Minister of State, who sits in the House of Lords, to conduct these negotiations.

Does the right hon. Gentleman accept that our best thanks to the Commissioners would be the implementation of their Report? Do I take it from his statement that implementation is proposed in two legislative bites?

No, I did not say so. I said that the negotiations on implementation would first deal with the main problems of functions and structure and then, having got that settled, with the production of a white paper, we would follow on with more detailed discussions about boundaries and all the other aspects, producing yet another set of decisions. I pointed out that then we would be ready to move into legislation.

Is my right hon. Friend aware that all Scottish Members will welcome this Report as an opportunity to have a wide-ranging debate in the country and in this House? Is he further aware that our minds have always been firmly made up that we could not prescribe the powers, functions and geographical nature of our local authorities unless we had the financial structure agreed to previously? That has been the decided policy of the Scottish Labour Group and I hope that we shall not depart from it.

I hope that my hon. Friend appreciates that this was one of the basic facts in the Report itself, which speaks about viability for an area in relation to functions and finance.

Will the right hon. Gentleman say whether the Wheatley recommendations, in proposing to divide Scotland into seven amorphous chunks, are an example of the Government's promised policy of devolution? Is there not a danger that, on the contrary, there will be great, centralist local authorities which will take the "local" out of local government?

The hon. Lady should read closely what the Royal Commission has said about each region—I shall not now commit myself to how many there will be—submitting a scheme of management giving an indication of its democratic viability so as to ensure that we shall get both effective local government and effective democracy at the same time.

In view of the mixed reception of the Wheatley Report and the fact that there has been what seems to me to have been an inspired Press leak that the reorganisation of local government in Scotland will not take place before 1975, does not my right hon. Friend consider that more time than 12 weeks should be given to local authorities to formulate their views on the more important of the two propositions, namely, the broad reorganisation? From my experience of local government, I feel that they should get far longer than 12 weeks to consider these wide-ranging alterations.

The local authority associations and their constituent parts are not coming new to this. Many of them gave evidence to the Royal Commission. We now have the advantage of the distilled wisdom of the Commission and against that background we should not require an infinite length of time to make comments. Indeed, I would be worried that some of the local authorities might make their comments far too early. I think that three months is a fair enough length of time to be allowed.

Mr. Edward M. Taylor:

Does the right hon. Gentleman accept the recommendation in paragraph 1038 where the Report suggests that any reorganisation should involve transferring a larger burden of financial responsibility from the central Government to the local authorities? Is the right hon. Gentleman also looking at a revision of the rating system or alternatives to it?

Obviously, any change in the method of raising finance will have its implications for the rating system. There is no doubt about that. If we are to give more power and freedom with that power to the local authorities, then we want to make them as viable as possible in relation to the moneys they can raise. I think that that goes without saying.

How is it possible to give the local authorities greater status and responsibility without looking at all the financial aspects? Cannot my right hon. Friend be more forthcoming about a debate rather than just saying that he will consider it? Surely we are to have an opportunity to debate the matter before he announces his decision.

I am not yet Leader of the House. Matters suggested for debate are for my right hon. Friend the Leader of the House. I may add that many of the functions I exercise which do not involve money at all could well be exercised properly by stronger local authorities.

In his statement, the right hon. Gentleman said that the old Division between country and town should be ended. Why should it be ended? The interests of town and country are often different. In what Session does the right hon. Gentleman expect legislation to be introduced? Will it be the next?

I think that we want legislation to be introduced as soon as possible consistent with a proper balance in relation to discussion. I think that the ending of the strict Division between town and country is one of the modern facts of life. Let us take Glasgow City as an example. There we have people being moved from the centre while people from the country are coming to live just beyond the fringe of Glasgow. There is more community, very often, between those people living just outside a city and those living just inside it than there is between the people who are living just inside it and those who are living in the centre. The present division is quite artificial.

Will my right hon. Friend use his influence with the Leader of the House to see that this matter is debated in the Scottish Grand Committee within the next two or three weeks?

I have noted the wish of hon. Members to debate this matter, and I welcome it. I will certainly draw it to my right hon. Friend's attention.

Is the right hon. Gentleman aware that it is quite unrealistic of him to try to limit debate on this subject of the white paper to structure and functions? It is impossible to consider these separately from the allied problems of boundaries and finance. Will he give us an early opportunity to debate the whole matter and give all local authorities the opportunity to make known their views on all these points as soon as possible?

I am not limiting anyone in what he discusses, but in the conduct of the negotiations we have suggested that we should, in the first place, get agreement, or come to the point of decision, about functions and the main structure, which are basic to the other things which will follow thereafter.

Several Hon. Members:

rose——

Order. I must protect the business of the House.