Orders of the Day — Scotland (Housing Support Grant)

– in the House of Commons at 10:15 pm on 14th January 1980.

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Photo of Mr George Younger Mr George Younger , Ayr 10:15 pm, 14th January 1980

I beg to move. That the draft Housing Support Grant (Scotland) Variation Order 1980, which was laid before this House on 21 December 1979, be approved. I suggest, Mr. Speaker, that it might be for the convenience of the House if we took at the same time the draft Housing Support Grant (Scotland) Order.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Is that agreed? Then so be it. We shall take the two orders together.

Photo of Mr George Younger Mr George Younger , Ayr

The original orders, which were laid on 30 November, had to be withdrawn as it was not found possible to debate them before the Christmas Recess, and in the new orders 1980 is substituted for 1979 where appropriate.

This is the second year during which the House has had the opportunity to discuss the provision of support through housing support grant for local authority housing in Scotland. The Convention of Scottish Local Authorities was consulted before the orders were laid and, while we could not be expected to reach complete agreement with the convention on the terms of the orders, the consultations were generally agreed by all parties to be most useful. I pay tribute to the efforts of the convention's representatives, who gave unstintingly of their time and expertise in what has been a difficult year.

I shall deal first with the variation order. The variation order for 1979–80 deals only with the effects of increases in prices; it does not deal with any volume changes. For example, the same base data were used in the calculations as were used for the main order debated in January last year, and no change has been made to the growth in general expenditure built into that order. I should point out also that the estimate of relevant income remains unchanged.

Having taken account of the level of interest rates, remuneration, costs and prices, I have decided to increase the estimate of eligible expenditure by £47 million, and, since the estimate of relevant income has not changed, the aggregate of housing support grant has increased by the same sum of £47 million. This is a very considerable sum, which demonstrates the Government's commitment and anxiety to play absolutely fairly with local authorities in what are very difficult conditions.

The estimate of expenditure takes full account of estimated increases in interest rates and of price increases throughout the year on management and maintenance costs, except that, as indicated in the report, we have abated the wages and salaries components of the indices used to update that head of expenditure.

I said earlier that the estimate of relevant income had not been changed. The estimate produced by the last Government assumed that earnings would increase by only 7 per cent. from 1978–79 to 1979–80. In the event—it will be no surprise to the House—

Photo of Robin Cook Robin Cook , Edinburgh Central

On a point of order, Mr. Speaker. The House is trying carefully to hear what the Secretary of State has to say, but we are experiencing some difficulty in picking up his words. I wonder whether you could bring the House to more quiet attention.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

I think that the door has been opened and the noise from outside was coming into the Chamber. I think that all will now be well.

Photo of Mr George Younger Mr George Younger , Ayr

I mentioned earlier that the previous Government assumed that earnings would increase by only 7 per cent. from 1978–79 to 1979–80, but I need not remind right hon. and hon. Members, especially those on the Opposition Front Bench, that in the event the increase was between 14 and 16 per cent. We recognise, however, that we could not increase the estimate of income at this stage in the year. Apart from anything else, local authorities would not have sufficient time to increase rents to make up the difference. But I shall return to this subject when I deal with the main order for 1980–81

Turning to the distribution of grant under the variation order, I should point out that while many of the factors used in the distribution formula have changed—this is a necessary consequence of the increased estimates of expenditure and increased grant—the distribution adheres broadly to the principles laid down in the main 1979–80 order and approved by the House. However, the House will have noticed that, while the aggregate increase in grant is about 31 per cent., not all the individual authorities will receive increases at that level. The average authority, in terms of relative house numbers and expenditure per house, will tend to receive increases close to the average. Others will receive increases that are greater or less, depending on factors such as their relative loan charges per house and numbers of houses.

On the main order for 1980–81, I should point out that, in distinction from the previous one, the estimates of both relevant income and eligible expenditure have been expressed at estimated outturn prices. That was done to avoid the confusion that was caused last year—I do not ascribe any blame for that—by the laying of the order using what might be called a hybrid price base. Last year's order was based on estimates of expenditure at November 1978 prices. Income was estimated at 1979–80 outturn prices. As a result of that, the bulk of local authorities underestimated their share of grant and produced estimates for budget purposes which have turned out to be somewhat inaccurate.

Another result is the size of the variation for 1979–80, to which I have already referred. By using forecast outturn prices, we should avoid having to adjust price increases which might occur later in the year. We cannot rule out entirely the possibility of a variation order, but by our producing all the estimates on an outturn price base there is a better chance of avoiding the need for one. If there is a need for a variation order, the amount of the variation in grant should be much smaller than I have had to fix for this year. In this case, that was my decision. That should make the 1980–81 figures easier to understand and it will enable local authorities to produce more accurate budgets for 1980–81 than would have been possible if we had stuck to the system that was used last year.

We can now look at the figures contained in the order and the accompanying report which hon. Members have before them. The 1978 Act empowers me to make estimates of the eligible expenditure and relevant income of local authorities on their housing revenue accounts. Those accounts relate entirely to local authority housing. Having made the estimates, I have subtracted income from expenditure and fixed the housing support grant for the year as the difference between the two amounts. For 1980–81, eligible expenditure has been estimated at £541·6 million, relevant income at £.356·8 million and housing support grant at £184·8 million. The estimates have been based on the latest reliable historical data available in good time for consultation with the convention and the determination of the laying of the order.

I should explain briefly how the estimates have been arrived at. On the expenditure side, the most important item is loan charges. They are the revenue consequences of capital expenditure. In order to estimate loan charges, it is necessary, as a first step, to make an estimate of aggregate debt. That is done by adding to the latest available historic debt figures capital expenditure estimates and by deducting repayments of loans to loan funds. The estimates of capital expenditure included in the calculation accord with the Government's public expenditure estimates. Certain aspects of the capital expenditure estimate for 1980–81 have been reduced by 10 per cent. but they are in line with the average of local authorities' unsubsidisable expenditure under the previous legislation. That requires a little explanation.

It is necessary because authorities are no longer subject to detailed control of their building projects since June of last year. I am considering the introduction of a system of incentives to economy in building costs from 1981–82. The unreasonable expenditure percentage is a somewhat crude device that is designed to protect the Exchequer interests in the interim year. In fairness to authorities, the 10 per cent. deduction has been applied to net capital expenditure excluding land. It has been accepted that land prices are out of the control of local authorities.

Photo of Mr David Lambie Mr David Lambie , Ayrshire Central

Will the right hon. Gentleman tell the House whether he has had any discussions or consultations with COSLA on the 10 per cent. reduction in capital expenditure? If so, what was the reaction?

Photo of Mr George Younger Mr George Younger , Ayr

Indeed, I can assure the hon. Gentleman that such discussion has taken place. My hon. Friend the Under-Secretary with responsibility for the environment and local government has met COSLA and discussed the matter. I do not believe that there was total agreement on the matter, but each party understoood what the other was saying.

Photo of Mr David Lambie Mr David Lambie , Ayrshire Central

Did COSLA agree to the 10 per cent. reduction in capital expenditure?

Photo of Mr George Younger Mr George Younger , Ayr

I think that the position can be fairly summed up by saying that it would very much prefer not to have had the 10 per cent., but, if COSLA had to have it, it reckoned that that was the right figure to use. I think that that is a fair description.

The object of the exercise is clear. We are in transition between two different types of system, and this is one way of compensating local authorities and at the same time preserving the Exchequer position at a time when we have withdrawn detailed controls over projects. I think that that was welcomed by COSLA and generally. By this time next year, I hope that we shall have moved to a better system. In the meantime this is, broadly speaking, fair to all concerned.

The loan charges consist of debt redemption—or repayments to loan funds—and interest charges. The rate of debt redemption has been based on a historic rate and interest charges are based on an assumption about the average outturn local authority pool rate for 1980–81. The other main area of spending is on the management and maintenance of houses. Although an allowance has been made for the estimated rate of inflation, in the current financial climate I consider that in real terms expenditure under this head should remain unchanged. Desirable as some people might think it to be to do so, we simply cannot afford at this time to devote even greater resources than in the past to the management and maintenance of local authority houses, although I had hoped to maintain the level at least at the previous rate.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

The Secretary of State said that inflation has been taken into account, but what inflation rate was used?

Photo of Mr George Younger Mr George Younger , Ayr

As the right hon. Gentleman knows, the inflation rates used are made up of several different figures and no single average figure is possible. I am sure the right hon. Gentleman will remember that these different items all carry different rates of inflation according to different rates of assumption. If I were able to put them together, weight them appropriately and produce an average figure, it would not mean very much and it would not be of much help to the right hon. Gentleman.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

It would be of help. The Secretary of State has a figure. Why does he not disclose it to the House? He has a figure for supervision and management. Why does he not disclose it?

Photo of Mr George Younger Mr George Younger , Ayr

I have already explained the background of this issue, and I do not know that the right hon. Gentleman is on very good ground. He will recall that his estimate of a 7 per cent. increase in earnings last year caused immense trouble and caused everyone to budget wrongly. It has caused great difficulty ever since on this issue and on that of the rate support grant. I do not feel inclined to take a lesson from the right hon. Gentleman on this subject.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

That 7 per cent. had nothing to do with expenditure but related to the estimate on increased rental income. We gave estimates for certain inflation figures. Why does not the Secretary of State come clean and tell us the figures?

Photo of Mr George Younger Mr George Younger , Ayr

When it comes to coming clean, the right hon. Gentleman should recognise that the two operations are the same in that they are both estimates. The right hon. Gentleman caused complete disaster last year by making an estimate that was thought at the time to be nonsense and turned out to be nonsense. It led local authorities, both on this issue and on that of the rate support grant, to budget wrongly. Many of the problems that I have had to deal with stem from that, and the right hon. Gentleman should show some humility.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

I should be delighted to show lots of humility, and I shall not intervene again if the right hon. Gentleman occasionally answers a question. He is quite wrong about last year. The estimates on expenditure were realistic and on the revenue they were extremely favourable to local authorities. If the Secretary of State gives an impression that they were not, he could not be more misguided. Why does he not answer the question about his responsibility and give us the figures?

Photo of Mr George Younger Mr George Younger , Ayr

If they were so excellent last year, I wonder why I am now before the House providing an extra £47 million in the variation order. That is almost one-third of the original total. The issue concerns the making of estimates. I have explained the background to our estimates, and I think that that is probably the best way to leave it.

Photo of Mr Hugh Brown Mr Hugh Brown , Glasgow Provan

Will the right hon. Gentleman give way?

Photo of Mr Hugh Brown Mr Hugh Brown , Glasgow Provan

It might also give him time to look at the matter. I know better than most how complicated it is, but the right hon. Gentleman must get one thing right. The question that he asked me during the equivalent debate last year was about the rate of increase in earnings and not the rate of inflation, which my right hon. Friend is asking about. That is a different thing.

Photo of Mr George Younger Mr George Younger , Ayr

I do not think that there is a difference between us. We are talking about the methods of making assumptions in these matters. I have explained the background to this one and the right hon. Member for Glasgow, Craigton (Mr. Millan) has explained, I would say not very effectively, the background to the one to which he was referring. The principle is the same, and I have made it clear that it is not a figure that is worth having and it cannot be brought together anyway. Therefore, I do not think that it contributes anything to the understanding of the matter.

Photo of Robin Cook Robin Cook , Edinburgh Central

The Secretary of State will be aware that under the 1978 Act he has a statutory duty to make an estimate of the likely rise in earnings, which he must take into consideration in arriving at his estimate of the increase in local contributions that he regards as reasonable. Can he tell the House what that estimate is?

Photo of Mr George Younger Mr George Younger , Ayr

I am not prepared to divulge details of the background calculations. I am delighted to fulfil my statutory obligations that are being brought up in this case in the variation order and the main order that we are discussing. As the hon. Gentleman knows perfectly well, the making up of these assumptions for the future is complicated and involves many different calculations from different sources. Even an earnings calculation is a compilation of many different figures. The question of whether a particular figure is used is complex and cannot be dealt with here.

The principal source of income to housing revenue accounts, apart from Government subsidies, is the local contribution—that is say, rents and contributions from rate funds. The local contribution has this year been increased by a sum averaging over the year about £1·40 per house per week. An increase of that level is necessary partly because the previous Government increased the local contribution in 1979–80 by their unrealistic estimates of earnings increases of 7 per cent. in the year up to 1979–80, which is the subject that we have just been discussing. That was a gross underestimate, and the latest figures show that earnings increased by 14 per cent. to 16 per cent.

My aim this year is to reduce public expenditure by the total increase in the local contribution—that is to say, about £70·8 million. To do that, local authorities will need to recover that sum from rents and refrain from increasing the burden on the ratepayer. To achieve that, rents will have to go up by an amount which will, over the year as a whole, average out at about £1·40 per house per week. An average increase at that level will bring the average rent level in Scotland to £6·28 per week. That is not a large sum in current circumstances when the average wage is nearly £100 a week.

Additionally, it should be remembered that about 40 per cent. of rent payers, as mentioned earlier today, are in receipt of either supplementary benefit or rent rebates. Many of them will not have to pay any increases, and the remainder of the 40 per cent. will face increases of less than the full amount.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

If I may try the right hon. Gentleman with one further figure, what is the percentage rent increase that he is assuming?

Photo of Mr George Younger Mr George Younger , Ayr

From memory, the present figure is £4·88, which will have £1·40 added to it. The right hon. Gentleman can work that out. I do not have it in front of me.

Photo of Robin Cook Robin Cook , Edinburgh Central

It will be 29 per cent.

Photo of Mr George Younger Mr George Younger , Ayr

It may be 29 per cent., but it will be an extra 1·40 a week, which is what the people having to pay it will be interested in.

The next stage is to consider how the grant should be shared out among authorities. Under the old subsidy system, the range of contributions by an authority to its housing revenue account was considerable. The aim behind the housing support grant is to narrow that range so that grant is more closely related to need.

There is a need to move slowly, however, and to ensure that there is a reasonably smooth transition. It was agreed last year that only one-third of the grant should be assessed according to the general distribution formula. Two-thirds of the grant was referred to as the transitional portion and was based on entitlements to subsidies under the previous system. This year, I have decided to reduce the transitional portion to approximately one-third of the total grant available. The transitional portion is calculated according to the authorities' shares of subsidies in 1978–79. In 1980–81, the general portion will account for about two-thirds of the aggregate grant.

The formula assesses for each authority a net amount of expenditure in accordance with the factors shown in the schedule to the order. The most important item used in the formula is that representing loan charges. It has been decided that for this year loan charges should be assessed in relation to the actual loan charges returned by authorities for 1978–79 so that, broadly speaking, the loan charges part of the grant is distributed pro rata to the loan charges incurred by each authority in 1978–79.

That means that an authority whose estimated loan charges for 1979–80 and 1980–81 are likely to move by a greater amount than the average movement in loan charges suffers from the lag and, if the formula remains unchanged, does not catch up for two years. The convention has asked that in order to minimise that discrepancy we should take into account an estimate of the previous year's loan charges, and I have promised to consider that for future years.

The other components on the expenditure side of the formula relate to management and maintenance expenditure. As in 1979–80, a standard amount per house has been allowed, but special factors have been used to boost the grant for authorities with special needs. A high-rise weighting has been used to support urban authorities with high-rise houses in their stock, and that has been set at twice the standard amount for all houses.

Authorities at the other end of the scale, those with relatively small stocks of houses scattered over wide areas, will receive the benefits of sparsity weighting. In 1980–81, in response to a plea by Argyll and Bute district council, it has been decided to widen the qualifications for the sparsity weighting. As a result, the Argyll and Bute and the Ross and Cromarty district councils will benefit from the sparsity weighting. For future years, the Department is carrying out a study of the effects that various factors, including high rise and sparsity, have on management and maintenance costs.

Net assessed expenditure is then calculated by deducting the basic income amount. This is comprised of two components, the first relating to the number of houses of the authorities and the second to the population of the authorities. To encourage authorities to raise rent levels and to fall in with our view that the increased local contribution should be met from rents, we have decided to set the per head income factor at the level established by the variation order for 1979–80 and to add the entire increase in the local contribution to the per house amount.

It has been necessary, as for last year, to build in a safety factor to ensure that authorities with small proportions of houses per head of population do not have to contribute more than a standard amount per house. That ensures that such authorities have some incentive to continue to provide houses where there is a need for local authority housing. The amounts selected for the per house and per head factors take account of a distribution percentage of 85 per cent.

The remaining portion is that concerned with hostels and lodging houses. It is apportioned according to estimates of net expenditure for 1980–81. It has been necessary to recover grant from two authorities in respect of 1979–80. Those authorities, in good faith, claimed grant for two buildings that were not operated as hostels or lodging houses as defined in the statute. It has also been found necessary to use an adjustment as part of the transitional provisions to limit loss of grant for 1979–80. That has been limited to a loss of grant of £52 per house, but it directly affects only a few authorities and the effect of the adjustment on the remaining authorities is negligible.

The amounts of housing support grant to be received by authorities in 1980–81 are listed in the report at annex C and the sums have been calculated to the nearest £10,000, though before payment they are, of course, calculated to the nearest £1.

I have tried to explain as much about the orders as I can in the time available. I think the House will agree that the variation order is extremely generous in the prevailing financial climate. I would very much like to have gone further on the main order, but I hope that the House will feel that in the difficult financial situation that we inherited we have been as generous as possible.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton 10:40 pm, 14th January 1980

I cannot say that the Secretary of State has given an adequate explanation of the orders. As soon as he was asked anything that was not dealt with in the bits of paper in front of him, he told us that he did not know the answer. He did not have to tell us that. It was obvious from his manner that he knows little about many of these matters.

That would not be too bad except that COSLA has been treated in exactly the same way, because a lot of the basic information that ought to be made available to COSLA—and was made available by me in the first housing support grant order—has not been made available this year. If the right hon. Gentleman thinks that COSLA is satisfied with the present method of consultation and with what happened this year, he could not be more wrong, because there was no genuine consultation. I have had that confirmed from COSLA as recently as today. One has only to read the COSLA memorandum, with its complaints about the inadequacy of the information—and, indeed, more than that, the absolute refusal of the Secretary of State to give basic infor- mation to COSLA—to understand how unsatisfactory the position is.

I want to deal briefly with the 1979–80 variation order, and I have only two points to raise. With regard to paragraph 7 of the covering report, it seems to me to be simply an impertinence and a gratuitous penalty on local authorities to make the abatement of wages and salaries of three percentage points. No justification is given for that. There is no suggestion that the local authorities have behaved in any way irresponsibly. It is simply a way for the Government to avoid or welsh on their obligations by taking a certain percentage of what ought to be paid to the authorities in terms of inflation, which is not their responsibility.

The second point is that although the variation order obviously contains a certain recompense for increased interest charges, it is still done on the basis of interest charges which do not take account, as I understand from COSLA, of the latest information about the very high recent interest charges and the effect they will have by the end of the current financial year. Indeed, the COSLA people estimate that on current interest charges—that is, interest charges that are already known in the current year—there may be additional local authority expenditure of more than £7 million compared with what is allowed for in the order. I want an assurance that when the figures for the end of the year are known the Secretary of State will bring forward another variation order to recompense the authorities for that additional money, because I think that they are entitled to it under the normal provisions of the scheme.

I am very much opposed to the main order, and we shall vote against it for a very simple reason. The order imposes burdens on the local authorities, which means that there will have to be very substantial rent increases and, indeed, rate increases as well. The Secretary of State was not able to give the figures. He gave a figure of £1·40 as an increased rent figure, and I have seen quoted in the press a percentage increase relating to that of 29 per cent. That is at the minimum. In other words, the Government are assuming at the minimum that local authorities will raise their rents next year by 29 per cent. In my innocence, I was accepting the £1·40 figure and the 29 per cent., until I studied the orders a little more carefully and also studied the recent COSLA memorandum.

The rent contribution in the order, on COSLA's estimate—the arithmetic is perfectly straightforward—is 37 per cent., not 29 per cent. I shall not go into the technicalities, because it is rather a complicated business. The basic income amounts, including rent and rates, included in the orders are not the total rent and income of the local authorities, because there is ultimately, from the figures obtained from the order, an 85 per cent. factor applied in calculating the grant. That means that rather less than 100 per cent.—not necessarily arithmetically 85 per cent.—is all that is included in the order. So it is completely untrue that, as stated in paragraph 8 of the order, to meet the obligations that the Government are imposing on local authorities rent increases of 1·40 per week will be required. That is only about 85 per cent. of what is required.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

It is not an average. To meet the obligations of the order, rent increases of 1·60 a week will be involved, not £1·40.

I do not quite understand this, but one must assume that even if the Secretary of State does not understand the technicalities of it, his Department does. The figure of £1·37 to £1·40 a week in the report on the order is completely misleading. It is disgraceful that it should ever have appeared in the order and that the right hon. Gentleman should have used it at his press conference. The correct figure is not £1·40 but about £1·60, and the correct percentage increase is not 29 per cent. but between 29 and 37per cent. On my own calculations, it is nearer 37 per cent. than 29 per cent. If the local authorities do what the Government are asking them to do, given the reduction of the grant in this order, they will have to increase rents next year by 33 per cent.

The order represents a reduction in real grant next year compared with the present year of about 20 per cent. on my calculation. Shelter calculated it at 28 per cent. I believe that it has made some errors in its calculation. But certainly there is a 20 per cent. reduction in real terms. Again, it is rubbish for the right hon. Gentleman to say that the Government have been generous to the local authorities in these circumstances.

The right hon. Gentleman quoted what happened last year with the Labour Government. We did not estimate earnings rises of 7 per cent. as the basic factor for the orders. We estimated that local authorities would have to raise additional rents of 7 per cent. in that year, and that was related to an estimate that we made of an earnings increase of 7 per cent. But, by underestimating the increases, we gave very considerable benefit to the local authorities and to every local authority tenant paying rent.

We were abiding by our statutory obligations. In the 1978 Act, the Secretary of State is meant to take the latest information about the general levels of earnings into account in fixing the estimated rent levels for the next year. Has the Secretary of State the impertinence to say that he believes that over next year earnings levels in Scotland will go up by 33 per cent. or even 29 per cent., or even, if he believes that we were very generous to local authorities last year and gave them 9 per cent. more than we should have done, that it will be 29 per cent. or 33 per cent. less 9 per cent.? Of course, he does not believe that.

The Secretary of State has cheated on the basis on which these orders are meant to be prepared, which is to assure rent levels, as was the intention of the 1978 Act, which will go up in any year roughly in line with the estimated increase in earnings in that year. The right hon. Gentleman will not give figures, but he does not expect—and certainly he does not hope—that earnings will go up by 33 per cent. next year. He is asking rent payers, nevertheless, to pay 33 per cent. more rent next year.

I was responsible for the 1978 Act. If the Act is abused in this way—what the right hon. Gentleman has done is not illegal, but it is against the spirit of that Act and against the undertakings that I gave at the time about the operation of the Act—I do not believe that we can continue with this housing support grant arrangement. There is not the necessary element of trust and good faith between the Government and the local authorities, and I could not justify the 1978 Act when the right hon. Gentleman has behaved in this completely outrageous and scandalous way. But that is what he has done.

I make it clear, and I hope that every district council in Scotland will make it clear to its tenants when it imposes substantial rent increases next year, as it will have to, that it is at the direct behest of the Government and a direct consequence of the reduction in housing support grant in this order for 1980–81. When Glasgow rents go up next year by 20 per cent. and the rates go up by 33 per cent.—and the rent increases are a good deal less than the Secretary of State is asking—I hope that the tenants will be told that they are paying additional rent and additional rates because the Government have cheated them out of housing support grant, as they have cheated every local authority in Scotland. I hope that the message will be made clear not only now but during the period leading to the district elections.

There are other dishonesties in the order. There is the part, which the Secretary of State mentioned, encouraging local authorities to put up their rents by loading the whole formula on the incomes side in the order on to the per house rather than the per head of population factor. That is no encouragement. It does not make a pennyworth of difference to any local authority in terms of grant whether it raises the additional income wholly in rent, wholly in rates, or a bit from rent and a bit from rates. Authorities can choose any variation. It does not make a pennyworth of difference to the grants. To encourage local authorities to take a particular action by using the formula in this way is a piece of legerdemain. I am sorry that the order should abuse the position.

These orders are not meant to be pieces of propaganda. They are meant to be serious and accurate accounts of what the Government are doing. It is not true that changing the formula in that way has no effect and that it is completely neutral. By loading the assumptions about income on to the per house factor rather than per head of population, there is a gratuitous penalty in the distribution of the grant on the local authorities with the higher-than-average percentage of local authority houses in their areas.

It is a gratuitous penalty because there is no way in which those local authorities can escape the penalty even if they obey to the letter everything that the Secretary of State wants them to do and put the whole increase on to rents and none on the rates. It will make not a pennyworth of difference. The whole order is misleading from that point of view. I believe that it is deliberately misleading.

I hope that we shall hear a commitment tonight to a variation order for 1980–81. This order does not take account of the increased loan charges that have arisen from the recent high increased rates. I hope that there will be a commitment to an increased order for 1980–81.

I object to the unreasonable expenditure deduction. If the Secretary of State wants to take action on unreasonable expenditure, he will have to find a better way. I do not believe that it is necessary, under the new system, for reasons which I have no time to elaborate, to impose a penalty on authorities, and certainly not on every local authority, those which exercise care in their expenditure and those which do not. That is what the 10 per cent. penalty does.

There is no improvement in real terms in the maintenance allowance in the order. The last order, under the previous Labour Government, made an improvement in real terms of 10 per cent. for repairs and maintenance and of 18 per cent. for supervision and management on top of the normal allowances.

The Secretary of State has said that we made mistakes. We did not make mistakes on the inflation factor. On the expenditure side, we used prices at a particular point in time. There was no need to build in an inflation factor. On top of prices at a particular time, we built in real improvements. We believed, as I still believe, that there is a need to improve in real terms the amount of money that local authorities spend on repairs and maintenance and also on supervision and management. There is nothing written into this order.

There is the mystery of the inflation rates. The Secretary of State was not willing to say much about them. He was not, in fact, willing to say anything at all. I put down questions and received certain answers. It took the Secretary of State a week to give me the answers. The first answer was that he was thinking about the matter and that he would inform me later. The right hon. Gentleman then gave me answers which I can only assume, as those who advise him are not completely stupid, were done in a way calculated to make the finding of the truth as difficult as possible. Extraordinary answers were given on Thursday 20 December to two questions that I had tabled. The assumption was made, however it is calculated, that an inflation factor is written in of about 15 per cent., and perhaps more. It is impossible to make an accurate calculation.

The Secretary of State refused that information to COSLA and he refused it in explicit terms to me tonight. It is at odds with the inflation factor which is being assumed for rate support grant purposes, which we shall debate on Wednesday of this week. Thirteen per cent. is assumed there, but here, when he is asked to do particular calculations, the right hon. Gentleman comes to a figure which I assume is at least 15 per cent. However, it would be nice if he would tell us that and not give deliberately obscure answers which make it as difficult as possible for any of us to calculate the figures.

COSLA has now said that it is unanimous in wishing the Secretary of State to change the system of using capital expenditure two years behind instead of one year behind. This is a matter of distribution—it does not affect the Secretary of State's total—so I see no reason why that should not be done.

Another point is the Secretary of State's inability to meet the point which affects Monklands and Caithness, which made mistakes in their original returns and are now suffering considerable penalties in terms of grant—which is additional money and does not come from other authorities. There is no reason at all why that should not be made up to those authorities and why it should not have been made up to them in this order. That has not been done. I want an assurance at least from the Minister that that will be done as soon as possible and that these authorities will not have to wait a year or two years for money to which, it is agreed, they are entitled and which everyone except the Government agrees they should have as soon as possible.

This is a shabby order for 1980–81. It is mean, it has reduced the real support to local authority housing in Scotland, it will impose massive increases in rents on local authority tenants in Scotland and, more than all that, it was introduced originally to the press and has been introduced tonight in ways designed to obscure the reality of the position and to pretend that something different is happening. What is happening is shabby and will be expensive for every local authority tenant in Scotland. That is why we oppose the order tonight.

Photo of Mr Barry Henderson Mr Barry Henderson , Fife East 10:57 pm, 14th January 1980

The right hon. Member for Glasgow, Craigton (Mr. Millan) seems much more in his element juggling with the figures on these orders than he was in arguing against the Tenants' Rights, Etc. (Scotland) Bill.

One of my points follows from the last point that the right hon. Gentleman made, about the position of Monklands and Caithness. One of the two local authorities that lie in my constituencyNorth-East Fife district council—is in a similar position. The council submitted its return to the Scottish Office, as required, by the end of June. Because at that time the loan charges were not finalised, it included some estimated figures. This the council took the trouble to point out in a covering letter. Since then, it has emerged that some local authorities were altogether late in sending in their returns

At some time—I know not when—it appears that the period for making these returns was extended to the end of August. Unfortunately, this was not communicated to North-East Fife district council, which could by then have provided firm figures. It discovered the fact of the extension, when it was too late to do anything about it, as a result of a fortunate meeting between an officer of North-East Fife district council and an officer of COSLA. It would not otherwise have known that there was an extension.

If it was known to the Scottish Office—as it must have been since it had the district council's covering letter—that the figures were provisional, and if the Scottish Office knew that an extension was to be granted to local authorities which had not even taken the trouble to send in any returns, it would seem a matter of common courtesy, if not of good sense, to have informed North-East Fife district council when something could haw been done about it.

This will affect the ratepayers in North-East Fife to the tune of about a halfpenny in the pound on the rates this year. One would have liked to ask my right hon. Friend the Secretary of State to take the order away and bring back another one so that everyone would be happy. I have taken independent advice on the matter, and I am grateful to COSLA and the district council for their help. It seems that unless my right hon. Friend can tell me anything to the contrary, even if he wished to do so—though I am sure he would like to rectify this unfortunate happening—he does not have the power to do anything about it at this stage.

We are talking of an authority which has one of the best records in Scotland in caring for ratepayers' money and public money generally and for dealing competently and timeously with Scottish Office interfaces. I think that the district council deserves the Minister's best endeavours.

We are, however, faced with the reality that there is a limit to what can now be done, but I urge the Minister at least to give a firm commitment tonight that he will exercise his discretion—though he does not have to do so—next year to compensate the authority at the earliest practicable time. That would at least recognise the unfortunate background and encourage my constituents to feel that they will not suffer in the long term. Though they may pay a little more in rates this year, the Minister's assurance would mean that they would be compensated in future.

The second issue which I wish to take up is that of Kirkcaldy district council, which also serves my constituents. I have received a copy of a letter which it has sent to the Secretary of State. Unfortunately, I had no opportunity of discussing the letter with the council before it was sent. I am in the difficult position that, like many other hon. Members, I am more than anxious to support any local authority in my area that will persuade my right hon. Friend to provide more good things for my constituents.

In this instance it seems to me that the case put forward that the council would have liked more money from the housing support grant order now before us is based heavily on the fact that it is getting such a generous contribution from the housing variation order which is also before us.

The council was glad to know that it would receive £1·3 million as a result of the generosity of the Secretary of State in the variation order. It promptly said that that was an excellent reason why it should receive rather more next year. I hope that when the Secretary of State replies to the letter from Kirkcaldy district council he will bend over backwards to satisfy the members that he has carefully considered their case and will explain to them why generosity on the one hand should not necessarily mean generosity on the other.

I return to the case of my constituents. Similar circumstances apply to a maximum of five district councils. I hope that my hon. Friend the Under-Secretary can give us an assurance about their difficulty.

Photo of Mr James Dempsey Mr James Dempsey , Coatbridge and Airdrie 11:05 pm, 14th January 1980

I am grateful for the opportunity to draw attention to the problem that faces the Monklands district council. It arises from the method of determining the housing support grant. On 5 June the Monklands council received a letter asking it to return its expenditure figure by 30 June, 25 days later. In such a period one can only estimate, because the abstract of accounts is not complete at that time. Due to the unavoidable absence of the council's director of finance, the sum of £7·7 million transferred from the Strathclyde and Mother-well councils was not recorded at that date. The loss of that incorporated indebtedness will result in a loss of between £600,000 and £800,000 of grant.

The Monklands district council was not aware that the closing date had been extended. It was not notified, and that has been confirmed by St. Andrew's House. Had the council been told that the date had been extended to 31 August the director of finance would have used the abstract of accounts, giving the accurate expenditure. That would have led to the Monklands district council receiving the grant due to it.

Mistakes were made in returns and it is unfair that thousands of ratepayers in the Monklands area should suffer the consequence. I do not criticise the Ministers, because the mistake was made by the administrators, both locally and centrally. There is no question about that.

The Government circular insists that the new system can be successful only if up-to-date figures are reported accurately. Without that, the system cannot be fair or efficient. The information sent to the Department was inaccurate, and it is still inaccurate. The Scottish Office was notified of the inaccuracies in October and the figures were corrected, but the decision has been taken that no additional grant can be given.

I am aware that the Secretary of State has discretion, after the financial year 1980–81, to make up the loss. That means that no payment will be made until 1982—if any payment at all is made. The Monklands district council estimates that it needs to borrow the money that it loses because of the reduction in grant. That will cost £200,000 a year in interest charges, at a time when the Government are calling for a reduction in public expenditure. I appeal to the Minister seriously to consider this. Surely there must be some other form of redress than to wait until the Secretary of State, for example, has arrived at his discretionary decision in two years' time.

If the Minister does not reconsider, the money will have to be recovered through rates and rents. I advise him that the present reduction in real grant could result in an increase in weekly rent—that is, if it is passed on through a renting charge—of £1·40 per week. The director of finance assures me that the charge will be £1·59 per week, plus whatever is added because of the additional loss due to the error of not returning an accurate calculation of the grant in time. The Secretary of State's Department decided that submission by October was too late to influence the calculation of the grant that the Secretary of State was then preparing for the whole of Scotland.

This is the first day of the 1980 parliamentary Session. We have all returned in the hope that the feeling of good will is still in the atmosphere. Remembering the nostalgic celebrations of a few weeks ago, I hope that the right hon. Gentleman will say to me tonight "give them the money".

Several Hon. Members:

Several Hon. Members rose

Photo of Lieut-Colonel Dick Crawshaw Lieut-Colonel Dick Crawshaw , Liverpool Toxteth

Order. I remind hon. Members that this debate has just over half an hour to run. I hope that those who are forunate enough to be called will limit the time they take. Mr. Allan Stewart.

Photo of Mr Allan Stewart Mr Allan Stewart , Renfrewshire East 11:12 pm, 14th January 1980

In accordance with your request, Mr. Deputy Speaker, I will be brief. I want to make one point about the distribution of the grant and the impact of the per head factor on a small number of authorities. There is strong argument for saying that there is a bias, because of the per head factor, against the few authorities that have a low proportion of local authority housing. There are two categories: authorities that have a high proportion of owner-occupied housing—I am thinking here of Eastwood district council, in my constituency—and authorities with a high proportion of new town development corporation housing.

The impact was shown under last year's order, when Eastwood district council received less subsidy per house than any other district council in Scotland. The 1979 rating review shows that Eastwood received only £90 per house compared with an average of £200 to £300 for other authorities.

I appreciate—my right hon. Friend made this point—that the variation order makes some difference to this by keeping the per head factor constant. That reduces the present bias in the system, but it does not eliminate it. I hope that we can have an assurance from the Minister tonight that the impact on councils such as Eastwood is recognised by the Government and that it will not be ignored in future Government orders.

Photo of Mr Robert Maclennan Mr Robert Maclennan Shadow Spokesperson (Foreign and Commonwealth Affairs) 11:15 pm, 14th January 1980

Like the hon. Member for Fife, East (Mr. Henderson) and my hon. Friend the Member for Coat bridge and Airdrie (Mr. Dempsey) I have been approached rather at the last minute—indeed, today—by my local authority about the points that it made and to which the Secretary of State alluded briefly regarding the distribution formula—namely, the problem arising from the loan charges element for 1980–81 being based on returns made by all authorities in June-July 1979 as to the outturn housing revenue account for the year to 31 March 1979.

The difficulty faced by Caithness appears to have been recognised finally only at the last minute. I do not blame my local authority for not approaching me earlier, because it had reason to hope that the Secretary of State would take a more flexible approach to its difficulties than he appears to be willing to do.

Owing to the delays that the authority has experienced in finalising the abstract of accounts for the Caithness county council—the predecessor authority—the abstract for the base year 1978–79 is not complete. As a result, the figures used to complete the support grant form for 1980–81 were the best estimates available.

I understand that the updated estimate, of which the Scottish Development Department was made aware in late October, shows that there has been a gross understatement of the loan charges. The Minister has been made aware of these problems not only by the Caithness district council but by COSLA which has espoused the cause of the few local authorities affected. I think that we should have had a more reasonable response than we had from the Minister. Indeed, the understatement of the aggregate grant by Caithness is considerable. It will certainly amount to the allocation to Caithness being understated by about £185,000 as a result of this inability to give a final figure.

The problem does not bear postponement in being dealt with in the way suggested by the Minister. It will have a substantial effect on the rate poundage, which I gather is put at about 2p per pound in the next financial year. I hope that the Minister will undertake to look at this matter and to act with more expedition than he appeared to be willing to exercise in his earlier remarks. He has not given any reasons for not responding to the appeal of the local authorities affected and to the arguments adduced by the hon. Member for Fife, East and my hon. Friend the Member for Coatbridge and Airdrie. I hope that in the light of these representations he will think again.

Photo of Mr Gordon Wilson Mr Gordon Wilson , Dundee East 11:18 pm, 14th January 1980

At the start of the debate it struck me that we were engaged in incantations between two financial wizards, neither of whom could fully understand his brief or succeed in explaining to the House what it was all about. It brought to mind that perhaps we should have some system whereby Ministers and those who care to put forward alternative figures should be able to put them up in graphics for the benefit of the rest of us to understand. It would be a far easier way of achieving some comprehension of these important matters.

It also occurred to me that, together with the local government rate support grant order that we are to deal with on Wednesday night, this might have been a better subject for the Scottish Grand Committee arranged for Tuesday next than the arcane and bizarre subject that has been chosen for it.

There is a serious difference between the figures that have been adduced both by the Secretary of State and by the former Secretary of State for Scotland, the right hon. Member for Glasgow, Craigton (Mr. Millan). The right hon. Gentleman made strong allegations about the honesty or otherwise of the Scottish Office in concealing figures. I hope that we shall be able to see some of those calculations in future and to consider them at leisure.

I do not wish to make a special plea, as have other hon. Members, on behalf of my local authority. However, if the Secretary of State has some cheer left over from the festive period I am willing to pitch in on behalf of the good citizens of Dundee. I make a general plea. What appears from the papers that accompany the order, whichever figures are accepted—whether those of the Secretary of State or those of the right hon. Member for Craigton—is that rents will soar substantially. My general plea is to ask whether this is necessary at this time. Every action that the Government take stokes inflation. Increases in electricity prices have been estimated at 25 per cent. for this year, gas price increases have been estimated at 29 per cent. and we hear that there will be extraordinary increases in rents. How any Government can hope to keep wage inflation down when costs rise at that rate, I do not know. For that reason, I hope to per- suade the Secretary of State to consider further additions.

More to the point, in the papers that we have received from COSLA there are statements to the effect that it has been left in the dark in relation to the assumptions that the Government have made. Members of Parliament are, by their nature, generalists in their approach to these matters. It is one thing to have gone over the figures in general, but it is to be expected that the Scottish Office should be able to come up with more detailed figures and assumptions so that it can satisfy the experts in local government who are as deeply involved in these matters as are the civil servants at the Scottish Office. It is a wrong beginning for the Government to have left COSLA in the dark in relation to certain figures.

There seems to be no adequate explanation why they have adopted the different interest rates for the rate support grant and the housing grant and why the 10 per cent. deduction for efficiency has been made without the consent of COSLA.

There is a remarkable sentence in paragraph 9 of the explanatory memorandum: If authorities' reasonable expenditure is substantially altered by changes in interest rates, costs, prices, etc., it may subsequently be re-estimated by the Secretary of State. I should have thought that the sentence should read: If authorities' reasonable expenditure is subsequently altered the Secretary of State will bring in the variation order. I know that the Secretary of State hinted that he might consider a variation order. He owes it to COSLA—as do we all, representing ratepayers and those who pay rent—to state fundamentally that if the calculations prove to be substantially and reasonably different he will bring in the variation order.

The right hon. Member for Craigton was right to put much of the blame on the Government for the increases in rents that will take place. As the Secretary of State has effectively said, the cupboard is bare, and he cannot be generous. The Government must accept responsibility. In turn, the Secretary of State has passed back that responsibility to the previous Government. As long as the Labour Party refuses to press for a share of the oil revenues it will be art and part of the increases in rents and rates that will take place. It will also be an art and part of the cuts in public expenditure. We are talking in terms of a housing supply grant of £184 million. Whichever cupboard is bare, it is not that of Scotland. Tomorrow night the House will consider the remaining stages of the Petroleum Revenue Tax Bill. That will effectively bring in, in this fiscal year, the princely sum of £2,090 million. Compared with the miserable £185 million for the housing supply grant, that is a downright insult to the people of Scotland.

Photo of Robin Cook Robin Cook , Edinburgh Central 11:24 pm, 14th January 1980

Those hon. Members who sat on the Committee that considered the 1978 Bill will recollect that I, together with a number of other hon. Members, had doubts about the wisdom of that measure precisely because of the amount of discretion that it left in the hands of the Secretary of State. At one stage we carried the present Secretary of State with us. If hon. Members care to look up the report of the first sitting of that Committee they will find an eloquent speech by the Secretary of State in which he also expressed doubts about the wisdom of giving the Secretary of State so much discretion.

We had a vote at the end of that sitting in which my hon. Friend the Member for Central Ayrshire (Mr. Lambie), some of the Secretary of State's colleagues and I carried an amendment to the 1978 Bill providing machinery whereby COSLA could seek arbitration if it were unable to reach a voluntary agreement with the Secretary of State. Regrettably, that amendment was deleted at a later stage. It is a great pity that we do not have that machinery now, because there is no doubt that COSLA would take advantage of it. COSLA has not been consulted.

The explanatory memorandum presented to the House says that the order has been laid in accordance with the provisions of the Act. The Act provides that COSLA shall be consulted, yet it plainly has not been consulted. I have discussed what happened with members of COSLA's housing committee. They were summoned to St. Andrews House for the one meeting to negotiate the housing support grant. They arrived for the pre-meeting at 9.30 am, when they were told the figure. They were also told that no change in the figure was likely because the press release had already been drafted and was to be released at noon that day. They went into the meeting at 10 am and were told the figure. I doubt whether even Brezhnev could convince the Supreme Praesidium that that amounted to consultation.

It will not do for the Secretary of State to say that COSLA was consulted about the 10 per cent. abatement in loan charges on capital costs. It was not consulted; it was told. If it had been consulted it would not have accepted the figure, because the provision is daft. One can see how daft it is by reading the explanatory memorandum, which says that 10 per cent. of the Secretary of State's estimate of capital expenditure for 1980–1 has been regarded as unreasonable. I repeat that quotation: 10 per cent. of the Secretary of State's estimate of capital expenditure for 1980–1 has been regarded as unreasonable. In a previous debate I congratulated the Government on their can dour in the financial memorandum to the Bill. However, this is the first time that I have seen a Government lay a White Paper, or piece of white paper, before the House saying that their own estimate has been regarded as unreasonable. That is nonsense. The Government themselves have decided what the housing allocation shall be for each local authority. If that estimate was thought to be unreasonable they could have reduced it by 10 per cent. In fact, they reduced it by far more than 10 per cent. since they have not given the local authorities anything like the amount that they sought. To reduce that amount still further is totally unreasonable.

I have been on a housing authority and I know that one cannot get 10 per cent. savings in contracts for construction by efficiency. The only way to make savings in contracts is to reduce the specification. The Government are saying that specifications are unreasonably high. I shall welcome a statement from the Secretary of State making clear in respect of which council houses in his constituency, and on which estates, he regards the specification as having been unreasonably high. That is the real nature of this provision in the housing support grant. I am anxious that the Secretary of State should reply to that question and give, chapter and verse, those specifications that have been unreasonable.

The consequences of the Bill upon the weekly outgoings of ordinary tenants will be severe. The rent increases will in most cases be well in excess of the average that has been quoted. COSLA's figures show that, out of 56 housing authorities, 38—if they are to recoup what they are losing under the order—will have to increase their rents by more than the average suggested. The average will end up at between 29 per cent. and 33 per cent. of present rents, although no Government Member will suggest that that will be the wage settlement for the coming year. However, that is what the Government are obliged under the Act to take into consideration when arriving at the increase in local contributions.

It would not be so bad if this increase in rent payments were being used to finance a new drive to solve our housing problems, if out of this we were to see more houses being built and a better standard of maintenance. The reality is that this increased financial payment is being asked for at the very time when we are faced with a cut in the capital allocation for construction, which is already at an all-time low. Local authorities are faced with a dramatic cut in their capital allocation and an equally dramatic cut in the subsidy that they receive towards their revenue costs. I am glad to see that the Secretary of State agrees with me on that. It is particularly damaging to have this sudden switch in housing policy. By their very nature, housing projects require at least five years to bring to fruition.

In view of our experience of the working of the 1978 Act I believe that the time has come for the House to look again at that Act, in the light of the criticisms that many of us made at the time, and find some way to protect local authorities and their tenants against damaging shifts in the housing budget at the whim of the Secretary of State, with the sole means of scrutiny being a brief debate in the Chamber followed by a vote. This is a form of scrutiny which can only be likened to the homologation after the decision has been taken. In the meantime those of us who disapprove of what is being done should take the opportunity to dissociate ourselves in the Lobby from that homologation.

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness 11:31 pm, 14th January 1980

I can be brief, because there is no time left to develop an argument. What we are supposed to be doing at present is exercising parliamentary control. We are told by the Secretary of State that his suppositions are so labyrinthine that they cannot be explained to the House and that practically the only person who understands the position is the former Secretary of State. That is an unsatisfactory situation. I hope that in reply the Minister will address himself directly to the accusations, forcefully made, that COSLA was ineffectively consulted. That is very serious and should be rebutted.

Photo of Malcolm Rifkind Malcolm Rifkind Parliamentary Under-Secretary (Scottish Office) 11:32 pm, 14th January 1980

I can certainly sympathise with the point made by the hon. Member for Inverness (Mr. Johnston) that the entire system that we are debating—which was introduced by the previous Labour Administration—is not simple to understand. All those who have had the courage to intervene in the debate deserve congratulations for that if nothing else.

The right hon. Member for Glasgow, Craigton (Mr. Millan) and other Labour Members suggested that the consultation with COSLA was inadequate. All I call say is that the consultation that we had with COSLA was, in all general terms, exactly the same as has been held in previous years. The housing working party of COSLA, together with officials of the Scottish Office, met over a long period and there was a statutory meeting, which I attended with my officials, when we discussed the problems that the COSLA representatives wished to raise. The right hon. Member suggested that certain information that he gave to the local authorities was not given by this Government. We can bandy that argument about for some time. There was certain information that, no doubt for good reasons, was not presented by the right hon. Gentleman.

The important point is that Labour Members cannot say that the consultation was inadequate simply because the Convention does not agree with the conclusions reached by the Government on a number of points. Consultation certainly means discussion, and wherever possible we have tried to take on board points raised by the local authorities. We accept that in certain areas agreement has not been possible. The Government have had to present to the House their conclusions as to what the most appropriate course of action should be.

The right hon. Member for Craigton also asked whether there would be a second variation order to take account of any changes in interest rates that took effect after the first variation order was announced to the convention. In accordance with past policy, any changes in interest rates that affect the local authorities are normally accepted by the Government as justifying further help. Whether this is done through a further variation order or next year's housing support grant, I can certainly tell the right hon. Gentleman that the local authorities will not suffer as a consequence of any change of that kind.

The right hon. Gentleman also made very heavy weather of the fact that a figure of 85 per cent. is used in the distribution of housing support grant. He suggested that this implied—indeed, he came to the very firm conclusion—that because the Government had not taken notice of it the proposed rent increases of approximately £1·40 were bogus and that the proper figure should be £1·60. The right hon. Gentleman, who is normally very knowledgeable in these matters, seems to have confused himself on this occasion. The 85 per cent. refers to distribution it does not have the slightest effect on the aggregate amount paid to Scottish local authorities. The £l·40 is based on the aggregate housing support grant, which is in no way affected by the distribution percentage.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

The hon. Gentleman is completely wrong. I am well aware of what the 85 per cent, formula does. The £.1·40 is the consideration for basic income—which is not the total rental income—in last year's order as varied by today's variation order and the 1980–81 order. That difference is £l·40, but, since that represents not the total amount of rental income but only a proportion of it, I say now—I checked this with COSLA today, through its financial adviser—that rents would have to rise by £1·60 and not £1·40 to meet the Government's demands. That is a fact, and what is in the order is wrong.

Photo of Malcolm Rifkind Malcolm Rifkind Parliamentary Under-Secretary (Scottish Office)

The right hon. Gentleman can believe that if he wishes, but I say to him again that the figure of £1·40 is based on the aggregate amount of housing support grant, which is not affected by the distribution percentage. If the right hon. Gentleman will not accept that, nothing that I can say will make him change his mind.

Photo of Malcolm Rifkind Malcolm Rifkind Parliamentary Under-Secretary (Scottish Office)

I am sorry, but I have only a few more minutes. Clearly, nothing I say will change the right hon. Gentleman's mind, so he must accept the point that I have made, or believe his own point of view.

The right hon. Gentleman also suggested that the rent increase that will be necessary as a result of this housing support grant is an intolerable burden. Part of the increase that will be required in the forthcoming year is a direct consequence of the unrealistic figure of 7 per cent., which his Government and he as Secretary of State for Scotland used in advising—"advice"is an inappropriate word to use in these circumstances—local authorities as regards any increases in average earnings. He must accept his share of the responsibility for any problems that local authorities might be facing in the current year.

The right hon. Gentleman asked whether there will be a variation order for 1980–81. That will depend on the actual expenditure of local authorities as they are affected by any increases in interest rates and other factors. If there is a variation order, however, it will clearly be for a much smaller amount than that which has had to be announced today, because of the change in estimating the expenditure of local authorities.

The right hon. Gentleman and other Members objected to the 10 per cent. deduction being classed as unreasonable expenditure. They must consider the background against which this has been introduced. In June of this year we relinquished, with the full aggrement of the local authorities, project cost control, thereby giving local authorities far greater freedom over their individual housing capital allocations. We did that in advance of having devised alternative incentives to economy. Therefore, we considered—I think that we were right to consider—that a 10 per cent. reduction of the kind indicated was exactly the figure required to ensure that local authorities neither benefited nor lost from the increased freedom that we have given them.

Although the right hon. Gentleman is correct in saying that obviously the convention would rather there were no such deduction, I do not think that I would be wrong in saying that the convention fully accepted that, if such a deduction was to be made, 10 per cent. was a reasonable figure. The important point I stress is that the sole purpose of this temporary application of the 10 per cent. reduction is to ensure that local authorities neither gain nor lose as a result of the increased freedom this Government have given them.

The right hon. Gentleman also indicated the concern of the convention that we were applying what is known as the grant-year-minus-2 rather than the grantyear-minus-1 method of determining entitlement. We are sorry that we were unable to use the system of distribution that the convention would like to apply. We have told the convention that we will certainly seek to do so next year.

Our reasons were simple. First, we had used that system, and given that there are to be changes next year, it would have meant that three quite distinct methods were being used in three quite separate years, which would have caused great confusion. Secondly, our consideration of the matter indicated that while about half the local authorities would benefit from such an approach, the other half would be positively disadvantaged. Nevertheless, we shall seek to meet the wishes of the convention for the future year if its strong view is that that would be suitable to its interest.

My hon. Friend the Member for Fife, East (Mr. Henderson) and the hon. Members for Coatbridge and Airdrie (Mr. Dempsey) and for Caithness and Sutherland (Mr. Maclennan) raised problems of their local authorities and said that the estimates they had given to the Scottish Office had turned out to be underestimates. Authorities were originally asked to submit the appropriate information by 22 June. Several did not meet that deadline, which was extended to 31 August to try to meet their requirements. In the event, we were told by Monklands on 30 October, Caithness on 8 November and North-East Fife on 26 November that they had, each for different reasons, provided information that was incorrect. Significantly, no local authority has informed us that it gave false information that would have led to its being overpaid. That problem has not arisen, which is perhaps not altogether surprising.

The simple problem faced by the Government is that, although we would have wished to respond to what clearly is the genuine concern of these individual local authorities, we could only have done so, given the late date at which the information was provided, by delaying the payment of housing support grant. Any increased payments made to these authorities could only have been at the expense of the many others that had made their returns timeously. They would have suffered problems of distribution if the few local authorities that had failed to do so had received increased payment. It would have been unfair generally.

Photo of Malcolm Rifkind Malcolm Rifkind Parliamentary Under-Secretary (Scottish Office)

I am sorry. The right hon. Gentleman has made his speech and I have a number of points to raise in only two or three minutes. That fact affects distribution.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

It does not affect distribution.

Photo of Malcolm Rifkind Malcolm Rifkind Parliamentary Under-Secretary (Scottish Office)

The right hon. Gentleman is good at making statements to that effect. If additional claims are made we cannot simply accept them at face value; they have to be investigated. Other local authorities have to be given the opportunity to make their additional claims if they wish. Either the same aggregate amount must be used, in which case distribution is affected, or a different aggregate amount must be used, in which case there would be unreasonable delay before any local authority could receive any payment whatsoever.

The statute under which that matter is determined fully envisages that that sort of problem may arise and provides that the Secretary of State may, when the audited accounts of the local authorities are known for the year in question, make supplementary payment to that local authority to make up for any loss that it has suffered as a result of not making the returns in time. Clearly, when these accounts are known from the various authorities in question, if they show what the local authorities believe that they might, the Scottish Office and the Government will in time respond in a constructive way.

The hon. Member for Dundee, East (Mr. Wilson) asked why the interest rates that were being used for the two orders—the rate support grant and the housing support grant—were different. The reason is simply that the statutory basis on which these interest rates are determined is different. Although in the case of the variation order the level of interest rates for housing support grant is slightly less than for RSG, it so happens that for the main grant for the forthcoming year it is the other way round—the housing support grant interest rate is slightly higher than that for RSG. There is no subversive or suspicious policy on the part of the Government to do the local authorities out of their income. On one basis they gain slightly and on the other they lose slightly, simply because of the different statutory basis on which these matters are determined.

Finally, the hon. Member for Edinburgh, Central (Mr. Cook) suggested that the rent increases would be severe, but we should remember that the average income in Scotland is about £100 per week. The average rent being paid, even after these increases, will be less than £7—about £6·40 per week—which is not an excessive amount to pay for housing.

The Government's proposals on the variation order and the main order are an extremely reasonable contribution to the housing needs of Scotland. They make up for some of the mistakes of the previous Government and the burdens that they introduced. They are a generous contribution.

Question put and agreed to.

Resolved,That the draft Housing Support Grant (Scotland) Variation Order 1980, which was laid before this House on 21 December 1979, be approved.

Motion made, and Question put,That the draft Housing Support Grant (Scotland) Order 1980, which was laid before this House on 21 December 1979, be approved.—[Mr. Mather.]

The House divided: Ayes 293, Noes 244.

Division No. 133]AYES[11.47 pm
Adley, RobertFaith, Mrs SheilaMacKay, John (Argyll)
Altken, JonathanFarr, JohnMcNair-Wilson, Michael (Newbury)
Alexander, RichardFell, AnthonyMcNair-Wilson, Patrick (New Forest)
Alison, MichaelFenner, Mrs PeggyMcQuarrie, Albert
Amery, Rt Hon JulianFinsberg, GeoffreyMadel, David
Ancram, MichaelFisher, Sir NigelMajor, John
Arnold, TomFletcher, Alexander (Edinburgh N)Marland, Paul
Aspinwall, JackFletcher-Cooke, CharlesMarlow, Tony
Atkins, Robert (Preston North)Fookes, Miss JanetMarshall, Michael (Arundel)
Atkinson, David (B'mouth, East)Forman, NigelMarten, Nell (Banbury)
Baker, Kenneth (St. Marylebone)Fowler, Rt Hon NormanMates, Michael
Baker, Nicholas (North Dorset)Fox, MarcusMather, Carol
Banks, RobertFraser, Peter (South Angus)Mawby, Ray
Bendall, VivianFry, PeterMawhinney, Dr Brian
Benyon, Thomas (Abingdon)Galbraith, Hon T. G. D.Maxwell-Hyslop, Robin
Berry, Hon AnthonyGardiner, George (Reigate)Mayhew, Patrick
Best, KeithGardner, Edward (South Fylde)Meyer, Sir Anthony
Bevan, David GilroyGarel-Jones, TristanMiller, Hal (Bromsgrove & Redditch)
Biffen, Rt Hon JohnGlyn, Dr AlanMills, Iain (Meriden)
Biggs-Davison, JohnGoodhew, VictorMills, Peter (West Devon)
Body, RichardGoodlad, AlastairMiscampbell, Norman
Bonsor, Sir NicholasGorst, JohnMitchell, David (Basingstoke)
Boscawen, Hon RobertGow, IanMoate, Roger
Bottomley, Peter (Woolwich West)Gower, Sir RaymondMonro, Hector
Bowden, AndrewGrant, Anthony (Harrow C)Montgomery, Fergus
Boyson, Or RhodesGray, HamishMoore, John
Braine, Sir BernardGreenway, HarryMorgan, Geraint
Bright, GrahamGrieve, PercyMorris, Michael (Northampton, Sth)
Brinton, TimGriffiths, Eldon (Bury St Edmunds)Morrison, Hon Charles (Devizes)
Brittan, LeonGriffiths, Peter (Portsmouth N)Morrison, Hon Peter (City of Chester)
Brocklebank-Fowler, ChristopherGrist, IanMurphy, Christopher
Brotherton, MichaelGummer, John SelwynMyles, David
Brown, Michael (Brigg & Sc'thorpe)Hamilton, Hon Archie (Eps'm & Ew'll)Neale, Gerrard
Browne, John (Winchester)Hamilton, Michael (Salisbury)Needham, Richard
Bruce-Gardyne, JohnHampson, Dr KeithNelson, Anthony
Bryan, Sir PaulHannam, JohnNeubert, Michael
Buchanan-Smith, Hon AlickHaselhurst, AlanNott, Rt Hon John
Buck, AntonyHavers, Rt Hon Sir MichaelOnslow, Cranley
Budgen, NickHawkins, PaulOppenheim, Rt Hon Mrs Sally
Bulmer, EsmondHawksley, WarrenOsborn, John
Burden, F. A.Heddle, JohnPage, John (Harrow West)
Butcher, JohnHenderson, BarryPage, Rt Hon Sir R. Graham
Butler, Hon AdamHeseltine, Rt Hon MichaelPage, Richard (SW Hertfordshire)
Cadbury, JocelynHicks, RobertParkinson, Cecil
Carlisle, John (Luton West)Higgins, Rt Hon Terence L.Parris, Matthew
Carlisle, Kenneth (Lincoln)Hogg, Hon Douglas (Grantham)Patten, Christopher (Bath)
Carlisle, Rt Hon Mark (Runcorn)Holland, Philip (Carlton)Patten, John (Oxford)
Chalker, Mrs. LyndaHooson, TomPawsey, James
Channon, PaulHordern, PeterPercival, Sir Ian
Chapman, SydneyHowe, Rt Hon Sir GeoffreyPink, R. Bonner
Churchill, W. S.Howell, Rt Hon David (Guildford)Pollock, Alexander
Clark, Hon Alan (Plymouth, Sutton)Hunt, Davzid (Wirral)Porter, George
Clark, Sir William (Croydon South)Hunt, John (Ravensbourne)Price, David (Eastleigh)
Clarke, Kenneth (Rushcliffe)Hurd, Hon DouglasPrior, Rt Hon James
Clegg, Sir WalterJenkin, Rt Hon PatrickProctor, K. Harvey
Cockeram, EricJessel, TobyRaison, Timothy
Colvin, MichaelJopling, Rt Hon MichaelRathbone, Tim
Cope, JohnJoseph, Rt Hon Sir KeithRees, Peter (Dover and Deal)
Cormack, PatrickKershaw, AnthonyRees-Davies, W. R.
Corrie, JohnKimball, MarcusRenton, Tim
Costain, A. P.King, Rt Hon TomRhodes James, Robert
Cranborne, ViscountKitson, Sir TimothyRhys Williams, Sir Brandon
Critchley, JulianKnight, Mrs JillRidley, Hon Nicholas
Crouch, DavidKnox, DavidRidsdale, Julian
Dean, Paul (North Somerset)Lamont, NormanRifkind, Malcolm
Dickens, GeoffreyLang, IanRoberts, Michael (Cardiff NW)
Dorrell, StephenLangford-Holt, Sir JohnRoberts, Wyn (Conway)
Douglas-Hamilton, Lord JamesLawrence, IvanRost, Peter
Dover, DenshoreLawson, NigelRoyle, Sir Anthony
du Cann, Rt Hon EdwardLee, JohnSainsbury, Hon Timothy
Dunn, Robert (Dartford)Le Marchant, SpencerSt. John-Stevas, Rt Hon Norman
Durant, TonyLennox-Boyd, Hon MarkScott, Nicholas
Dykes, HughLester, Jim (Beeston)Shaw, Michael (Scarborough)
Eden, Rt Hon Sir JohnLloyd, Ian (Havant & Waterloo)Shelton, William (Streatham)
Edwards, Rt Hon N. (Pembroke)Lloyd, Peter (Fareham)Shepherd, Colin (Hereford)
Eggar, TimothyLoveridge, JohnShepherd, Richard (Aldrldge-Br'hills)
Elliott, Sir WilliamLuce, RichardShersby, Michael
Emery, PeterLyell, NicholasSilvester, Fred
Eyre, ReginaldMcCrindle, RobertSims, Roger
Fairbairn, NicholasMacfarlane, NeilSkeet, T. H. H.
Fairgrieve, RussellMacGregor, JohnSmith, Dudley (War. and Leam'ton)
Speed, KeithThatcher, Rt Hon Mrs MargaretWard, John
Speller, TonyThomas, Rt Hon Peter (Hendon S)Warren, Kenneth
Spence, JohnThompson, DonaldWatson, John
Spicer, Jim (West Dorset)Thorne, Neil (Ilford South)Wells, John (Maldstone)
Spicer, Michael (S Worcestershire)Thornton, MalcolmWheeler, John
Sproat, IainTownend, John (Bridlington)Whitelaw, Rt Hon William
Stainton, KeithTownsend, Cyril D. (Bexleyhealh)Whitney, Raymond
Stanbrook, IvorTrippier, DavidWickenden, Keith
Stanley, JohnTrotter, NevilleWiggin, Jerry
Steen, Anthonyvan Straubenzee, W. R.Wilkinson, John
Stevens, MartinVaughan, Dr GerardWinterton, Nicholas
Stewart, Ian (Hitchin)Viggers, PeterWolfson, Mark
Stewart, John (East Renfrewshire)Waddington, DavidYoung, Sir George (Acton)
Stokes, JohnWakeham, JohnYounger, Rt Hon George
Stradling Thomas, J.Waldegrave, Hon William
Tapsell, PeterWalker, Bill (Perth & E Perthshire)TELLERS FOR THE AYES:
Tebbit, NormanWalker-Smith, Rt Hon Sir DerekMr. Tony Newton and
Temple-Morris, PeterWaller, GaryMr. Peter Brooke.
NOES
Abse, LeoEastham, KenLewis, Ron (Carlisle)
Adams, AllenEllis, Raymond (NE Derbyshire)Litherland, Robert
Allaun, FrankEllis, Tom (Wrexham)Lofthouse, Geoffrey
Anderson, DonaldEnglish, MichaelLyon, Alexander (York)
Archer, Rt Hon PeterEnnals, Rt Hon DavidLyons, Edward (Bradford West)
Armstrong, Rt Hon ErnestEvans, Ioan (Aberdare)Mabon, Rt Hon Dr J. Dickson
Ashley, Rt Hon JackEvans, John (Newton)McCartney, Hugh
Ashton, JoeEwing, HarryMcDonald, Dr Oonagh
Atkinson, Norman (H'gey, Tott'ham)Field, FrankMcElhone, Frank
Bagier, Gordon A. T.Flannery, MartinMcGuire, Michael (Ince)
Barnett, Guy (Greenwich)Fletcher, Ted (Darlington)McKay, Allen (Penistone)
Beith, A. J.Foot, Rt Hon MichaelMcKelvey, William
Benn, Rt Hon Anthony WedgwoodFord, BenMacKenzie, Rt Hon Gregor
Bennett, Andrew (Stockport N)Foster, DerekMaclennan, Robert
Bidwell, SydneyFoulkes, GeorgeMcMahon, Andrew
Booth, Rt Hon AlbertFraser, John (Lambeth, Norwood)McMillan, Tom (Glasgow, Central)
Bottomley, Rt Hon Arthur (M'brough)Freeson, Rt Hon ReginaldMcNally, Thomas
Bray, Or JeremyGarrett, John (Norwich S)McWilliam, John
Brown, Hugh D. (Provan)George, BruceMagee, Bryan
Brown, Robert C. (Newcastle W)Gilbert, Rt Hon Dr JohnMarks, Kenneth
Brown, Ronald W. (Hackney S)Ginsberg, DavidMarshall, David (Gl'sgow, Shettles'n)
Brown, Ron (Edinburgh, Leith)Golding, JohnMarshall, Dr Edmund (Goole)
Buchan, NormanGourlay, HarryMarshall, Jim (Leicester South)
Callaghan, Jim (Middleton & P)Graham, TedMartin, Michael (Gl'gow, Springb'rn)
Campbell, IanGrant, George (Morpeth)Mason, Rt Hon Roy
Campbell-Savours, DaleGrant, John (Islington C)Maxton, John
Canavan, DennisHamilton, James (Bothwell)Maynard, Miss Joan
Cant, R. B.Hamilton, W. W. (Central Fife)Meacher, Michael
Carmichael, NeilHardy, PeterMikardo, Ian
Carter-Jones, LewisHarrison, Rt Hon WalterMillan, Rt Hon Bruce
Cartwright, JohnHart, Rt Hon Dame JudithMiller, Dr M. S. (East Kilbride)
Clark, Dr David (South Shields)Hattersley, Rt Hon RoyMitchell, Austin (Grimsby)
Cocks, Rt Hon Michael (Bristol S)Haynes, FrankMitchell, R. C. (Soton, Itchen)
Cohen, StanleyHealey, Rt Hon DenisMorris, Rt Hon Alfred (Wythenshawe)
Coleman, DonaldHeffer, Eric S.Morris, Rt Hon Charles (Openshaw)
Concannon, Rt Hon J. D.Hogg, Norman (E Dunbartonshire)Morris, Rt Hon John (Aberavon)
Conlan, BernardHolland, Stuart (L'beth, Vauxhall)Morton, George
Cook, Robin F.Home Robertson, JohnMoyle, Rt Hon Roland
Cowans, HarryHomewood, WilliamMulley, Rt Hon Frederick
Cox, Tom (Wandsworth, Tooting)Hooley, FrankNewens, Stanley
Craigen, J. M. (Glasgow, Maryhill)Horam, JohnOakes, Rt Hon Gordon
Crowther, J. S.Howell, Rt Hon Denis (B'ham, Sm H)Ogden, Eric
Cryer, BobHowells, GeraintO'Halloran, Michael
Cunliffe, LawrenceHudson Davies, Gwilym EdnyfedO'Neill, Martin
Cunningham, George (Islington S)Hughes, Robert (Aberdeen North)Orme, Rt Hon Stanley
Cunningham, Dr John (Whitehaven)Hughes, Roy (Newport)Owen, Rt Hon Dr David
Dalyell, TamJanner, Hon GrevillePark, George
Davidson, ArthurJay, Rt Hon DouglasParker, John
Davies, Ifor (Gower)John, BrynmorParry, Robert
Davis, Clinton (Hackney Central)Johnson, James (Hull West)Pavitt, Laurie
Davis, Terry (B'rm'ham, Stechford)Johnston, Russell (Inverness)Pendry, Tom
Deakins, EricJones, Rt Hon Alec (Rhondda)Penhaligon, David
Dempsey, JamesJones, Dan (Burnley)Powell, Raymond (Ogmore)
Dewar, DonaldKaufman, Rt Hon GeraldPrescott, John
Dixon, DonaldKerr, RussellPrice, Christopher (Lewisham West)
Dobson, FrankKilroy-Silk, RobertRace, Reg
Dormand, JackKinnock, NeilRadice, Giles
Douglas, DickLambie, DavidRees, Rt Hon Merlyn (Leeds South)
Douglas-Mann, BruceLamborn, HarryRichardson, Jo
Dubs, AlfredLamond, JamesRoberts, Albert (Normanton)
Dunn, James A. (Liverpool, Kirkdale)Leadbitter, TedRoberts, Allan (Bootle)
Dunnett, JackLeighton, RonaldRoberts, Ernest (Hackney North)
Dunwoody, Mrs GwynethLestor, Miss Joan (Eton & Slough)Roberts, Gwilym (Cannock)
Eadle, AlexLewis, Arthur (Newham North West)Robertson, George
Robinson, Geoffrey (Coventry NW)Stallard, A. W.Welsh, Michael
Rodgers, Rt Hon WilliamSteel, Rt Hon DavidWhite, Frank R. (Bury a Radcliffe)
Rooker, J.W.Stoddart, DavidWhite, James (Glasgow, Pollok)
Roper, JohnStott, RogerWhitehead, Phillip
Ross, Ernest (Dundee West)Strang, GavinWhitlock, William
Rowlands, TedTaylor, Mrs Ann (Bolton West)Williams, Rt Hon Alan (Swansea W)
Sever, JohnThomas, Jeffrey (Abertillery)Wilson, Gordon (Dundee East)
Sheerman, BarryThomas, Mike (Newcastle East)Wilson, Rt Hon Sir Harold (Huyton)
Sheldon, Rt Hon Robert (A'ton-u-L)Thomas, Dr Roger (Carmarthen)Wilson, William (Coventry SE)
Shore, Rt Hon Peter (Step and Pop)Thorne, Stan (Preston South)Winnick, David
Short, Mrs RenéeTilley, JohnWoodall, Alec
Silkin, Rt Hon John (Deptford)Torney, TomWoolmer, Kenneth
Silkin, Rt Hon S.C. (Dulwich)Urwin, Rt Hon TomWrigglesworth, Ian
Silverman, JullusVarley, Rt Hon Eric G.Young, David (Bolton East)
Smith, Rt Hon J. (North Lanarkshire)Wainwright, Edwin (Dearne Valley)
Snape, PeterWalker, Rt Hon Harold (Doncaster)TELLERS FOR THE NOES:
Soley, CllveWatkins, DavidMr. Joseph Dean and
Spearing, NigelWeetch, KenMr. James Tinn.
Spriggs, LeslieWellbeloved, James

Question accordingly agreed to.

Photo of Mr Esmond Bulmer Mr Esmond Bulmer , Kidderminster 11:59 pm, 14th January 1980

I welcome this opportunity to put before the House the problems facing the Kidderminster hospital in pursuing its development programme. I have no need to emphasise to my hon. Friend the Under-Secretary the importance attached by my constituents to an efficient, well-equipped local hospital.

Kidderminster general hospital is a developing hospital which, over time and phasing, will from new buildings provide the bulk of all secondary care services for the Kidderminster health district.

I pay tribute to the staff of that hospital. The hospital has established an outstanding reputation for patient care. It has not enjoyed the capital investment that has been available to some neighbouring hospitals, and the staff have shown great imagination and dedication in meeting the difficulties placed upon them both by their Victorian inheritance—many of the buildings date from that period—and by the delay in the implementation of desirable new projects.

The purpose of seeking this debate is to bring to the Minister's attention two specific problems—the future character of maternity provision and the need for a new twin operating theatre. The first has been the subject of protracted, not to say excessive, deliberations and the second is a matter of budgetary priority to the health authority but a matter of life and death to my constituents.

I turn first to maternity provision. There is great local concern about where mothers will have their babies in the mid-1980s. Looking at the figure for bookings in the Kidderminster health district over the period from June to November 1979, of the 630 bookings made, 305 were to hospitals outside the district. Bromsgrove took 190, Worcester and others 89, and the Queen Elizabeth, Birmingham, 26. Of the 320 booked into the two local maternity homes—the Croft and the Lucy Baldwin—157 were transferred to Bromsgrove and Worcester before labour commenced and 59 women were transferred while actually in labour.

I am sure that my hon. Friend will agree that it is highly undesirable for women in labour to be transferred considerable distances to outlying hospitals. He will also no doubt agree that it is highly desirable for Kidderminster to be able to offer a complete range of maternity services to its population. If the proposed unit is not given the go-ahead in the near future, even the present unsatisfactory arrangements will deteriorate. The Bromsgrove unit is moving to Redditch. It is certain that it will not be able to take the present number of maternity cases coming from the Kidderminster district.

The Birmingham and Worcester hospitals have indicated that in the future they will be unable to continue to provide the service thatthey are offering at the moment, and Dudley has also made clear that it will not be able to offer beds to Kidderminster on any scale. The strategy document prepared by the West Midlands regional health authority states that A district general hospital should provide for the whole population of its district a full range of specialised treatment including a maternity unit. As my hon. Friend will know, a development control plan for Kidderminster has been in existence for many years. Despite inevitable revision as the development has progressed, the plan has always contained provision for a consultant obstetric unit to serve the district's catchment population. This provision was never in question until about 18 months ago, when the related development of GP maternity services became the subject of consideration and consultation within the area.

The area health authority proposed that all GP maternity services should be centred on the general hospital site as part of phase 5, with their ultimate inclusion with the consultant unit, which will be provided within phase 6. At this point, and for the first time, the regional health authority, which had previously been committed to the development control plan, raised fundamental questions about the viability of a consultant obstetric unit because of the size of the catchment population—just over 100,000—and the annual number of births. These are currently above 1,300, rising to between 1,500 and 1,600 on projected population figures.

Because of various issues involving obstetric services, including the move of the consultant obstetric unit at Bromsgrove general hospital, which currently serves Kidderminster, to the site of the new Redditch district hospital at Woodrow, proposed for 1986, and the need to redevelop the maternity facilities in Worcester, the regional health authority asked the area health authority to produce an area strategy for obstetric services. The area health authority responded by establishing a sub-committee to give detailed consideration to the problem. The sub-committee confirmed the original strategy to house GP maternity facilities on the general hospital site and established that the Kidderminster district should have a consultant obstetric unit.

Those recommendations were unanimously accepted by the area health authority. The regional health authority's response was to give the matter "unresolved issue" status within the context of the regional strategy, as the AHA's resolution ran counter to the regional policy for obstetric units—that is, a minimum of 1,500 births per annum.

It is the AHA's contention that the Kidderminster district should have a consultant obstetric unit, first, because the district is self-sufficient across the range of main facilities, with this one fundamental exception. Secondly, the Kidderminster district has a discrete natural population, with about 90 per cent. residing within the urban area of Bewdley, Kidderminster and Stourport. Indeed, that is the largest concentration of population in the whole of Worcestershire, and it is expanding. Thirdly, the present consultant service provided from Bromsgrove general hospital, about 15 miles away, will cease when this unit, designed exclusively in any case for the Bromsgrove-Redditch catchment area, moves yet further away to the new district general hospital on the Woodrow site at Redditch. Fourthly, there are no other options for the provision of this vital service outside the Kidderminster district which present as effective a solution as that originally proposed by the AHA—that is, to provide a unit on the Kidderminster general hospital site.

It is of particular concern that no firm decision has yet been made. The AHA has proposed that a consultant obstetric unit should be built as part of phase 6 of the main hospital development, but it is as yet unprogrammed within the region's 10-year strategy. Phase 5 is likely to be completed in 1982. The Woodrow development is due for completion in 1986, and by then Kidderminster should have an effective alternative service, which, in the AHA's view, should be within the district.

The absence of a decision on this pressing issue will lead to the real possibility that a large number of Kidderminster mothers-to-be will have to seek consultancy facilities from any one of a number of centres outside the district and even further a field than now.

I understand that the present opposition to a unit in Kidderminster is based on standards established by the Royal College of Obstetricians and Gynaecologists and the British Paediatric Association. While there is an undeniable need for high standards of obstetric care, these recommendations need to be applied within the context of the hospital needs of particular populations.

I am aware, as is the AHA, of the arguments set out against the authority's policy. It is important to emphasise, however, that the AHA's commitment is a considered policy, arrived at after due account had been taken of the problems, as well as the obvious advantages. I can see no good reasons why the authority's view should not prevail. The absence of firm decision not only creates considerable uncertainty and conflict but leaves the Kidderminster community with the fear that no adequate provision will be made in time to meet its obvious needs.

This fear is compounded by the concern that further reorganisation of administration in the Health Service may for a period make it more difficult to obtain the necessary decisions on time. I hope that my hon. Friend will be able to allay such fears by confirming that an early decision will be made. I trust that that decision will confirm the area's view that Kidderminster should have a consultant unit.

I turn now to the urgent need for increased theatre capacity at the hospital. This is particularly urgent if Kidderminster is to have a consultant unit in future. A survey in 1979 showed that the existing theatres were grossly overworked. There is a 91 per cent occupancy, which is the highest in the region. The number of cases handled has doubled in the last 10 years. The problems created are severe. If nothing is done, the consequences are likely to be catastrophic, with a real fear that life will be endangered.

I should like to spell out some of the problems to my hon. Friend. The first is the distress caused to individuals. Recently a 10-year-old girl was admitted in the morning with acute abdominal pains. Because of the work load, she could not be operated on until 8 pm, by which time she was hysterical. If any of us paused for a moment to put ourselves in the position of the parent of that child, I think that we would feel that we would move heaven and earth to see that that experience was not undergone by anybody else.

On another morning when a major accident casualty was taken to the theatre, four orthopaedic cases were cancelled, one of which was a Charnley hip replacement, and the patient had to be turned back from the theatre.

The staff have been forced to take cases—which should have been dealt with in the main operating theatre—either to the minor operating theatre, which is totally unsuitable, or even to the wards. Pressure on the theatre means that it is virtually impossible to carry out a planned programme of maintenance as scheduled. This in turn means that there is a real risk to health from infection and that an excessive use has to be made of antibiotics.

The staff are under pressure because of the number of hours that the theatre is working, and there is the added pressure of all specialties working in two theatres. Home life is disrupted and holidays are lost. The conditions are such that the Royal College of Surgeons has commented unfavourably.

Mr. Roper Hall, in his report on the hospital, said: I am sorry to have to inform you for the reasons given in the visitors' report that recognition cannot be granted at the present time for an S.H.O. post in ophthalmology. He went on: The theatre accommodation is limited to two operating rooms of the four originally planned. This has disadvantages which have already been commented upon in a report by Mr. Wakeley of the Board of Surgical Training. It has the unfortunate result that the use to which each theatre is put is multiple and there is no separation to allow elective clean surgery to be performed in a theatre allocated for that purpose. This has already been criticised in respect of orthopaedic surgery. As far as ophthalmology is concerned one of the consultants operates in one theatre and the other in the other. It would be helpful if the theatre complex were completed by the addition of the two additional theatres, one of which could be devoted to the requirements for ophthalmic microsurgery shared with other suitable disciplines. Mr. Wakeley commented further on the work load: The waiting lists are also increasing in size and this is due to the fact that there are only two operating theatres for the whole of this hospital. There is no doubt that the two further theatres planned for this hospital should be put in hand as a matter of the highest priority. This would not only allow more operating to go on and give a better service to the patients but it would also allow the orthopaedic surgeons to do their hip replacements in a more favourable atmosphere of their own theatre. It would further enhance the fact that more gynaecology and obstetrics could be done at Kidderminster thereby improving the training for the trainee anaesthetists. I have, therefore, no hesitation whatsoever to say that the implementation of putting two further theatres in this hospital should have the highest priority. He concluded: I feel that these jobs should be recognised for 2 to 2½ years and then re-inspected to see that there is implementation of the theatre project so that there are two further theatres. Should the new operating theatre not be introduced shortly, Kidderminster is faced with the possibility of the withdrawal of recognition by the Royal College of Surgeons, with all the implications that that has for future staffing. Prospective consultant surgeons were deterred by the present inadequate facilities from applying for a recent vacancy.

Should recognition be withdrawn, the hospital will not attract doctors of sufficient calibre to maintain its present high level of service and junior staff presently employed there will obviously start to look round for jobs in hospitals with better facilities.

In a letter to the chairman of the surgical division at Kidderminster hospital, the chairman of the area health authority accepted the urgent need for additional theatres in Kidderminster but said that the capital resources currently available were not sufficient to allow this project to be included in the next five-year allocation.

I know that my right hon. Friend the Secretary of State and the other Ministers in the Department are determined to see that more money is available for patient care even if some of it has to be obtained by reducing the number of those currently employed in Health Service administration. I believe that among my constituents a new operating theatre would come top—or close to the top—of the list of projects on which they would wish their taxes to be spent. I believe that they understand the difficulties facing my right hon. Friend in funding the requirements of the Health Service at the present time and I know that they are right behind him in demanding a rigorous examination of priorities.

I welcome the proposed visit by the Secretary of State to Worcestershire later this month when he will visit Kidderminster hospital. He will have the opportunity to talk to those involved and to acquaint himself at first hand with their problems. If, after a further examination of the priorities of the authority, the Secretary of State is persuaded that the money for new operating theatres cannot be made available in the next two years, I hope that he and the health authority will consider the possibility of joint funding. Many people in my constituency will be prepared to contribute to the cost of the new theatres. We need them badly and we are determined to have them.

Photo of George Young George Young Parliamentary Under-Secretary (Department of Health and Social Security) 12:15 am, 14th January 1980

I congratulate my hon. Friend the Member for Kidderminster (Mr. Bulmer) on securing this debate. Perhaps some might say that the first Adjournment debate of the new decade is only a minor milestone in the history of the House. What is certain is that for the people of Kidderminster this is a major debate, directed as it is to the future devolpment of their hospital.

I thank my hon. Friend for letting me know in advance some of the topics that he intended to raise. I thank him for making his case so cogently and persuasively. I appreciated in particular his kind words about the staff and I know that they will also appreciate them. There is little dispute about the facts of the case, which my hon. Friend has researched diligently.

It might be helpful if I said a few words about past developments at the Kidderminster hospital and then gave some details of the scheme that will be started shortly, and finally looked a little further into the future.

As my hon. Friend will know, acute hospital provision in the district, which serves a population of about 100,000, of which 90,000 are in Kidderminster, Bewdley and Stourport, is based on the general hospital. This hospital is split on two sites—the larger Bewdley Road branch, of about 270 acute beds, and the Mill Street branch, with out-patient, day hospital and long-stay geriatric facilities. There are additionally two small general practitioner maternity hospitals and a cottage hospital at Tenbury, just over the border with Salop. Future development at Kidderminster is planned for the Bewdley Road branch.

Up to now there have been four recent separate developments at the Bewdley Road branch of the Kidderminster general hospital. Phase 1, which was completed in 1968, consisted of twin operating theatres and X-ray suites, with administrative accommodation, a sterile supply unit and medical stall accommodation. Phase 2 comprised 116 acute beds, with a kitchen and dining room complex, stores, boiler house and workshops. Also included in this phase were nurses' residential accommodation and a training school, which was completed in 1972. Phase 3 comprised a psychiatric department of 60 beds and 80 day places. It was completed in August 1977 and forms part of the Worcester development project which my right hon. Friend is due to open formally later this month. Phase 4 provided a further 64 acute beds in May 1978. The proposals for phase 5 include a three-storey ward block of the design type known as "Nucleus", consisting of 34 children's beds, with assessment and outpatient facilities, 48 geriatric assessment beds and 28 general practitioner maternity beds, with an ante-natal clinic.

There will also be a new telephone exchange and facilities for uniform exchange and staff changing rooms. The ward block is essentially a replacement for an old block, which is structurally unsound and has a limited life, rather than an expansion of existing provision. Its content was the subject of protracted discussions at and between the area and regional health authorities, which were, I understand, resolved to the satisfaction of all parties.

It is hoped that work on this latest scheme, which will cost about £2 million, will start soon and be completed in 1982 or 1983. I think that it can be fairly said that the developments that I have described represent a quite steady rate of progress towards the modernisation of Kidderminster's acute hospital service.

Indeed, when I was told of these developments my reaction was that Kidderminster seemed to have done well as compared with some other parts of the country, although, as my hon. Friend the Member for Kidderminster said, other hospitals in his area may have done even better. But what of further phases at the general hospital? Here, the nub of the problem is whether Kidderminster should have its own consultant obstetric unit.

Perhaps I might at this point digress slightly to describe the difference between a consultant obstetric unit and a general practitioner maternity unit. In the former the expectant mother comes under the care of a consultant obstetrician who works from a particular hospital or hospitals. She may well attend ante- and post-natal clinics run by the obstetrician and his staff, and the delivery of her baby will be supervised by his team, which includes resident medical staff.

Such care is desirable when it is anticipated that the special skills of a consultant obstetrician and full hospital facilities, such as an aesthetic, paediatric and pathology services, are, or might be, needed. Where this is not the case, mothers-to-be may remain in the care of their general practitioner throughout their pregnancy, and the delivery and appropriate hospital facilities are often provided for this. Usually in a general practioner unit there is no resident member of medical staff.

Currently, patients from Kidderminster look to Bromsgrove, Birmingham or Worcester for consultant obstetric services, with the majority going to Bromsgrove. Consultant out-patient clinics are, and will continue to be, provided at Kidderminster, however, and this cuts down quite a bit of the travelling. Many mothers, of course, make use of the general practitioner maternity units at the Croft maternity home in Kidderminster and the Lucy Baldwin maternity hospital in Stourport-on-Severn.

The consultant unit at Bromsgrove is to be transferred to the first phase of the new Bromsgrove and Redditch district general hospital, which is to be built at Woodrow, on the outskirts of Redditch, about six miles further away from Kidderminster. I might say in passing that approval to proceed with the new Bromsgrove and Redditch hospital has recently been given by my Department, although, in view of the consequential changes that I have mentioned, I could well understand if that news was treated with rather less acclaim in Kidderminster than I expect it has been in Redditch. Because where will Kidderminster patients go when the Bromsgrove unit moves?

The Hereford and Worcester area health authority has, I understand, looked at all the possible alternatives and has concluded that consultant obstetric facilities should be provided at Kidderminster, as my hon. Friend said in his speech. It has therefore resolved that a consultant unit should be included in phase 6 of the Kidderminster general hospital development. The AHA also urges that the opening of such a unit should coincide with the transfer of the existing unit at Bromsgrove to Redditch.

The West Midlands regional health authority, which is responsible for major NHS capital developments throughout the region, considered this issue during the preparation of its recently published regional strategic plan, which covers the period up to 1988.

Unfortunately, this is one of a small number of issues that it has been unable to resolve. Apparently, on projected annual births, Kidderminster does not satisfy the RHA's criteria for a separate unit. The RHA is also concerned that the birth rate figures do not justify the appointment of the consultants which it feels is the minimum requirement to provide cover for such a unit, and problems are envisaged over the capacity to train sufficient midwives for units at both Redditch and Kidderminster.

Photo of Mr Esmond Bulmer Mr Esmond Bulmer , Kidderminster

Is my hon. Friend able to say how recent those population projections are?

Photo of George Young George Young Parliamentary Under-Secretary (Department of Health and Social Security)

I will make further inquiries about the date on which these forecasts were made and write to my hon. Friend. If it appears that he has more recent information which casts doubt on these projections, it is right that the matter should be looked at again.

Because of these doubts, the RHA has not felt able to include phase 6 of the Kidderminster general hospital in its proposed strategic capital programme for the period 1979–80 to 1988–89. I can well understand the concern of my hon. Friend and that of his constituents, but we are not, I think, at an impasse, and I have therefore to say that I do not believe that it would be appropriate for Ministers to intervene on this issue at present.

As I understand it, discussions on this issue are currently being held between regional, area and district officers, and I am sure we all hope that a solution can be found that will be acceptable to everyone. At member level there can be no doubt that the regional health authority will return to this question, either as part of its consideration of the results of its consultation on the regional strategic plan or separately as one of the unresolved issues.

I fully appreciate that my hon. Friend and the people of Kidderminster are pressing for an early decision and I understand the concern expressed in his remarks. I have no doubt that the regional health authority will take fully into account both the need for urgency, particularly in view of the progress in the planning of the new hospital at Redditch, and the general arguments put forward tonight with such conviction by my hon. Friend, and any new information that emerges on forecasts.

I know that my hon. Friend is concerned also about the provision of a twin operating theatre suite at the Kidderminster general hospital. I am told that the need for additional theatre capacity is recognised and that the development plan for the Bewdley Road site includes a further two theatres. I had enormous sympathy with the story that my hon. Friend told the House about the child waiting for her operation. Having recently emerged from hospital after a minor operation, I understand the concern that that child felt as she waited to be wheeled into the operating theatre.

The area strategic plan of the Hereford and Worcester AHA envisages that twin theatres at Kidderminster will be built during the current 10-year strategic period, but I understand that in the face of competing claims for other schemes this development cannot take place within the next five years.

Whilst I understand that there will have been disappointment over this, particularly in the light of the visitors' report from the Royal College of Surgeons, to which my hon. Friend referred, I hope that he will understand that Ministers are reluctant to dictate to authorities the order of priority to be accorded to schemes of this kind, because it is our firm intention that local people should be given more, not less, say in decisions over the provision of their health services.

Towards the end of his speech my hon. Friend mentioned the possibility of voluntary contributions playing a role in the provision of these facilities. He will know that the Health Services Bill, currently before the House, makes it easier for health authorities to tap additional sources of income of this kind.

On Second Reading of the Health Services Bill, my right hon. Friend said: We all recognise that the Health Service is unable to meet all the demands made upon it. All Governments in recent years have found and every Secretary of State has had to make speeches explaining that there are waiting lists and that important projects must wait and why there is not enough money available. … At the same time, there is undoubtedly great public concern about the well-being of local hospital services, and there are welcome signs that more people want to do something about it. Of course, leagues of friends and other similar bodies can raise substantial sums and channel them into the Health Service. But it really seems absurd that health authorities themselves should not have power to appeal for funds to supplement what they get from my Department."—[Official Report, 19 December 1979; Vol. 976, c. 662.] My right hon. Friend was right to raise this option in his remarks, and I hope that those concerned will pursue it vigorously.

I am sure that tonight's debate will have been most useful, in that it has allowed a full discussion of the issues involved in hospital provision in Kidderminster and will be useful background information for the visit to which my right hon. Friend is looking forward to paying towards the end of this month.

For my part, I shall certainly directly draw the attention of both the regional and area health authorities to the points made in the debate, and they may wish to look at both these urgent matters again in the light of what my hon. Friend has said.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes past Twelve o'clock.