Rate Support Grant (Scotland)

– in the House of Commons at 10:22 pm on 16th January 1980.

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Photo of Mr George Younger Mr George Younger , Ayr 10:22 pm, 16th January 1980

I beg to move, That the Rate Support Grant (Scotland) Order 1979, a copy of which was laid before this House on 28 November, be approved. In introducing the order to the House I shall be a brief as I can. I hope that my hon. Friend the Under-Secretary will be fortunate enough to catch your eye, Mr. Deputy Speaker, at the end of the debate to deal with points that will be raised by hon. Members in the course of the debate.

Before coming to the provisions of the order, I should say a few words about the economic background that has led to it. The extremely difficult economic background to the settlement is summarised in the opening paragraphs of the White Paper "The Government's Expenditure Plans 1980–81", Cmnd. 7746. The White Paper notes the long-term deterioration of the British economy and points out that under the previous Administration public spending plans were increased on assumptions about economic growth that were, and can now quite clearly be seen to be, quite unrealistic. The previous Administration's proposals were set out in the White Paper, Cmnd 7439. A growth of just under 1 per cent. annually was planned for local authority current expendture for the years from 1978–79 to 1982–83.

No justification can be found for that from the economic prospects of the same period. I should have thought that Labour Members would recognise that those prospects were, to say the least, bleak and difficult throughout that time. Moreover, that substantial further rise would have followed a substantial growth of about 18 per cent. in total between 1973–74 and 1978–79. Indeed, that was equally difficult to justify by any calculation or even cursory study of the economic circumstances of the period.

The lack of realism shown by the previous Labour Government and by Labour Members over expenditure levels was also carried into their forecasts of cost increases. The most notable example of that was the forecast made at the time of the 1979–80 grant settlement that local authority wage costs would rise by 5 per cent. in the ensuing year. It was apparent to everyone from the outset, even when the announcement was made, that the forecast was totally misconceived. It was, of course, rapidly overtaken by the high wage settlements for local authority employees made during the past year.

The over-optimism that underlay the initial forecast was not only ingenuous but was damaging, in the sense that when preparing their budgets local authorities placed little credence on estimates of grant entitlement under the increase order, as they saw that it made no sense even before they got it. Loss of confidence as between central and local government in this way is always regrettable, and it creates considerable problems leading to budgeting and estimating based on figures that no one believes in—even at the time of their making.

Photo of Dennis Canavan Dennis Canavan , Stirlingshire West

Is not the Secretary of State being over-optimistic and completely unrealistic in basing his rate support grant order on a rate of inflation of 13 per cent. when inflation is already approaching the 20 per cent. mark? We are unlikely to get inflation down to 13 per cent. in the lifetime of this silly Government.

Photo of Mr George Younger Mr George Younger , Ayr

It is my besetting sin that I am always far too kind to the hon. Gentleman. I should not have given way to him, because I shall come to that point later. His comparison is misleading, because he was looking back to a former rate of inflation whereas we are looking forward to 1980–81 in this order.

Unlike our predecessors, we are determined to tackle the root cause of the economic difficulties in which we find ourselves. To that end, stabilisation of public expenditure and realistic forecasting are an essential part of our economic strategy. My right hon. Friend the Secretary of State for the Environment made that same point this afternoon. As a piece of extra information, I should add that my right hon. Friend the Prime Minister's recent statement about further reductions in public expenditure in 1980–81 does not affect the provisions of the order.

Local authority current expenditure forms a substantial proportion of total public expenditure in Scotland. On taking office last year, I was acutely concerned to learn that local authorities were planning to exceed by nearly £50 million the expenditure estimate on which the rate support grant settlement for 1979–80 was based.

I am, of course, aware that that excess was above the figures commended to authorities through the rate support grant settlement for 1979–80 by my predecessor. I support the objective of controlling local authority expenditure that has frequently been expressed by the right hon. Member for Glasgow, Craigton (Mr. Millan), along with his colleagues. There is no doubt that the general tendency that has been shown by authorities to budget for ever-increasing levels of expenditure was encouraged by the lax attitude generally shown by the previous Labour Government on fiscal matters. That has been touched upon by Conservative Members and by several courageous Labour Members.

Accordingly, as a first step in bringing current expenditure under control, I asked all authorities in Scotland to review their spending plans and to ensure that actual expenditure was held to the level assumed in this settlement and, indeed, below that if possible.

I warned authorities at the same time that if they failed to heed my advice they would have difficulty in adjusting their programmes to the more realistic level of expenditure that I had in mind for 1980–81 and future years. I am hopeful that authorities will constrain their expenditure, although I am sorry to say that there is evidence, especially in manpower figures for the second quarter of the year, that further action still needs to be taken. It can only be seen as worrying that in September 1979, at the time of the last manpower survey, the figure for local authority manpower was 7,319 greater than in September 1978 and no less than 13,336 greater than in September 1977. I hope that all in local government will look carefully at that matter and do their best to correct it.

Turning to 1980–81, I have based the rate support grant settlement on a volume of expenditure just over 2 per cent. less than the corresponding figure for 1979–80. Before deciding on that level, I undertook consultations with the Convention of Scottish Local Authorities, which were both extensive and effective. From May to November, my hon. Friend the Member for Edinburgh, Pent lands (Mr. Rifkind), who has responsibility for home affairs and the environment, and I met the convention, or its president and office-bearer, on seven separate occasions.

Hon. Members know that the convention, naturally enough, has reservations about some aspects of the settlement, but it has been good enough to acknowledge that it has had ample opportunity to express its view. That is how things ought to be, and I shall do my best to see that that is so.

Overall, the convention's contribution was most helpful and effective. It was one of the factors that I took into account in my review of all the expenditure programmes for which I am responsible and that enabled me to set the necessary reduction of all local authority expenditure in 1980–81 at £145 million, compared with the £175 million originally contemplated and which I originally put to the convention. Also, by accepting the convention's recommendation that a higher proportionate cut should be made in capital rather than in current expenditure, I was able to set the reduction in current expenditure relevant for RSG at only 3 per cent. of the figure planned by the previous Administration.

Although I have been greatly encouraged by evidence from a number of individual authorities that the force and sense of the Government's economic policies are recognised by them and that an overall reduction in expenditure of the order now proposed should be attainable without prejudicing essential services, it is most disturbing to me, and I dare say to ratepayers, that other authorities are contemplating budgets reported to involve substantial rate increases. I believe that many hon. Members will agree that it is a pretty commonly held view by ratepayers and the public at large that expenditure growth and rating levels must be checked.

I must therefore clearly warn any authority that is making irresponsible decisions that the Government will not bail it out and that its ratepayers and electors will undoubtedly hold the authority responsible if excessive spending leads to excessive rating levels.

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

Will the right hon. Gentleman give an estimate of what he believes the likely rate increases will be on the assumption that local authorities take the advice set out by the Government and embodied in the rate support grant order? As the right hon. Gentleman knows, we tried hard to get this information from the civil servants at the hearing of the Select Committee on Scottish Affairs. Perhaps understandably, they said that they could not give it, but an addendum to the report says that A number of estimates"— of rate increases— were however made within the Scottish Office of what the increase in the total rate burden might be on various assumptions. Will the right hon. Gentleman therefore tell us what these estimates and assumptions are?

Photo of Mr George Younger Mr George Younger , Ayr

I am afraid that I am not in a position to do that. Any estimate made at this time would be wholly irrelevant and would depend on decisions that local authorities still have to make. An estimate made by me would have no meaning and no relation to the likely level of rate increases in various authorities.

Several Hon. Members:

Several Hon. Members rose

Photo of Mr George Younger Mr George Younger , Ayr

I shall give way in a moment. It would not have any relation to anything that made any sense, and in any case it is not my practice to give future estimates of this kind. This is a matter that must await the decisions of individual local authorities.

Photo of Mr Norman Buchan Mr Norman Buchan , Renfrewshire West

The right hon. Gentleman is wrong. The report of the Select Committee has an addendum that makes it crystal clear that the assumptions were made. A number of different assumptions and calculations of estimates were made of the total rate burden. What were the assumptions and the relevant estimates based upon them? The crucial question is this: given that every local authority obeys the Secretary of State's guidelines, what is the likely increase?

Photo of Mr George Younger Mr George Younger , Ayr

That is something that has been done in the past. Incidentally, I noted that an estimate was made last year that was wildly wrong—wrong by 100 per cent. or more. The right hon. Member for Craigton made an estimate that the increases were likely to be in single figures, but they turned out to average 20 per cent. He can correct me if I am wrong, but I understand that those are the figures. I do not intend to make an estimate of that sort at this time. I am waiting for the decisions of individual local authorities in the light of the guidance and guidelines that have been given. I have given local authorities the strongest possible advice to be careful in their expenditure and not to be extravagant. If they follow that course, they should be able to keep rate increases to a reasonable level. That is the correct position for me to take at the moment.

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

But it is made clear in the addendum supplied by the Scottish Office civil servants that certain assumptions were made about rate burdens. We are not asking for a whole range of different assumptions. The one question we ask is whether the estimate has been made and the evidence provided to the Select Committee is accurate. If it is accurate, on the basis that local authorities do exactly as the Government wish, what is the likely effect of that on the rates?

Photo of Mr George Younger Mr George Younger , Ayr

The assumptions to which the hon. Member refers are not assumptions made by Ministers in the course of ministerial discussions. They are made as working assumptions as a result of much official work over many months. They are not definitive assumptions. Incidentally, I can confirm that I was correct in suggesting that the estimate made by the right hon. Member for Craigton last year was that the average rate increases in 1979–80 would be in single figures, provided that local authorities accepted the previous Government's guidelines on inflation assumptions. In the event, the average increase was about 20 per cent.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

Will the Secretary of State now give us the figures for 1980–81? Is he seriously suggesting that the Government have produced this order without any idea at all of the rate increases next year in Scotland? That cannot be so.

Photo of Mr George Younger Mr George Younger , Ayr

My general maxim for approaching my task is not to repeat any of the mistakes made by the right hon. Gentleman. As his error was clearly demonstrated as a 100 per cent. error, I might be well advised not to embark upon the same course.

Paragraphs 9–20 of the report give a brief account of the assumed level of expenditure on particular services. Since time is short, I shall not go over the ground exhaustively under each heading. It is, of course, for individual local authorities to decide what level of current expenditure to incur on particular services. My hon. Friend will be glad to reply to any questions on particular services that hon. Members may wish to raise during the debate.

There are two points that I should make. The expenditure estimates for many services show a small increase compared with 1979–80. In particular, I have urged authorities to give priority to maintenance of law, order and protective services and services for the handicapped and disadvantaged. But in proposing a material reduction in expenditure on education—the largest single programme—I have taken into account the continuing decline in the school population. It would be irresponsible for the Government to propose continual increases in total expenditure having regard to such a steady decline in pupil numbers.

The reductions proposed for 1980–81 assume that authorities will be able to make significant savings on milk, meals and transport as a consequence of the greater discretion that we intend they should be given as to the nature of and the charges for these services, without in any way imperilling exemptions from charges as appropriate.

Photo of Mr John Maxton Mr John Maxton , Glasgow Cathcart

In view of his statement about the decline in pupil numbers, which is happening in the primary schools and is beginning to happen in the secondary schools, will the right hon. Gentleman explain why he has asked for restraint and cutbacks both in the further education sector and in the area of the central institutions that are under his direct control, where over the next few years there will be a large expansion in the number of people entering?

Photo of Mr George Younger Mr George Younger , Ayr

I accept the hon. Gentleman's point. The position of those sectors is that we can allow for some growth, but I accept that it will not be as much growth as we should like, and it will probably not be as much as the demand would require if we had all the money that we wanted. This is one of the many factors that we shall all have to face—the fact that we do not have, and will not have for a long time in the future, the money to doall the things that we want to do. Nevertheless, the hon. Gentleman made a valid point, and no doubt he will develop it further if he has the opportunity.

On the basics of education—the classroom work in our schools—we plan to maintain standards. Whereas the pupil population is expected to decline by 2·8 per cent. in 1980–81 compared with 1979–80, the expenditure that we are allowing declines by only 1·4 per cent. As is mentioned in the report, expenditure per pupil will actually rise during 1980–81, from £538 per head to £548 per head.

Paragraph 22 of the report records that the rate of grant for 1980–81 will remain at 68½ per cent., the same as in 1979–80. The background to my decision to keep the same rate of grant is that I am anxious to ensure that local authorities are able to meet the expenditure levels proposed without placing an undue burden on ratepayers. I very much hope that authorities will respond positively to the lead that I have given by exercising stringent control over their expenditure programmes.

Application of the grant percentage to the relevant expenditure figure at November 1979 prices produces an aggregate grant of £1,362·8 million, of which £114·9 million is due to be distributed through specific grants. They are set out in appendix E of the report. That leaves £1,247·9 million to be distributed as rate support grant.

As in previous years, there will be a cash limit for 1980–81 on the additional grant that may be paid in due course, by way of increase orders, towards increases in the level of prices, costs and remuneration after November 1979. That cash limit will be £194 million. It is compatible with increases in costs affecting the level of relevant expenditure of 13 per cent. between 1979–80 and 1980–81. Allowance has also been made for the cost of outstanding comparability awards.

I must stress that this 13 per cent. assumption relates to local authority expenditure that is relevant for rate support grant and that other assumptions may be appropriate for different or non-specialised purposes. I must also emphasise that the significant figure for local authorities is the £194 million cash limit on grant payable under the increase orders for 1980–81. This is a firm ceiling and I think that it is fair and realistic. It compares with the £63 million cash limit set last year on the basis of the absurd 5 per cent. wage increase, which turned out to be wholly inadequate.

Several Hon. Members:

Several Hon. Members rose

Photo of Mr George Younger Mr George Younger , Ayr

I have such an embarrassment of riches here. I do not know to which of the young eagles I am supposed to be giving way.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline

If the Secretary of State is not able to estimate the effects of his policy on rate increases, will he tell the House what effect his policy will have on the increase in unemployment or job losses in the public sector, particularly in relation to local authorities?

Photo of Mr George Younger Mr George Younger , Ayr

I wish that I could make such estimates. Even supposing I could do that, what good would it do me? The simple fact that is so important for all of us in the House to understand is that this is all the money that this country has earned and can afford to spend upon supporting local government. I am sure that the hon. Member for South Ayrshire (Mr. Foulkes), who is well versed in these matters, will accept that there is no such thing as a limitless, bottomless purse into which we can dig. Therefore, he must accept that were I able to make a calculation such as he wishes me to make—[Interruption.]

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

Order. Since this debate started, many hon. Members have continually been making remarks from a sedentary position. The Minister has given way. If hon. Gentlemen wish to ask the Minister to give way, they must rise in their seats and do so. It is most discourteous of hon. Members to talk the whole time.

Photo of Mr George Younger Mr George Younger , Ayr

Thank you, Mr. Deputy Speaker.

I conclude my last point by saying that in the last two years the numbers in local government have increased by about 13,000. We are nearly bust as a result. That is what has happened. The estimates laid down by the right hon. Gentleman have proved to be quite inadequate. The money to back them up is not there. It is not an option that is open to us. We must get our expenditure under control. It is essential that hon. Members on both sides face up to that.

Several Hon. Members:

Several Hon. Members rose

Photo of Mr George Younger Mr George Younger , Ayr

I shall be accused of taking up too much time if I give way again. If hon. Gentlemen will not find me discourteous, I hope that they will not mind if I carry on. I must allow time for other hon. Members to speak.

The ceiling also includes provision for the Clegg comparability awards, in addition to the provision for an annual rate of increase in relevant costs of 13 per cent.

The purpose of the £194 million cash limit—which will not be adjusted other than for the effect of interest rateson loan charges—is to make clear to local authorities what level of support they can expect for 1980–81 so that they may take action, whether in their budgeting or their wage negotiations, to contain their expenditure in the national interest.

I do not think I need delay hon. Members for long over the arrangements for distributing grant in 1980–81. They are similar to those adopted in 1979–80, with one exception.

Domestic relief will remain at 3p in the pound. The needs portion will be distributed on the same formula as that which was adopted in 1979–80, except that population estimates, as at June 1979, will be used in respect of total population and that the weighting for total population in the distribution formula will be increased so that grant transferred from the resources element—a matter that I shall deal with in a moment—will be distributed according to population. The amount of grant paid through the extraordinary expenses portion of needs element on the net costs of services and infrastructure connected with offshore oil exploration shows a small increase of £1·7 million over the corresponding figure for 1979–80. The resources element will be distributed in accordance with the relevant statutory provisions, the national standard amount being notified, as is usual, at a later stage when information necessary for its calculation becomes available.

The notable change to which I referred is in the ratio of the resources element to the needs element. I should explain that the actual rate poundage struck by each authority is an important factor in determining entitlement to resources element. In needs element on the other hand, distribution is based entirely on demographic factors. Individual authorities' entitlement is not influenced by decisions on expenditure or rates.

I have been anxious to discourage high levels of expenditure and I have accordingly reduced by about £100 million the amount of grant paid through resources element by altering the ratio from 1:4—as in 1979–80—to 1:7. The effect of the change will not be substantial, provided that authorities show a uniform degree of responsibility in fixing expenditure and rates. It will, however, mean that total grant payable to an authority opting for a relatively high increase in rates will represent a smaller percentage of its expenditure than if the ratio had remained at 1:4.

In present circumstances, I think that there is general agreement that this is a just policy. I hope that authorities will respond positively. I shall weigh carefully the reactions of authorities as a whole and I am consulting the Convention of Scottish Local Authorities before deciding whether any changes are required in my statutory powers to enable me to give even more positive encouragement to stringent control of expenditure.

It is my wish to be able to announce to the House a rate support grant settlement that allows everyone in local government to expand services and spend more money. It would be totally irresponsible to do that today. I have no prospect of doing that and there is no prospect of a rate support grant in such a style under this or any other Government for many years.

I hope that everyone will now adjust to the idea that money does not grow on trees. We have to cut back expenditure to what we can afford. Until the economy begins to pick up, everyone in local government must learn to economise, as everyone in private life does already. With that in mind, I hope that local authorities will respond positively to our fair rate support grant settlement. It requires and encourages them to save public money and the money which ratepayers are called upon to provide.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton 10:52 pm, 16th January 1980

As some of my hon. Friends have indicated in questions to the Secretary of State, ratepayers are interested in the rate increase for next year. The Secretary of State makes his estimates on the assumption that local authorities do exactly as he asks—that they cut expenditure in the way that he requests and that they made the same assumptions about the rate of inflation. He is not willing to give those estimates to the House because they will show that substantial increases in rates will occur in the next year.

When I was Secretary of State, I provided estimates. As it happens, in the years before 1979–80, I overestimated because in each year the actual increase in rates was lower than the figure which I gave to the House. In 1979–80 the figure was greater because the authorities over-budgeted. The rates increase in the current year is not 20 per cent. but 14 per cent.

In the last two years taken together for which the Labour Government were responsible—1978–79 and 1979–80—the domestic rate-payers of Scotland paid less than a 10 per cent. increase in rates. The increases in 1980–81 will be substantial. A typical increase in rates next year will be between 25 per cent. and 30 per cent. In many local authority areas the increase will be higher than 30 per cent. I shall explain later why that is inevitable. The Secretary of State's refusal to be frank with the House about these matters is typical of the lack of frankness that we have seen, for example, on the housing support grant and on the form of the order before us.

Let me now deal with the question why the rate increases next year will be very large. Conservative Members had better understand that, because they will have some irate ratepayers to deal with next year and these increases will come deliberately and inevitably as a result of the actions of the Government and the meanness of the order.

Let me deal first with 1979–80, because the Secretary of State pretended that the variation in the grants was somehow generous. It is anything but generous, as his order brings out. Paragraph 5 makes it clear that the moneys to which the local authorities were entitled have been reduced by £36·5 million. To put that in simple terms for Conservative Members, that simply means that a further £36·5 million has to be provided by the ratepayers. That is what happens when the Government cheat on the rate support grant and the cash limits and take the money from the local authorities.

COSLA says—perhaps in replying the Minister will deal with this—that the reduction has been not £36·5 million, but £63 million because another £26 million has been taken from the local authorities for other reasons and quite unfairly. I have no doubt that if that is not so the Minister will give us his information. The information that I am providing comes from COSLA, not from me.

Because of the reduction in grants for the current year it is unlikely that many local authorities in Scotland will start the next year with much cushion of balances in hand to enable them to moderate rate increases in that year. The direct result of these penalties on local authorities this year means that they will start next year with very little in the kitty and therefore the full rigour of the order will affect the rate increases next year.

To pretend that maintaining the same rate of grant is somehow a generous settlement is hooey, because when one takes account of cash limits one sees that the rate of grant will be considerably less than 68·5 per cent.

The right hon. Gentleman is making unrealistic estimates of savings and relevant expenditure for 1980–81. Ho says that the figure is only about 2 per cent. compared with the current year, but it is more than 3 per cent. compared with the projected figures in the Labour Government's White Paper. Without going into the Secretary of State's tortuous and unconvincing economic argument, I san say that there is no economic justification at the moment for the public expenditure cuts being made by the Government, and in Scotland the only effect of the cuts will be to add to an unemployment figure that will already probably increase substantially for other reasons in the course of next year.

At least the reduction of 3 per cent. is rather better than the reduction of 7½ per cent. that the right hon. Gentleman was assuring us in the debate in July would be perfectly easily achieved by local authorities in 1980–81. I said then that that was nonsense, and the Secretary of State is having to admit that I was right. Nevertheless, the reduction is a very painful one.

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

I am glad to have that agreement. Ministers, including the Prime Minister, are trying to tell us that there are no reductions, that they are keeping public expenditure up and that they cannot understand what the fuss is about. The fact is that the cuts will be painful. I am glad that the Solicitor-General for Scotland who does not normally grace us with his presence on these occasions, also agrees with me.

The way that the Government reckon to achieve these savings in 1980–81 is, first, outrageous and, secondly, completely unrealistic. The vast bulk of the saving—without this saving the relevant expenditure figures will not be achieved—will be in education on school meals, milk and transport.

I got the figures in answer to a question on 17 December. The estimate for expenditure on school meals this year, at constant prices, will be £39·3 million, but next year it will be only £22·2 million—a reduction of 44 per cent. in 1980–81. That is utterly disgraceful. But it will not happen. It could take place only if the school meals service were completely savaged and, in some areas, obliterated. That will not be possible until the Education (No. 2) Bill goes through, and it will not go through in time for the start of the local authority financial year. If these savings are to be achieved—I say with absolute confidence that they will not be achieved in 1980–81—they will have to start from the autumn of 1980, and the reduction in school meals expenditure starting then will be considerably greater than 44 per cent.

Photo of Mr Ian Lang Mr Ian Lang , Galloway

Does the right hon. Gentleman accept that because of the fall in pupil numbers expenditure, in real terms, next year will be up by £10 per pupil? Therefore, is he not giving a misleading picture?

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

The hon. Gentleman is talking about something different. That is a phoney figure as well.

I want to concentrate on school meals. According to the Secretary of State, expenditure on school meals is to be reduced savagely by 44 per cent. in 1980–81. The school meal charge would have to be increased to 55p or 60p a day—it is being increased anyway under the terms of the order that has been introduced—so that it would be about double what it was when the Government came to office. But it will not happen, because Scottish local authorities have no intention of obeying the Government's injunction on school meals. They are right to take that course, and I shall support them in their refusal to make these outrageous savings.

The Government estimate a reduction of 48 per cent. on school milk expenditure next year. The National Farmers Union does not like that. As a good deal of the money is subsidised by the EEC, it does not make sense in terms of the Government's intention to try to get more money out of the EEC.

There is to be a modest 14 per cent. reduction in expenditure on school transport, but regional authorities in Scotland have indicated that they will not change their school transport arrangements because of what the Government are asking them to do. COSLA has officially said that it wishes the clause on school transport to be withdrawn from the Education (No. 2) Bill. Even Grampian and Tayside, which are usually anxious to please the right hon. Gentleman by making any savings for which be asks, have said that they will not make reductions in school transport expenditure. There is no chance that savings on the scale asked for by the Secretary of State will be made next year. Therefore, the relevant expenditure figures—the figures for which the authorities will budget—will be higher than those in the order.

The Secretary of State will no doubt say that the authorities should make savings elsewhere. But other services are under pressure as well. There is considerable concern and agitation about public expenditure cuts in the social services, home helps, and so on.

Even the manpower figures are quite interesting. I agree with what the Secretary of State for Scotland said; his figures are perfectly accurate. I make it clear that I am not in favour of local authorities constantly increasing their manpower. I said that as Secretary of State for Scotland and I repeat it now. Some of the increases during the past year are very worrying.

Mr. Millian:

Let me just finish this point. I received a useful answer today. If we exclude from the local authority manpower figures teachers, policemen and firemen, the total number of other employees is still actually less than it was in March 1976. These are the figures that I have received today.

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

The right hon. Gentleman is right, but will he accept that the figures show that there are 11,000 more employees than there were in 1977?

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

I agree with that. I have already said that there have been worrying trends over the past 18 months. I am agreeing with the Government on that. But the Government have given the impression that these are outrageous figures. However, it is still true—one has to say this on behalf of local authorities—that the number of general employees is lower than in 1976.

The number of policemen has risen substantially during the past year and so has the number of firemen. The Secretary of State shakes his head, but the figures he quoted this evening included policemen, firemen, and categories of employees that he wanted to see increase in number. Therefore, he was cheating a bit by the figures that he gave this evening.

Photo of Mr Peter Fraser Mr Peter Fraser , Angus South

If the right hon. Gentleman is so concerned about the increase in the number of local government officials taken on by local authorities, why, when he was Secretary of State for Scotland, did he do nothing to secure agreement with local authorities to give a breakdown of increases in recruitment, authority by authority, as has now been achieved?

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

The manpower figures were first published by the Labour Government. They had not been published before. It was under myself as Secretary of State for Scotland that we produced these figures because I was worried about local authority manpower.

The figures I have given are still accurate. A number of misleading things are said about local authority manpower, and the idea that there has been, over the years, a remorseless increase in local authority manpower does not bear serious examination.

But if one wants to reduce manpower and one is not going to achieve—as this Government certainly will not—the savings in expenditure on school meals, milk and transport, it is necessary to look at the number of teachers. I suppose that is the reason why we had the extraordinary statements that the Under-Secretary of State made the other day about the excessive number of teachers in Scottish schools. I hope that teachers took careful note of those statements.

The main factor causing the rates to be considerably increased next year will be the cash limit. The cash limit of £194 million that the right hon. Gentleman has introduced, as he emphasised again tonight, is a firm figure. As I understand it, that figure will not be changed, whatever happens, apart from allowing for loan charges.

That has not happened before. Before, the Government have always said that the cash limit was based on assumptions and that if the assumptions proved to be false adjustment of the cash limit would be considered. The difference here is that the right hon. Gentleman is saying that the figure is firm. So it does not matter what happens to inflation; local authorities will not receive any more money.

The inflation rate that is written into the cash limit is 13 per cent., but nobody, not even the right hon. Gentleman, believes that the rate of inflation for local authorities next year will be 13 per cent. The general rate of inflation at present is 17½ per cent. Earnings, according to the latest figures published today, have increased by 19·2 per cent. over the past year. Even the leaked Treasury document on costs, about which we read in the newspapers over the weekend, contained a figure of 14 per cent. for wage settlements, and I understand that when the Civil Service complained about that the Government gave certain assurances that it would not necessarily apply to civil servants. Rents will go up, as we saw on Monday, by 33 per cent.

The truth is that the Government are gaily putting up the cost of all sorts of other essential services. Only this afternoon we heard what is to happen with electricity and gas. In these circumstances, to pretend that the figure of £194million and the 13 per cent. inflation rate are realistic is nonsense.

Photo of Mr Ian Lang Mr Ian Lang , Galloway

Is the right hon. Gentleman proud that his Government a year ago anticipated a rate of inflation of 5 per cent. and does he agree that a rate of 13 per cent.—

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

Order. The right hon. Gentleman gave way to the hon. Member for Galloway (Mr. Lang), and it is not right for him to stand up while the hon. Gentleman is still making his intervention.

Photo of Mr Ian Lang Mr Ian Lang , Galloway

Does the right hon. Gentleman feel that his Government's figure of 5 per cent. a year ago was more realistic in anticipating inflation than the 13 per cent. given by my right hon. Friend for prospective inflation?

Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Craigton

In fact, the figure was not 5 per cent., but if the hon. Gentleman will look not only at what was said but at what was done in previous rate support grant orders he will see that the cash limits were adjusted for increases beyond the assumptions that were made at the point at which the cash limits were originally calculated. The point that I am making is that this year nothing will happen; even if inflation goes to 20 per cent. the local authorities will get nothing more.

Moreover, the figure of £194 million includes amounts for comparability settlements and the rest, and the Secretary of State has refused to give a breakdown. The cash limit figures fixed by the Labour Government were on every occasion broken down in detail for COSLA at the settlement meeting. The COSLA representatives were able to discuss them, and, for that matter, we sometimes adjusted the figures on the basis of the comments made.

Now, however, the Secretary of State, with his open government, does not give COSLA any information, and he still refuses to give a breakdown of these figures.

What is clear—I could argue it but there is no time now so I simply assert it—is that the figures included in the £194 million are extremely unlikely to meet local authority costs which will arise from the comparability studies, particularly in respect of teachers. I simply assert that, and I believe that that will be the situation.

What will the authorities do? The Secretary of State may think that he is being rather clever in refusing a lot of information and leaving them a bit in the dark, believing that he will get some sort of solution at the end of the day that will be more agreeable to him than otherwise. If he believes that, he is utterly misguided.

Of course, the local authorities could just assume a 13 per cent. inflation rate and finish up at the end of the year with very substantial deficits—which, incidentally, they are not by law permitted to do—but I forecast that what the typical local authority will do is make its own inflation estimate, which will be considerably above 13 per cent., and then rate accordingly.

In so far as an authority rates for inflation above 13 per cent., each 1 per cent. that it rates for will cost it three times as much as the figure for which there is coverage under the rate support grant. So if it estimates for an inflation rate of only 17 per cent., which is very modest, the rate increase by that alone will be 13 per cent. plus three times the additional 4 per cent., which will inevitably bring us to a rate increase of 25 per cent.

Even if the local authorities did all that the Secretary of State asked them to do, we could not, I believe, have average increases of less than 20 per cent., and I repeat that in my view they will be between 25 per cent. and 30 per cent., and in some cases more than that, because as well as the inflation factor there is the understatement in respect of comparability awards and there is also the un realism of the relevant expenditure that has been assumed in this order.

Perhaps the Government do not care. They do not seem to care. They were elected on the promise to reduce inflation, yet every major action they take has put inflation up, starting with VAT in the Budget and finishing with today's rate support grant order and the gas and electricity price increases announced this afternoon. Some Conservative Members looked rather sick this afternoon when the announcements were made. Some of them do not look too happy now. No doubt they have in mind the prospects over the next year for ratepayers in the areas that they represent.

The Tories were elected on a myth, namely, that public expenditure was out of control and that they could make easy, painless savings. Public expenditure was not out of control. In the local authority sector the increases projected in the Labour Government's White Paper were modest and realistic. They could have been achieved and maintained. There could have been a decent level of essential services.

The Tories found themselves in office, and they have been attempting to wield the butcher's axe. The result of their policy is soaring inflation and rising unemployment. We shall have poorer local authority services. The poorer services will cost Scottish ratepayers considerably higher rates. That is the result of the order, and that is why the Opposition are voting against it.

Several Hon. Members:

Several Hon. Members rose

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

Order. The debate is due to conclude at eight minutes to 12 o'clock. Short speeches will enable more hon. Members to participate.

Photo of Mr Barry Henderson Mr Barry Henderson , Fife East 11:17 pm, 16th January 1980

My right hon. Friend the Secretary of State has managed to secure a rate support grant order that brings real benefits to Scotland and contributes to the battle against inflation. Having listened to some Labour Members, one begins to form the impression that they regard the public service generally—this applies not only to their comments on local authorities—as a new form of job creation scheme to disguise the unemployment that the Labour Government created in the past five years. That is not the purpose of local government. That is recognised by the order.

The outturn this year is more than that for last year. Scotland's special needs are recognised. My right hon. Friend has redressed the unfair rigging of last year's order. Local authorities that curb expenditure will receive benefits. Those are some of the good features of the order. As for the latter feature, I hope that my right hon. Friend will go a great deal further when he introduces next year's order. However, the order will give benefits to authorities that have been careful with their expenditure during the financial year. There should be some recognition of authorities with historical good records of careful expenditure. Cuts hurt most the authorities that have been the most careful in the immediate past. I hope that by next year my right hon. Friend will have found a way of recognising that in the rate support grant order.

As my hon. Friend the Member for Galloway (Mr. Lang) said, it is important to understand that the education budget provides more money per head of pupil than last year. As with the health services, so the personal social services are totally protected from cuts in the order.

I have referred to features that are contained in the order, but there are two items that should have been in it that are missing. First, I refer to local authority subsidies to bus operators. The traffic commissioners recently rejected the proposition from the Scottish bus group that fares should be increased equally across the board. There is a threat to the existence of the commissioners, and that rejection seems to be the first useful thing that they have done for a long time. I say that for one reason, if for no other—that the Fife regional council has done an enormous amount of work at the ratepayers' expense—

Mr. William Hamiliton:

Of course, it is Labour-controlled.

Photo of Mr Barry Henderson Mr Barry Henderson , Fife East

As the hon. Gentleman says. it is a Labour-controlled authority. I do not deny that. Because it is a Fife one, it is much better than most. It is not as bad as other forms of Socialism. Because of that work—greatly encouraged by the Conservative group on the council—savings have been created for Alexander's, the bus organisation that operates in Fife, of about £500,000. For the Scottish bus group to ask for an across-the-board increase in fares would be wholly unreasonable. Alexander's would not require that sort of fare level, because of the savings that have been made.

Not only is that cross-subsidy unfair to regional councils that operate effectively to help bus companies save money; there is further serious injustice that results from bus operators being treated separately. If Alexander's makes a profit it pays corporation tax on that profit and it will not go to help other bus operators. That must be wrong. I hope that the Secretary of State will see that something is done about the cross-subsidy on the one hand and the corporation tax on profitable bus undertakings on the other.

Last but not least, I hope that in the coming year my right hon. Friend will take the necessary steps so that early in the next Parliament, when there is a Conservative Government, we shall see the final abolition of the domestic rate.

Photo of Mr David Lambie Mr David Lambie , Ayrshire Central 11:21 pm, 16th January 1980

The first point that I shall make is one that I have made in previous debates on the rate support grant. The debate is a farce. In one-and-a-half-hour debate we are dealing with a rate support grant of £1·2 billion. No consultation has been held between the Government and hon. Members. In October of last year I made representations to COSLA asking that confidential negotiations between the Government and COSLA should be broken and that Members of Parliament should be involved in those negotiations. Unfortunately, COSLA did not accept that suggestion and tonight we are in the same position—hon. Members are being asked to vote "Yes" or "No" on large sums of money. I hope that the new Select Committee on Scottish affairs will look at the matter so that in future years we will not have this complaint. We should have more participation and negotiation by Members of Parliament in the debate before decisions are reached by the Government.

The Secretary of State said that the Government have given the same percentage award that the previous Government gave, 68·5 per cent. He did not stress, as was stressed by COSLA, that the percentage is on a narrower expenditure base. According to COSLA, the increase in cost that is to be paid by the local ratepayer, out with the 68·5 per cent., will be £63 million. Again, according to COSLA—as reaffirmed by my right hon. Friend the Member for Glasgow, Craig-ton (Mr. Millan) tonight—local ratepayers—even if councils carry out the Government restriction on such things as school meals, transport and milk—will be faced with increases of between 25 per cent. and 30 per cent. Where Labour authorities say that they will maintain the services, ratepayers will be faced with increases of 35 per cent., 40 per cent or even 50 per cent. The Government must come clean and state clearly that they are estimating for rate increases of up to 30 per cent. across the board—even from Tory local authorities.

In 1978 we had a revaluation in Scotland. We should have had a revaluation this year in England and Wales. The Secretary of State for the Environment told English ratepayers that they could tear up their revaluation notices because the revaluation of England and Wales had been delayed. Has any account been taken of the fact that revaluations took place in Scotland but not in England and Wales?

Photo of Mr Donald Stewart Mr Donald Stewart , Na h-Eileanan an Iar

Not for the first time, either.

Photo of Mr David Lambie Mr David Lambie , Ayrshire Central

Can the Secretary of State explain why the domestic rate relief for England is 18½p and for Wales 36p, yet the domestic rate relief for Scotland is only 3p? These figures may have been correct last year but they are certainly not correct this year. I made that same point last year to the previous Labour Government. Why has that figure of 3 per cent. not been increased, bearing in mind that revaluation has not taken place in England and Wales?

Photo of Mr George Younger Mr George Younger , Ayr

If the hon. Gentleman wishes to complain about comparisons will he also complain that the percentage in Scotland is 68·5 per cent. whereas in England it is 61 per cent.?

Photo of Mr David Lambie Mr David Lambie , Ayrshire Central

I accept that. Last year the figure was 68·5 per cent. as well. I have made this point before. I did not get a satisfactory answer last year, but perhaps I shall get a more satisfactory answer tonight.

Revaluation is an important factor. In the Scottish revaluation there was a shift away from the domestic ratepayer to the industrial and commercial ratepayer. Because revaluation has not taken place in England and Wales the Scottish commercial enterprise is at a disadvantage. Why has the Secretary of State not taken that into account in the rate support grant? Certain areas, such as those represented by my two local district councils of Cunningham and Kyle and Carrick, which are mainly represented by Conservative Members, discriminated against the domestic ratepayer by imposing a higher than average increase in revaluation. Why did the Secretary of State, when he was in opposition, say that the ratepayers in Ayr, Troon and Argyll were being discriminated against in the rate support grant settlement, yet tonight nothing has been done to help those ratepayers?

I put it to those new hon. Members representing Tory constituencies—I am sorry that the hon. Member for Argyll (Mr. MacKay) is not here—that they must vote against the order, in order to represent their ratepayers. If they do not vote against the order they will not be playing fair by their ratepayers and they will be carrying out a policy that they criticised when they were in opposition.

1980–81 will be a hard year for ratepayers and for services. That is why shall vote against the order. I ask the Government to take the order away and to come back with a better one, which gives a better deal to Scottish ratepayers.

Photo of Mr Donald Stewart Mr Donald Stewart , Na h-Eileanan an Iar 11:30 pm, 16th January 1980

During the debate on Monday on the Tenants' Rights, Etc. (Scotland) Bill the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) claimed as a justification for the Government's action that they gave a pledge not to the local authorities but to the public in Scotland that every council tenant would have the right to buy his house. I refer to that Bill only to pinpoint the fact that whether one believes that the Conservative manifesto at the last election as a good one, a bad one, or something of a curate's egg, fact is that it was decisively rejected by the people of Scotland.

Photo of Mr Barry Henderson Mr Barry Henderson , Fife East

So was the right hon. Gentleman's party.

Photo of Mr Donald Stewart Mr Donald Stewart , Na h-Eileanan an Iar

I am not forcing the SNP manifesto on to the people of Scotland. I wish that I were, and when we have a mandate to do so we shall. The Government have no mandate to bring in an order such as this, especially in a country whose oil is the lifeline of the Government, as their document states.

It is clear that the highest cuts will be in education, and the Government assume, as they say, that authorities will be able to effect substantial savings on school meals, school milk and school transport. This is bringing us to the realisation of the old expression about the unkindest cut of all. But of course we have a Government run by a Prime Minister who first came to prominence as a snatcher of milk, and the Government's actions are based on the same ungenerous and unfeeling attitude.

The Government say that authorities will be able to effect substantial savings on school meals, school milk and school transport as a consequence of the increased freedom that they will have in providing and charging for these services. That is another example of the old expression about adding insult to injury, because it is fraudulent for the Government to make a virtue of giving local authorities power to use their own blood for the necessary blood transfusions.

The order also raises the question—I refer to it only in passing—of the functions that are being wished on local authorities by successive Governments. It is true that at first these functions were funded by the Government, but we are nearing the situation in which Governments will expect local authorities to carry on these functions, while withdrawing the necessary finance. I suggest that local authorities should think seriously of putting it to their people that these functions cannot be continued, and laying the responsibility for their retraction or withdrawal where it belongs, which is on the shoulders of the Government.

The cuts in education will have drastic consequences. Even the NFU in Scotland has been moved to protest. Parents with more than one child may find it impossible to send their children to school, particularly if they have to walk two or three miles to get there. There will be fewer passengers for buses. Bus services will be withdrawn. There will be more rural deprivation. There will be a spiralling effect. That is inevitable as a consequence of what is being done.

Let me deal with the school building programme. It is true that the demand for places has decreased, but what about the condition of the existing buildings? Many Victorian buildings are still in use in Scotland, and many of the buildings in my constituency—it is not alone in this—are more than 100 years old. These buildings ought to be brought up to a proper standard. Some of them would not meet the requirements of the Offices, Shops and Railway Premises Act, yet children are being taught in these schools every day. That is the kind of thing that the Government are doing. The buildings should be refurbished to modern standards. That is what the situation demands.

Expenditure on recreational services is to be reduced by £3·5 million. Normally this would not be the highest priority of a Government faced with the need for financial stringency, but I ask the Secretary of State to consider the rising figures of unemployment, of young people running around with nothing to do. These young people ought to be used to the full, physically and mentally, yet, as I say, they are running around with nothing to do, and it is a serious matter that this provision is to be cut.

I shall not go into detail about the other services, but I agree with the view of COSLA that 13 per cent. is nonsense. Every Conservative Member knows that it is complete nonsense, and I should like to see them all stand up to defend it. These cuts are being made regardless of the needs of Scotland and without a mandate from the people of Scotland. We have more than our fair share of deprivation. The Government will never convince anybody in Scotland that there is any justification for the cuts in these services.

Photo of Mr Iain Sproat Mr Iain Sproat , Aberdeen South 11:35 pm, 16th January 1980

Unlike the right hon. Member for the Western Isles (Mr. Stewart), I support warmly and strongly the settlement which my right hon. Friend the Secretary of State has brought to the House tonight. In one word in his speech, which I thought was almost the most important thing he said, he described this as a realistic settlement. Realism was the one commodity which was totally absent from all the speeches we have heard by Labour Members.

The fact is that the Government had to cut public expenditure. [Hon. Members: "Why?"] If there is anybody in this country today, let alone in the House, who does not understand why we have to cut public expenditure, he cannot know the meaning of "bankruptcy" and he cannot realise how it was we came to that dread situation. It was precisely because we had been led to the brink of bankruptcy by the Labour Government that it was essential to cut public expenditure, and local government had to bear its share of the cuts.

We understand, of course, why certain local authorities do not like it when told that they must cut back or restrain their expenditure. Nobody likes to be restrained on his favourite projects. If we understand that, those on the other side must understand that there just is not the money. It is no use crying out "We cannot cut", because they can cut. There is waste to be cut out.

Unfortunately, in the few minutes at my disposal I cannot list all the examples of waste. One need consider only one local authority—Lothian—which my hon. Friend the Member for Edinburgh, South (Mr. Ancram) has exemplied so often in the House. There is the miserable affair of the Haymarket escalator of £180,000—or was it £¼ million?—which it was just to throw away. Yet it says that there is no waste. The very same authority wanted to pay its employees to come from Edinburgh down to London—this is the profound irony of it—to lobby against cuts in public expenditure. Yet it says that there is no waste.

There was the sad and bizarre saga of the Lothian public relations department and the man who was to receive a golden handshake of £24,000. It turns out that it is not £24,000, but the officials are so ashamed of what it is that they will not tell us what the sum is.

There are thousands of examples of waste. I suggest to councils like Lothian and those hon. Members who represent them that they should take a leaf out of the book of Grampian regional council. Not only does Grampian regional council have the lowest administrative costs of any region in Scotland, but it gives value for money.

Hon. Members have spoken about school transport. Grampian was the first regional council to say "No, we will continue by giving support to rural transport, to support those of our people who live in the countryside". My right hon. Friend rightly said that councils have an option to do what they want. Grampian was so well run that not only did it have the lowest administrative costs but it now says that it can afford to continue this vital service to its constituents. That is what I mean by having a good regional authority.

Not only in that way, but through its North-East of Scotland Development Authority, Grampian has managed to provide about 27,000 new jobs in the past five years. That should appeal to Labour Members as well as to Tory Members. So it is perfectly possible to have a region that is so well run that white having the lowest administrative costs in Scotland it gives the people of the region what they want.

Having said that to my right hon. Friend, I will enter one small caveat. It is on the question of the oil-related grant. Over the past five years Grampian region has spent about £30 million on providing infrastructure for oil companies. However, having spent £30 million, we have received only £16 million back from successive Governments. That deficit of £14 million has had to be borne by the ratepayers of Grampian.

I very much hope that my right hon. Friend, who has done so much in the settlement order to encourage thrifty regional councils, will look at Grampian. Not only has Grampian been thrifty but it has had the additional burden of an extra £14 million to push forward the national oil programme, and we maintain that the development of North Sea oil is a national programme that should have greater national funding.

Having said that, I completely support my right hon. Friend. He has made a realistic settlement. If Grampian regional council can do it, so can spendthrift councils like Lothian and Strathclyde. Let them get down to it now.

Photo of Mr John Maxton Mr John Maxton , Glasgow Cathcart 11:40 pm, 16th January 1980

I shall be brief, as time is short, but I should like to develop the point that I raised with the Secretary of State for Scotland on the statistics on education that have been bandied around from the Government Benches.

I has been said that the figure has risen by £10 per head for children in school. A changing structure within the school and further education system, with fewer children at the bottom and more at the top, will inevitably cost more per child. It costs less to educate a primary school child than a secondary school child doing highers or O-levels. It is a simple fact and there is no way round it, and it costs more again to educate a student in an FE college.

The Secretary of State accepted that we would have more people coming into the FE and post-school education area, but he said that we could not afford it, which is economic nonsense. Is he saying that the country does not want and need skilled and trained people, who are required by private industry if we are to get the economy going? Who will provide that training and ensure that there are more engineers and other skilled people? The only way to do that is through FE colleges, central institutions and universities, yet this Government say that they cannot afford to expand in an area that more and more people are entering.

I notice that the Secretary of State is nodding his head, and I therefore leave the matter there.

Photo of Malcolm Rifkind Malcolm Rifkind Parliamentary Under-Secretary (Scottish Office) 11:42 pm, 16th January 1980

The right hon. Member for Glasgow, Craigton (Mr. Millan) made great play of the fact that the Government are not willing to make estimates of what the rate increases might be, and took great credit for the fact that when he was Secretary of State he insisted on making rate estimates on each occasion. He did make such estimates, but on each occasion he was absolutely wrong. Sometimes they were higher than he expected and on other occasions lower, but never was he correct.

The simple point is that, if a rate estimate is given to a local authority, it will not be of the slightest use unless it bears some relation to the rates that it will be setting. For any Secretary of State to indulge in pleasant guesswork and give guesses, suggestions or estimates to local authorities, when the experience of the past few years is that these have been totally wrong, is a meaningless exercise that we do not intend to indulge in.

What is of importance to local authorities is that they should know the cash that will be made available to them. It is on the basis of cash and not estimates that they will be able to determine what rate increases are required, and they may be slightly different in some areas, depending on the response to the Government's expenditure proposals.

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

Does the Under-Secretary accept that estimates are often wrong because local authorities do not perform as the Government wish—and that point has often been made from the Conservative Benches? However, it is still valuable to have an estimate, which must be available, of what the rate rise will be if local authorities conform to the Government's wishes. We know that estimates have been made from the evidence of the Select Committee, and will the Minister now give us the estimate?

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

The point was conceded by the right hon. Member for Craigton that rate increases will be different in different areas, even if local authorities respond to the Government's wishes, and the hon. Gentleman must be aware of that. What is important to authorities is to know the cash that will be available, the cash limits and the nature of the distribution of the rate support grant. That information is being made available, and it is only right and proper that it should be.

The right hon. Member for Craigton made various predictions about rate increases. Of course we all know of one local authority that intends to reject any attempts to make savings, and to impose upon its ratepayers in the Lothian region a rates increase of 38 per cent. We might have expected the right hon. Gentleman to give some condemnation, advice, suggestion or exhortation to people of his own party who, contrary to the public interest, are refusing to meet a reasonable request. It may have been thought that the reason this is happening in the Lothian region is the intolerable burden being put upon councils by the Government. Yet after the rate support grant was announced, Councillor Bill Taylor, the secretary of the ruling Labour group on Lothian region, was quoted in an article in the Edinburgh Evening News of 17 November which read as follows: Lothian region's Labour councillors had expected much tougher cuts from the Government than those announced by the Secretary of State. Councillor Taylor agreed that he and his colleagues were not as annoyed by the Government's spending plans as they had expected to be. The ratepayers of Lothian region can take some comfort from the fact that they are expected to suffer a rates increase of only 38 per cent., because Councillor Taylor was not as annoyed as he might have been.

The simple fact is that if local authorities accept the Government's advice on expenditure there will, of course, be rates increases, as there were under the previous Government. But these will be modest—not the frightening increases that the Lothian region appears to be contemplating.

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

I am sorry, but I cannot give way. It is very important for me to answer the points that were made in the debate.

The right hon. Member for Craigton also referred to the manpower situation, and indicated his rather mild complacency that, because the figures in 1976 were slightly higher than they are now, we could ignore the fact that in the last two years they have increased by some 13,000. What is most worrying is that even the last quarterly figures show a frightening increase in Scotland at a time when the figures in England and Wales are actually beginning to fall. This must be a matter for concern because the overall figures conceal the fact that, while some responsible authorities are reducing their manpower, progress in this area is being offset by increases elsewhere.

The right hon. Gentleman also said that he did not believe that inflation would be only 13 per cent., and therefore the Government were being wicked in using that figure. Did he believe that earnings would increase by only 5 per cent. when he used that figure in his negotiations with local authorities? We know for a fact that the level of earnings increased by three times that amount, and, whatever doubts some authorities might have about our cash limit, they far prefer it, as a more realistic assessment of their requirements, to the bogus figures used by the right hon. Gentleman when he was in charge.

My hon. Friend the Member for Fife, East (Mr. Henderson) referred to the problem of assisting prudent authorities, rather than giving out even-handedly to high spenders. This year we have made a radical change in the needs-resources ratio in Scotland. We have transferred £100 million from resources element to needs element, which, while it has not affected the total aggregate of grant available, has ensured that those authorities that insist on levying high rate poundages will not benefit at the expense of the general taxpayer. This is only the beginning of many other changes that the Government are contemplating to ensure that prudent authorities benefit from their prudence and profligate authorities do not benefit from their profligacy. I believe that the public as a whole will welcome this.

The hon. Member for Central Ayrshire (Mr. Lambie) complained that the Government had not increased the percentage grant from 68·5 per cent. I understood that he was suggesting that it should not have been kept constant, that we should feel no satisfaction over the fact that it was kept constant. He might like to know that the only time when that grant was reduced was during the period in office of the last Labour Government, as a result of the public expenditure cuts imposed by the IMF.

The hon. Gentleman also mentioned that revaluation in England and Wales had been cancelled, but the fact is that no revaluation is due in Scotland for some time. My right hon. Friend will take a decision on that matter at the appropriate time. The hon. Gentleman need have no fear about the effect on rate support grant. It has had not the slightest effect on rate support grant in England and Wales this year, nor will it have any effect in Scotland.

My hon. Friend the Member for Aberdeen, South (Mr. Sproat) pointed out the particular needs of the Grampian region as regards extraordinary expenditure which is oil-related. We have been able to maintain the special help given to those areas that have had special oil-related expenditure. I am glad that my hon. Friend welcomes this.

The hon. Member for Glasgow, Cathcart (Mr. Maxton) raised the question of education and complained about the provision for further education. He must accept that a real increase for further educations provided for, at a time when other areas have had to suffer a real decrease. He should appreciate that that is a very realistic and reasonable contribution when we are all experiencing great difficulties.

Equally, it is surely reasonable that, at a time when school rolls are falling dramatically, particularly at primary level, we should be able to ensure a reduction in expenditure on education and not thereby have a dramatic effect on standards. I think that any hon. Member, on either side of the House, will appreciate that as being a reasonable response to the present period of difficulties. We said that in Opposition, because any sensible person would recognise it as being desirable.

The whole tenor of the Opposition's case appears to be that there should be no restraints on public expenditure, no restrictions on local authority expenditure. They appear to wish to encourage

local authorities to spend more this year and next, and to encourage the use of more manpower. Yet we know that the major problem that local authorities face came about because the previous Government planned for 3 per cent. extra spending without providing a penny to meet it.

The right hon. Gentleman complained about the abatement of £36 million in the current year. He did not comment on the fact that local authorities were overspending by £49 million. That is a very important consideration.

Therefore, I have no hesitation in commending the order to the House and asking the House to give it its full and unqualified support.

Question put:

The House divided: Ayes 262, Noes 215.

Division No. 139]AYES[11.52 pm
Aitken, JonathanClegg, Sir WalterHamilton, Michael (Salisbury)
Alexander, RichardCockeram, EricHannam, John
Alison, MichaelColvin, MichaelHaselhurst, Alan
Ancram, MichaelCope, JohnHastings, Stephen
Arnold, TomCormack, PatrickHawksley, Warren
Aspinwall, JackCorrie, JohnHeddle, John
Atkins, Rt Hon H. (Spelthorne)Costain, A. P.Henderson, Barry
Atkins, Robert (Preston North)Cranborne, ViscountHeseltine, Rt Hon Michael
Atkinson, David (B'mouth, East)Critchley, JulianHicks, Robert
Baker, Kenneth (St. Marylebone)Crouch, DavidHiggins, Rt Hon Terence L.
Baker, Nicholas (North Dorset)Dean, Paul (North Somerset)Hill, James
Banks, RobertDorrell, StephenHogg, Hon Douglas (Grantham)
Beaumont-Dark, AnthonyDover, DenshoreHolland, Philip (Carlton)
Bendall, VivianDunn, Robert (Dartford)Hooson, Tom
Benyon, Thomas (Abingdon)Durant, TonyHowell, Ralph (North Norfolk)
Benyon, W. (Buckingham)Eden, Rt Hon Sir JohnHunt, John (Ravensbourne)
Berry, Hon AnthonyEdwards, Rt Hon N. (Pembroke)Jessel, Toby
Best, KeithEggar, TimothyJohnson Smith, Geoffrey
Bevan, David GilroyEmery, PeterJopling, Rt Hon Michael
Biffen, Rt Hon JohnFairbairn, NicholasKimball, Marcus
Blackburn, JohnFairgrieve, RussellKing, Rt Hon Tom
Body, RichardFaith, Mrs SheilaKitson, Sir Timothy
Bonsor, Sir NicholasFell, AnthonyKnight, Mrs Jill
Boscawen, Hon RobertFenner, Mrs PeggyKnox, David
Bottomley, Peter (Woolwich West)Finsberg, GeoffreyLamont, Norman
Boyson, Dr RhodesFisher, Sir NigelLang, Ian
Braine, Sir BernardFletcher, Alexander (Edinburgh N)Langford-Holt, Sir John
Bright, GrahamFletcher-Cooke, CharlesLawrence, Ivan
Brinton, TimFookes, Miss JanetLawson, Nigel
Brocklebank-Fowler, ChristopherForman, NigelLee, John
Brown, Michael (Brigg & Sc'thorpe)Fox, MarcusLe Marchant, Spencer
Browne, John (Winchester)Fraser, Peter (South Angus)Lennox-Boyd, Hon Mark
Bruce-Gardyne, JohnFry, PeterLester, Jim (Beeston)
Bryan, Sir PaulGalbraith, Hon T. G. D.Lloyd, Peter (Fareham)
Buchanan-Smith, Hon AlickGarel-Jones, TristanLoveridge, John
Buck, AntonyGlyn, Dr AlanLuce, Richard
Bulmer, EsmondGoodhew, VictorLyell, Nicholas
Burden, F. A.Goodlad, AlastairMcCrindle, Robert
Butcher, JohnGorst, JohnMacfarlane, Neil
Butler, Hon AdamGow, IanMacGregor, John
Cadbury, JocelynGower, Sir RaymondMacKay, John (Argyll)
Carlisle, John (Luton West)Grant, Anthony (Harrow C)Macmillan, Rt Hon M. (Farnham)
Carlisle, Kenneth (Lincoln)Gray, HamishMcNair-Wilson, Michael (Newbury)
Carlisle, Rt Hon Mark (Runcorn)Greenway, HarryMcNair-Wilson, Patrick (New Forest)
Chalker, Mrs. LyndaGrieve, PercyMcQuarrie, Albert
Chapman, SydneyGriffiths, Eldon (Bury St Edmunds)Major, John
Churchill, W. S.Griffiths, Peter (Portsmouth N)Marland, Paul
Clark, Hon Alan (Plymouth, Sutton)Grylls, MichaelMarlow, Tony
Clark, Sir William (Croydon South)Gummer, John SelwynMarshall, Michael (Arundel)
Clarke, Kenneth (Rushcliffe)Hamilton, Hon Archie (Eps'm & Ew'll)Marten, Neil (Banbury)
Mather, CarolPrice, David (Eastleigh)Stewart, John (East Renfrewshire)
Mawhinney, Dr BrianPrior, Rt Hon JamesStradling Thomas, J.
Maxwell-Hyslop, RobinProctor, K. HarveyTebbit, Norman
Mayhew, PatrickRaison, TimothyTemple-Morris, Peter
Mellor, DavidRathbone, TimThompson, Donald
Meyer, Sir AnthonyRees, Peter (Dover and Deal)Thorne, Neil (Ilford South)
Miller, Hal (Bromsgrove & Redditch)Rees-Davies, W. R.Thornton, Malcolm
Mills, lain (Meriden)Renton, TimTownend, John (Bridlington)
Mills, Peter (West Devon)Rhodes James, RobertTownsend, Cyril D. (Bexleyheath)
Miscampbell, NormanRidley, Hon NicholasTrippier, David
Mitchell, David (Basingstoke)Ridsdale, JulianTrotter, Neville
Moate, RogerRifkind, Malcolmvan Straubenzee, W. R.
Monro, HectorRoberts, Michael (Cardiff NW)Vaughan, Dr Gerard
Montgomery, FergusRoberts, Wyn (Conway)Viggers, Peter
Moore, JohnRost, PeterWaddington, David
Morris, Michael (Northampton, Sth)Sainsbury, Hon TimothyWakeham, John
Morrison, Hon Charles (Devizes)St. John-Stevas, Rt Hon NormanWaidegrave, Hon William
Morrison, Hon Peter (City of Chester)Scott, NicholasWalker, Rt Hon Peter (Worcester)
Murphy, ChristopherShaw, Michael (Scarborough)Walker, Bill (Perth & E Perthshire)
Myles, DavidShelton, William (Streatham)Waller, Gary
Neale, GerrardShepherd, Colin (Hereford)Ward, John
Needham, RichardShepherd, Richard (Aldridge-Br'hills)Warren, Kenneth
Nelson, AnthonyShersby, MichaelWatson, John
Neubert, MichaelSilvester, FredWells, John (Maidstone)
Onslow, CranleySims, RogerWheeler, John
Oppenheim, Rt Hon Mrs SallySkeet, T. H. H.Whitney, Raymond
Osborn, JohnSmith, Dudley (War. and Leam'ton)Wickenden, Keith
Page, John (Harrow West)Speed, KeithWiggin, Jerry
Page, Rt Hon Sir R. GrahamSpeller, TonyWilkinson, John
Parkinson, CecilSpence, JohnWilliams, Delwyn (Montgomery)
Parris, MatthewSpicer, Jim (West Dorset)Winterton, Nicholas
Patten, Christopher (Bath)Spicer, Michael (S Worcestershire)Wolfson, Mark
Patten, John (Oxford)Sproat, lainYoung, Sir George (Acton)
Pattie, GeoffreySquire, RobinYounger, Rt Hon George
Pawsey, JamesStainton, Keith
Percival, Sir IanStanbrook, IvorTELLERS FOR THE AYES:
Pink, R. BonnerSteen, AnthonyLord James Douglas-Hamilton and
Pollock, AlexanderStevens, MartinMr. Peter Brooke.
Porter, GeorgeStewart, Ian (Hitchin)
NOES
Adams, AllenDavies, Rt Hon Denzil (Llanelli)Grant, George (Morpeth)
Allaun, FrankDavies, Ifor (Gower)Grant, John (Islington C)
Alton, DavidDavis, Clinton (Hackney Central)Hamilton, W. W. (Central Fife)
Archer, Rt Hon PeterDavis, Terry (B'rm'ham, Stechford)Hardy, Peter
Armstrong, Rt Hon ErnestDeakins, EricHarrison, Rt Hon Walter
Ashley, Rt Hon JackDean, Joseph (Leeds West)Hart, Rt Hon Dame Judith
Ashton, JoeDempsey, JamesHaynes, Frank
Atkinson, Norman (H'gey, Tott'ham)Dewar, DonaldHealey, Rt Hon Denis
Bagier, Gordon A. T.Dixon, DonaldHeffer, Eric S.
Barnett, Guy (Greenwich)Dobson, FrankHogg, Norman (E Dunbartonshire)
Beith, A. J.Dormand, JackHolland, Stuart (L'beth, Vauxhall)
Benn, Rt Hon Anthony WedgwoodDouglas, DickHome Robertson, John
Bennett, Andrew (Stockport N)Douglas-Mann, BruceHoram, John
Booth, Rt Hon AlbertDubs, AlfredHowell, Rt Hon Denis (B'ham, Sm H)
Boothroyd, Miss BettyDunn, James A. (Liverpool, Kirkdale)Hudson Davies, Gwilym Ednyfed
Bray, Dr JeremyDunnett, JackHughes, Robert (Aberdeen North)
Brown, Hugh D. (Provan)Dunwoody, Mrs GwynethHughes, Roy (Newport)
Brown, Robert C. (Newcastle W)Eadie, AlexJanner, Hon Greville
Brown, Ronald W. (Hackney S)Eastham, KenJay, Rt Hon Dougias
Brown, Ron (Edinburgh, Leith)Ellis, Raymond (NE Derbyshire)John, Brynmor
Buchan, NormanEllis, Tom (Wrexham)Johnson, James (Hull West)
Callaghan, Jim (Middleton & P)English, MichaelJohnston, Russell (Inverness)
Campbell, IanEvans, loan (Aberdare)Jones, Barry (East Flint)
Campbell-Savours, DaleEvans, John (Newton)Jones, Dan (Burnley)
Canavan, DennisEwing, HarryKaufman, Rt Hon Gerald
Carmichael, NeilField, FrankLambie, David
Carter-Jones, LewisFlannery, MartinLamond, James
Cartwright, JohnFletcher, Ted (Darlington)Leadbitter, Ted
Clark, Dr David (South Shields)Foot, Rt Hon MichaelLeighton, Ronald
Cocks, Rt Hon Michael (Bristol S)Ford, BenLestor, Miss Joan (Eton & Slough)
Cohen, StanleyForrester, JohnLewis, Arthur (Newham North West)
Coleman, DonaldFoster, DerekLewis, Ron (Carlisle)
Concannon, Rt Hon J. D.Foulkes, GeorgeLitherland, Robert
Conlan, BernardFraser, John (Lambeth, Norwood)Lofthouse, Geoffrey
Cook, Robin F.Freeson, Rt Hon ReginaldLyons, Edward (Bradford West)
Craigen, J. M. (Glasgow, Maryhill)Freud, ClementMabon, Rt Hon Dr J. Dickson
Crowther, J. S.Garrett, John (Norwich S)McDonald, Dr Oonagh
Cryer, BobGeorge, BruceMcElhone, Frank
Cunliffe, LawrenceGilbert, Rt Hon Dr JohnMcGuire, Michael (Ince)
Cunningham, George (Islington S)Ginsberg, DavidMcKay, Allen (Penistone)
Cunningham, Dr John (Whitehaven)Golding, JohnMcKelvey, William
Dalyell, TamGourlay, HarryMacKenzie, Rt Hon Gregor
Davidson, ArthurGraham, TedMaclennan, Robert
McMahon, AndrewPenhaligon, DavidStraw, Jack
McMillan, Tom (Glasgow, Central)Powell, Raymond (Ogmore)Taylor, Mrs Ann (Bolton West)
McNally, ThomasPrescott, JohnThomas, Mike (Newcastle East)
McWilliam, JohnPrice, Christopher (Lewisham West)Thomas, Dr Roger (Carmarthen)
Marks, KennethRace, RegThorne, Stan (Preston South)
Marshall, David (Gl'sgow.Shettles'n)Radice, GilesTilley, John
Marshall, Or Edmund (Goole)Richardson, JoTinn, James
Martin, Michael (Gl'gow, Springb'rn)Roberts, Allan (Bootle)Torney, Tom
Maxton, JohnRoberts, Ernest (Hackney North)Varley, Rt Hon Eric G.
Maynard, Miss JoanRobertson, GeorgeWainwright, Edwin (Deerne Valley)
Meacher, MichaelRodgers, Rt Hon WilliamWalker, Rt Hon Harold (Doncaster)
Mikardo, IanRoper, JohnWatkins, David
Millar,, Rt Hon BruceRoss, Ernest (Dundee West)Weetch, Ken
Mitchell, Austin (Grimsby)Rowlands, TedWellbeloved, James
Mitchell, R. C. (Soton, Itchen)Sever, JohnWelsh, Michael
Morris, Rt Hon Alfred (Wythenshawe)Sheerman, BarryWhite, Frank R. (Bury & Radeliffe)
Morris, Rt Hon Charles (Openshaw)Shore, Rt Hon Peter (Step and Pop)White, James (Glasgow, Pollok)
Morris, Rt Hon John (Aberavon)Silkin, Rt Hon John (Deptford)Whitlock, William
Morton, GeorgeSilkin, Rt Hon S.C. (Dulwich)Williams, Rt Hon Alan (Swansea W)
Moyle, Rt Hon RolandSilverman, JuliusWilson, Gordon (Dundee East)
Mulley, Rt Hon FrederickSmith, Rt Hon J. (North Lanarkshire)Wilson, William (Coventry SE)
Newens, StanleySnape, PeterWinnick, David
Oakes, Rt Hon GordonSoley, CliveWoodall, Alec
Ogden, EricSpearing, NigelWoolmer, Kenneth
O'Neill, MartinSpriggs, LeslieWrigglesworth, Ian
Owen, Rt Hon Dr DavidSteel, Rt Hon DavidYoung, David (Bolton East)
Park, GeorgeStewart, Rt Hon Donald (W Isles)
Parker, JohnStoddart, DavidTELLERS FOR THE NOES:
Pavitt, LaurieStott, RogerMr. Hugh McCartney and
Pendry, TomStrang, GavinMr. James Hamilton
Question accordingly agreed to.
Resolved,
That the Rate Support Grant (Scotland) Order 1979, a copy of which was laid before this House on 28 November, be approved.