We shall consider that when the time comes, but at this stage we are not forecasting what will happen. However, we know what the forecasts are and the figures with which we shall have to deal.
Setting priorities within local circumstances is one of the main tasks of local government. Exactly the same problem must be met in placing any public expenditure programme. We must find ways of protecting those things that are essential in priority and use the money available to concentrate on them. If authorities plan for expenditure significantly above the levels commended to them in the grant settlement I shall not hesitate to use the full range of statutory powers available to me. We took resolute and effective action last year. If necessary, that can be repeated, but I very much hope—I am sure it is the hope of everyone—that it will not have to be.
The rate of grant for 1982–83 is 64.2 per cent. —2–5 percentage points lower than for 1981–82. The effect of this reduction on rate-borne expenditure will be the same as the effect of the 3.1 per cent. reduction to be made in England. I have no doubt that hon. Members will complain about this reduction, but I remind them that the right hon. Member for Craigton and those who supported him did very much the same thing in 1977–78, when the grant was cut by no less than 4 percentage points—from 72.5 per cent. to 68.5 per cent. That was at the time of the 1977–78 grant settlement.
In an article he wrote in The Scotsman not long ago, the right hon. Gentleman told us that he thought a legitimate weapon for the Government to use in persuading local authorities to reduce spending was a reduction in the rate of grant. He was right to say that, having done it himself. In case it is suggested, as I think the right hon. Gentleman did on the last occasion, that this was a technicality and was not to do with reduced expenditure—he said in the House that it was to do with local government reform—I have with me the report on the rate support grant order for 1976. That document was produced by the right hon. Gentleman, and in paragraph 19 on page 7 he makes his position quite clear. It states:
Local authorities have been advised by Circular that it was the intention of the Secretary of State to reinforce the Government's public expenditure policy by reducing in real terms the financial resources which local authorities would receive from the Government in 1977–78 by setting the percentage of relevant expenditure for that year below that for 1976–77".
That was below by 4 per cent. Therefore, do not let us have any more complaints about the reduction in the rate of grant—a perfectly legitimate thing to do. Labour Members will have their work cut out if they want to make anything of that.
I propose to change the arrangements for the distribution of grant in only minor respects from those adopted in earlier years. The domestic rate reduction will remain at 3p in the pound, and the scheme for special assistance to authorities affected by oil developments will continue with payment of £ 17 million in respect of an initial calculation for 1982–83 and a further calculation for 1978–79. The amount of resources element will be increased by about a quarter, and that goes some way to meet the views of the convention in order to improve the equalisation of local rating resources.
Needs element of £3.9 million will be distributed among regional and islands councils in accordance with the incidence of youth unemployment in their areas. This is to enable them to enrol more 16-to-18-year-old students in full-time vocational further education courses. The general portion of the needs element—by far the largest part of the grant—will be distributed on the population formula prescribed in schedules 3 to 5 to the order.
The additional assistance for Islands areas is also continued. For the first time, I have thought it right to take some account of the widely differing circumstances in the Western Isles on the one hand and Shetland and Orkney on the other. I am aware of the problems created for the northern isles by oil developments, but these have resulted in local rating resources in excess of those available to other authorities.
Grant support to Orkney and Shetland will therefore be slightly lower than in previous years—for Shetland, £397 per head and for Orkney, £388 per head. These figures are well above the average figure of £320 per head for regions inclusive of districts. I have provided for an increase of about £13 per head to the Western Isles in recognition of its problems.
Let me summarise the main points. First, if the House approves the order, local authorities are being provided with resources from the Government that will enable them to maintain services at an adequate level, but they must reduce their expenditure as a whole. Some have proved that they can do so. Others can now do so and I hope that they will.
Secondly, I hope that they will heed the advice that I have given them since 1979 to reduce their staffing levels, which are still much higher than they ought to be. I am not asking them to do anything that private industry, other local authorities and the Scottish Office are not having to do.
Thirdly, by importing the principles of cash planning, this grant settlement invites authorities to recognise, and take account of, the economic reality and discipline that the private and public sectors must observe, do observe and have observed for years.
Fourthly, ratepayers, whether domestic, industrial or commercial, must recognise that the Government's firm intention is to help them by encouraging local authorities to reverse the trend of expenditure which, as I have demonstrated, has been ever upwards in recent years. As a result of that, local authorities must moderate increases in rates, which it is clearly demonstrated follow reductions in expenditure.
On those bases I commend the order for approval by the House. It is in the interests of every ratepayer in Scotland that local authorities should pay close heed to the need to reduce their expenditure accordingly.