That the Rate Support Grant (Scotland) (No. 2) Order 1982, a copy of which was laid before this House on 15th December, be approved.
The House received notice as long ago as 28 July of the general approach which I propose to adopt to this settlement. Details of my final proposals were set out fully in the report on the order, which was laid on 15 December. I do not therefore propose this evening to take the time of the House on a detailed recital of the provisions in the order, all of which are printed anyway in the order and its accompanying memorandum, but it may help hon. Members if I give a brief summary of the main features. Thereafter, I should like to deal in detail with some of the main issues that arise from this settlement.
The key to any RSG settlement is the level of relevant expenditure assumed by the Government and commended to authorities. For 1983–84 the expenditure total is £3,118 million. This is the first occasion on which it has exceeded the £3 billion mark. The magnitude of this sum illustrates both the importance of the services and the need for expenditure control by all concerned with local authorities.
Discounting loan charges and similar items, relevant expenditure amounts to £2,660 million. That represents an increase of over 9 per cent. on the corresponding planning figure that we allowed for in 1982–83. This is well above the rate of inflation. Taking that into account, it implies a reduction of only about 3 to 4 per cent. from the level of expenditure that was actually planned by local authorities for 1982–83. This seems to me to be a very generous provision to make, given the economic difficulties that we face. I think that it strikes a very good balance between the aspirations of local authorities and the need for reductions in the national economic interest. The order makes provision for aggregate grant of £1,924·25 million. That is an increase of 3·5 per cent. over the 1982–83 figure.
I have no doubt that some will be critical of the fact that the grant expressed as a percentage of relevant expenditure is lower than it was last year. However, the primary objective of the lower rate of grant is to secure reductions in expenditure and not to transfer burdens.
The right hon. Member for Glasgow, Craigton (Mr. Millan) will no doubt recall that he also adopted the device of cutting grant as a means of reducing expenditure. Between 1975–76 and 1977–78, grant was reduced from 75 to 68·5 per cent. The right hon. Gentleman is quoted in a press article on 1 December 1981 as having written:
Central Government already had effective weapons which they could use to try to influence the level of council spending—like reducing the percentage of rate support grant.
Hon. Members will have noted that, as before, the actual rate of grant in Scotland proposed for 1983–84 of 61·7 per cent. is considerably more than the grant in England of 52·8 per cent. The difference is longstanding and Opposition Members will be aware that it arises from three important factors.
Differences in the composition of relevant expenditure—for instance in the treatment of rate fund contributions to housing—are included in relevant expenditure in England but not in Scotland. The other factors are the comparatively lower level of rating resources in Scotland and the comparatively higher level of need in Scotland.
Approximately £180 million will be distributed as specific grants in support of expenditure on specific services. The balance of £1,744·25 million will be distributed as rate support grant. The arrangements for grant distribution have been extensively discussed with the Convention of Scottish Local Authorities, which agrees with my proposals to maintain domestic relief at 3p in the pound, the same level as in 1982–83, and to allocate the balance between the needs and resources elements in the ratio of 7:1.
The resources element will be distributed in accordance with the arrangements laid down by statute. Provision is made in the needs element for continuation of special assistance towards oil-related expenditure, and a small part of the needs element will be distributed among regional and islands councils in accordance with the incidence of youth unemployment in their areas. There is also special provision for the protection of low spending authorities against the effects of the £27 million general abatement of grant, which I had to make most reluctantly in response to the planned overspending for 1982–83.
As a result, no authority spending within the guidelines will lose any grant and no authority will lose more in grant than its excess over the guidelines. Otherwise, the needs element will be distributed in accordance with the demographic formula, which is designed to recognise local differences in expenditure needs.
Provision is made for additional grant amounting to about £1 million to Orkney Islands council to ease the effect on that authority of the order laid before the House today which provides for the derating of certain external plant and machinery.
Provision is also made for a modest increase in the total grant payable to district councils to help them meet expenditure on certain functions which they are to assume from regional councils under the provisions of the Local Government and Planning (Scotland) Act 1982. The amount that is transferred is necessarily an estimate, since the transfer of functions does not become effective until 1 April and some decisions have yet to be made. This is therefore a transitional year. However, I look to authorities to undertake the new responsibilities in a spirit of cooperation, striking a reasonable balance between the need for economy and the interests of the bodies concerned with the arts.