Local Government (Scotland)

Part of the debate – in the House of Commons at 6:08 pm on 24th January 1985.

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Photo of Donald Dewar Donald Dewar , Glasgow Garscadden 6:08 pm, 24th January 1985

I agree, and I thought that I had spelt that out. I do not want to be an alarmist, but there will still be a substantial increase in the share borne by the domestic ratepayer. I accept that the Secretary of State has taken some steps to try to mitigate this, and it would be wrong to deny it. The derating of industry from 50 to 40 per cent. was mentioned in an interesting part of the right hon. Gentleman's speech. For years — if one adds the speeches up and lays them end to end it comes to months — I have listened to speeches in which Conservative Members have said that the rates in Scotland are a uniquely difficult burden for Scottish industry.

I was interested to hear the Secretary of State say that, if one takes the rate burden as a proportion of turnover, we are in equilibrium with England, and will remain so after the adjustment. I hope that Conservative Members will remember that, because it undermines the point of one of their favourite hobby horses—the so-called profligacy and irresponsibility of Scottish authorities.

We also have a complicated formula under which the domestic element, which was 3p on the old valuation standard, will go up to 5p in the new valuation. This is a substantial increase. Is this a permanency for the period of this quinquennium? The derating of industrial properties from 50 per cent. to 40 per cent. is specifically said to continue to 1990, but, as far as I am aware, nothing has been said about similar permanent arrangements to the end of this revaluation. If this is not to be permanent, the implications for the domestic ratepayer will be considerable.

Although partial help has been given, there is an element of the fraudulent in this system. I am sorry to use a rather ugly word. In the settlement for last year, some £14 million of the grant paid had to be devoted to support of the domestic ratepayer. Now, we are being asked to find £64 million from a slightly reduced settlement for the same purpose. In effect, that is a loss of £50 million to the local authorities. Even after that, we know that the equivalent burden for domestic ratepayers is an increase of 8 per cent. on the rates.

The Secretary of State will not quibble with the proposition that there is nothing wrong in helping to meet the burdens—to some extent, he is doing so. However, in view of the depressing statistics emerging from district councils and of the blow falling on the domestic ratepayer, the Secretary of State should have cushioned them more effectively and should have alleviated that burden. We shall return to this again and again. I recognise that there are always problems about cash resources, but in the present circumstances, to leave the domestic ratepayer partially unprotected would be unacceptable to Labour Members.

It is self-evident that all this has complicated this year's arithmetic. However one looks at the problem, this is another rotten rate support grant settlement. It is bad for the councils, bad for ratepayers and bad for those who use local authorities' services. Understandably, the Secretary of State made a great deal of play with the increase in relevant expenditure, but just as it is not only the rateable value but the rateable value and the rate poundage that have to be taken into account, so we have to look at the relevant expenditure and at the level of grant paid. That has dropped again from 62·2 per cent. to 56·5 per cent. As a result, in cash terms we shall be paying £6 million less this year than last to local authorities.

I know that the Secretary of State has said that that is an unfair comparison because somewhere two colleges are moving from one sector to another, but the Secretary of State has a nasty habit of mentioning special factors when they are in his favour and ignoring special factors when they are inconvenient for him. The truth is that we have lost £6 million. If we add to that the increase from £14 million to £64 million that I referred to in the domestic element, there is a loss in effect of £56 million.

Relevant expenditure has gone up by £194 million to allow for inflation. The Secretary of State makes a virtue of that, but it has not been reflected in the grant. If £194 million is the proper inflation figure, that should have been met in the grant settlement. If we add the lot together, we find that we are £250 million worse off than last year. That is a substantial loss to local authorities that are suffering the difficulties, problems and demands faced by almost all local authorities in Scotland.

The impact on services is bound to be severe. COSLA has supplied figures and I do not think they are open to challenge. If we apply to the 1984–85 budgets 4·5 per cent., 4·75 per cent. or whatever the proper deflator is that the Government have set in the White Paper, and compare the figures with the guidelines for 1985–86, we find that the standstill budgets would have to be cut by £101 million to meet guidelines. If that is measured against the crisis in education and the fact that the White Paper is proposing that by 1987–88 there will be a reduction in real terms of about 10 per cent. in education spending, we begin to see what bad news these figures add up to.