Orders of the Day — Local Government (Scotland)

Part of the debate – in the House of Commons at 10:58 pm on 22nd October 1985.

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Photo of Mr Bruce Millan Mr Bruce Millan , Glasgow Govan 10:58 pm, 22nd October 1985

I have made my views about this pernicious system of penalties clear many times and I do not intend to deal with the matter in any detail. I should like to concentrate on one aspect of the crisis in the relationships between the Government and local government in relation to the dispute about teachers' salaries, about which there were exchanges in the House earlier today.

The real crisis in the rating system and local authority finance has arisen because of the Government's continued cutting of the amounts and the rates of grant during the past six years. Irrespective of whether we reform the system, it will not operate satisfactorily unless a proper relationship between central and local government is established. The Government's crises and troubles are the direct result of their actions during the past six years.

I shall deal with teachers' salaries and the point of my hon. Friend the Member for Kilmarnock and Loudoun (Mr. McKelvey) about inflation assumptions in the figures imposed in the Government's guidelines.

At one time Government disclosed the inflation assumptions, but now they are careful not to disclose them. From the little information from central Government, we know that in every year since 1979 the inflation assumptions have been less than the actual inflation outturn. That is the main reason why we have the so-called excesses of budgets over Government guidelines. It is all right for Government to talk about inadequate inflation factors, but local authorities which pay the bills must make realistic assumptions in the budgets they prepare.

A major budget item is the assumption about pay increases in the forthcoming year. Already, because of the agreement reached with local authority manual workers, Scottish local authorities are faced with additional expenditure in the current year. Expenditure for authorities which are suffering penalties is multiplied. For example, if an authority pays any group of workers 1 per cent. more than it has assumed in its budget and, like Strathclyde, has a grant penalty of 1·65 per cent., the extra 1 per cent. will cost the authority 2·65 per cent. —1 per cent. for the workers and the 1·65 per cent. deduction in rate support grant. That is one of the particularly pernicious effects of the system, which operates in relation to the teachers' dispute. Opposition Members judge the Secretary of State's anxiety to settle the teachers' dispute, and to get teachers back to school and education back to normal, in that context.

One of the ironies is that if the dispute is not settled in the current year — we must all profoundly hope that there will be a settlement—and local authorities do not have to pay any increase to teachers for which they have budgeted, those authorities will save the teachers' increase and receive penalties back. If no increase is payable, for example, in Strathclyde region, which may have assumed 6 per cent. for a teachers' salaries increase in the current year, it will get that 6 per cent. back with a further 10 per cent. It will get 16 per cent. back simply because there is no settlement. Could there be a more absurd system of local government than that? There is actually a financial incentive to local authorities, which I am glad to say they are not taking advantage of, not to reach a settlement in the current year. That is absurd.

The system is particularly pernicious when local authorities want to make a generous settlement with employees. Unless there is an increase in the relevant expenditure and unless the penalties are removed, any act of generosity towards the teachers or another group—by that I mean any act intended to be fair and just—will be penalised twice or three times under the order. Certainly the major Scottish authorities will all suffer penalties under the order.

It is nonsense to claim, as the Secretary of State claimed earlier, that he is not involved, because, as my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) pointed out, he is a member of the negotiating committee. The right hon. Gentleman has his representatives there. In addition, he effectively controls the total offer made to the teachers, partly by his contribution through the rate support grant and even more because of the operation of the penalty system.

There was some justice in an arrangement under which the Secretary of State said, "I am willing to pay so much and if you wish to pay more you can pay it out of the rates." But local authorities do not now have that freedom. If they wish to pay more, they not only pay the extra, with no contribution from the Secretary of State, but they pay penalties on top of that. It costs them two or three times as much as it would under any sensible system of local government finance.

The Secretary of State pretended in the House this afternoon that the reason why he did not grant an independent pay review was that the teachers did not wish to include pay and conditions in the review. But even if they had done so. the right hon. Gentleman would have not granted an independent pay review, because he is frightened of the independence of a review and not its exact terms of reference.

The Secretary of State has come up with £125 million over four years, which is less than the penalties being imposed in one year under this order. If the £125 million were built up gradually over the four years, the sum involved in 1986·87 — the right hon. Gentleman is giving nothing for 1985–86 — would be trivial in comparison with the need of teachers. We are told that it would be about 2·5 per cent. on the going rate. But what is the going rate?

The Government have announced today that they will no longer have pay norms for the Civil Service and presumably they intend something similar for the rest of the public sector. The pay norms have been 3 or 4 per cent. and what is the use of saying to teachers, "You can have 3 per cent. and another 2·5 per cent." when the Government may decide that next year's pay norm will be nil or 1 or 2 per cent.?

No genuine negotiations are taking place anywhere in the public sector and they are certainly not taking place with the teachers. The order is another turn of the screw for local authorities and another example of Government interference in what they pretend are free negotiations between the management and the teachers.

In any case, the extra £125 million is not extra Government cash. It is only extra relevant expenditure, of which they are paying a decreasing percentage. They have decreased the percentage of grant in every year since they took office in 1979 and I have not the slightest doubt that they will do the same next year and the year after if they are still in power. The extra money could easily be siphoned away by reductions in grants, penalties and the rest.

If the Secretary of State continues in this way, the crisis in Scottish education can only worsen. I have never known a situation like the present one in which teachers have voted to ban participation in the SCE examinations.