Rate Support Grant (Scotland)

– in the House of Commons at 5:40 pm on 23rd July 1987.

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Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office 5:40 pm, 23rd July 1987

With permission, Mr. Speaker, I wish to make an announcement about local authority expenditure and rate support grant in Scotland for 1988–89.

I propose to set the level of provision for local authority relevant current expenditure in Scotland at £3,640 million. This figure allows authorities to maintain their spending broadly level in real terms, and it includes provision for costs that local authorities will incur in preparing for the introduction of the community charge. The figure represents an increase of 9 per cent. over provision in the current year, and £170 million over the provision for 1988–89 in the public expenditure White Paper.

Aggregate Exchequer grant will be £2,372 million. This will maintain, at present estimates of loan charges and other financing items, the grant percentage which is being paid this year — 55·5 per cent. — and will provide an additional £180 million over the current year's figure.

This is a realistic and a fair settlement. In reaching it I have taken careful account of the views that the Convention of Scottish Local Authorities expressed to my hon. Friend when they met him on 3 July. For the second year running, the settlement is based on local authorities' own budgets and the grant percentage is being maintained. If authorities adjust their spending to guideline this year and budget at guideline next year, average rate increases will not exceed the rate of inflation. I hope that local authorities will respond positively to this settlement.

Photo of Donald Dewar Donald Dewar , Glasgow Garscadden

There is some limited evidence in the statement that the right hon. and learned Gentleman is learning some hard lessons at this time, and that is perhaps something of a tribute to the electorate of Scotland. Is it not extraordinary that, only a week ago, Ministers were forcing through a measure to cut £202 million from local authority budgets in the general clawback, and that that figure is now incorporated in the calculations for 1988–89? It is an "Alice in Wonderland" situation and reflect no credit on the Scottish Office's consistency of approach. Will the Secretary of State accept that the logic is that the penalty for this year should now be cancelled?

The relevant expenditure to which he referred includes provision for additional responsibilities of one sort or another, which I understand are being shouldered by local government for the first time. Will he confirm that it includes, for example, £34 million that will totally take care of the final instalment of the teachers' pay settlement? Does the figure that he announced allow for a full settlement of the firemen's and police pay claim, or at least a calculation of it? How much has been put in for that? Has he added a figure for the considerable cost of implementing the Disabled Persons (Services, Consultation and Representation) Act 1986, which was skilfully piloted to the statute hook last year by my hon. Friend the Member for Monklands, West (Mr. Clarke)? Will that sum have to be found at the expense of established expenditure if local authorities are to do what they should and what they want to do to help the disabled?

The right hon. and learned Gentleman referred to the cost of preparing for the introduction of the poll tax. He said that it was specifically taken into account in the relevant expenditure figure. He will recall, of course, that the memorandum to the Abolition of Domestic Rates Etc. (Scotland) Act 1987 mentions a figure of £9 million for compiling the register. That has been seen as clearly inadequate and condemned by everyone—not only by councillors but by impartial officials — as simply not measuring up to the cost of the chaos and complications that the introduction of the poll tax will involve. As he has said that a specific figure has been included, will the Secretary of State say what it is and just how much he therefore thinks the completion of the register will cost in 1988–89?

Will he accept that the distribution of the grant, the relevant expenditure and aggregate grant amount are vital? As he knows, this year, authorities such as Edinburgh, Glasgow, Stirling, Strathclyde and Lothian were given guidelines that meant expenditure at or below the previous year's budgets in real terms. I should like an assurance that, in 1988–89, there will be sufficient room for the figure that he announced and that it is his intention that no authority will get a guideline that, in real terms, is below this year's budget.

Will the Minister accept that there is little cause for satisfaction in the announcement? Discounting the special factors, as I understand it, the calculation for inflation is 4 per cent. Does he accept that that will be inadequate when measured against what will almost certainly happen in the 1988–89 pay round and the general rise in local government costs? Does the right hon. and learned Gentleman accept that, if the grant percentage had been held at 68·5, as it was in 1980–81, and applied to the relevant expenditure figure that he announced for 1988–89, it would have yielded another £550 million? Is it not a simple fact that the Government have a very long way to go if they are to undo the terrible damage that they have done to jobs, services and the fabric of local democracy in Scotland?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

It is probably fair to say that the hon. Gentleman's comments represented a welcome for my statement. I appreciate that he had somewhat to qualify them for the purposes of the occasion, but nevertheless that is the reality behind his contribution. I noted that, last year, when I announced a generous settlement for local authorities. the hon. Gentleman informed me that it was because of the imminence of an election. Today, when I announced a generous settlement for local authorities, he informed me that it was the result of an election. [Interruption.] Perhaps the hon. Gentleman will conclude, whether circumstances are of one kind or the other, that the Government have been extremely fair to local authorities. I hope that local authorities will respond in a similar way.

The hon. Gentleman asked whether the penalty that was announced some time ago will be cancelled. No, it will not be cancelled. The hon. Gentleman knows perfectly well that, if local authorities reduce their expenditure, that sum will he returned to them for the benefit of themselves and their ratepayers.

The hon. Gentleman asked whether the £34 million represented the full requirement for the teachers' pay settlement. I confirm that it does. I am also happy to confirm that pay increases for police and firemen have been allowed for in the figures.

The hon. Gentleman asked me about the Disabled Persons (Services, Consultation and Representation) Act 1986. That is a matter for local authorities to decide on the basis of what they perceive to be their priorities within what we all agree is a generous provision. The hon. Gentleman asked me about the community charge provision. In the provision figures, we have assumed costs of £12 million. That figure comprises £9 million for the preparation costs of the community charge register and £3 million to cover the additional work load in housing benefit administration.

The hon. Gentleman asked me about guidelines. They will be considered over the next few weeks. I anticipate that local authorities will be informed of the level of individual guidelines in late September or early October.

The hon. Gentleman concluded his questions with the ritual denunciation that is required on such occasions. On this occasion, he does not feel strongly about the matter. The provision that I announced for local authorities is £3,640 million. The hon. Gentleman might like to know that the Council of Scottish Local Authorities budget projection for the year in question is only £3,679 million, and that is a difference of £39 million. On that basis, when we take into account the fact that its estimates for inflation are substantially greater than the actual expected rate of inflation, at the very least one will be entitled to assume that, if local authorities spend even on the basis that they are projecting, overspend next year should be infinitely smaller than that with which we are faced this year. Indeed, the figures that local authorities are announcing will be held against local authorities if in the event, despite such a generous settlement, we find degrees of overspending of the kind that we have seen in recent years.

Several Hon. Members:

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Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. I again appeal for brevity. Will hon. Members ask questions instead of making debating points'? There are five Northern Ireland orders after this statement and time is getting on.

Photo of Mr Hector Monro Mr Hector Monro , Dumfries

I congratulate my right hon. and learned Friend on the settlement. Perhaps even COSLA will begin to realise that the Government's economic policies are working to the benefit of local government. May I press him further on the guidelines? Will he do all that he can to bring local authorities whose guidelines are below assessed needs up to that level, and when he is working on the formula, will he keep in mind the importance of rural areas?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I give my hon. Friend that assurance. It is our aim to bring all authorities' guidelines up to assessed need, and I hope to make significantly more progress on that in the forthcoming year. My hon. Friend will appreciate that, this year, 11 more authorities had their guidelines brought up to assessed needs and all authorities with guidelines below assessed needs were still able to increase their spending in real terms. I take my hon. Friend's suggestion very much to heart.

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness, Nairn and Lochaber

The Secretary of State said that he had taken careful account of the views of COSLA in reaching his decision on a settlement. In what respect did those views adjust his position'? He said that the statement was based on local authorities' own budgets. Is it not true that they were based on his imposed guidelines? Is he really trying to tell us that the settlement offers any opportunity for an improvement in local government services?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I hate to disappoint the hon. Gentleman, but it is based on local authorities' own budgets. I said explicitly, and I am happy to repeat — the hon. Gentleman clearly missed that part of my statement—that the figure for grant is based on local authorities' budgets, after the selective action in respect of the two authorities which the House considered on Monday night, plus 4 per cent. to take account of inflation, plus the other components to which I referred. I am happy to reassure the hon. Gentleman on that point.

Photo of Sir Nicholas Fairbairn Sir Nicholas Fairbairn , Perth and Kinross

I congratulate and thank my right hon. and learned Friend for his statement and the provision that he has made. After what we went through on Monday evening, I hope that he will be anxious not only to punish the wicked but to reward the good — among them Perth and Kinross district council, which is prudent—when he pronounces his sentence. Is it not an amazing phenomenon, which it must be difficult for the Opposition to swallow, that even the extravagance of Socialist COSLA cannot be beaten by the success of Tory economics?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I am unable to improve on my hon. and learned Friend's remarks. In determining such matters, we try to give positive and genuine support to prudent local authorities.

Photo of Mr Dick Douglas Mr Dick Douglas , Dunfermline West

Will the Secretary of State give us some insight into the influence which the Under-Secretary of State, the hon. Member for Stirling (Mr. Forsyth), had on the settlement? Did his persuasive skills manage to salve his conscience in relation to his strictures about the profligacy of local authorities?

More seriously, will the Secretary of State give me some advice on how I can go to places such as Valley Field and Oakley in my constituency, which have suffered from mine closures, and tell the people there that the Scottish Office feels justified in allocating £12 million for the poll tax but in excluding that area from urban aid? They have been hit severely by mine closures. Although we recognised the need to revive city centres, those areas in west Fife must also be revived, and we have had discussions with the Scottish Development Agency to that effect. How can I persuade the local authorities in those areas to pay attention to central Government when that Government are spending £12 million unnecessarily?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I am not familiar with the details of the hon. Gentleman's point about urban aid. The Government have made an extremely generous provision of urban aid, although we are not always able to meet every request that is made. But I hope that every request, especially those from areas of high unemployment, is considered sympathetically, within our overall capability. The hon. Gentleman will appreciate that the local communities which he represents will benefit from such a realistic and fair rate support grant settlement.

Photo of Mr Bill Walker Mr Bill Walker , North Tayside

I thank my right hon. and learned Friend for this very generous settlement. Does it take into account the specific needs of areas such as Perth and Kinross, where Breadalbane is listed as an environmentally sensitive area? Will he confirm that no allowance is made for the dumping of nuclear waste on Schiehallion, which was one of the fairy tales put out by the Scottish National party during the election? Has he noticed the absence of the Scottish National party member for Angus, East (Mr. Welsh)—

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. I asked for questions, not debating points.

Photo of Mr Bill Walker Mr Bill Walker , North Tayside

It is a very important question, because the hon. Gentleman was making some comments about a road in my constituency

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. This is about the rate support grant.

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

The needs of my hon. Friend's constituency will be considered in the context of the guidelines when they are announced. Financial support is given to environmentally sensitive areas, such as Breadalbane, but not through the rate support grant.

Photo of Dr Norman Godman Dr Norman Godman , Greenock and Port Glasgow

In the light of his announcement on Tuesday about the Inverclyde initiative, will the Secretary of State show much more sympathy to Inverclyde district council in its hour of desperate need? I remind him that unemployment on the lower Clyde is still scandalously high and that 1,200 employees at Scott Lithgow are still being forced to suffer because of the Government's bad faith in relation to the three Ministry of Defence orders which were promised 17 months ago. That promise has still not been honoured by the Government, who are quite without principle or humility.

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

If the hon. Gentleman was as fair and objective as he usually is, he would at least have prefaced his remarks by welcoming the substantial support for Inverclyde which I announced earlier this week and in respect of the land that is being released by Scott Lithgow to ensure industrial development and improvement of the infrastructure in that area. I am well aware of the needs of Inverclyde. The hon, Gentleman might ensure a sympathetic response if, when constructive contributions are made to his constituency, he at least had the fairness to acknowledge it.

Photo of Mr Allan Stewart Mr Allan Stewart , East Renfrewshire

Does my right hon. and learned Friend agree that, in view of the overriding need to maintain rigorous control of public expenditure in Scotland, this is by any standards a very generous settlement? Will he confirm that what he said about prudent authorities will apply to authorities in urban as well as rural areas? Does he agree that, after this generous settlement, it is high time that the Labour group on Strathclyde regional council announced an end to its policy of keeping police numbers below authorised establishment?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I agree with everything my hon. Friend has said. If there is concern—as there understandably is — to ensure the maximum effort to deal with the problems of crime and dishonesty in Strathclyde, it is a matter of great regret that the region remains one of the few authorities, if not the only authority, in Scotland that is not making provision to enable the full utilisation of the resources available for its police service.

Photo of Mr Jimmy Wray Mr Jimmy Wray , Glasgow Provan

Is the right hon. and learned Gentleman aware that local authorities can be prosecuted for failing to provide services for the disabled? Is he aware of the cost of implementing in Scotland the provisions of the Disabled Persons (Services, Consultation and Representation) Act 1987?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I take the hon. Gentleman's point, but I am sure that local authorities will be able to carry out their statutory responsilities under that Act when they remember that the provision announced today is £3,640 million. It should not be difficult for local authorities to carry out their minimum statutory requirements with such a provision.

Photo of Alex Salmond Alex Salmond , Banff and Buchan

May I focus the Secretary of State's attention on need and on the agreed requirement for local authority services? Will he assure the House that the proposed settlement for next year will avoid the present ludicrous and disgraceful position where five local authorities are being penalised by grant penalty despite the fact that their budgeted expenditure is less than the agreed need assessment formula of his Department?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I cannot give the hon. Member that assurance because he knows perfectly well that, not only do we have the objective of ensuring that those authorities with guidelines below assessed need have their guidelines increased. but that, even in the current year and the previous year, those authorities were allowed guidelines that enabled substantial increases in expenditure in real terms before any penalty was approved. I believe that that is the basis upon which these matters should be considered.

Photo of Mr Tony Worthington Mr Tony Worthington , Clydebank and Milngavie

The Secretary of State will be aware that the announced settlement is a global sum and whether it is a fair settlement will depend very much upon the distribution of that settlement. Is the right hon. and learned Gentleman aware that, in terms of material received from his Department, Strathclyde was ranked first in terms of areas of deprivation and Borders was ranked ninth—the last in the list? Therefore, how does the right hon. and learned Gentleman explain the fact that, in 1987, the assessed expenditure need of Borders was £582 per head and for Strathclyde £556 per head? That represents a difference of £26 per head, or about £51 million, which is the amount by which Strathclyde will be over guideline. Will the Secretary of State rectify that unjustifiable imbalance?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

Whether this is or is not a fair settlement does not depend on distribution. It is a fair settlement because of the sums involved and the local authorities' own predictions of what their requirements will be. Distribution is a separate matter and, as the hon. Gentleman knows—

Mr. Rifking:

If the hon. Gentleman will allow me a moment. The hon. Gentleman has had long, detailed experience within COSLA and he knows perfectly well that the distribution formula is not only discussed with the convention, but that the present distribution formula is one agreed by the convention. While the hon. Gentleman may represent an individual authority that has a difference of view on this matter, he knows perfectly well that the convention as a whole discussed those matters and there are no outstanding, significant differences between the Scottish Office and the convention with regard to the formula used for distribution. Therefore, if Strathclyde region has a difference of view on this matter, it is up to that region to persuade its colleagues on the convention who can then make representations to the Scottish Office.

Photo of Nigel Griffiths Nigel Griffiths , Edinburgh South

Will the Secretary of State explain why he will not restore the rate support grant settlement to the level of 1978–80 or 1981–82 in proportion to the amount levied on local rates? That would allow local councils to reduce rates this year by up to 15p in the pound.

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I must inform the hon. Gentleman that, in the four years when the grant percentage was, far example, 68·5 per cent., the rates imposed on ratepayers in Scotland went up by 60 per cent. Therefore, the suggestion that ratepayers benefit from a high grant percentage would be true only if some local authorities did not abuse the situation to increase their expenditure and still impose heavy rates increases on the local people.

Photo of Mrs Maria Fyfe Mrs Maria Fyfe , Glasgow Maryhill

In the light of what the Secretary of State has just said about the convention being consulted and discussions taking place, does he not agree that he is being a bit disingenuous? The reality of those discussions is that COSLA representatives get told what the formula will be and they do not engage in a process of negotiation. Does the Secretary of State's statement mean that there will be real negotiations with the Scottish local authorities?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

The settlement that I have announced today has already been referred to by a number of the hon. Member's hon. Friends as an extremely reasonable and fair settlement. [HON. MEMBERS: "Who?"] That is the only inference that I can draw. Indeed, the hon. Member for Dunfermline, West (Mr. Douglas) asked me whether my hon. Friend the Member for Stirling (Mr. Forsyth) would be pleased with such a generous settlement. How are we to interpret that question except on the basis that I have suggested?

Photo of Alistair Darling Alistair Darling , Edinburgh Central

Will the Secretary of State consider making an earlier announcement as to the guideline for each region or district? Does he not accept that the important thing for each local authority is to know exactly what its guideline will be? Will he not allow time so that the authorities can make representations to him? Will he also consider publishing a definition, in clear and unambiguous terms, of what he considers to be excessive and unreasonable as regards local authority expenditure, given the fact that the Minister said in the early hours of Tuesday morning: there is no precise basis on which excessive and unreasonable expenditure is automatically triggered."—[Official Report, 20 July 1987; Vol. 120 c. 159.]

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

On the hon. Gentleman's latter point, we have had discussions on that matter and evidence was given to the Select Committee some time ago as to the basis on which those matters were approached.

I agree that the guidelines should be given as early as possible in the financial year. I have said that we would hope to be able to give them in late September. However, I hope that the hon. Gentleman will appreciate that we cannot consider individual guidelines until we know overall provision because, clearly, the two are directly and inevitably related. The provision is now known and we can now start working on the details of individual guidelines.

Photo of Mr Martin O'Neill Mr Martin O'Neill , Clackmannan

With regard to distribution, will the Secretary of State take account of the money that Central region spent on providing assistance to the National Coal Board for the development of Polmaise colliery? The Government's energy policy resulted in the closure of that colliery last week. Will the Secretary of State ensure that Central region will not be out of pocket as a result of the money that it spent to encourage the NCB with that project, which has now sadly ended?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

The hon. Gentleman knows perfectly well that individual local authorities take responsibility for any specific use of their resources on matters that they believe to be important to their local communities. Our control is exercised with regard to the totality of that expenditure, not with regard to individual projects.

Photo of Mr Brian Wilson Mr Brian Wilson , Cunninghame North

Does the Secretary of State agree that, in areas such as Cunningham with a 30 per cent. male unemployment rate, many people will be astonished by the selective profligacy of the Government because they are prepared to spend £12 million on the preparation of a poll tax register? Will the right hon. and learned Gentleman give an assurance that the idiotic enterprise in which he is engaged will be accounted for separately? If the cost of preparing that register turns out, as many suspect, to be more than £12 million, will local authorities be appropriately reimbursed?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

The Department has made the best estimate of what the cost will be and we have suggested provision of the kind that I have mentioned today. In the context of the overall provision that I have announced today, I do not believe that anyone could seriously suggest that the sums involved are other than extremely modest and relevant to what is required in that respect.

Photo of Mr George Foulkes Mr George Foulkes , Carrick, Cumnock and Doon Valley

Does the Secretary of State agree on the importance of rural schools not just for primary education, but as a community resource in constituencies such as mine, North Tayside, Dumfries and others? Will this settlement enable Strathclyde regional council to keep open all the existing rural primary schools?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

It is a matter for Strathclyde region to determine whether it wishes to do that. If it does and if that is the priority of the authority, there should be no difficulty given the vast sums allocated to Strathclyde region.

Photo of Mr Kenneth Hind Mr Kenneth Hind , West Lancashire

Will my right hon. and learned Friend confirm that the percentage grant for Scotland is 55·5 per cent. compared with the grant of 46·2 per cent. for England and Wales? Does my right hon. and learned Friend agree that the increase in rate support grant for Scotland is 9 per cent. whereas in England it is only 7 per cent. and that that increase will involve an added £36 being spent on every person in Scotland by the Treasury? If that is correct, will my right hon. and learned Friend agree that Scotland is in an extremely privileged position in relation to the rate support grant and that that grant involves a massive transfer of resources from England and Wales to Scotland to improve employment in that region?

Photo of Malcolm Rifkind Malcolm Rifkind Secretary of State for Scottish Office

I do not entirely agree with my hon. Friend. The grant percentage in Wales is 66 per cent., certainly higher than in Scotland, but in a sense that does not tell us very much. The grant percentage for any territory — Scotland, England or Wales — is only an average figure. Within Scotland, Wales and England there are extremely wide ranges of grant percentage. In some parts of England the grant percentage is lower than in Scotland and in some parts of Scotland it is lower than in England. Throughout the United Kingdom the grant percentage of any individual local authority depends upon the resources it can raise through the rate poundage applied in that part of the country. If certain parts of Scotland, England and Wales are less able to raise high resources from within the local community, inevitably that increase will be averaged in that locality. That is the position, and it should be borne in mind.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Application under Standing Order No. 20.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

The hon. Gentleman has not been rising. [Interruption.] I did not see the hon. Gentleman rising. If he has been rising regularly, that is my mistake, and I shall call him.