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Scotland (Rate Support Grant)

Volume 885: debated on Tuesday 28 January 1975

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7.6 p.m.

I beg to move,

That the Rate Support Grant (Scotland) Order 1975, a copy of which was laid before this House on 20th January, be approved.

I understand that it will be for the convenience of the House to discuss at the same time the two following motions:

That the Rate Support Grant (Increase) (Scotland) Order 1975, a copy of which was laid before this House on 20th January, be approved.
That the Rate Support Grant (Increase) (Scotland) (No. 2) Order 1975, a copy of which was laid before this House on 20th January, be approved.

These are important orders governing the expenditure and the support given by the Government in respect of the expenditure of the Scottish local authorities. The first order provides grant for the coming year, 1975–76. The second order increases the grant for 1973–74, which has already been increased by an order made in 1974. The third order is to increase the grant for the current year, 1974–75. As the two increase orders are to compensate for the effect of inflation on grant settlements which the House has debated previously, I shall address my remarks principally to the Rate Support Grant (Scotland) Order 1975, which provides grant for 1975–76.

The orders relate to what is bound to be a difficult period for the Scottish local authorities. In the first place the system of city, county, burgh and district councils, which have been familiar to us all, will cease to exist. Every one of those authorities is being abolished and they will hand over to the new regional, island and district councils which were elected last year. Such change, which would not be easy at the best of times, is taking place at a time of exceptional economic difficulty. An economic situation such as this strains the local authority financial system. Budgetary control loses its effect if it is not related to some static base.

Unfortunately many of the authorities which are going out of existence did not make a practice of separating the element of inflation in their budgets and distinguishing it from the cost of continuing commitments and real development. When the effect on rates of real growth at 4 per cent. to 5 per cent. is dwarfed by the effect of inflation at 20 per cent., it is all too easy for a council's control of expenditure to slip if the budget does not clearly distinguish these two elements. I shall be sending the new local authorities a circular giving some advice on the control of budgets and determination of rates for 1975–76.

The situation is the worse because of the time scale within which the important decisions have to be made. The total of expenditure acceptable for rate support grant purposes for any year has to be determined about half way through the previous year, and a first determination of grant has to be made four to five months before the beginning of the year. It is possible to make subsequent increase orders to add to the grant for the services in respect of increases of costs.

But a local council is not in that happy position. It can determine its rate poundage only once a year—and it is now generally agreed that rates ought to be fixed at the beginning of the year, much earlier than in the past. If the council includes a wrong forecast, nothing can be done about it until 12 months later, when the following year's rates can include a corrective element.

The difficulties can be seen very clearly in relation to the present year, 1974–75. Though neither I nor my predecessor made any prediction about the rate of inflation when we considered rate support grant a year ago, there is no doubt that neither we nor the local authorities allowed for it to be as great as it has turned out to be. This meant that on average rates were pitched at a lower level than, in the event, we can now see they should have been.

There is also a difficulty about balances, arising from 1974–75 being the last year before reorganisation. A prudent local authority tries to budget for a credit balance at each year's end as a cushion against the possibility of unexpected heavy expenditure during the year and to provide for expenditure pending the receipt of rate income in the following year.

This year, I suspect, some authorities have budgeted to run their balances down and to reduce the likelihood of their having anything to hand over next May—which, of course, is rather foolish, because it is the same ratepayers who will bear the burden. If that is so, however, there will not be enough in reserve to cover the unexpected increases of expenditure caused by rising costs and there are likely to be substantial deficits, some at least of which the new authorities will have to take over and liquidate by rating in 1975–76 or 1976–77.

The only way in which that could be avoided would be for the Government to meet the deficits. Obviously such a course would be unfair to the ratepayers of the more prudent authorities. What we can do, to help all ratepayers equitably, is to give a generous increase of grant in the present increase orders. Normally, for an increase order we first assess the amount of inflation and then apply the same percentage grant rate as in the original order. This gives for 1973–74 an extra £8½ million grant—that is, the takeover of the last element of inflation for 1973–74 and application of the percentage.

In 1974–75 the grant rate of 68 per cent., applied to £128 million of extra costs, gives a figure of £87 million extra grant. This is in the increase order for 1974–75. However, to help the local authorities with the remainder of the cost increases, which are greater than they could have foreseen when fixing their rates, I have decided to allow a special addition of £25 million, making a total addition to grant for 1974–75 of £112 million. Details of the calculations are given in the reports on the orders, House of Commons Paper No. 123 for the 1973–74 increase and No. 124 for the 1974–75 increase.

Of course further increases of costs, relative to the current year, may well have to be met before next May, including arrears under the teachers' pay settlement. There will be another increase order in relation to these costs and I intend that this should be paid earlier than usual. However, I should make it clear that the extra £25 million is a once-for-all addition. The next increase order will be for 68 per cent. of the further cost increases and no more.

I now turn to the order for 1975–76. The figures for reckonable expenditure given in the report on the order—House of Commons Paper No. 122—are, in accordance with the 1966 Act, at November 1974 prices. They do not provide for subsequent rises in costs which cannot be precisely quantified but clearly will be substantial. Local authorities when determining their rates will need to make provision for meeting their share of expenditure as at present estimated, plus this potential increase of costs—those that are known or will be known by the time the local authorities are fixing the rates.

However, I have taken account of the likelihood of cost increases, and ensured that their effect on ratepayers will be minimised, by deciding that the grant rate should be raised from 68 per cent. in the current year to 75 per cent. in 1975–76. Detailed figures are given in the report. I shall explain some of the considerations which led to this decision.

First, while the average level of rates is bound to rise, I want to help the new local authorities to hold the increase to as small a figure as possible. Therefore, I have taken into account not only the level of reckonable expenditure shown in the report but also the substantially higher prices at which local authorities will have to rate for it. Then, in the 75 per cent. rate of grant I have taken into account two transitory factors. One is the deficits which some of the new authorities are likely to inherit as a consequence of underrating by their predecessors this year.

Secondly, I have allowed for the consequences on the finances of particular regions of applying a new distribution formula to new local authorities. This is explained in detail in paragraph 32 of the report. The overall effect happens to be that, by comparison with England and Wales, the grant will rise by one percentage point in 1975–76. This may be regarded by some—at least by some Scots—as a welcome reversal of the trend in the last two years. However, some of the factors which affect the grant rate for next year will not recur. There is no fixed relativity between the appropriate rate for the two countries, and the differential is unlikely to remain constant in the future.

As regards the level of reckonable expenditure on which the 75 per cent. grant is calculated, because of the economic situation we have had to apply more stringent tests than in past years in determining what is acceptable. The Government reached the conclusion that growth of spending in real terms must be restricted to inescapable commitments. This includes, for example, the charges to revenue account arising from past and current building programmes and the extra cost arising from changes and movement of population. Among these is, of course, the extra expenditure by local authorities connected with the development of North Sea oil.

Some of this extra expenditure is covered by the normal grant distribution. But I have carried out my undertaking to introduce a new element in the distribution formula to ensure that additional grant is given to the authorities concerned so as to ensure that an unreasonable burden does not fall on the ratepayers.

As explained in paragraphs 7 to 11 of the report, the effect of the restrictions which have been applied is to provide for reckonable expenditure in 1975–76, excluding loan charges and cost increases, to be 3·8 per cent. higher than in 1974–75, a reduction of about one-third of the average actual increase in recent years—the actual, not the calculated increase. This means the deferment, I am sorry to say, of new developments and improvements and a severe restriction on increases of staff numbers. The implications for different services are briefly set out in the report, and I shall issue a circular specifying them in more detail and giving a lead to local authorities about the areas in which they should be able, with our support, to reduce the rate of growth of their expenditure.

But the local authorities have said to me—I conducted these negotiations personally—"If you want us to curtail expenditure, give us some guidance". It is not just a matter of convincing the representatives of the local authority associations. They have to convince their own people of the gravity of the situation, and the Government will do what they can to help.

Paragraph 2 of the report explains how all figures have been calculated for a period of 12 months and have then been adjusted to the 10½ months of the financial year 1975–76. For the full 12 months the reckonable expenditure is about one-third higher than in the settlement of a year ago relating to 1974–75—that is, £908 million against £660·61 million—while the grant is up by over one-half. The grant is £681 million as against £449·21 million last year. I hope that the House will recognise the generosity of the settlement.

I can assure the House that I got agreement with the local authorities in relation to this. There was no row at our meeting. That is not to say that they would not have liked more. It means that rate poundages next year will be significantly lower than they would have been if the rate of grant had remained unchanged. It has to be understood that this is designed to keep rates down; it must not be taken as a charter for staff expansion or other new commitments.

Even so, substantial extra sums will have to be raised by rates, mainly as a consequence of inflation. I do not propose to predict the amount by which rates will rise. Whatever figure I mentioned would probably be immediately challenged, but in any case it could only be an average of the increases over the whole country. Averages always tend to be misleading, and this will particularly be the case in this reorganisation year, when variations will be even greater than usual.

Let me remind the House of the ways in which reorganisation may affect rates. I have already mentioned the way some authorities have artificially reduced rates this year by running down balances. Obviously, all reductions of this sort not arising from net reduction of expenditure must be followed by a compensating increase next year.

Changes of boundaries on reorganisation will also affect the distribution of grant, which is related to demographic factors. The formula must be changed in any case because, for example, a weighting depending on the proportion which the population of the landward area of a county bears to the total population is clearly no longer workable in a new situation in which certain local authorities, landward and urban areas, are now part of one authority. The new formula is designed to give a fair amount to each new authority in relation to its new circumstances.

But this sum for 1975–76 is bound to be different from what would have been channelled to the same area had there been no reorganisation. A reduction of grant results in an addition to rates over the whole area, even though some ratepayers actually have a reduction of rates for other reasons—which I shall come to. As I have already mentioned, this was one of the factors in deciding on the 1975–76 grant percentage, and the effect is to add £5¼ million to the grant, which will help to cushion this particular effect. The order provides for this sum to be distributed to the regions losing grant under the new distribution, in proportion to their estimated losses, so as to mitigate the rise in rates which otherwise would be required.

Thirdly, apart from grant, rates will be affected by changes of boundaries. These changes affect the distribution of net expenditure, which is spread over ratepayers in proportion to rateable value. The inevitable effect of combining two or more areas is to average out their rate poundages, with those previously below the average being increased and those previously above average being reduced. This is inevitable. That relates to expenditure which does not change. With extra expenditure in 1975–76 compared with 1974–75, the combined effect may be that all rate poundages will rise, but some considerably more than others.

This consequence of reorganisation is not related to the grant distribution and cannot be dealt with in a rate support grant order. It is not even to be deplored, because for the most part it means that the greatest discrepancies in charges to ratepayers will be eliminated. Nevertheless, those who have very low rates in 1974–75 are bound to complain if they have very large increases in 1975–76. Those are the ones we are likely to hear about. Officials of my Department and the local authorities are therefore trying to work out a scheme which would phase the transition from the present variety of rates to uniform regional rate poundages over a period of three years. This scheme, once worked out, would be put into effect by an order under Section 215 of the Act of 1973.

My hon. Friend the Minister of State in replying to the debate will deal with any questions of detail about the distribution formula. The details and the reasoning are set out fully in the order and the report. We believe that this order will produce a much greater fairness among ratepayers than any previous order, though of course we may be able to introduce further refinements next year.

Perhaps I may anticipate one criticism—that the relatively simple distribution of needs element to districts is unfair to the big spenders, among whom are most of the districts in Strathclyde. At the small burgh and county landward level, I should remind the House, there always have been differences in the range of services provided and their costs. We are not dealing here with services provided to every ratepayer at a broadly equivalent standard. It is doubtful, therefore if we could in fairness use the grant distribution to equalise the burdens of ratepayers in districts where the range of services provided may be quite different.

Even if we could do that, however, I was advised by the joint working party of officials which reported on the grant distribution that no weighting formula could be worked out to distribute grant in such a way as to equalise the net reckonable expenditure per head of population in districts. What formula, for instance, would put Sutherland into the same bracket as Kirkintilloch, Berwickshire alongside the city of Aberdeen, the Eastwood district alongside Edinburgh or Orkney alongside Angus? Nevertheless, we may do better in future. I have undertaken that the distribution formula will be fully considered in consultation with the new local authorities' association before next year's order is made.

The order provides a really massive degree of help to local authorities which should enable the burden of rates to be kept to a tolerable level. I commend it and the increase orders to the House.

7.26 p.m.

I should like, first, to thank the Secretary of State for explaining what is an extremely complicated order. The increase orders are also complicated. I want to direct my remarks to the main order. It is this order, with the new distribution formula, and the very new situation into which we are moving in Scotland with the new local authorities, which obviously causes the greatest concern. I am sure that most of the speeches, from both sides of the House, will be directed to it.

I welcome the fact that these increases will give relief to local authorities in respect of the costs they are having to face. I also welcome the increase in the Government's contribution from 68 per cent. to 75 per cent. under the main order. This is a generous increase. I am sure that it will be welcomed by local authorities and ratepayers throughout Scotland. At the same time, the efforts being made to help on the question of transitional relief over this period—something about which we spoke in the debate on the Local Government (Scotland) Bill last week—are again to be welcomed, as is the help for oil development areas. Therefore, in principle I welcome these things, although I am sure that there will be plenty of questions on individual points during the debate, some of which I hope to put myself.

What really matters to the ordinary person in Scotland, the ratepayer, is the effect at the end of the day on the rates he actually has to pay. What he wants to know is the effect of the order on his pocket. The right hon. Gentleman, understandably I suppose, was somewhat coy about that matter tonight. He said that he would not go into the realm of trying to estimate what this increase might be. I appreciate his reasons for not doing so, but I am rather sorry that he does not have the courage of his right hon. Friend the Secretary of State for the Environment, who, when the English order was debated on 12th December, tried to give certain estimates. He said:
"I reckon that the average increase"—
Like the right hon. Gentleman, he said
"I stress the word 'average'"—
One has to be careful about the use of that word in matters such as this—
"will be about 25 per cent. for domestic rates."—[Official Report, 12th December 1974; Vol. 883, c. 788.]
That figure has been spoken of widely south of the border. If the Secretary of State cannot give some indication, albeit an average indication, of what this increase will be, all that one has to go on in such a debate is the expectation that, for the same reasons and economic factors as are affecting local authorities south of the border, as well as those in Scotland, ratepayers in Scotland may well be having to expect an average increase of that sort.

This rate support order is a sad comment on the way in which inflation is moving. These are extra burdens which people have to bear. The Minister of State said in the Scottish Grand Committee last July that he thought that the large increases announced for England and Wales were unlikely to be repeated in Scotland. Those were pious hopes. The treasurer of the city of Glasgow has predicted a rate increase of about 30 per cent., which makes the Minister of State's words of last July look a little thin today.

During the election campaign Labour Members were more careful about their figures. We now know that inflation is running at about 19 per cent. Given that increase, it is not surprising that rate increases of 25 per cent. and above are being discussed. Such figures are inevitable if services are to be improved and extended. It is against this sombre background that we have to examine the order.

The situation is made all the more difficult because of the distortions produced this year by the way in which local authorities have used up their balances. I can understand the reasons for that. Over the region I represent the authorities have used up balances of the order of £3 million, representing about a 40p rate poundage. Is that figure correct? If so it automatically builds a large sum into prospective rate increases. For that reason we welcome the transitional relief given here.

There is a need for economy and for local authorities throughout Scotland to cut out extravagances of any kind. The extra money being provided must be used carefully, and local authorities must ensure that all expenditure is justified.

I return to the vexed question of the salary levels of those employed with local authorities. In replying to the debate last Monday evening, the Minister of State rather glossed over this. He shrugged off the salaries question by saying that it was a matter for the new local authorities and that there was not much the Government could do. There could be some economies by local authorities. Perhaps the Minister of State can give us some further information.

I have examined this since last week and it appears that there is no uniform level of extravagance over these new posts. I have had to rely on Press reports in my researches. No doubt the Minister can be more specific. The Dundee Courier of 9th January said that Fife Regional Council had reduced by 56 the number of posts in the new set-up. This is the kind of news which the ratepayers want to hear.

Does this not reflect the wisdom of keeping Fife as a regional local authority?

I am certain that the hon. Gentleman will take credit for that, with my hon. Friend the Member for Fife, East (Sir J. Gilmour). I hope that economies can be greater still in some of the other regions in Scotland.

In The Scotsman of 8th January it was said that there had been increases of between £1,000 and £3,000 in salaries for posts which it was claimed carried no increased responsibility. Far too often over the last few weeks attention has been focused on authorities where, in some cases, new posts have been created with salaries apparently greatly in excess of parallel posts under the old local authorities. I hope I am wrong when I say that there appear to have been extravagances. I would certainly exclude Fife from some of those strictures. We have seen reports in the Press. I hope that we can have some reassurance about the economies being made. The Secretary of State said that he and the Scottish Office would be watching how the money was used. I hope that this happens and that tight control is exercised.

The hon. Gentleman goes on endlessly about this. Has he taken the trouble to get any specific examples from the Lothian Region or the district councils involved? Having made those assertions, he owes it to the House to give some examples. I have taken the trouble to go into this carefully, and it is not as bad as he suggests.

I asked for this information a week ago. The Government are in the best position to provide it. I have quoted from specific Press reports, which I shall be delighted to give to the hon. Gentleman later. I have been in touch with local authorities in my area when concern has been expressed. It is a great reassurance to the ratepayers if they know what the position is.

Before the hon. Gentleman continues to make assertions from the Opposition Front Bench, will he say whether he has bothered to contact any of the district authorities in the Lothian Region or the new regional council? Yes or no?

I have not contacted the Lothian Region. I have contacted authorities in my region. I see nothing wrong in using reports from the Press which have not been denied. If the reports were wrong I should have thought that the authorities would have denied them.

I turn now to oil-related developments and to the grants announced in this connection recently. I hope that we can have some clarification about how this money will be used and how much expenditure the additional grant is likely to generate. The Minister of State said last week that this money would be largely used to meet loan charges. If he was correct, the assistance will be virtually on loan charges alone, and capital expenditure will get no direct help from this source.

Some of this expenditure is not related to capital expenditure. Roads, sewerage and water schemes and education services are necessary in oil development areas, but in matters like salaries—I repeat the concern expressed in the Grampian Region by the convener for finance—it is difficult to distinguish oil-related expenditure. For example, because of the buildup in population and housing work, there will be an increase in staff not due only to oil. I hope that local authorities can can have more guidance. Circular 84/74 asked for returns by 9th December of what local authority expenditure would be. I hope that now, two months later, some analysis has been made and that we may hear about it tonight. We should like more precise information to reassure ratepayers than the round figures that we had last week.

Probably the most complicated question is the new distribution formula. There is great dissatisfaction in some areas with the way that this has worked. In the Grampian Region, with which I have been most closely concerned, the chairman of the finance committee was reported as saying that, because of the new formula, the region would lose the equivalent of a 9p rate. There is some relief under the transitional arrangements but the net effect is still alleged to be a 5p rate, and it alleged that the Strathclyde Region will gain about 5p.

Concern has also been expressed at the division of district from regional councils. Whereas the districts will receive about 6 per cent. to 7 per cent. of the grant, their percentage share of expenditur is 14 per cent. There are good reasons for changing the formula, which has not worked well in some areas. The root of complaints from the city of Glasgow distract is that it will have to bear an additional burden.

It is alleged that these two sets of complaints are a result of the formula. The balance may have gone too far the other way in the past, but there is a feeling in the North-East that the new formula is biased against the rural and in favour of the industrialised areas. Those to whom I have spoken appreciate the trouble that has been taken to meet this formula and they are prepared to see how it works for the first year in the light of the assurance that it will then be reviewed. I welcome that assurance of the right hon. Gentleman. If there is a shift in the balance, they want to know whether this is as a result of the formula. If this is shown to be so this year, will it be taken into account in the review?

Will the hon. Gentleman accept that rural areas in the Grampian and Highland Regions have had many amenities that most cities have not had? If their rates are raised, there is no question of any improvement in amenities in the early years, so they will always suffer for the new arrangements. Should we not be certain that we do justice to the rural areas in some transitional arrangement, and will he keep pressing the Minister on these matters?

There is an element of transitional relief in the order, which I welcome. As the hon. Lady says, however, the question is whether that is adequate. I represent a rural area which at the moment enjoys a relatively low rate poundage but faces the likelihood of a higher poundage without the benefit of these extra amenities. One such amenity, as I said on the Second Reading of the Local Government (Finance) Bill, is rural transport. Specific grants have been removed, and I am concerned that under the new arrangements the balance will be in favour of the urban areas. At present transport expenditure falls within the ambit of the main rate support grant expenditure. It may be that local authorities will direct the money to areas of expenditure other than rural transport, about which there is so much concern and worry.

I welcome the amount of this order and the help that it will give, and hope to receive clarification of the points raised affecting ratepayers in Scotland. In some senses the order is generous and will be welcomed by Scottish local authorities. However, it must be considered against the background of inflation, which is running at 19 per cent. while ratepayers are being faced with increases of the average order of 25 per cent. The Government are not being generous in that situation. In spite of what will be done, ratepayers in Scotland face a serious situation in the coming year.

7.51 p.m.

We are grateful for the tributes which have been paid to the Secretary of State.

I was grateful to the Secretary of State for the fact that the new distribution formula is not as bad as was at first expected, and I am delighted that Glasgow will benefit to the tune of £10 per head.

I appreciate the point made about the difficulties experienced by the urban and rural areas. That argument has been put forward over many years. There will be a problem between Glasgow and the other areas in the Strathclyde Region. The rural areas have their problems but I am glad to see that recognition has been given to the problems faced in the city of Glasgow.

Glasgow is experiencing terrible problems with regard to housing, schools and the rundown of industry. It is fitting that the rate support grant should take account of the unfortunate decay which has taken place in Glasgow over the past few years. Nevertheless, I should like to pay attention to two points in the report on the Rate Support Grant Order regarding education services and social work services. Paragraph 12 says:
"In the forecast of expenditure for education, provision has been made for increased expenditure proportionate to the growth in pupil and teacher numbers and for the continued improvement in the pupil-teacher ratio in secondary schools".
We welcome that and hope it will continue.

I am worried about the number of promoted posts within the Glasgow education authority. Although there is a shortage of teachers in many schools in Glasgow, I am worried about the number of teachers who are not in the classroom. I should be grateful if the Secretary of State would hold discussions with local education authorities and ask them to use their persuasive powers to move the teachers from the promoted posts back into the classroom. That would go a long way to counteract the shortage of teachers and would be beneficial to teaching as a whole.

On the question of social work, which is dealt with in paragraph 13, I am disappointed that no allowance has been made for further expansion of the home help services, nor for any general levelling up of standards of services within the new regions. I have raised the matter in the last three debates on rate support orders.

A substantial part of hospital boards' development building programmes is devoted to the construction of geriatric units. I do not dispute the need for such units. However, the large number of geriatric units built recently and in the pipeline gives deep cause for concern for people engaged in social work, as to whether the accent is right and whether, instead of building these human filing cabinets in which people are stored away and by means of antibiotics kept alive as vegetables, other facilities should be provided. Geriatric units are costly to build and difficult to staff. I do not dispute the need for a certain number of such units but contend that the emphasis over the last few years has been to build far too many of them. It seems all too easy, when a person lives alone and becomes disabled, to place him in a geriatric unit. I prefer the provision of more community services, an extension of the home nursing service and the home help service. Information should be made available to com- munity councils and other interested bodies participating in community care in favour of elderly people, who are often disabled, being kept at home. Will the Secretary of State consider placing more emphasis on a programme to build more houses for the disabled?

For instance, the Glasgow Corporation has not built one house specifically for disabled persons, which is to its discredit, although it has a fine record in other respects. I have had a deep interest in disabled people over a number of years, and I have pointed out to the Glasgow local authorities the need to concentrate on building and adapting houses for the disabled, so that with an extension of the home help and home nursing services we could reduce the number of people entering geriatric units.

Does the hon. Gentleman mean that no sheltered housing has been built for the disabled in Glasgow or that no house in Glasgow has been adapted for the use of disabled people? I doubt whether that is true.

I trust that the hon. Member for Ayr (Mr. Younger) will not misunderstand me. I said that no house in Glasgow had been specially built for disabled persons, which the local authority is supposed to do under Section 3 of the Chronically Sick and Disabled Persons Act. Many older council houses have been adapated, and a degree of sheltered housing has been created by the corporation.

A large number of disabled people in Glasgow end up in geriatric units. There are many disabled people under the age of 65 who end up in geriatric units for want of proper accommodation. That is wrong. Therefore, with more community care, through community councils and other voluntary groups, and by making available the home help and home nursing services, we could enable many hundreds of such people to remain at home. That is a compassionate attitude which could be taken by local authorities. That should be their aim, not the building of more geriatric units, which are costly to construct and difficult to staff.

I intend to be brief since the debate can last only one-and-a-half hours.

Order. Usually I would con cur with the point of view that debates such as this are limited. However, this debate can continue until 11.30 p.m.

Nevertheless, I shall be brief in the interests of other speakers.

I appreciate that there will have to be stringent cuts in local authority programmes. I ask my right hon. Friend, in reviewing the programmes of local and other authorities for which he is responsible, to take account of the needs of sheltered workshops. In Edinburgh on Friday we shall discuss the deep concern felt by the National League for the Blind for its members. We all understand and appreciate the problems of those who are redundant, but for the disabled, especially the blind, redundancy problems are magnified.

I am also very concerned about youth employment. My right hon. Friend has responsibility, within the terms of the rate support grant, for taking action in this regard. Any re-location of rate support grant should be devoted to youth employment services. It is vital that our young people be kept in training. Community involvement projects in Glasgow and elsewhere are worth further support.

The next few years will be very difficult as regards local authority expenditure. In view of rising costs, I am very pleased that the Government have seen the need and are giving increased help to such areas as Glasgow district. I hope that the cry which will doubtless be made later for extra help for rural areas will not blind my right hon. Friend to the need of areas like Glasgow which have very special problems.

8.1 p.m.

The Secretary of State is in a rather unusual position, in that I am the third person in succession to refer to his treatment of local government as generous.

However, in fairness, it must be said that in the present difficult economic climate the Government have produced proposals which in the main are designed to sustain basic services.

It remains true, however, that the consequence will probably be an increase of up to one quarter in the rates as referred to by the hon. Member for North Angus and Mearns (Mr. Buchanan-Smith). As the rating system is a very regressive and unfair form of taxation, the sooner the Government press ahead with their reform of the system the better.

I should like the Minister to say something more about the effects of the restricted size of this rate support grant. The Secretary of State twice referred to departmental circulars. He said that he intended to advise local authorities on budget control and on ways of curtailing expenditure. In other words, I presume that he proposes to advise local authorities on the priorities they should adopt.

St. Andrew's House advice to local authorities is much more mandatory than the mild word "advice" suggests. The history of Scottish local authorities suggests that if St. Andrew's House seeks to direct local authorities about certain things, there are many ways in which it can achieve its objective without appearing to demand that something be done. It would be a bad start to a reformed structure of local government which from the beginning was intended to give local authorities more independence if they were too closely controlled and directed.

In saying this I accept that in the present economic climate, particularly when dealing with new authorities and new councillors who have to shoulder new responsibilities at an inauspicious time, some guidance from the centre may be required.

Presumably there must in some areas be a cut-back in services or, at any rate, there will probably be no improvement. The hon. Member for North Angus and Mearns mentioned a number of services. We all could list a number of services. Transport is very important in rural areas, particularly with the rise in the price of petrol. There is the question of concessionary fares for the old on public transport. The Department of the Environment Circular 171 in England seems to suggest that that will come to a dead stop. There is the question of the general subsidising of transport in rural areas in the present climate.

The question has been bruited abroad—I am in correspondence with the Chancellor of the Exchequer about it; the hon. Member for Ayr (Mr. Younger) has raised the matter in the House—whether some way can be found of assisting the private motorist who has no option but to use his motor vehicle in an area where there is no public transport. If a way were to be found of doing so—and I admit that it is not an easy question—presumably it would have to be through the local authority, and this would presumably involve its contributing to a subsidy.

Then there is the question of education. The Scottish Education Department has been notorious for a long time for being unwilling to improve a school until the children are in the temporary huts attached to it. The feeling of dissatisfaction in the teaching profession, of which the Secretary of State has had recent and perhaps uncomfortable experience, cannot be separated entirely from the conditions in which it works. Teachers' feelings will be exacerbated if they are faced with yet another cut-back in expenditure on buildings.

The hon. Member for Glasgow, Queen's Park (Mr. McElhone) referred to social work, and it is a fact, certainly reflected in my postbag, that the effect of the present economic climate is that the work load of the social work department is rising sharply, because all sorts of people are getting into difficulties which they would not be getting into but for the present economic climate. Our priorities are wrong if we cut back on social expenditure at a time when social need is intensifying. I should prefer not to have new roads to being unable to help people in trouble.

If I had to make the choice, at the end of the day my priority would be helping people rather than having the A9, necessary though that road is. As circulars are to be issued on the subject of the curtailment of expenditure, I should like to hear precisely what the priorities are.

As regards oil development areas, I understand that a statement will be made on Friday about the Scottish Development Authority. [HON. MEMBERS: "Oh!"] A little bird told me this the other day. Little birds are often well informed.

I am not responsible for making Government statements and, therefore, am not to be questioned on that.

It is worth asking whether the Scottish Development Authority will be able to channel in advance oil money into local authority areas with particular infra-structural pressures because of oil development. I do not see why one should not ask whether there are possibilities of augmenting what is available in rate support grant from other sources. That would be one possible source. Equally, I sometimes wonder whether the 10½ per cent. general loan rate of the European Investment Bank is made sufficiently widely known to local authorities, because that is an attractive rate of interest for large projects.

Reference has been made to the new distribution formula. Despite the disclaimer of the Secretary of State, the formula seems to many of us to underestimate the problems of the rural areas. I put it no more strongly than that, because the Secretary of State has said that there will be a review and supplement. I hope that this matter will be fairly considered.

Like the hon. Members for North Angus and Mearns and Queen's Park, I accept that the Government have sought to do the best they can in the circumstances. But the sooner the rating system is substituted by a fair and understandable system the better. I wonder how many hon. Members, let alone members of the public, understand the complications in the documents issued. The Secretary of State shakes his head. It would be worth while someone trying to simplify these documents so that they can be readily understood, because people are not able to make proper decisions if they do not properly comprehend the basis on which the computations are made.

That said, basically I should like to hear more clarification of the Government's social priorities in expenditure in the coming year.

8.14 p.m.

I, too, am pleased with the priorities which my right hon. Friend has struck in relation to the rate support grant. I am delighted that he has not cut expenditure on education and library services. I think that most Scottish people are prepared to pay extra for what they regard as absolutely vital services to the community. One lesson which we all take to heart is that if we want improvements in a service money does not grow on trees and we must be prepared to pay for them.

I was pleased to note that there is to be an increase of about 8 per cent. in real terms in the expenditure on social work, although, bearing in mind the situation which we shall be in during the next two or three years, I wonder whether an 8 per cent. growth will meet the needs of the social work services. However, we shall not be able to answer that question for perhaps 12 or 24 months.

I take issue with some of the remarks of my hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone)—and not because Queen's Park defeated Ayr United on Saturday. My hon. Friend referred to the geriatric services. Like him, I naturally regret that no allowance has been made for further expansion of the home help service. But we are realistic enough to understand that the Secretary of State has had to strike priorities, and priorities within priorities. It is possible for the community to make up for the loss of growth in such services by community action.

Let me give my right hon. Friend the Secretary of State an example from my constituency. One of the helpful byproducts of two major mining strikes in South Ayrshire has been that we have compiled in many years street registers of elderly and disabled people. I mention one area in particular—Bellsbank, in Dalmellington. There is a street warden system in which someone in almost every street looks after the elderly and disabled and can report when something untoward happens and so arrest the development which carries an old person to the stage of needing a home help and ultimately into a geriatric hospital.

Will my right hon. Friend the Secretary of State ask his Department to see how the matter is dealt with in that part of Ayrshire and consider whether lessons can be learned for wider application in Scotland? I acknowledge that that is a rural area and a mining community, but it might be possible to adopt and operate such a system elsewhere. It is extremely beneficial for the old people and the disabled, but it is of even greater benefit to the community because it becomes involved with the problems of such people.

I take the gravest exception to the comment of my hon. Friend the Member for Queen's Park about geriatric hospitals being human filing cabinets. He said that one of the difficulties is the staffing of such hospitals. How are we to staff geriatric hospitals if Members of Parliament relegate them, in the hierarchy of the hospital service, to places to which people are consigned like human filing cabinets? We should be going round geriatric hospitals and talking to the staff and patients in them. We should be talking to the area health boards, which have done a tremendous amount of work in the last 10 or 15 years to upgrade geriatric hospitals.

I should like to refer to a geriatric hospital in my constituency, and as the hon. Member for Glasgow, Cathcart (Mr. Taylor) is present I shall acknowledge the contribution which he made in this respect. Some years ago, when he was a Minister, I asked him to visit Holm-head Hospital in Cumnock when he was at Ballochmyle. He did so, and later we received the money necessary to improve the accommodation there.

Holmhead Hospital is not a human filing cabinet. It is one of the most friendly hospital units—[Interruption.] The hon. Member for Dumfries (Mr. Monro) is taking the credit. He might have been the Minister after the hon. Member for Cathcart left the Department, but the man who wrote the letter to me saying that the matter was going forward was the hon. Member for Cathcart. Anyone who visits Holmhead Hospital will find it to be one of the friendliest hospitals is is possible to find anywhere. The patients receive a great deal of loving care and attention from the nursing staff, not only when they are being paid to work but in the general attitude which they and the community adopt to the hospital.

Rather than have fewer geriatric hospitals, if we maintain and improve the standard of our medical services more old people, including some of us, will require geriatric accommodation and the provision of geriatric care. If we do our job correctly, the old people in the geriatric hospitals will be returned to their homes and taken into the care of the home help service.

I pay tribute to the excellent street warden service which my hon. Friend has mentioned, but it is a rare example. I echo his tribute to the Bellsbank geriatric unit. Perhaps it is a wonderful unit; I have not visited it. But I have visited other geriatric units. I repeat that, with antibiotics, people are often kept alive as vegetables. The serious matter is that young chronic sick people, because of lack of proper accommodation, are also in these units. No one who visits such units can be happy about the situation. If we provide more home help and home nursing services, we shall prevent people from going into geriatric units. I do not say that we should not have geriatric units; I believe that we have too many.

Without being arrogant, may I say that I have probably been in more geriatric units than has my hon. Friend. I was a member of the regional hospital board, which made fantastic efforts to expand high-quality accommodation in geriatric units. I have been in geriatric units in the Argyll constituency, in the Lanarkshire area and elsewhere and I have always been impressed by the standards and by the staff. It is a foolish waste of time for us to argue that there will not be a requirement for the extension of geriatric services, because there will be.

The hon. Member for Inverness (Mr. Johnston) talked of striking priorities between road development and social services. That is perhaps the most difficult area of decision for the Secretary of State and the Scottish Office. We delude ourselves if we believe that we should not on occasion put a high priority on infrastructure which has a direct bearing on what Scotland can do industrially. In one year or another we should perhaps put more emphasis on raising our industrial capacity to enable us to live as a trading country in the future. We should spend money on consumption services in return for a future growth of wealth. It is our ability to continue to create wealth that will determine the level of services. I do not complain about the A9; I simply wish that it was dual carriageway all the way.

I wish to raise with the Minister of State a question on House of Commons Paper 122, paragraph 19, which deals with roads and transport. I should like that passage to be explained to me in relation to the Labour Party's manifesto commitment to assist public transport, especially in the rural areas. I acknowledge that there are difficulties in city areas, but there are also peculiar problems of public transport in rural areas. The Labour Party recognised this when it wrote that passage in the manifesto. How does the rate support grant square with our manifesto commitment?

My hon. Friend the Minister of State and I had an exchange on this subject. My hon. Friend said that this was principally a matter for the local authorities. He went on to say:
"The main responsibility must be with local authorities to identify local needs, so that assistance may be made available. There is nothing to prevent their taking that action at present."—[Official Report, 20th November 1974; Vol. 881, c. 1311.]
We all know that there are enormous rateborne constraints on a local authority's ability to meet rural transport needs. That is why we said in the manifesto that a Labour Government would do something about it. I read into the answer given by my hon. Friend on 20th November that the Government would do something by channelling extra resources to the local authorities to allow them to apply rural transport solutions in their own areas. Will my hon. Friend say what extra resources we are putting towards that promise in the manifesto? The people who live in rural areas have been in even graver difficulty since the October election because of the increase in petrol prices. Whether they be workers or people who would not like to be termed working class, there are many who rely upon public transport in the rural areas.

8.23 p.m.

It is not often that I am in agreement with the hon. Member for South Ayrshire (Mr. Sillars), but with the two main arguments he has put forward, on rural transport and geriatric hospitals, I entirely agree. I am glad that the Conservative Government took a particular interest in the hon. Gentleman's area and improved the facilities there.

As the Secretary of State said, this is probably the most important single measure to be presented to the House each year because it affects the whole of the Scottish nation in relation to the rates and the services provided. That is why I join other hon. Members in welcoming the substantial increase in the grant this year and the two increase orders. One must have doubts that the grant will be sufficient to cope with inflation at its present level. As the Secretary of State said, he may have to bring in later a further increase order.

The Government should make a special publicity effort during the next few months to impress upon the Scottish public that rating in the coming year is for ten and a half months. That will cushion the impact of the increase in rates by making the rate bill less than it would have been over 12 months. In 1976–77 there will have to be a steep increase to cover the longer period of 12 months. We should not allow the Scottish public to be "conned" into thinking that they are getting away with a smaller increase this year when it is being stored up for the future. It would be worth while for all hon. Members and the Government to explain that this arrangement arises from the Bill which is now going through the House and the necessity for a change in the financing year. If people do not understand that, it will come as a nasty shock to them.

To speak for a moment in broad terms, I want better services to be provided locally, always understanding that we are having a difficult time in providing resources for them in the coming year. With the hon. Member for Glasgow, Queen's Park (Mr. McElhone), I believe that we should give greater importance to social work. It should have the same priority as education and housing. I accept that it will cost money, but I hope that social work will not be forgotten if a further increase order is brought forward. There is no doubt that we must put more resources into the services, and I feel particularly strongly about social work.

Speaking as a former councillor, I found it terribly depressing not to be able to move forward with ideas for improving services. If councillors are continually pruning back, it may be good for the ratepayer in that year but it often builds up trouble in years to come. I hope that more resources will be available for developing services such as social work. It is a young service, and its potential is still a long way away.

If we are to restrain expenditure, let us try to cut out some of the junketings and celebrations to mark the end of some authorities. I notice that the city of Glasgow is to spend £150,000. I would much rather see that money spent on a geriatric home or a recreation centre. Expenditure of that nature would be remembered over the years as a worthwhile exercise rather than if it were spent on a few commemorative mugs and a jolly party.

I am glad that the Secretary of State announced an increase in grant in the coming year from 68 to 75 per cent. I take it that the figure of local authority expenditure is based on a mathematical calculation which was made as far back as November. I accept that it must be made some months before an order is presented, but I wonder how much inflation has been built into the figure. Has the Department allowed a 25 per cent. inflation rate for the coming year? It is better to try to make the original calculation as accurate as possible rather than proceed by increase orders from time to time. If the Government have budgeted on the November figure, the final figure could be out by as much as 25 per cent. in the coming year.

I have one or two questions to ask about the Houghton award. Let me say at the outset that I am glad that the award was made. We must appreciate that from this month education authorities will pay out a lump sum and the increases will be back-dated to May. This will run many of the present authorities into substantial sums on overdraft. We must appreciate that they will spend a large sum on interest payments, and this will be a charge on the rating account between now and May. No doubt another order will be brought in to deal with the situation, but I hope that the Secretary of State will go further and increase the order to cover the situation when Houghton is implemented in April. The present authorities are very keen to clear up the account before they hand over in May. This would be very much to the benefit of finance officers of both present and future authorities.

The hon. Member for Inverness (Mr. Johnston) and the hon. Member for South Ayrshire spoke about rural transport. Sufficient resources should be brought into the order to cover the increase in expenditure on rural transport which will be essential in the coming year. But, as I understand the situation, concessionary fares will be the responsibility of the regions. But in regard to subsidy the bus companies, in providing services, will represent a concurrent responsibility between region and district. Bus companies are asking for increases of subsidy. I should like to know whether the Secretary of State has allowed a sufficient margin within the order to cover inevitable demands by the bus companies in providing services. It is essential throughout Scotland to provide concessionary fares for the old and the disabled, and I hope that a sufficient amount will be allowed for that element of expenditure.

I should like to turn to the topic of community councils. The Department recently issued a document on this subject, and I noted that the Minister of State in the other place said that the setting up of these councils was still some way off. I believe that the sooner they are set up the better. I should like to see them take over within weeks of the changeover in May so that there can be as much continuity as possible. The departmental publication to which I referred said on page 36:
"The establishment and servicing of community councils will call for a measurable commitment of staff resources by local authorities and probably for the appointment of liaison officers."
Have the Government allowed for the element of finance for community councils in the rent support grant? It is important that the councils get off the ground in the coming financial year. I hope that we can be given an assurance on that point.

I turn to a slightly controversial subject, on which it is true to say that both the Government and the Scottish National Party have had a bad week. I refer to grant-aided schools. Some local authorities send pupils to grant-aided schools and pay the fees. Does the order allow for the increase in fees to be covered by the education authorities which send children to grant-aided schools?

My hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) rightly raised the issue of the distribution formula and general allocation of the grant. If possible, it would be helpful for the House and the local authorities to hear in more detail from the Minister of State about the transitional arrangements. Some authorities will be faced with very steep increases. If these can be held down by the transitional arrangements, so much the better.

Where do the new authorities stand in the set-up which will operate after May in relation to pooled expenditures in such matters as list D schools? The Minister of State must clear up the issue of the weighting of the density or distribution grant between the rural areas and the central belt. Most of the authorities in the periphery—Dumfries, Galloway, Grampian and the Highlands—firmly believe that the weighting is far too heavily in favour of the central belt and that they will, therefore, have a disproportionately high rate increase. I should like further clarification on that point.

I am concerned, too, about the position of rural properties which do not enjoy the benefit of sewerage and water schemes but have to pay the full rate. The Minister of State, Department of the Environment said in a Written Answer in November that it had been decided in England and Wales to give 50 per cent. rating relief to domestic properties not connected to sewerage facilities. Will that apply in Scotland, because in many rural areas up to 50 per cent. of properties do not have sewerage or water services since it is not practical to provide them? Will these properties benefit from the Bill which is now in Committee?

The Press, particularly the correspondence columns, and the other media are hammering away at local authority salaries, but I wonder whether they are being fair since these are very closely watched by the Staff Commission. When the new authorities take control in May, I think it will be proved that if the services are the same and the staff is the same the increase in salaries will be minimal. We must accept that for years the Government have been putting more and more responsibilities on local authorities. The authorities are facing heavy inflation, and rates are likely to go up. This increase, however, is not only on account of salary rises, and we have to be fair to local government staffs, who do a good job in Scotland.

8.38 p.m.

I want to reinforce what my hon. Friend the Member for Dundee, West (Mr. Doig) said in the debate on the Local Government (Scotland) Bill. If I had been able to catch your eye on that occasion, Mr. Deputy Speaker, I would have tried to make the case for some form of rating reform.

The question of rating reform is entirely outwith the scope of the order.

I would have tried to make the comments at that time.

Today we are discussing the rate support grant. It is only the follow-up to many similar grants which hon. Members have had to discuss because of the complicated state of local government finance. We have had specific grants, percentage grants, block grants and equalisation grants. Glasgow sent a letter to all its Members of Parliament, including my hon. Friend the Minister of State. The Minister of State seemed to indicate that Glasgow had missed the point, which suggests that the system is becoming more and more complicated and more difficult to understand.

In his letter my hon. Friend mentions a weighting in the district distribution for loss of population to Glasgow equal to £1·12p per head of population in the Glasgow district. Further on in his letter he estimates that the new grant formula is worth about £10 a head for the ratepayers in the city of Glasgow. Is the £1·12p included in the £10 per head?

I support the appeal made by my hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) for special help for the city of Glasgow. We do not need to tell the Minister the position in which Glasgow finds itself. Its heart is in a state of dereliction and dilapidation, which is frightening away industry. Glasgow needs more help to attract industry and jobs. High rating is a deterrent to industry. My hon. Friend the Member for Queen's Park is correct. If areas are getting help because of the special circumstances of the oil development, there is a case for giving Glasgow substantial help because of its unique situation.

I want finally to talk about social work. I am glad to note that expenditure on it is increasing. My hon. Friend the Minister of State did a marvellous job when piloting the Social Work (Scotland) Act 1968 through the House, but social workers and the Act have come in for a lot of unjust criticism. The social workers and panel members are trying to do a humane and understanding job. Unfortunately the finance set out in the order does not seem to be finding its way into the necessary area of residential and field work resources.

It is strange that boys and girls are waiting from six to nine months for a place in a list D school. After the panels have dealt with the case they have nowhere to send the boy or girl for remedial treatment. There are only 26 beds in the Glasgow district for mentally disturbed adolescents. When the boy or girl returns to the normal school, the whole school is upset.

Larchgrove Assessment Centre is licensed to hold 70 adolescents. At present there are 103 there and 140 are awaiting entry to list D schools, and they are waiting from six to nine months. It is obvious that if the Social Work (Scotland) Act is to operate as it should, more finance must be directed into residential and field work. The social workers and panel members cannot deal fairly with the cases because the resources are not there. Therefore, they cannot give the remedial treatment necessary to the boy or girl who is sent to them for assessment and they come in for unjust criticism. I again appeal to my hon. Friend to increase the expenditure considerably on social work. This is necessary if the Act is to work properly.

8.45 p.m.

First, I shall say a word or two about the oil-affected areas. I shall then return to the consultation that took place with local authorities and the committee which decided on distribution.

It appears that the sum set aside for the oil-affected areas in terms of the Local Government (Scotland) Bill is £2½ million out of a total of £664 million. If that is the wrong figure I shall be glad if the Minister will correct it. If that is the case, it seems to be a very small amount to support areas which have such a tremendous strain on their present resources. Many authorities have been investing heavily in infrastructure and this has been a great additional burden on their rate resources. The Government propose that for 1975–76 a special portion of the needs element will be distributed to authorities which are in special need. That is to be determined by developments relating to North Sea oil. But it will not be given for any services or works not essential to the main activities of exploration and extraction.

It appears that the infrastructure which is required in the event of refining or for petrochemical projects will be excluded. Will the Minister elaborate on that point? Is any alternative proposed to assist local authorities which are faced with that kind of expenditure?

Last year the rates in the Highland Region rose considerably. The rates in Ross-shire rose by 15p or 19 per cent. In Inverness-shire they rose by 28 per cent., in Sutherland by 15p and in Orkney by 11p. Naturally the thought of another increase in rates causes considerable alarm in those areas.

There was allegedly considerable consultation with the local authorities earlier last year, and I must say a word or two about the kind of consultation that took place. On 28th November there was issued from the Scottish Office to the chief executives of the regions a massive document containing a host of information and suggestions. It was issued, as I have said, on 28th November and comment was asked for by 15th December. Naturally, many of the regions felt that the time allowed was inadequate. If I draw attention to one or two of the points in the document, I think it will be clear why the regions felt that a great deal more time should have been given for comment and discussion.

In page 3, paragraph 9, we read:
"We think it is necessary to correct the apparent bias of the present distribution formula in favour of the more rural areas and that a weighting for population density would be a suitable means of doing this."
Straight away, people living in rural areas will be badly treated if that proposal is carried out.

It does not finish there. There are other matters in the document which prove exactly what a great many of those who served on the committee must have felt. For example, in page 6, paragraph 18, the effect of the recommended changes is described. We there see the region plus district poundages for 1972–73 and the estimated effect of changes in grant distribution on region and island areas. We find that the effect on the Highland Region, for example, will be an increase of plus 7½2p and in the Grampian Region an increase of plus 8½9p. There is a plus increase practically everywhere, with the exception of the Central Region, where there is a decrease of 0½1p, and the Strathclyde region, where there is a decrease of 4½7p.

Those figures caused great consternation, particularly in the Highland Region. It is perhaps not surprising that the chief executive, after he had examined the document, wrote back to the Scottish Office pointing out a number of weaknesses which he and the council felt that it contained. The first was that it was wrong to alter the basis of distribution in the first year. The second was that the proposals were in danger of confusing both authorities and the public, because where the rate support grant was poor the public would have difficulty in deciding where the blame lay—whether on the poor rate support grant or on re-organisation. He felt that so much was contained in the document that there should have been an opportunity not only for discussion among officials of the council, with perhaps the chairman of the appropriate committee, but for public discussion as well, since the matter would affect each new region very much and it was natural that the authorities and the public would want to consider it.

In reply to the telex communication sent by the Highland Regional Council there came another letter from the Scottish Office, dated 17th December and addressed to the chief executive. In the fourth paragraph, the writer commented:
"I am, of course, glad to hear that the Highland Council have been exercising strict economy in budgeting for next year's expenditure. I really do not see how the grant proposals can possibly require any increase in the expenditure for which you have to budget."
I am not in a position to substantiate the remarks made by my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) about regional councils saving or not saving, but I want to tell the hon. Member for West Lothian (Mr. Dalyell) that the Highland Regional Council has gone out of its way to cut back on expenditure wherever possible for next year. Its budgeting is extremely sensitive, and it decided that at this time it would be quite wrong to be extravagant in its demands.

It is a little naughty of the Opposition Front Bench to make these sweeping assertions, because when one takes the trouble to inquire about them in many of the regions—I do not know about the Highlands but it is certainly the case with the Lowland regions—one finds that they tried all they could to cut back on expenditure, much of which they could have granted.

I can speak only for the Highland Region, although there have been some rather wild stories about what has been going on in some of the other regions. There has been a certain amount of evidence in the Press in different parts of the country. We have read about very large limousines being purchased here and there, and this has terrified people to some extent.

I am not making any party point. If I am offending some of my friends, it is too bad. I am giving an example. There was a Press report, which I assume was accurate, of a very large limousine being bought in that region. I would have thought that something of much less size would have been adequate in this day and age.

Thet hon. Gentleman does not know, and he must admit that he does not know.

If the hon. Gentleman wants a direct answer, I am sure that if he tables a Question to his right hon. Friend he will be able to ascertain it.

The obligation is not on me. If statements like that are made in the House of Commons, the least we can ask for is supporting evidence. The hon. Gentleman should be a bit adult about it.

We have already told the hon. Member for West Lothian the region involved. Any more than that, he can find out for himself. He is quite able to do that.

The hon. Gentleman wants to know.

However, the Highland Region has been exemplary in not carrying out this kind of exercise. But as we move on and think again of what was contained in the letter sent to my region, it is very revealing that in the penultimate paragraph the writer from the Scottish Office said:
"I think it must be inferred that the Committee considered that in the past the authorities in the Highlands have received a disproportionately high proportion of the grant and that this 'unfair advantage' must be reduced to some extent."
I wonder who could have been influencing the members of that committee, because certainly that statement was not greeted with any joy in the Highlands. I wonder whether it could be that eminent lady Mrs. Ellen McCulloch, who is the treasurer, I believe, of Glasgow City Council.

A constituent of my hon. Friend the Member for Glasgow Cathcart (Mr. Taylor). No doubt she votes for him too. The point is that this lady has said:

"We had argued for a new formula for the distribution of grant so that urban areas would get a better share than the rural and Highland areas."
If the committee was listening to that sort of statement from that lady, I am not surprised that a letter such as that to which I have referred was written to my region.

I am not at all happy about this matter. I am very glad to have the Secretary of State's assurances that this whole matter will be looked at again before another year passes. I assure him that there are many people in many regions who welcome his statement of the increase in total in grant but who are far from happy about the distribution. The Highland Region is certainly not happy about the distribution.

8.58 p.m.

In speaking very briefly about the rate support grant, it may be appropriate for me to follow up what has just been said by the hon. Member for Ross and Cromarty (Mr. Gray). He made some play about the purchase of a limousine. It is not with a great deal of satisfaction that I can say that Argyll and Bute District Council has gone even better by purchasing a castle.

I do not want to be too long-winded about this matter. There has already been a great deal of unnecessary discussion. I begin by echoing some of the remarks, made chiefly by hon. Members on the Opposition side, about rural areas. It is a wee bit ironic that they are making such great play about rural areas when the future of my rural area, at least in my consideration, has been made very bleak by the inclusion of the area in the Strathclyde Region—even though Lord Wheatley in preparing his report did not put it there but put it into the Highland Region. Hon. Members may think that this is something of the past, but in some respects it is still remembered with a great deal of displeasure by most of the people in the present county of Argyll.

However, to come to more modem times I want to comment on the question of oil developments. Clearly, in various parts of Argyll we are very concerned about how these sums of money are to be expended. I share the views of other hon. Members in questioning whether the sums which have been laid aside for this purpose will be sufficient. We have widely scattered areas which will be affected. I have great admiration for all those hon. Members who make so much play about the A9. There is another route which affects oil developments, and that is the A82 Loch Lomond road. Parts of it are being repaired but it is a shame and disgrace that its improvement has been held up for such a long time.

I come now to rural transport. Few areas of Scotland have a greater stake in this issue than Argyll. Yesterday morning I received a delegation in my drawing room comprising people who live on the Isle of Luing. Their only connection, not only with the mainland but with all the services such as the doctor and the district nurse, is via the ferry called the Cuan ferry. Next week the ferry charges are to rise by 100 per cent. The service is operated by the local authority. This is an example of how important transport is in the rural areas. It is vital that we ensure that no changes made in the rate support grant affect these services. This will be more important when such services are transferred to large bodies which do not necessarily have the same knowledge of the problem as the smaller local authorities.

I have made a habit of speaking briefly in this House. It is a great feat and one which I commend to other hon. Members. There are, however, two other points I would like to touch upon which are not entirely germane to my argument. The hon. Member for South Ayrshire (Mr. Sillars) referred to a remark by his hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) concerning geriatric units. I wish to associate myself with the remarks of the hon. Member for South Ayrshire. I have been to every geriatric unit in Argyll. The hon. Member will know that there is perhaps a larger proportion of geriatric units in certain parts of Argyll than in other parts of Scotland. It is important that the morale of those associated with caring for the people in these units should be maintained at the highest level.

Frankly I have been in some doubt as to whether we should have gone in such depth into the issue of geriatric units in this debate. I hope that the hon. Member will be brief and will finish this subject.

I appreciate your concern, Mr. Deputy Speaker, but I do not want my remarks to be misconstrued. I am not against having a number of these units but I was saying that we should put more emphasis on the voluntary spirit and on home helps. In this way we could ensure that many of these people do not go into such units.

I accept what the hon. Member says. I hope he will accept that it is right that there should be no shadow of doubt in the minds of the people who work in these places that we greatly appreciate their services.

The hon. Member for Dumfries (Mr. Monro) spoke of community councils. In rural areas such as Argyll these councils will be playing a vital part in the local government structure. If we are to regard local government as something which is evolving, we must assume that these councils will become more important. I certainly hope that this happens. Once a Scottish Assembly is in operation and the rôle of the regional councils diminishes, I hope that these community councils will become more important.

One thing above all which concerns those we represent is the amount of rates they pay. I should like to know the global effect of regionalisation on the rates.

9.6 p.m.

There is a great fear in isolated communities about the maintenance of rural bus services, which are already making huge demands for subsidies. There is a risk that the inclusion of a subsidy for rural transport services in the overall grant will mean that the difficulties of rural communities may be overlooked.

Only £2½ million of the increased grant of £680 million has been allocated to local authorities which have to invest in oil-related infrastructure. That is not enough. With houses, schools, hospitals, roads and so on, they will be under tremendous pressure. Inverness-shire had great problems last summer with escalating costs. A circular to local authorities confirmed that provision for oil-related infrastructure would not qualify for special assistance. There seems to be a strong case for reconsidering this and making sure that the terms of the circular are more broadly framed. The extraction of oil is very important, and it seems that the sums required will be far greater than anticipated.

As a result of the Government's decision on the grant-aided schools, the chairman of the education committee in Edinburgh has said that he may have to make a specific request to the Government. He believes that the number of parents applying for their children to enter comprehensive schools will put a much greater burden on the ratepayers. I have inquired of headmasters but the precise numbers of pupils involved are not available. The director of education has asked for applications by 14th February, and as soon as the information is available I shall put it before the Minister.

Edinburgh Corporation has been pressing for the completion of an outer city bypass since 1947. It has shown immense patience, and the residents hope that some action will be forthcoming or at least that the Government will make their position clear.

I hope that the Minister will keep these matters under review. One feels strongly that the people of Scotland want a simpler form of taxation. Anything that he can do to achieve that will be greatly welcomed.

9.10 p.m.

The most encouraging remark made by the Secretary of State was that the local authority associations had requested his advice on how they could effectively save money in the current situation. I gather that the Secretary of State would issue a circular giving advice to the associations on how to do that. I look forward eagerly to seeing the advice of the Secretary of State. Before the circular is drafted, will the Minister arrange for a debate in which hon. Members can make suggestions as to how they think savings in local government expenditure can be made? The Government should arrange to set up special permanent units to advise local authorities on saving money.

There is a great deal of concern about how councillors should tackle the difficult question of avoiding needless waste of money. There is now an unusual situation. The termination of the old authorities is a temptation to councillors to spend up to the hilt every penny they have before the old authorities disappear. I am the last to act as Scrooge and to object to any reasonable marking of the end of an old authority. However, some of the authorities have exceeded what is reasonable. That is a symptom of an attitude towards spending of which we should be critical, and I make no apology for being critical now.

The Minister will correct me if I am wrong, but I understand that in Glasgow the winding-up of the corporation is to be celebrated by the expenditure of £156,000. Perhaps that is not a large sum in terms of Glasgow's total expenditure. However, of the sum mentioned it is proposed to spend £56,000 on the purchase of special mugs to commemorate the occasion. It may be thought appropriate in the circumstances that special mugs should be bought. However, I would have thought that the purchase of 56 mini-cars for the use of disabled people in the city would have been a far more appropriate, popular and useful way of spending that £56,000. I hope that even now a suggestion could be made by the Minister in that case.

Celebrations are also planned in Aberdeen. Each of the 37 council members will receive an inscribed silver dish. I am not sure how much a silver dish costs or whether it is made of real silver. However, if that is true, it is going beyond the score to celebrate in that way, particularly at a time like this.

Then there is the tremendous expenditure made by Grangemouth with the distribution of £480,000-worth of gifts worth £60 apiece to each of the 8,000 tenants in the town. That is very nice for the ratepayers and tenants there. Although those people are proud of their traditions, I feel that is going a little too far. We should say that we hope that that will not get out of hand.

I do not subscribe to the wholesale view that the salaries paid to the new officials are ridiculous and should be condemned out of hand. An official taking over a large new authority must be properly paid. When one official replaces a considerable number of officials in previous authorities, there is not necessarily an increase in the charge to public funds. There should be, and in many cases there is, a saving.

On the other hand, there are one or two cases which need examination. Why are increased salaries paid to officials who have not got greater responsibilities—in-deed, to officials who have lesser responsibilities? For instance, in many respects the chief executive of Glasgow District Council has less responsibility, although I admit that there is an increase in the area for which he is responsible. Education is not part of his responsibility. I wonder whether the increase in salary for him is reasonable.

The responsibilities of the chief executive of Fife are no greater than those of the chief clerk of the present authority. We should watch carefully the level of payment in this case.

What does the hon. Gentleman mean by "watch carefully"? Does he suggest to the Government that action should be taken to roll back the salaries? If not, why does he continue in this vein?

The hon. Gentleman is being a little churlish. It is surely desirable that this matter should be drawn to the attention of Ministers. I hope that in the contacts that the Department has with local authorities it will let it be known that this sort of thing should be closely watched. It is my experience that that is what the Scottish Office tries to do, and it does it in a helpful way, not in a critical way. We should not feel too inhibited about making criticisms. If the criticisms are without foundation, we shall be told. I shall be happy to withdraw anything that I have said, although I have not made any accusations.

It would be a good thing if, for the record, the hon. Gentleman would specify what the salary increases are in the case of the chief executives of Fife and Glasgow.

I can give details, if they will help. The major officials in the Strathclyde Region can expect to be paid between £11,000 and £11,500, which will give most of them an increase of £2,000 on what they had previously. We should examine that carefully. I understand that senior officials on Edinburgh District Council have received rises ranging from about £1,000 a year to about £3,600 a year, although there is no corresponding increase in their responsibilities. Again I am prepared to be told that I am wrong. I am entitled to make these points and to hold myself open to being told I am wrong, if I am wrong. That is what we are all here for.

I will not give way. I have done the House perfect justice. I was asked to give details. I have done so. I cannot be gagged in this way by being continually barracked by hon. Members opposite. I have made perfectly reasonable statements. I am entitled to have them treated with respect even by those who do not agree with them. [Interruption.] The hon. Gentleman should not bully like this.

Order. The hon. Member for West Lothian (Mr. Dalyell) must resume his seat if the hon. Member for Ayr (Mr. Younger) does not give way.

If the hon. Gentleman is going to bring the debate to a halt I am forced to give way. He is misusing the normal conventions of the House by behaving as he is.

It is indeed a serious mater when ex-Ministers in reply to my hon. Friend make fantastic innuendoes. What is being said here is that somehow or other, improperly, the newly elected councillors have connived with officials to give them salaries greater than they should have. What other inference are we to draw from what has been said? I find it astonishing that first one ex-Minister and then another ex-Minister—people who should know better—make such sweeping statements without having bothered to find out what the facts are. I have bothered to find out the facts. What the hon. Gentleman is saying is absolutely disgraceful.

I hope that I am not being unfair to the hon. Gentleman, because I usually try to be fair, but I can only imagine that he is determined to make a row about something over which no row exists. He has put words in my mouth. I never suggested that there was anything which was in the slightest way improper. [Interruption.] The hon. Gentleman must stand by his words. He indicated that I said that something improper had taken place. I said no such thing; I say no such thing. He indicated that I suggested that there was connivance between officials and councillors. I said no such thing; I say no such thing. The hon. Gentleman is being less than fair to me. I have made a perfectly fair point with which I am sure the Minister will deal.

I should like to raise three other points. The first relates to the question of allowances for councillors. During the proceedings on the Local Government Bill we discussed what the allowances should be and, indeed, whether there should be allowances. What consideration has the Minister given, in connection with the rate support grant, to the level of allowances which will be paid? I recollect that when the Bill was proceeding assurances were given by myself, or perhaps by my right hon. Friend the then Secretary of State, that the Minister would be consulted on the methods of payment of allowances which the authorities would adopt.

I said that we would ensure that the allowances were reasonable in the terms of the assurances given in the debates. I have heard one or two suggestions by local government people that some practices have grown up south of the border which I hope will not grow up in Scotland, such as paying allowances to councillors purely for carrying out "surgeries" with their constituents. I should like an assurance from the Minister that he is keeping a close watch on this matter—if I am allowed by the hon. Member for West Lothian (Mr. Dalyell) to say such a thing, which I doubt.

The Secretary of State said that the question of staff numbers was being carefully considered by him but that he was not allowing for increases in staff. He should be allowing for reductions in staff, because one of the objects of the reorganisation into larger units was to achieve over-all reductions in staff. We hoped that that would happen.

I wish to ask a question about the phasing arrangements which the Secretary of State mentioned. I hope that the Minister will give some more information on the phasing arrangements where rates will be severely different under the new authorities. Will he say whether the three-year phasing period will mean that the difference in rates between one authority and another will be brought together in the three-year period? What will happen if during the second and third years the rate increases, as almost certainly it will? Will the phasing be altered in the second and third years, and at what point will the differences meet?

The difference could be considerable if one takes the lower rates in some existing authorities with the rates in some of the new areas. For instance, I understand that in the burgh of Monifieth the rate is 53p in the pound and in Dundee city the rate is 104p in the pound. The increase is pretty drastic even with phasing. I should like to know how the system will work.

I echo the appeal of many hon. Members to the Minister to say what calculation he made in the rate support grant to allow for increases in support for rural bus services? With the present fuel crisis, it is plain that there will have to be a reappraisal of the help given to rural bus services. Probably a number of them which have not had any help—in fact, they probably have not existed up to now—will have to be given help because of the drastic effect of higher petrol prices, which I entirely understand. I should like to know as much as possible about that.

I general, I join in the welcome that has been expressed for this rate support grant. In the economic circumstances of the country it is a generous settlement. It has to be borne in mind by those who use local government services that the restriction on the development of services, which I entirely accept is necessary, arises from the Government's failure to control inflation. It is their failure that they are having to put right in the order.

9.25 p.m.

I am rather surprised to be called now, because I expected the hon. Member for West Lothian (Mr. Dalyell) to rise, he having accused of exaggeration three of my hon. Friends in succession. I am glad to see that he intends to make a speech.

I agree with my hon. Friend the Member for Ayr (Mr. Younger) that the rate support grant order is a generous one. I wish to direct my remarks to one aspect of the order. My remarks may not sound so charitable as certain remarks made by my hon. Friends. I wish to speak on paragraph 3(3)(b) about the £2·5 million which is to be made available for extra expenses incurred by authorities in oil-related areas.

I welcome the fact that help is to be given, but I cannot welcome the amount of the help, because £2·5 million is derisory. I know nothing of any announcement that may be made on Friday, referred to by the hon. Member for Inverness (Mr. Johnson). If £2·5 million is the total extra amount that is to be given, it is no more than an insult to the ratepayers in Aberdeen and other oil-related areas in Scotland. I am only thankful that at least the 2p rate threshold has been scrapped. That is something, and, if they are here this time next year, I hope that the Government will not seek to bring back that obnoxious provision.

Apart from being an insult to the ratepayers, the £2·5 million is a totally inadequate response to the oil programme in Scotland. While the whole of Scotland is being given £2·5 million for the oil programme, the Government are giving £4·9 million to the Meriden Co-operative, £3·9 million for the Kirkby Co-operative and £1·2 million for Scottish News Enterprises. The ratepayers in the oil-related areas will note that the Government apparently feel able to give four times as much to those extremely dubious ventures as they are giving for the extra expenses incurred in oil-related areas. The ratepayers are bound to draw the conclusion that Left-wing extremists and trade unions who are involved in dubious schemes will get what they want whereas mere ratepayers can go whistle "Dixie".

It is of little help to my constituents to know that, while their rates are likely to rise by at least 25 per cent. on average, we are still giving aid to oil countries such as Iran, which is awash with oil and does not know what to do with its money. We give Iran £500,000, Iraq £50,000 and Oman £230,000, and so on. That being so, the ratepayers are bound to feel that this rate order is unsatisfactory.

Not only is the £2·5 million too small but it applies to far too small a range of oil-related activities—that is to say, too small if we still follow Circular 84/1974. My hon. Friend the Member for Ross and Cromarty (Mr. Gray) said that the circular cut out petrochemical works, refineries and so on. I should like to know whether that still stands, as the 2p rate threshold referred to in the same circular has been dropped.

Circular 84/74 refers to any oil-related works and mentions petrochemical works, if my memory serves me right—in other words, expenditure not directly incurred by the local authority in the extraction of oil—and says that any downstream expenditure is not to be eligible.

I ask the hon. Gentleman a specific question: where are the petrochemical refineries which are to be excluded?

They are not built yet or we would not be asking for money to build them. That is the whole point of the circular.

The Minister will be able to answer this point later if he wishes. The circular defines the oil-related activities fairly sharply, but the order refers simply to

"… expenses incurred … in connection with developments relating to exploration for, or exploitation of, offshore petroleum."
Perhaps the Minister in his reply could say whether this means that a tighter definition is finished, or are we still to go by the tight definition in the circular? If we are to go by a broader definition of oil-related activities, will it mean that local authorities in oil affected areas will be able to obtain some of the money to cover activities such as those which affect Aberdeen? For example, local authorities will face great increases in wages bills because, in competition with oil industries, they will have to pay higher wages. Are the increases likely to be greater than in other parts of Scotland, or will authorities be eligible for extra governmental assistance?

There are many other points which could be advanced, such as the increase in rate burden caused by the extra manpower required to police the oil rigs. I recently asked the Department about a lorry park which is desperately needed in Aberdeen. Will expenditure for such a development fall within the funds available within paragraph 3(3) of the circular? The Minister must realise that he has caused a great deal of confusion, as my hon. Friend the Member for North Angus and Mearns (Mr. Buchanan-Smith) said when he mentioned the possibility of payments in respect of loan interest. Could the Minister say what the financial memorandum means when it says that the figure of £2·5 million might rise to £5 million—

I am talking about the £2·5 million in the order. If the money is to be paid to local authorities in terms of the interest on principal, will the money have to be borrowed or will it be included in the capital expenditure incurred by local authorities?

9.33 p.m.

I was sitting here quietly minding my own business when I heard not one but two ex-Ministers of the Crown suddenly indulge in cheap slurs against public servants, and I felt that questions should be asked. Stories about certain local authorities and regional public servants being paid a thousand pounds more than they should be paid, without any evidence to back such statements, is going a little far. It is the politics of innuendo. Before people make such allegations in the House of Commons they should have before them the facts and figures and should take the trouble to go to the authorities and discover the facts.

After the matter was first raised by my hon. Friend the Member for South Ayrshire (Mr. Sillars), I asked a number of questions in depth in my own Lothian region, and I was convinced that everything had been properly carried out. Incidentally, these allegations are being made against people who, night after night, have been sweating their guts out in facilitating the change from one kind of authority to another. We in the House of Commons have not understood how hard local authority employees have had to work in that changeover. It has taken a toll in terms of family ilfe, and many employees have been working 16 hours a day on six days of the week. That is the reality of the situation.

When one looks at the post-tax situation in these inflationary days these allegations that somehow the staff have got together with the elected members and fixed their salaries at a higher rate than might otherwise have been the case is a bit much. Has my hon. Friend the Minister of State the facts available to set the record straight? I hope that it will not go out from this House that there is a body of MPs that believes that local authority elected members and public servants have got together in this way. That is far from the situation. I see the hon. Member for Ayr (Mr. Younger) is nodding. Perhaps he will have the grace on this occasion to withdraw some of the things he said.

9.36 p.m.

It is unfortunate that our useful debate has ended on this sour note. Those who heard my hon. Friend the Member for Ayr (Mr. Younger) will appreciate that the hon. Member for West Lothian (Mr. Dalyell) is accusing him of saying things he did not say and asking him to withdraw statements which he did not make. This is a serious matter, and I hope the Minister will give us some reassurance on the points raised during the debate.

We rarely get good news in the House of Commons these days, and it must have been disappointing to the Minister of State and the Secretary of State to come along with orders which offer a record increase in cash for local authorities and to hear expressions of worry and apprehension about what will happen in the forthcoming year. Although we appreciate that there has been a substantial increase in the amount of money available, there is no doubt that what hon. Gentlemen have been saying represents the true feelings of those Members and the concern they feel.

Concern has been voiced about various aspects of these orders. The hon. Member for Argyll (Mr. MacCormick) and my hon Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) referred to transport. With the impending change which is proposed in the Local Government (Scotland) Bill, the removal of specific grants and the change of responsibility for these under the rate support grant, there is concern that transport, which is so essential in the rural areas, may be neglected. It would help the House if the Minister could give some assurance that in future years there will be adequate provision for the needs of transport in the rural areas.

Concern has also been expressed about distribution. No matter how the money is distributed, there is inevitable concern. My hon. Friend the Member for Ross and Cromarty (Mr. Gray) expressed the view of some rural communities that they were getting a raw deal under this distribution compared with some populated areas. There has been concern about the provision for oil developments. The hon. Member for Inverness (Mr. Johnston) and my hon. Friends the Members for Edinburgh, West and Aberdeen, South (Mr. Sproat) expressed concern that the sum provided is inadequate to deal with the problems which have been arising.

In addition, there is a growing doubt, as the Secretary of State is probably aware, whether a formula of any sort can do justice to all the local authorities in view of their special problems. It seemed to me, from listening to the debates about the rate support grant and the formula that the hard-working officials of the Scottish Office and the local authorities have been trying to stretch the formula in various ways to try to meet the particular needs of particular areas. I wonder whether it would not be better, instead of having a formula, for the individual authorities to hold negotiations with the Secretary of State. It is becoming more and more difficult to arrive at a single satisfactory formula.

There is a special problem in Glasgow. The hon. Members for Glasgow, Queen's Park (Mr. McElhone) and Glasgow, Springburn (Mr. Buchanan) touched on the special problem that they believe will arise for their district authority as a result of the reorganisation in May. I was interested to read the report by the Minister of State which was handed to us at the beginning of the debate. One point must be cleared up immediately. Glasgow believes that the present formula will be unfair to it because it will not get what it regards as a fair proportion of the expenditure which the district would carry out. It argued that the distribution formula should take account of expenditure per head. The Minister, understandably and rightly, pointed to the difficulty of arriving at a formula which took account only of actual expenditure. But there was a clear indication in his reply that in his view there was excessive spending by Glasgow. He said:
"Glasgow's argument is that the Strathclyde districts should get more because their expenditure per head on district services is, in most cases, well above the average for all districts."
Over the page we read:
"On this point the Distribution Committee's report said: 'For districts … we were unable to infer from the figures any direct relationship between expenditure and the objectively measurable needs of the communities concerned.'"
In other words, the committee seems to be saying that it cannot say that because an authority spends more its needs are greater. There is clearly an indication that, at least in the committee's view, there is extra expenditure in particular areas, and it seems that it is particularly looking at Glasgow.

There is no doubt that Glasgow has special problems. As the hon. Member for Springburn rightly said, it has the problem of redevelopment. There is the problem that a great deal of industry and many people who were put in Glasgow district under the original proposals are being taken away by the new towns and suburbs. There is the special problem that many of the people and industries that would normally have located themselves in the city are moving elsewhere. One of the many factors influencing them is the rates burden in Glasgow. We are all aware that the burden of rates dissuades some commercial undertakings from staying open and prevents new enterprises from starting up in the city. It will be a major headache for Scotland and Glasgow if there is a further contraction in industry, commerce and business in Glasgow.

The Minister points out in the increase order for 1974–75 that an increase of about £105 million, which includes the £25 million extra for the reorganisation, takes account of rises in prices and in the pay of teachers, firemen, police and clerical officers. Is it the Government's policy that these increases shall be paid only on rises which come within the social contract? What will be the position if, say, Glasgow, which faces severe strike action by some of its employees, pays sums over and above those agreed in the normal local authority negotiations, increases which are outwith the terms of the social contract? Will the social contract be part of the basis of the increase order, or will the order just be based on the actual increased salaries and wages paid by the local authorities?

The main concern expressed in the House tonight has been that felt by many people in Scotland that next year and this year, in particular, will see a massive increase in local rates. There is every indication that that may happen. [Interruption.] I see that the Minister of State is in agitated conversation with one of his Government colleagues. He should look back to the debate on 4th July, when there was another such cheerful conversation, and when the hon. Gentleman said:
"we do not see why reorganisation in Scotland should by itself impose considerably increased local authority expenditure."
[Interruption.] The hon. Gentleman has said "Hear, hear" to that. What splendid sentiments! On that occasion the person who knocked the Minister down and said that he was distressed and aggrieved was the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing), now sitting beside him as a Minister. His hon. Friend then said:
"I was rather distressed when I heard my hon. Friend the Minister of State say that he did not expect the reorganisation of local government to increase the rate burden. Even the early evidence is that the rate burden throughout Scotland will be substantially increased, not temporarily, but permanently as a result of the reorganisation of local government."—[Official Report, Scottish Grand Committee, 4th July 1974; c. 123–130.]
I am sure that the breath of fresh air in the Scottish Office and those splendid sentiments will have an influence on Government policy. I hope that they do.

But why are people concerned about the possibility of a rates disaster in 1975? First, we have the problem of the change of a system. I believe that the Secretary of State is well aware from his previous periods of office that whenever we have a change it is used by the local authorities to have what in some cases is a spending spree. It is only necessary to look at the figures for previous years to see that, while we have had certain increases year by year in local government expenditure, every time we have had a revaluation when the increase can be covered up there has been a substantial rise in expenditure. That has certainly been the case whenever revaluation has taken place. There is a greater opportunity for that problem to arise when we have a reform of local government.

There is also the problem of inflation progressing at a rapid rate. It was disturbing to see in the reports on wage increases which were referred to by the Secretary of State for Employment that increases in the public sector were going ahead far faster than in the private sector.

Am I right in thinking that the hon. Gentleman is quoting percentages? Is it not the case that a number of public sector settlements have involved people in a low wage category? Does the hon. Gentleman agree that 25 per cent. of £40 is not as much as 18 per cent. of £100, which is the sort of figure that might be paid in the private sector?

The hon. Gentleman makes a fair point. However, he knows that an enormous part of local government expenditure is taken up by wages. He knows that if there is a large percentage increase the effect on the ratepayers will be substantial.

As the Secretary of State said, there is also concern about the way in which funds have been dealt with by local authorities as we approach the changeover. Undoubtedly a great deal of money has been spent from funds which it would have been wiser to pass over to the new authorities. There is also the problem of authorities worrying about the effect on their rates of the changeover. It was good to hear from the Secretary of State that a three-year transition period is being considered.

We must be aware of the problems. I shall take a case in my own area. The ratepayers of Rutherglen at present pay a rate of 80p. When they move into the Glasgow district they will come into an area in which the present rate is £1·21p. There is the additional problem of housing deficits. That will be a major problem. It is unfortunate that at a time when we are facing a major increase in rates the Government have decided to introduce new legislation which will free local authorities from the statutory liability which they have had under our legislation to review their rates year by year. We know from previous experience that many of the authorities which have the most substantial rate burdens are the ones which are most reluctant to wipe out deficits in their housing accounts.

Bearing in mind that we have a major problem facing us, will the Minister of State tell us precisely what he intends to do if local authority spending gets out of control? I know that it is not an easy problem. It is a problem that previous Conservative Governments and Labour Governments have faced. They have not always come forward with the right answer or a satisfactory answer. It must be galling for Chancellors to impose the most rigid restrictions on spending by central Government in the national interest only to find that often their activities are undermined by remarkable increases in spending and in the rates called for by local authorities.

The Secretary of State was rather savage in what he said about the need to prune and restrict expenditure to the minimum possible level. He also has said in the paper that has been issued on the Rate Support Grant (Scotland) Order:
"the growth of public expenditure in demand terms must not be allowed to exceed 2¾ per cent. a year on average over the next four years."
In page 5 of the report it is said:
"The Secretary of State has already advised local authorities that increases in staff complements on local government reorganisation cannot normally be considered to be justified."
We have a situation in which the Secretary of State has expressed his own justifiable concern about what may happen over the forthcoming year. He will find that ratepayers in Scotland in general have the same fear about what may happen. He did not mention any percentage when he was talking about how the rates might go, but I think that we know from our experience south of the border that there have been some astonishingly large increases. We hope that that will not happen in Scotland.

Could the Minister of State indicate what contingency plans he has for local authorities which might disregard the advice of the Secretary of State and impose excessive increases in their rates which would be detrimental to the people of the locality, and could be bad for regional development and attracting industry and commerce? Is consideration being given to monitoring expenditure, as we had for a brief period under the last Government? We did not get much co-operation from some local authorities but it had some deterrent effect on others in getting to certain levels of expenditure or rate rises.

Can the hon. Gentleman give a guarantee of any sort to local authorities that if the rate burden were to increase by, say, more than 20 or 25 per cent. some special action would be taken, as was taken in the case of England and Wales by the Secretary of State for the Environment? Could he also assure us that if he believes a local authority is overspending—is spending more on its services than is reasonable, bearing in mind the state of the economy and the needs of the ratepayers—he will at least send an inquiry team, perhaps of accountants, to that authority to go through the books and make perhaps a public report as to whether the ratepayers are getting value for money?

But the Minister of State is usually scathing about our suggestions. He has shown himself not to be very reasonable. On the other hand, I hope that he will appreciate that we have tried to approach this matter responsibly and reasonably, reflecting the genuine concern felt by ratepayers throughout Scotland about what may be a savage rise in the rates in the forthcoming year. It is no good for the Secretary of State to produce White Papers saying that he insists that local authority expenditure must not increase by more than a certain amount, that he will not allow certain things to happen and does not approve of them happening, if he is not prepared to use any powers.

We face what could be an extremely serious situation in 1975–76. I hope that the local authorities will respond to the calls made by the Secretary of State, I hope that we shall be told precisely how he intends to deal with those which do not listen to the advice coming from the Government.

9.52 p.m.

We have had a quite lengthy debate and many detailed points have been raised about individual services. I would not claim that in what I have to say I shall cover all those points, but I shall deal with at least some of the main themes of the debate. I do so in the context of the recognition by the House generally that this is an extremely generous settlement—easily the most generous settlement there has ever been for rate support grant in Scotland. That should be put on record firmly in view of some of the extravagant language used about the previous rate support grant, which basically we inherited from the last Government, and of some of the equally extravagant language used in our debate in July.

Hon. Members on both sides recognise that, if we are to keep rate increases next year down to a tolerable level, there is need for considerable stringency in local authority expenditure. There have been virtually no suggestions in the debate as to how individual services might be reduced, cut back or particularly hardly dealt with so that we can keep local authority expenditure under control.

The hon. Member for Ayr (Mr. Younger) said that we should have another debate about the matter, but this debate is about it. If the Opposition or any other hon. Members have particular suggestions to make about local authority expenditure, this is the occasion one would have expected them to make them. But we have not had one suggestion, except a rather tentative one from the hon. Member for Inverness (Mr. Johnston) that we might look at roads—and he rather rapidly withdrew and modified it when I asked about the A9. The hon. Member for Inverness, even if he was frightened off later, at least moved towards making a suggestion, but apart from that we have had absolutely nothing.

I was not going to deal with all the trivial suggestions made this evening, but I might make an exception in the case of the hon. Member for Dumfries (Mr. Monro) if he wishes me to do so. However, nothing has been said by any hon. Member this evening which represents anything like a programme for keeping local authority expenditure under control.

We faced an extraordinarily difficult situation. We made it clear in the covering White Paper for the order for 1975–76 that extreme care would have to be taken by local authorities in their expenditure commitments in the next year and, indeed, that they would not be able to take on any new commitments—I say that in absolute terms—for 1975–76. They will be able to take up only inescapable commitments which arise out of legislation or for other reasons which pre-date the year 1975–76. One has to look at the particular services mentioned in the covering White Paper in that kind of light.

Of course, in education we are taking account of what is an inescapable commitment, which we happily take on: we want to have a growth in the number of teachers as well as in pupil numbers in Scotland. That is provided for in the rate support grant order for 1975–76.

In the case of social work, about which a number of hon. Members have spoken, there is allowance in the year 1975–76 for an increase of about 8 per cent. in real terms. This represents, again, inescapable commitments. It does not represent any new initiatives in the development of these services. I regret very much having to say that, but that is the fact of the situation. But within that expenditure, increased by 8 per cent. in real terms, there will be very substantial improvements in many of the social work services. I think that this is supported on both sides of the House.

I shall not go into particular disputes about geriatric services and so on, except to make the obvious point that there is social work provision here and the need for hospital provision as well. One must look at both services as being complementary. In the Scottish situation in the past there has been, as compared with England and Wales, rather too much emphasis on hospital provision and not enough on local authority provision. In recent years we have tried to tilt the balance. I say that without in any way accepting the criticisms of the tremendous work which I know personally has been done in the hospital services for geriatric patients and, indeed, psychiatric and other patients who are also recipients of social work care.

A number of other particular services have been mentioned. For example, we had the question of rural transport. We are moving over from a specific grant up to 1974–75 to a system of support by the Government for these services through the rate support grant system. This has been deliberately done. We have inherited a policy here. I make no complaint about that, because I happen to think that it is the right policy. This was done specifically to allow increased local initiative and, in particular, increased local initiative in the context of local government reform and the new planning procedures, regional plans and, for that matter, district plans and the rest, which will come under the new reorganised local government set-up.

In calculating the reckonable expenditure for 1975–76 we estimated that there would be an increase in these services of about 6 per cent. to 7 per cent. It may not be as much as some hon. Gentlemen would like but it is a genuine increase and beyond the general increase in the rate support grant for the forthcoming year. If we allow some services to go beyond the average expenditure increase, automatically a number of services have to be kept below the average. I would not be so uncharitable later in the year as to quote back at Tory Members some of their speeches when they write to me pleading for more expenditure in their constituencies.

Any Minister at the Scottish Office knows only too well that many hon. Members who are most vociferous in demanding that public expenditure should be kept under control are also the most constant correspondents with the Scottish Office, asking Ministers for additional expenditure in every conceivable area which they consider to be of value to their constituents. It is no use paying annual obeisance to public expenditure control at local authority level and then thinking that one can write to Ministers in extravagant terms for the remaining 11 months and 30 days of a year. Unfortunately, that is what happens with some hon. Members.

I shall not go into the details as to whether expenditure on community councils is included in the rate support grant order. The hon. Member for Dumfries raised this point. Obviously many of these matters are quite small in overall terms. They come under the general heading "Other Services". Anything that is an inescapable commitment, anything arising out of legislation which the House has enacted, which the House wishes to see implemented by local authorities, is provided for as reckonable expenditure for 1975–76. That is a matter of principle which is accepted by the Government as well as by local authorities. That is also an answer which applies to many points hon. Members have put to me.

I shall not deal yet again with the issue of grant-aided schools. The hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) made what I thought was the worst argument I have heard on this matter, namely, that this might place an additional burden on Edinburgh ratepayers. He must know that if, as has happened before, there has been Government expenditure directed towards these schools, this has represented a considerable saving for Edinburgh ratepayers which was not taken into account in other ways because the rate support grant is not distributed in a way which takes account of that factor.

If the Edinburgh ratepayers—I wish no set of ratepayers any harm—had to pay a little more for education in the years ahead because of the change of policy here, it would only be natural justice.

Is not the Minister aware that it will cost a great deal more to accommodate the children concerned in comprehensive schools than it will to keep them at the grant-aided schools? What we are complaining about is the additional cost.

The hon. Gentleman was complaining about the burden on Edinburgh ratepayers. I specifically took his words down. I do not accept the general point. We can debate that on another occasion.

I turn to some general matters arising from the order which relates to 1974–75. We are still in that year and I thought that hon. Members might take some interest in what is happening in the current year. The order for this year includes, apart from the normal reimbursement of increased costs, an extra £25 million, which is probably unprecedented. This is because in the current year we wish to make sure that Scottish ratepayers do not bear a disproportionate burden.

On the latest information, rate increases for 1974–75 are likely to be 15 per cent. That is not a small figure, but in all the circumstances I do not think hon. Members will feel that it is out of the ordinary. It certainly does not justify the extravagant language used by the hon. Member for Glasgow, Cathcart (Mr. Taylor) in the debate on 4th July. Until he mentioned it I had forgotten that debate, and rather than look up my own speech, which I dare say was admirable, I looked up his. This is the sort of thing he was saying in a year when the burden is rising by 15 per cent. He referred to
"the simple fact that we are facing an emergency the like of which we have not seen in Scotland for many years".—[Official Report, Scottish Grand Committee; 4th July 1974, c. 149.]
He was talking about "an alarming problem" and "fantastic increases". We have heard the same thing several times at Question Time.

So I do not take the hon. Member terribly seriously in some of the extravagant language that he habitually uses about rates, about education or about virtually anything else.

Will the Minister confirm or deny that there is an emergency over rates and that rate arrears of Scottish local authorities are at a record level? Has he any information on this? Will he stop being so smooth, super- ficial and totally complacent about a problem which is causing intense hardship to hundreds of thousands of people? The average of 15 per cent. includes wide variations, the full list of which I have here. The hon. Gentleman said that 15 per cent. is not substantial or significant. Will he now say whether the rate arrears for Scottish local authorities are higher or lower than ever before?

The hon. Member continually changes his ground. He is not denying the accuracy of the figure I have given. He was forecasting all through the year—indeed, he would have been forecasting today, except that the facts are now available and are against him—substantial increases. I do not consider an increase of 15 per cent. a matter for complacency, but neither do I consider it an emergency the like of which we have not seen in Scotland for many years.

In comparison with the 25 per cent. which we are facing now, 15 per cent. seems very mild. But in what other year in the last 10 have we had an average increase of 15 per cent.?

In none of them—[HON. MEMBERS: "Exactly"]—but, as I demonstrated in the debate in July, the increase in rates was accelerating under the Conservative Government from 1970 to 1974. It was in that period, during which we suffered hon. Members opposite, that rates began to take off in this admittedly disagreeable way.

But I have made the point about 1974–75 and I am grateful to the hon. Member for drawing my attention to that speech, which he not unnaturally had tried to forget.

Does the Minister have any information on my specific question about rates arrears? He has now admitted that the increase for 1974–75 is a record for the 10 years. In view of what I said about an emergency, and the complacent words he has used, may I ask whether he has any information about arrears?

I have not used any complacent words. I draw attention to the fact that the hon. Member continually uses extravagant and absurd language which he never subsequently attempts to justify. There are problems of rate arrears for local authorities as there are problems of rent arrears. They do not justify the language used by the hon. Gentleman on 4th July. When we discuss the rate support grant, neither the situation in 1975–76, nor what happens in the current year justifies the extravagant language used by the hon. Gentleman this evening.

As regards the situation for 1975–76, the support figure is the highest ever. In the last support grant order debate we heard many arguments about the missing ½ per cent. We heard nothing about the missing ½ per cent. this evening because it has been made up. It was missing when we took over the order left to us by the hon. Gentleman's party.

The local authorities thought it was finalised, because that was what they told us. We found it disagreeable that they could not have the additional money. However, the missing ½ per cent. has been made up.

There will be an increase of 7 per cent. in 1976, which is the most extraordinary increase ever. It means that the rate support grant for next year will be approximately 50 per cent. higher than the 1974–75 figure. That will be a creditable achievement because the expenditure will not rise by 50 per cent. My right hon. Friend gave that figure in his opening speech.

My hon. Friend the Member for South Ayrshire (Mr. Sillars) was right to point out to the hon. Member for Ayr that the position regarding local authority staff numbers and costs comes about because of the Local Government (Scotland) Act 1973, for which the hon. Member was to a large measure responsible. None of the extravagant claims about wholesale local authority extravagance has been substantiated by anything said by the Opposition this evening. There are isolated instances of what those of us, looking from the outside, consider to be extravagant payment of salaries and staff costs. That is not the overall situation.

It is expressed in the most formidable terms in the White Paper that we do not expect, and have not provided for in 1975–76, increases in local authority staff because of local government reorganisation. I state that categorically. We do not expect and we shall not provide out of Government funds for increases in local authority staff arising out of local government reorganisation on the scale we have heard complained about this evening.

My point was that with many fewer authorities there should be a reduction in staff.

One would hope for that. I am not sure that there is any great prospect of having our hopes fulfilled. Some local authorities have made the point that they are saving in staff numbers. In some areas a certain number of staff have retired early where there were no places for them. Staff salaries are monitored by the employers' side of the negotiating machinery. The Opposition complain constantly about Government interference with local democracy.

The Government do not determine local staff salaries, nor do we determine local staff numbers. The hon. Gentleman spoke about sending out inquiry teams of accountants. This reminds me of what was to happen with the Housing Commissioners—who never eventuated—going into local authorities to monitor their affairs and tell them how to run things.

That is not the relationship between central Government and local authorities. When the Local Government Bill was going through we were told by Conservative Members that part of the process was that there would be more freedom for local authorities to determine their own affairs. Local authorities—not the Government—determine the salaries and staff numbers appertaining to their officials.

We have said on numerous occasions—I repeat it—that we do not want to see extravagance in staff or in any other way in local government. We welcome the fact that the employers' side of the negotiating machinery is checking up on staff complements and salaries. We hope that when we get this information many of the wild claims about local authority extravagance will be exposed as being such. If instances of extravagance occur they will be paid for not by the Government but by local ratepayers. Ratepayers must be vigilant to ensure that such things do not occur.

I was asked about the question of oil expenditure. It is rather less than gracious on the part of Conservative Members that a new form of assistance, which they denied local authorities, should be treated in such a thoroughly nagging way as it was, for example, by the hon. Member for Aberdeen, South (Mr. Sproat), who has some kind of fixation about a lorry park in Aberdeen and seems to think that there should be some mention in the White Paper of the lorry park in Aberdeen. That is carrying detailed examination of Ministers to an absurd extent.

We have sent out a form. It is available to hon. Members. The kind of services which will mostly be in question are housing, education, sewerage and roads—the basic services which are involved in oil-related development. We had to get the returns from local authorities in fairly quickly because we wanted to get an estimation of the situation. We believe that the figure of £2·5 million in the order is perfectly reasonable. We have had far less complaint from local authorities than we have had from hon. Members. Local authorities appreciate the fact that we are making this special exception. We must maintain a balance of fairness with other local authorities which have special burdens placed upon them which are not provided for in the rate support grant.

Officials from my Department will be visiting the regions and districts within the next few weeks to discuss the figures that have been brought out in the returns we have already received so that we can finalise this provision and make the distribution to the local authorities concerned. If arising from that some changes are required in the scheme for the next year, we are perfectly willing to consider them. We have started in a way which is very welcome to local authorities generally.

I was asked about an increase order for 1974–75 because of Houghton. We have said that we will introduce the order as soon as possible. Hon. Members must recognise that there is likely to be only one further increase order for 1974–75, and if we bring this in too soon we shall not be able to take account of additional items of increased costs which may arise before the end of the financial year. We want to work with all possible speed. We take the point about local authorities standing out a lot of money. We want to include everything we can in the increase order. When we come to increase orders for 1975–76 we shall certainly pick up the Houghton salary, increases and anything else not included in actual expenditure as calculated in November 1974.

I come to the question of distribution. A special transitional element is provided for, in a comprehensive paragraph on page 2 of the order, of £5¼ million which will be a distribution within regions to take account of the fact that under the new distribution formula the position of some regions—basically the Strathclyde Region—will improve and the position of others will worsen.

The transitional arrangements for districts within regions will be arrangements to redistribute the burden within the region and not between one region and another. We have provided for the intraregional distribution by making special provisions in the order. The distribution between districts within a region to take account of the fact that in some districts there will be considerably greater increases than in other districts within a region will be dealt with by an order under the 1973 Act which we envisage—this is subject to continuing consultation with the authorities—will be over three years. The hon. Member for Ayr asked whether I could give details. In the nature of things, since the consultations are continuing, I cannot give details, but the order will be available for debate in the House. I shall be happy then to have the matter thoroughly ventilated.

Mention of the question of consultation reminds me that the hon. Member for Ross and Cromarty (Mr. Gray) complained about consultation generally on the rate support grant this year. In turn I remind him that until last week there was no one local authority association in Scotland representing the interests of the new authorities, which are the authorities concerned with the year 1975–76 for which we are providing in the main order. This has been a considerable embarrassment to us. I am not attributing blame to anyone. I am simply indicating that no blame attaches to the Government. In the situation which we faced we sent out documents to all the new authorities because we thought that that was the most satisfactory way of dealing with the question.

The hon. Gentleman suggested that there was undue Glasgow influence in the local government finance working party. He apparently had the report with him; he seemed to be quoting from it. It is a pity that he did not look at the annex which lists the members of the working party. There was one representative from Glasgow and one representative from the Highlands Region. They are both admirable, conscientious and able members of the working party. But I do not think that the Highlands were outnumbered, any more than the Glaswegians or anyone else were outnumbered.

Will the hon. Gentleman say how many representatives there were from West Central Scotland as opposed to the number from the Highlands Region?

I cannot give the figure. From the counties of cities there were four, from the Convention of Royal Burghs there were three, and from the Association of County Councils there were four. I do not consider that to be an unfair balance between the different regions and districts of Scotland. There was one Glaswegian and one representative from the Highlands. There is a special additional grant for the Highlands in the formula which we are discussing.

The working party took the view, which I strongly endorse, that the previous formula did not sufficiently take account of the special burdens which rested on certain urban areas and produced a net effect in terms of rate burden per head of the population in some urban areas which was unfair to them compared with the rest of Scotland. That is why the changes were made in the formula. It is a direct result of what the working party was attempting to do that the Strathclyde Region, which has more urban areas than have other regions, has gained at the expense of the other regions. That is laid down explicitly in the report, and there is no mystery and nothing sinister about it.

It is also true that the Glasgow district—although judging by the letter I have received it seems to be remarkably ungrateful—does very well out of the new formula. What has happened in the Glasgow district is that to much emphasis is placed on the district situation specifically and in isolation. What the ratepayer has to consider is the district and regional burden combined, because he pays a combined rate. The fact that some grant goes to the district and some to the region is a matter of considerable interest and is dealt with in great detail. The reasons for the distribution formula are explained in great detail in the working party's report. At the end of the day the ratepayer gets one bill, and it is the overall bill that is important from his point of view.

In this formula which the Government have accepted we have deliberately tilted the balance away from rural towards urban areas because we believe it is right and that it gives a fairer distribution of the grant. I should be delighted to debate that matter at length, but that is the specific intention of the formula, and we shall be reviewing the formula again for next year, when these matters can be considered again.

I have dealt with a number of detailed points and most of the general points that have been raised. I repeat that the settlement is extremely generous to the local authorities. It is a well-deserved settlement because we recognise the burdens that the local authorities face in this year of reorganisation, and the special burdens they face in a period of inflation. It is, nevertheless, a generous settlement, and I commend it to the House.

Question put and agreed to.


That the Rate Support Grant (Scotland) Order 1975, a copy of which was laid before this House on 20th January, be approved.


That the Rate Support Grant (Increase) (Scotland) Order 1975, a copy of which was laid before this House on 20th January, be approved.—[Mr. Millan.]


That the Rate Support Grant (Increase) (Scotland) (No. 2) Order 1975, a copy of which was laid before this House on 20th January, be approved.—[Mr. Millan.]