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Proposals For Reductions In Local Authorities' Rates

Volume 24: debated on Monday 17 May 1982

The text on this page has been created from Hansard archive content, it may contain typographical errors.

I beg to move amendment No. 1, in page 1, line 7, leave out clause 1.

With this it will be convenient to take the following amendments: No. 2, in page 2, line 4, at end insert—

`(aA) In subsection (I A)(a)(iii) at end add "and he shall have specific regard for the principles and protection of local democracy in reaching any such decision and".'.

No. 3, in page 2, line 9, after 'grant', insert—

`but any such decision to leave out of account any category of estimated expense or to vary such categories according to whether the proposed reduction under this section is of a rate or of the amount of an element of rate support grant shall be implemented by statutory instrument and such statutory instrument shall have no effect until approved by resolution of each House of Parliament.'.

No. 4, in page 2, line 14, after 'above', insert—

`and is also satisfied that any proposed reduction in expenditure can be achieved by the local authority without the withdrawal or impairment of statutory and other essential services'.

No. 5, in page 2, line 15, leave out 'or in addition to'.

We have objected to clause 1 all the way through. We continue to object to the clause as a further attack on local democracy. We take the view that the Secretary of State already has not just sufficient power but excessive power over the actions of local authorities under the Local Government (Miscellaneous Provisions) (Scotland) Act 1981. That Act gave the Secretary of State the power, which he has exercised in a number of cases, to reduce the rate support grant payable to any individual local authority as well as to impose penalties on local authorities generally. In effect, it forced local authorities, against their better judgment, and contrary, in our view, to the principles of local democracy, to reduce their expenditure and, in effect, to substitute the Secretary of State's judgment for their judgment about what is right in terms of services and rates for their areas.

The 1981 Act was unprecedented in local authority legislation. Until the Government introduced the measure it was always recognised that Governments of the day had a responsibility, and certainly the right, to take a view about local government expenditure, and in particular to take a view about the Government's contribution through the rate support grant to local authority expenditure.

It was also recognised before the 1981 Act that local authorities had the right, once the Government had taken their view, to determine the overall level of their expenditure and what they would levy by way of rates. If that sort of power is not available to local authorities, it is difficult to understand why we have them. Local authorities should exercise their judgment on the most important issues that face them as duly elected bodies.

8.15 pm

Clause 1 extends centralisation. It gives the Secretary of State power to reduce local authority expenditure and the rate support grant. More important, it gives him the power, in effect, to determine the local authority rate, over the head of the local authority and against its wishes. The clause will enable the Secretary of State to substitute a rate that has been fixed by him for the rate fixed previously by the authority. Once we have this power in the hands of the Secretary of State, local democracy as we have known it will disappear. That view is also held by CoSLA. It is not confined to the Labour members of CoSLA. It is held also by the Tory members.

Amendment No. 1, which is the principal amendment, would remove clause 1 from the Bill. However, if that does not happen, certain amendments can be made that will provide some protection for local authorities against the Secretary of State's dictatorial powers.

Amendment No. 2 would ensure that the Secretary of State had regard to the principles and protection of local democracy in exercising his powers when the Bill became law. If the right hon. Gentleman were interested in the least in protecting local democracy the Government would have no difficulty in accepting the amendment. I am not optimistic that he will accept the amendment, because in exercising his powers under the 1981 Act he has demonstrated that he has little regard for the protection of local democracy. However, if we are to have sweeping and unprecedented powers in legislation, qualifications and conditions should be written into it to which the right hon. Gentleman should have regard before exercising his powers, and amendment No. 2 would do just that.

Amendment No. 3 would represent a reduction in the sweeping and untrammelled powers that the Secretary of State has given himself in the clause. When deciding whether to exercise his powers he can decide to leave out certain categories of expenditure and to have regard to other categories. Those decisions will not be subject to any control. When we discussed certain orders under the 1981 Act it was striking that the right hon. Gentleman failed adequately to explain the basis on which he had exercised his powers.

If one reads the local authority answers to the Secretary of State when he first intimated that he proposed to use his powers, one can see—apart from the principle of the thing—that there were considerable differences of opinion between the Secretary of State and the local authorities over what was happening in a particular local authority and why expenditure was on one level rather than another. There were many detailed refutations by the local authorities of the Secretary of State's case, but not one of those arguments was answered by the Secretary of State either in the orders or in the speech that he made in the House.

The right hon. Gentleman has untrammelled powers and he exercised them in a more than capricious, if not malicious, way in 1981. Amendment No. 3 would reduce to some extent the sweeping nature of the right hon. Gentleman's powers.

Amendment No. 4 would insert a requirement to have some regard to the quality of the local services. That is a matter which the Secretary of State continually omits to take into consideration, and which he has omitted all the time to take into consideration in his dealings with local authorities over the past two or three years. We are not talking about some and financial argument which has no effect on the way that ordinary people live. We are dealing with the quality of important, essential services such as education and housing.

In the exercise of the Secretary of State's powers in all the dictatorial legislation that is being put through by the right hon. Gentleman there is no mention of the quality or the level of services and the effect that his action might have on reducing the quality of those services. The Opposition feel strongly that the ultimate decision making in those matters should be at local level, instead of the powers being taken away and arrogated to the Secretary of State, who certainly does not know the local circumstances in the way that the duly elected local authorities do.

Amendment No. 5 would limit the Secretary of State's powers. Under the clause he will have a double power—a power both to reduce the RSG and to redetermine the rate. He can do one or the other, but he can also do both. It seems to me monstrous that with those new powers being taken in the clause all the existing powers will continue and from 1983 onwards the Secretary of State could both redetermine the rate and reduce the rate support grant.

That is a double use of power which I believe is intolerable. Amendment No. 5 would say "If you are to have those dictatorial powers, at least you should use only one and not be able to use them both simultaneously."

Those are the effects of the individual amendments.

I return to some of the more general arguments. The Secretary of State always justified the powers that he tock under the previous legislation—and he is using the same argument for the new powers under this legislation—by saying that local authority expenditure was wildly out of control. It was said that a responsible Government and a responsible Secretary of State were doing the best that they could with Government expenditure, but local government expenditure was out of control.

The Government have a paranoia about local government expediture. According to The Scotsman, Councillor Proudfoot, Tory leader of the Perth and Kinross district council, said at a meeting with the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), who was then Under-Secretary of State for Scotland:
"I think central government has become paranoid as far as local government is concerned".
I am sorry that the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn) is not present to hear the comments of the Conservative leader of his district council. I do not know where the hon. Gentleman is. He is probably invading the Falklands.

The Secretary of State told us in the RSG debate in February that in 1980–81 local government expenditure increased by 1·6 per cent. in real terms. The spending may not be at a level that the right hon. Gentleman finds acceptable, but it could hardly be said to be wildly out of control. In 1981–82 local government expenditure was planned to rise by only 0·2 per cent. in real terms.

There is no question of local authority expenditure being out of control. However, with increase of 1·6 per cent. in one year and 0·2 per cent. the next year, we have to ask why rates went up by 32 per cent. and 36 per cent. respectively during those years.

The Secretary of State tries to pretend that massive rate increases, about which we warned ratepayers on numerous occasions, were the result of local authority extravagance. The truth is that the rate increases have been largely due to inflation and the fact that the Government have cut the RSG in a number of ways, sometimes by cutting the percentage rate and sometimes by inserting phoney figures for inflation and so on.

My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) was told in a recent parliamentary reply that local authorities were budgeting for about £200 million above the Secretary of State's guidelines for 1982–83—about 8·3 per cent. over the guidelines. The ultimate figures may be slightly different, and I understand that, in accordance with what has happened in earlier years, the budgets are likely to be nearer the guidelines.

However, the guidelines are unrealistic. The figures for local government expenditure look so high only because the guidelines are unrealistic. As we and CoSLA pointed out earlier this year, even if local authorities collectively had introduced standstill budgets for 1982–83, compared with 1981–82, taking into account the Government's assumptions of 4 per cent. inflation in wages and salaries and 9 per cent. inflation for other costs, those standstill budgets would be £152 million above the RSG guidelines and settlement.

At that time CoSLA calculated that to reduce its budget to what the Secretary of State wanted in the rate support grant, using his assumptions about inflation, there would have to be a 6·3 per cent. reduction in local government expenditure in real terms in 1982–83. As we said during the rate support grant debate, that will not happen. There is no chance of its happening. The figures have never been denied. If the Secretary of State disputes them, he can deny their correctness later. We said that there was not the slightest hope that the local authority budgets for 1982–83 would come anywhere near the figures that the Secretary of State had assumed for rate support grant purposes.

8.30 pm

While preparing their budgets, local authorities often do not use the Secretary of State's assumptions about inflation. It is just as well that they have not done so. We already know that they have been falsified by events. There is a 4 per cent. rise in rate support grant for salary increases. Manual workers have already been awarded a wage increase of 6·9 per cent. Teachers are to have a salary increase. Of course, the Secretary of State can stop that if he is really serious. We shall see what he does. A 6 per cent. increase has been recommended. If the Secretary of State's rate support grant settlement allows for only 4 per cent. and manual workers have been awarded a 6·9 per cent. increase and teachers a 6 per cent. increase, the additional burden falls exclusively on the rates.

The Secretary of State normally says that the cost can be offset by reducing the number of people employed. Perhaps he will say specifically either that he will not allow the teacher's salary increase to go through or that he will tell local authorities to reduce their teaching staff. That would be monstrous. I do not believe that he will do that. It would be extremely foolish. But if he does not want local authorities to spend money he should tell them to trim their teaching staff accordingly. He does not do that. He and his sidekick the hon. Member for Edinburgh, North (Mr. Fletcher) who is not present, constantly boast about the wonderful teacher-pupil ratios. They fail to point out that we have them only because local authorities sensibly ignore what he tells them to do about education expenditure.

When one takes into account realistic inflation figures, one finds that in 1982–83 local authorities will spend no more in real terms than they spent 1981–82. As I have said, in 1981–82, according to the Secretary of State's own figures, the real increase in expenditure by local authorities was only 0·2 per cent.

All the talk about local government being extravagant and expenditure being out of control is absolute nonsense. In fact, it is more than nonsense. It is a deliberate attempt to put the blame of the Government's failure on to the shoulders of local authorities and to confuse electors into believing that they are suffering because of the inadequacies of local government. Unfortunately, there are hundreds of thousands, indeed millions, of people in Scotland who are suffering. They are suffering from the inadequacies of the Secretary of State and the Government, not from the inadequacies of local authorities.

The paranoia about local authorities goes on. There is talk of a crisis in local government relationships with central Government. There is much talk about alternatives to the rates. We heard from the Under-Secretary of State that the Government have got no further on that matter. He seemed to think that that was all right because before the 1974 general election they only promised to abolish domestic rates. Apparently it is acceptable to say eight years later that they have made no progress. It is a curious argument.

Moreover, the Bill is a further attack on local democracy. Let us consider how the previous powers have been operated by the Secretary of State and what success he has had after all his great—in my view, completely misguided—efforts to make local authorities obey his dictates and act as poodles of the Secretary of State rather than as independent authorities making their own decisions.

In 1981–82, 59 out of the 65 local authorities were above the guidelines by 8·93 per cent. There was a marginal improvement in 1982–83. As we predicted—there is no difficulty in making these predictions as the results are obvious—56 out of 65 local authorities were above the guidelines, so there is not a great deal of difference there.

The Secretary of State has singled out two authorities—Lothian region and Stirling district. I am extremely interested in what will happen in Lothian region over the next few weeks. I see that the Conservative administration there is asking for a meeting with the Secretary of State. I do not know why a meeting should be needed. If the guidelines are perfectly fair and reasonable and the previous Lothian council was rating for £66 million in excess of the guidelines, I do not understand why the new Conservative administration is not aiming not just for £45 million but for £66 million savings. If the guidelines are right, it should be able to achieve that saving.

Even if the Conservative councillors in Lothian achieved a reduction of £45 million, however, according to the guidelines the overspending would be reduced from 22·6 per cent. to 7·3 per cent. Moreover, I do not think that even that saving will be achieved. Now that the Conservatives are trying to run the council rather than just criticising from the sidelines, they will have found that the Labour administration was absolutely right about the effect on services and so on if such massive savings were made. Nevertheless, even if it made £45 million savings, Lothian region would still be 7·3 per cent. above the guidelines whereas the Strathclyde Labour administration is only 4·9 per cent. above the guidelines. Perhaps the Secretary of State will explain how justice operates in that odd circumstance. When the matter was raised at Question Time recently, he said that the penalties had nothing to do with the guidelines. In that case, what are the penalties to do with? And what do the guidelines mean? Will he explain the anomalies in those figures?

I hope that the Secretary of State will not make the claim that he made in Perth at the weekend. We all understand the atmosphere there, of course.

Yes, we all understand what it was like. The Secretary of State—or perhaps it was the hon. Member for Edinburgh, South (Mr. Ancram), the non-Minister who is with us tonight—was explaining how the Tories won the election in Scotland on 6 May. If they keep winning elections like that, we shall be delighted. In the country as a whole, the percentage vote for Labour rose from a margin of 9 per cent. in our favour in 1978 to 12 per cent. in 1982. Even in Lothian region, the Labour share of the vote was 2 per cent. higher than the Tory share—29 per cent. for the Tories and 31 per cent. for Labour. That is no great victory. Nevertheless, the Tories have taken the administration in Lothian. We shall see what they will do with the reduction that the Secretary of State has asked for. I shall be surprised if they can make a reduction anything like that which the Secretary of State has asked for.

My hon. Friend referred to the Secretary of State's address to the Tory conference at Perth. I saw a snippet of that on the television and the message seemed to be that we should not be grumbling because the re t of the United Kingdom is doing even worse than Scotland.

That is an uplifting message. It is so uplifting that I avoid watching the Secretary of State on television, in case I am carried away with enthusiasm over all the benefits that the Government are giving Scotland. The fact is, as we know, that the situation in Scotland, in terms of the economy, employment and the rest is disastrous. I find it extremely offensive, even in the ambience of a Tory Party conference, to have the Secretary of State boasting about what he has done for Scotland when there are 330,000 Scottish people unemployed at the present time.

As I have said, CoSLA has condemned these further interferences in local authority power and we have condemned them as well. We have said, and I repeat, that what has happened in relation to Lothian, Stirling and the rest, cannot even be justified on the basis of the Secretary of State's guidelines. I put on the record once again that if Lothian is 22 per cent. above the guidelines, Orkney is 25 per cent. The right hon. Member for Orkney and Shetland (Mr. Grimond) complained about the situation. He has conveniently disappeared. Orkney council is 25·8 per cent. above the guidelines. The Scottish record is held by Shetland. It is 79·5 per cent. above the guidelines. I shall be interested to know when the penalties will be imposed on Orkney and Shetland. I wager that there will be no penalties on Orkney and Shetland. The Secretary of State would not dare. Why not? I do not want penalties on Orkney and Shetland, or on anyone, but if they are to be justified on the basis of the guidelines, it is scandalous fiat authorities—one could quote many—that are substantially above the guidelines are apparently escaping unscathed. At the moment, Tory authorities are escaping unscathed whereas there is a continued vendetta against the Lothian region. The figures do not justify it.

We are objecting not just to the exercise of the powers but to the possession of the powers. We have been against them from the beginning. We have already committed ourselves to repealing the powers that the Secretary of State took in the 1981 Act. If clause 1 goes through, we shall repeal that as well. This is another scandalous accretion to the Secretary of State's powers and we are absolutely opposed to it. That is why we tabled the amendments.

I am pleased to participate in the debate and to speak after my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan).

I had the great privilege to be a local authority councillor from 1970 until I entered the House in 1979. It grieves me to see some of my former colleagues in local government, who have striven valiantly over the years, many of them working in a voluntary capacity without pay and with a great sense of duty and mission, being beaten down, undermined and thrashed by the Secretary of State. They are still there, working hard and striving to provide decent services.

Surely the hon. Gentleman is not right in that respect. They are not being beaten down; they are being beaten. Was it not the electorate who beat them?

8.45 pm

I think that the right hon. Member lives in the Central region. He certainly does not live in Ayr, his own constituency. I can assure him that if he comes to Strathclyde occasionally he will see that the huge majority that the Labour group in Strathclyde had has now been increased very substantially. He will also find that to be so if he looks in Fife and in Central. With the assistance of the Tory press, he went out of his way to attack and to vilify the Lothian region, yet the Labour Party still managed to get as many seats as the Conservatives. The Labour Party did very creditably in the circumstances. [Interruption.] I maintain that that is so, whatever guffawing we may have from the Tory Benches.

The situation grieves me greatly. There are many people who have gone into local government to do a job and to do it well, but they have been constantly undermined by the Secretary of State, who knows nothing about local government. I do not think that he has had the opportunity of serving in local government. I do not think that he understands it. There are many other Conservative Members who do not understand how local government works.

When I say that people have gone into local government to do a job of work, I am not referring only to Labour representatives. Many of the Conservatives, the independents and others have gone into local government to help build up services. That is why, as my right hon. Friend the Member for Craigton has said, many of the Conservative representatives in local government are greatly disturbed by the way in which their position has been undermined.

This is an important debate, and before I continue my attack on the Secretary of State and his tribe, I want to propose a toast to absent friends. None of the members of the middle party—the odds and sods—was prepared to serve on the Committee. I have noticed that in this debate, apart from an odd Liberal—a very odd Liberal—from time to time, none of the Social Democrats has been present.

The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) was supposed, at the time of the by-election, to be the great saviour of Scotland. I award him the title of damp squib of the decade. Not only has he failed to make any impression on national or United Kingdom issues; we have seen no evidence of him in Scottish debates speaking for the people of Glasgow or the people of Scotland—except on one issue. In the Scottish Grand Committee he made a fantastic, wonderful speech about taxis. That is the only contribution that we have had from the right hon. Member for Hillhead—the man who sets himself up and who was set up by the media as the great saviour of Scotland. He was to be the symbol of the new renaissance in Scotland. Before the month was out, we were all to be drinking claret till the cows came home. What have we seen from him? Nothing. He is the damp squib of the decade.

My right hon. Friend was right in what he said about Lothian. We shall watch very carefully, over the next few weeks, the actions of Convenor Meek and his colleagues. It will be very interesting to see what happens. I know Brian Meek very well. He has already asked for a meeting with the Secretary of State. My right hon. Friend asked "Why does he need a meeting? Why does he not do his master's bidding? Why does he not do what the Secretary of State is telling him?" We know why Brian Meek is not doing it. Brian Meek knows as well as everyone else that the guidelines are unrealistic, arbitrary and meaningless. He knows that as well as the hon. Member for Edinburgh, South (Mr. Ancram), who is sitting there on the Tory Benches grinning. Brian Meek knows that these are arbitrary guidelines. That is why he needs a meeting.

Brian Meek needs a meeting in order to say to the Secretary of State "You asked us what we were doing. We have to tell you truthfully"—probably the meeting will be in private—"that what the Labour administration said to you was pretty well right—that in order to achieve your guidelines we shall have to have major reductions in services, we shall have to increase fares in Lothian regional transport substantially, and we shall have to have redundancies. They will not be just voluntary redundancies. If you press us to follow your guidelines there will have to be forced sackings as well."

The hon. Gentleman speaks of enforced redundancies. Can he say, when £30 million was removed from the Lothian budget last year in November within a six month period, how many redundancies, enforced or voluntary, were caused? I think that he will find that there were none.

If the hon. Member examines the facts he will find that there were redundancies and cuts in the number of services.

As my hon. Friend knows, the cuts were made last year by allocating only £6 million in respect of staff cuts. It was therefore possible to meet the figure by natural wastage of over 2,000 jobs. That was only because Lothian confined its cut on staff to £6 million. There is no chance of that this year.

I am grateful to my hon. Friend. I want to go on to deal with that £30 million cut. I shall do so not by quoting myself, or by making statements which Conservatives might believe were politically motivitated, even should they give me the benefit of the doubt. I shall quote from an old sparring partner of mine, a chap with whom I have disagreed on many occasions. He used to sit across the table from me in the discussions that we had in the Lothian regional council when I was there, about teachers, salaries, conditions of service and all the questions of education.

The person concerned is Mr. Henry Philip, the well-respected head teacher of Liberton high school in the constituency of the hon. Member for Edinburgh, South. The hon. Member will know how well-respected Mr. Philip is. He will know that Mr. Philip is the chairman of the Lothian Educational Institute of Scotland regional executive and has been active on the national EIS as well. He talks about the Lothian cuts in a letter that he wrote to The Scotsman on 4 May. He says:
"Because there has been no replacement of staff … headteachers have been unable to guarantee class continuity of teaching … children have been deprived of certain subjects".
One of the great deprivations has been in language teaching. There are now serious inadequacies in language teaching in most of our local authority schools. Most of the minority languages are almost extinct because of the cuts.

The letter goes on to say:
"Children have had to learn without textbooks and teachers have had to scrounge old computer paper when stocks and jotters ran out. Windows have not been replaced, damaged roofs and ceilings have gone unrepaired, heating has been substandard, rooms have gone uncleaned and there has been no routine maintenance which, as all householders know, will result sooner or later in a massive bill for serious structural defects".
That is what is happening with the cuts that have already been imposed, before we get to the cuts that will be imposed this year. There will be great damage to the fabric of our educational establishments.

Mr. Philip goes on to give some of the facts and figures that have already been given about the inadequacy of the allowance for inflation, and to criticise what the Government have done. This is outside criticism, not from the Labour Party but from somebody desperately concerned about the educational service. Mr. Philip finishes by saying:
"Sadly, I have come to the conclusion that Mr. Younger thinks that the education of ordinary children is not important and, because the excellent educational provision in Lothian has shown up the serious inadequancies in other regions which have tried to follow his dictate, he has decided to cut Lothian down to their level.
I would hope that all those who realise that the future of this country depends on the education of the young would not let him get away with it."
I hope that when we have the next opportunity to ensure that the Secretary of State does not get away with it, Henry Philip and all the other teachers, all the social workers, the dustmen and the old people who rely on the services that Lothian and other regions provide will not let him get away with it, and will ensure that the Secretary of State and his tribe will not return.

The Secretary of State and his tribe look after their own. While these cuts are taking place, because of the dictate of the Secretary of State and the Conservative Government, affecting ordinary children in local authority schools, his children and their children are well looked after. Their children in the private schools are getting more and more money. Their children are getting £800,000 extra in the assisted places scheme. Their children are getting £2 million in rate relief assistance. Their children are well looked after in their schools. No cuts are being made in the private schools because of the extra assistance given by the Government.

I find it appalling to see the penny pinching that is going on. We are talking about only hundreds of millions of pounds. In normal parlance, in the budgets of individuals, that is a great deal of money, but it is not a great deal of money in national budgets. After all, it seems to be perfectly possible to find out of thin air, not hundreds of millions of pounds, but thousands of millions of pounds to send the infernal task force to the South Atlantic in pursuit of some way to mend the hurt pride of the right hon. Lady the Prime Minister. That, basically, is what it is about. Even in the ordinary Budget, the latest predictions for the public sector borrowing requirement show that it will be £2 billion below the estimate that the Government gave. Why then does the Secretary of State continue to squeeze these vital services in the local authorities? On that basis, there is no justification for it.

I want to deal with a local authority that is a little nearer my home and my constituency, and a little nearer the constituency of the Secretary of State. Last year, the Secretary of State and his advisers made a bloomer. They put Cumnock and Doon Valley district council on the hit list. When they went into the matter in detail, instead of just looking at the league table, they found that they were wrong, and discovered that Cumnock and Doon Valley was not an overspending authority. Cumnock and Doon Valley gave the Secretary of State a detailed answer. In the end, the Secretary of State had to admit that he was wrong, and he withdrew the authority from the hit list.

On the basis of the guidelines published the other day in The Scotsman, there appears to be a prima facie case for Cumnock and Doon Valley to be on the hit list again. The Secretary of State would be equally wrong, equally misguided and equally stupid if he put it on the list, and at the end of the day he would again have to retract. He misunderstands the way in which the budget is drawn up by Cumnock and Doon Valley. Its budget is drawn up slightly differently from the method adopted by Lothian region and in most other authorities. The apparent figures of excess over guidelines, given in the article in The Scotsman, is therefore misleading. If the Secretary of State examines the accounts and projected figures of Cumnock and Doon Valley, as I have done, he will find that they are far from being over the guidelines. The authority is extremely prudent and reasonable. In fact, it seems almost too reasonable and prudent in its budget for the current year. So I hope that the Secretary of State will proceed carefully, and not act just on the basis of raw figures of excess over guidelines, as shown in the table.

The Secretary of State continually tells us, on some kind of spurious basis, that he has the support of the public for this vicious attack on local authorities, and that somehow he has a mandate for it, because at the last election the Conservative Government were elected on this as part of their platform. Apart from the important fact that the Conservative Government obtained no mandate in Scotland—the hon. Member for Dundee, East (Mr. Wilson) wanted me to make this point, but I make it because I want to do so—if we had had the Scottish Assembly that we should have had, the Government would not have had the opportunity to introduce this Bill. There would be none of this ridiculous unauthorised pushing of local authorities in Scotland.

We must look at what might be considered a fairly reasonable analysis of whether the Government will have any support at a general election, or even at local elections. We know that there are many factors that decided the way people vote. I am sure that many people did not vote in the general election or, I fear, in the recent local elections, on the effects of this clause or on the Government's general policy towards local authorities.

9 pm

The Scotsman did us all a favour in producing the MORI poll on Tuesday 4 May. The poll showed that the Government does not have the support of the people for their policy of bashing local authorities. The article states:
"It does not seem either that the Government have won overwhelming support for themselves in their battle to control the spending of local councils. Over Scotland as a whole, 48 per cent. of voters disapprove of the Government's actions, against 39 per cent. who approve."
The article continues that the poll did not find approval even in the Lothian region, where the issue is perhaps heightened more than anywhere else. We were talking earlier about raising money for the funding of local government. I therefore draw to the Under-Secretary of State's attention the next extract from the article. It states:
"There is, however, a persistently high degree of popular loyalty to the concept of local government—82 per cent. of Scots say they prefer local services to be controlled by elected local council rather than by central government."
The vast majority of people believe in local government and want decisions regarding their services to be made locally. That is the message that comes strongly from the poll, and on every other occasion. Since that is the message, we should accept my right hon. Friend's amendments and defeat the Government who are constantly berating, undermining, and attacking the local authorities and councillors who are elected to uphold services and local democracy and whom the Opposition support.

I always hate to question The Scotsman, or, indeed, opinion polls, but I should have thought that the hon. Member for South Ayrshire (Mr. Foulkes) might have decided that the most conclusive opinion given in Lothian region over the past three months was not that of the opinion polls but the result of the elections. It is amazing to hear his claim of victory. There is almost a cry of "We wuz robbed" from the Opposition. One fact was absolutely clear from the result in Lothian. The total vote against Labour in that region shows that Labour was comprehensively rejected. The electors of Lothian made certain that the type of confrontation that we have seen in local government, deliberately motivated by a Left-wing band of councillors, was conclusively ended.

Will the hon. Gentleman confirm that the Labour Party polled 2 per cent. more votes than the Conservative Party in the Lothian region?

This is a semantic argument. I was elected to the House in February 1974 in the seat presently held by the hon. Gentleman. I was faced by a Labour Government when the Conservative vote at that election was 1 million more than the Labour vote. We can argue until the cows come home, but the simple conclusion drawn by the electorate at Lothian—I shall not be drawn into the argument for electoral reform by the minor parties who have returned to the fray—is that they have had enough of that type of confrontation and they voted accordingly.

I had not intended to speak, because I thought that I had already spoken often enough on this subject. However, I was provoked into speaking by some of the remarks made by the hon. Member for South Ayrshire. I was provoked not by his totally unworthy remark about the Prime Minister's motives in sending the task force, but by other remarks that he knows—as an ex-Lothian regional councillor—are so selective as to be unworthy of rational discussion.

The hon. Member for South Ayrshire said that in addition to last year's cuts, more cuts would be imposed this year, which would make the position worse. He knows as well as I do that the cuts are made within the annual budget and that the cuts made last year were made for that year. They are not additional to the cuts to be made this year. If £30 million was taken off last year, and if £30 million is taken off again this year, on an equivalent budget—which it is not, because there was a degree of increase in it—the expenditure would be the same. The cut is not additional and will not create more difficulties than last year.

The hon. Member for South Ayrshire cited a headmaster in my constituency, Mr. Philip. I know him well and I have had many discussions with him about educational cuts. The hon. Gentleman quoted a letter that Mr. Philip had written to The Scotsman, which was another interesting bit of special pleading. I do not know why the hon. Gentleman decided to set up Mr. Philip as someone who was, if anything, across the table from him. To suggest that Mr. Philip, as the chairman of the Lothian Educational Institute of Scotland, is somehow apolitical, is to suggest that Mr. John Pollock, the general secretary of the EIS, is a Conservative. I am sure that the hon. Gentleman would not suggest that.

In that letter, Mr. Philip was selective because, although he spoke about the effects of the reductions made last year on educational provision within his school, he did not mention educational administration. He failed to mention that Lothian region still, amazingly, has more people administering education than teaching in the classrooms.

That is not true. The EIS is not affiliated to the Labour Party. Many people, at all levels of its ranks, are members of parties other than the Labour Party. Regrettably, far too many are members of that funny Social Democrat lot. The hon. Gentleman keeps repeating an error. I have corrected him before and I can only assume that he is repeating it mischievously. He claims that those in administration outnumber those teaching. That includes cleaning ladies, dinner ladies, technicians, janitors and so on. They are not administering education, but are providing essential services in our schools. They are fed up with being denigrated by the hon. Gentleman.

I am not surprised that the hon. Gentleman should take that line. After all, he was the architect of that system within Lothian and it is he—and not the regional councillors, of whom he spoke so highly, and who were recently defeated—who bears responsibility for the situation that existed within the education authority in Lothian region. He bears as much responsibility as anyone else for the high rates imposed on Lothian region in the past four years, even if he was not there. It falls ill from his mouth to make such comments. He knows that anyone who has had the responsibility that he has had should be careful about how they later apportion responsibility for the things that go wrong. Therefore, I hope that we shall hear no more from the hon. Gentleman on that matter.

I shall not give way. I shall conclude on a more serious point. The right hon. Member for Glasgow, Craigton (Mr. Millan) described the legislation as dictatorial. It is not mandatory, but enabling. If the Secretary of State wishes to impose an order under the clause, he must return to the House to seek its approval. That will not happen automatically and now that the one highly irresponsible authority in Scotland has changed, the Secretary of State is less likely to have to return to the House. I am thankful about that because I have never enjoyed the confrontation between local and national government during the past three years.

It is important for us to realise that the Secretary of State, quite rightly, is asking for a power to be made available—for which he must receive the consent of the House of Commons—so that the electors of a local authority area need never again suffer rate rise after rate rise as the people of Lothian have suffered during the past four years.

I hope that one thing that will happen as a result of the local elections last week is that, during the next four years, local government in Scotland can once again enjoy the general co-operation with national Governments that it enjoyed previously with Governments of both parties and as a majority of local authorities have enjoyed cooperation with the Secretary of State during the past three years. I hope that it will remove the confrontation and allow local authorities to know that if they go too far, deliberately seek confrontation or put party politics above their electors, this Secretary of State and this Government will not stand by idly and see the electors suffer. For that reason, I welcome this legislation and I hope that the House rejects the amendment.

My hon. Friend the Member for South Ayrshire (Mr. Foulkes) pointed out earlier that the Secretary of State for Scotland has never served on a local authority. The same is true of the hon. Member for Edinburgh, South (Mr. Ancram). His idea of a public school is somewhat different from mine. I went to a State school and I suspect that, when the hon. Gentleman talks about public education, he is referring to the private sector.

I wish to return to the substance of the amendments moved by my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan). If the Government are so keen to do good for the ratepayers as they keep telling us, it would be far better to sustain a higher measure of central Government support for local authorities. For example, if we take Glasgow district, had the rate support grant remained at its 1979–80 level of 41 per cent. in 1982–83 the ratepayer would be 13p better off. That is the measure of the shift in the allocation that is given by central Government to local authorities. In Glasgow during that period there has been a reduction in central Government support from 41 per cent. to 33 per cent., which means that the ratepayers must pay a larger proportion of the burden of sustaining local authority services.

The Secretary of State appears to wish to have a double-edged razor. With one cut, he wishes to lower the rate support grant, as many of his predecessors wished. But he now wishes to have a second blade, so that he can reduce the rate that is levied by the local authority. That is a significant intrusion into the powers of local authorities. Had the Government really been keen to improve the position of ratepayers, they would have produced a much more positive Green Paper before the new year. As it is, the consultative document offers very little prospect of improving the position for industrial firms and commercial organisations and little prospect of assisting domestic ratepayers.

9.15 pm

When I examined a previous Conservative Government Green Paper, published in 1971, it struck me that one significant difference was that there was less emphasis on the prospect of agricultural rerating because, of course, the Government do not want to upset the farmers. If the Government persist in seeking rigidly to control local authorities they will get into as big a mess as they have with their national housekeeping. The Government provide little cause for believing that their ability to handle expenditure and services at the local level will be any better.

This is information technology year and we spent most of the afternoon discussing new technologies. It seems that the Secretary of State wants the newly elected regional councillors and the existing district councillors to sit at the computer terminals and more or less approve all the printouts from New St. Andrew;s House. This is his idea of how local government in Scotland should operate. He wants, more or less, to put the words into the mouths of councillors.

One can see all the usual moves toward quick-spend projects as the Government become a little more nervous about unemployment increasing. In the meantime, we have to go through this Gilbertian phase when the Secretary of State assumes the role of the Lord High Commissioner. He has a little list and no doubt——

Perhaps the events this week at the General Assembly caused me to make that inadvertent slip. There might come a time when the Secretary of State becomes the Lord High Commissioner—we cannot tell.

At any rate, the Secretary of State is not thinking of ecumenical matters now. He is more concerned with clobbering the local authorities. I suggest that when the Manpower Services Commission has just published its youth group report and when the Government are seriously considering how they will cope with the employment training of the 16 to 17-year-old age group the way in which the Government are examining manpower is developing into a nonsense. On the one hand, they are telling local authorities that they should reduce the level of their manpower and decrease the number of permanent jobs—either through natural wastage or, as is likely;to happen, through the "wedge" of redundancy. On the other hand, they are saying that we should spend more money on special programmes to sustain projects that would often rank as lesser priorities were it left to the local authorities to draw up the priorities. At the end of the day, the jobs created are only temporary jobs; they are not permanent.

There exists an inconsistency in the Government s manpower policy and it is one that the Secretary of State, wearing his other hat as the Minister responsible for employment in Scotland, should seriously consider. We cannot go on destroying permanent jobs to create the illusion of employment through impermanent jobs on special programmes.

When talking of guidelines we give the impression that we are discussing scientific measurements, understood by central Government, local authority officials and elected councillors. Nothing could be further from the truth. Apart from the creation of the new client groups under the new formula for rate support grant, a new language is developing. I understand from people who are informed in these matters that "smoothing", "stability" and "specific cost variations" are involved. That is the new terminology introduced so that the Government achieve their required result. There can be no statistical error by which a local authority is able to scoop out of the pool. According to the new terminology the Government must be able to alter the figures so that they suit them.

We spend much time bandying words about local authorities. We tell them what they should do but Scotland has been relatively well served over the generations by its local government system. In Scotland local government matters more than it does south of the border simply because of the range of services that local government is obliged to provide.

I hope that the Government will address themselves more to a reform of the way that resources are allocated to local authorities. Too often we consider only the structure of change in local government. The Labour Government were mistaken in simply asking the Wheatley commission to examine the structure of local government, thinking that that could be compartmentalised without taking into account the equally important aspect of ensuring that the resources are available to local authorities.

Local authorities will be able to master the services that they provide and operate them more effectively and in a more stable way only if the Government ensure that they are sufficiently funded so that they can raise the bulk of the cash themselves instead of relying on Government arbitrarily determining each year the amount of rate support grant and the way that it is funded. The Government promise a reform of local government in the foreseeable future. They should, therefore, withdraw clause 1 in the meantime.

I am grateful to my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) for mentioning the link between the cuts imposed on local government by the Secretary of State and jobs. It makes a farce of the Government's exercise in local government expenditure. In real terms local government expenditure is not wildly out of control, but, increasingly, Government expenditure is wildly out of control. One of the reasons is rising unemployment. Each time that the Government cut local government services, despite what the hon. Member for Edinburgh, South (Mr. Ancram) said, further unemployment is created, even if it is by natural wastage or voluntary redundancy. The Conservatives have consistently failed to recognise that every time a person leaves a job, and the job disappears, someone in the pipeline does not get that job. It means that someone is unemployed. It may not be the person who has lost the job, but someone down the line who has lost a job as a result of natural wastage.

The Government are cutting essential services in local government. Those who operated those services are being declared redundant or are leaving and are not being replaced. The Government are transferring that expenditure into the national purse for the payment of unemployment and social security benefit. The Government are not saving any money by cutting local government expenditure. They are transferring it to another part of the public purse.

The hon. Member for Edinburgh, South attacked my hon. Friend the Member for South Ayrshire (Mr. Foulkes). He thought that he was attacking my hon. Friend for what he did as convenor of education in Lothian region. Most of my hon. Friends think that he did a remarkably good job.

I did not hear my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) say "Hear, hear."

My right hon. Friend the Member for Glasgow, Craigton (Mr. Millian) may, when he was Secretary of State, have had difficulty with my hon. Friend when he was convenor.

The hon. Member for Edinburgh, South used that attack on my hon. Friend to get out of answering the question that he had asked. When the hon Gentleman says that there are more people in administration in Lothian region than there are teachers, he includes in those figures large numbers of essential workers. If the hon. Gentleman was referring to middle management in industry, would he tell his voters who work in management in private industry that they are administrators and quite useless in the general running of industry? Of course he would not. The hon. Gentleman is using false figures to try to create a gain and to build and feed upon his paranoia about a Labour-controlled Lothian region.

I assure the hon. Gentleman that I had no intention of attacking his hon. Friend. The day that that happens he will know about it. In view of what he says about the necessity to have more non-teaching staff than teaching staff in Lothian region, is he making strong representations to the Labour-controlled education authority in Strathclyde region, where the figures are very different?

I am not. Different education authorities work in different ways. I have heard the same complaint made by the hon. Gentleman;s Conservative colleagues in Strathclyde region about the administration of education in Strathclyde. It does not stand up to close examination. One must have administration. One must have cleaners, janitors, school meals ladies and so on if an education system is to operate. Lothian region has one of the best—probably the best—teacher-pupil ratios in the whole of Scotland and probably in the whole of Britain.

It was the hon. Gentleman who complained about the lack of teachers in Lothian region, not I.

That is the sort of myth that is being perpetuated. It is paranoia. My right hon. Friend the Member for Craigton was right when he said that the Secretary of State was suffering from paranoia about the Lothian region to the extent that we had a remarkable Conservative Party political broadcast—I did not see it, but I have been told about it—on the eve of the local elections in Scotland on 6 May. I gather that the Secretary of State spent the first few minutes of his broadcast praising a Labour-controlled authority in Strathclyde region. He did that so that he could make his usual attack on Lothian region.

The party political broadcast was not about Conservative aims in local government or what they were trying to achieve. I gather that it was merely another paranoic attack upon Lothian region. It must be accepted that paranoia is a mental illness and that those who suffer from it should not hold high offices of State.

9.30 pm

I agree with my hon. Friend. The right hon. Lady should not be holding a high office of State, especially when she finds it more exciting to talk about war than providing services for the British people, which is what she did at the Conservative Party conference at Perth. It is disgusting that anyone finds war more exciting than the welfare of the people. However, that is the impression that the right hon. Lady gave on Friday night. Some of us heard her while watching television and know exactly what she said.

The hon. Gentleman should have heard the whole of my right hon. Friend's speech.

Order. I think that the debate is running rather wider than the contents of clause 1. I think that we should return to the amendment.

I was about to say, Mr. Deputy Speaker, that the clause constitutes another attack upon local democracy in Scotland. Throughout the three years that the Government have been in office there has been a continuous attack upon those who run local government in Scotland. Local councillors of all parties, including the very few Social Democrats in Scotland, all feel that the Government are attacking them and removing their powers. They have introduced a series of Bills to try to curb the power of local government.

It is clear that the Government's intention is to curb one region within Scotland. Now that the Secretary of State's party has gained control of Lothian region, following a small change as a result of the recent local elections, the right hon. Gentleman might start to withdraw some of the legislation that the Government have introduced. He may feel that he has achieved his ends.

Many of us feel that Lothian Conservatives will overspend. If that happens they, too, will face the risk of being penalised by the right hon. Gentleman by means of clause 1. They will find that they cannot cut expenditure to the extent that the right hon. Gentleman wishes. If they do not cut it to the same level as other regions, the right hon. Gentleman will find it extremely difficult—I hope that his hon. Friends will take this into account—to penalise any other district authority in Scotland.

Today The Scotsman has issued a list of the excess over guidelines spending of authorities. The Secretary of State issues the guidelines and the local authorities do not have much of a say. Which authorities will the right hon. Gentleman penalise? I have already referred to Stirling and Lothian. Presumably Lothian will come off the hit list following the change of control as a result of the local elections.

The Lothian region's excess over guidelines spending was 22·5 per cent. There are other district authorities—for example, Aberdeen, with an excess over guidelines spending of 22·1 per cent.—which run Lothian close. The spending of Skye and Lochalsh amounted to an excess of 21·6 per cent., which again was very close to the Lothian figure. Sutherland's expenditure amounted to an excess of 22·6 per cent., which was even higher than the excess of the Lothian region.

I note that the right hon. Member for Greenock and Port Glasgow (Dr. Mabon), an SDP Member, has joined us. Surely the hon. Member for Caithness and Sutherland (Mr. Maclennan), who is also an SDP Member, should be here. It is clear that the Caithness and Sutherland district council might be on the right hon. Gentleman's next hit list of the local authorities that he is to penalise.

The right hon. Members for Glasgow, Hillhead (Mr. Jenkins) and for Greenock and Port Glasgow manage to pop in for a moment or two. They are not interested in local government in Scotland. They do not seem to care what happens. It is no wonder that the people of Scotland voted for so few of their colleagues in the local elections. It is apparent that they do not really care about local government. Aberdeen is one of the local authorities that it is suggested might be on the hit list. If one hits Aberdeen, why not Orkney and Shetland? The excuse given for Shetland in particular is that the oil related industries create problems. It has to spend over the guidelines to cope with the problem. That is true of Aberdeen also. It has problems of coping with the oil industry, housing and other services that it has to provide. Which one of those is now on the hit list? If the clause goes through, what rates will be decided by the Secretary of State?

I have heard many people—journalists and even some people in local government—say, "What a charming man the Secretary of State is. He always sits and listens to what we say. He smiles gently and quietly at us." He apparently occasionally gives them a drink or a cup of tea. There is a Shakespearean quotation that I think fits the Secretary of State to a T. It is that
"one may smile, and smile, and be a villain".
That is the Secretary of State for Scotland in terms of local government. He is taking dictatorial powers. He is determining what local government shall be. It is no longer a matter of local democracy with the people of the areas deciding. It is down to him—a tinpot dictator of the worst order.

A number of hon. Members have addressed themselves to the position in Lothian in the light of the local government elections. I wish to comment on that, but I should like to preface what I say with the observation that I think that it is a sad debate in the sense that we are debating something important, the clauses that provide for the suppression of local government in Scotland. I choose those words with care. Since we had the Second Reading debate, there has been published a historic document in the context of Scotland's social development, "A time to listen—a time to speak out" by CoSLA. I have no doubt that it has been quoted frequently in Committee, but I should like to mention two sentences from it.

"The Scottish Office is no longer prepared to undertake meaningful discussions with the Convention. In recent years, there has been a systematic devaluation of the role of consultations. These have now in many cases been reduced to pointless ritual."
That is a terrible indictment of any Government since it is a document that is representative of Scottish local government and is endorsed by representatives of the Tory Party as well as the Labour Party. It is time for the, Government and the Secretary of State to think carefully about the road that they are determined to tread. I say unequivocally that the Tory Party will live to regret what it has done with the legislation. I hope that we shall see the early return of a Labour Government, because the Labour Party and my right hon. Friend the Leader of the Opposition have made it clear that they will repeal the legislation and restore democracy to local government.

I return to what has happened in Lothian. I suppose that the Secretary of State feels that his party has achieved a victory and that he deserves a share of the credit. As the Labour Party no longer controls the regional council the right hon. Gentleman's feeling may be justified.

However, we are only at the beginning. The conclusions to be drawn from the confrontation between the council and the Government will be assessed only after we have seen what happens between the Government and the new council which is controlled by the Conservatives and their allies.

There is no doubt that cuts will be made. I regret that the Labour Party no longer controls the council, but, given that councillors have no scope to take independent decision, it is as well that the cuts will be made by Conservatives rather than by Labour councillors. I assume that the council has complete freedom to decide where to make the cuts, that there is no change in that regard and that there will be no suggestions or guidance from the Secretary of State.

Much nonsense has been spoken about the regional council being unreasonably alarmist about the Secretary of State's cuts. That is not true. The Labour Party has had thrown at it the accusation that we claimed that thousands would be made redundant if the Secretary of State went ahead with his policies. In fact, no one has been made redundant and staff savings have been achieved by natural wastage.

When the council submitted its considered response, which was debated in the House, it was on the basis of the Secretary of State's initial proposal of £53 million of cuts. Secondly, the council's officials made the reasonable assumption that the cuts would be made pro rata across the board and that as staff costs represented 70 per cent. of total costs the staff would bear 70 per cent. of the cuts.

In the event, neither assumption applied. The £53 million was reduced to £30 million. I am glad that the Secretary of State agreed to that reduction, but it must be accepted that there is an enormous difference between the two figures and that the final £5 million or £10 million of cuts are the hardest to make. The second assumption was not fulfilled, because the council, to its credit, went to great lengths to avoid redundancies. I hope that the new council will do the same and that there will be no compulsory redundancies.

It is unfair to criticise the council in that regard. It had to make cuts and we are now paying the price for them. I hope that Conservative Members in Edinburgh are getting as many complaints as I receive from my constituents whose children are having their education dislocated because of the freeze on staffing in Lothian.

I put another point to the Secretary of State and I hope that he will answer it squarely. I assume that the considerations that led the Secretary of State to conclude that Lothian region should cut its expenditure by £45 million are not altered by the result of the election. I assume, therefore, that the magnitude of that cut has nothing to do with the means by which Lothian regional council chooses to make that cut. I assume also that the size of the cut will not be altered in any way because the council now happens to be controlled by his Conservative allies, supported by the Liberals and the SDP.

It was quite wrong of the Secretary of State to intervene and make his announcement during the elections. Perhaps he felt that the Labour Party had a good chance of retaining control and that it was essential to get the matter on the record before the election. Perhaps he felt that he could influence the outcome. I am not sure that it did.

9.45 pm

We want two assurances from the Secretary of State—first, that Lothian regional council will be free to make the cuts in the way that it chooses; secondly, that the magnitude of the cuts will not be influenced by the political complexion of the council.

There will be a real reduction in the level of services in the region. Many of the electorate, some of whom voted for Conservative councillors, will resent and oppose that. There is no way that anything like £45 million can be cut from the Lothian regional council's budget without there being severe effects on both the staffing of the council and, above all, the level of services provided for the benefit of the people in the region.

I was not fortunate—or unfortunate—enough to be selected for the Standing Committee that dealt with the Bill. If I had, I should have been tempted to table at least one amendment to change the title of the Bill to the Destruction of Local Government (Scotland) Bill. If the Bill is passed, it will be another nail in the coffin of local government in Scotland and another nail in the coffin of local democracy in Scotland.

I intervene simply to say that I tabled an amendment in Committee on the lines that my hon. Friend suggested. It was that the short title of the Bill should be altered to the Abolition of Local Government (Scotland) Bill. Unfortunately, the Chairman did not select it.

I am grateful to my hon. Friend for that information. It just goes to show how unfair so-called parliamentary democracy is. Whatever unfairnesses exist in this place and in the Committees of the House, they are as nothing compared with the unfairnesses and injustices that the Secretary of State is now trying to inflict on local government in Scotland. Nowhere is that more clearly seen than in clause 1, which we seek to delete.

Traditionally, central Government, either through the Secretary of State for Scotland or, south of the border, through the Secretary of State for the Environment has had powers to influence local government or even to intervene to some extent in local government decisions. That is not new. However, since the Tory Government came to power there has been an erosion of the freedom of duly elected councillors, representatives of the people, many of whom have a better mandate than the Secretary of State and his colleagues. They now find themselves being bulldozed and streamrollered so that, if the Secretary of State has his way, they will be reduced to mere puppets with himself as the central dictator.

At about this time last year, we were discussing the Local Government (Miscellaneous Provisions) (Scotland) Bill. We saw then what many Opposition Members described as a very dangerous precedent. Previously, Government, with parliamentary approval, had the right to influence local government finance by determining not just the overall level of rate support grant but the distribution of rate support grant in consultation with the local authorities through CoSLA. Last year, however, an unfortunate precedent was created. The Secretary of State not only took extra powers to propose to Parliament at the beginning the amounts of rate support grant to be allocated both totally and to individual authorities but thereafter took extraordinary powers selectively to reduce the amount of rate support grant for local authorities that he decided were guilty of excessive spending.

We warned at that time that this might be the first phase in the Secretary of State's quest for additional powers. In other words, the Tories are adopting new tactics. Instead of clobbering the trade union movement all at once, they are bringing forward a series of anti-trade union measures. In the same way, instead of clobbering or indeed killing off local authorities with one blow, they are inflicting what could almost be described as death by slow torture. Last year we had the Local Government (Miscellaneous Provisions) (Scotland) Bill and now we have the Local Government and Planning (Scotland) Bill. If the Secretary of State manages to get this on to the statute book, no doubt he will try to come back next year with further measures to erode what little freedom remains to local authorities.

Fortunately, however, the Secretary of State is unlikely to have the chance to do that next year. It is to be hoped that a general election will take place before then, and no doubt my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) will then be Secretary of State for Scotland—that is, if I do not get the job myself. At any rate, there will be a Labour Secretary of State who will be able to undo much of the damage caused by this rotten legislation.

As my hon. Friend the Member for South Ayrshire (Mr. Foulkes) and others whose experience in local government in Scotland has been far greater than my own have said, many people who have given a lifetime of service to local government in Scotland are now absolutely sick to the teeth. Initially, they thought that they were elected to maintain and improve services, but they now find themselves in an almost hopeless position in which the Secretary of State is trying to turn them into puppets who will simply administer cuts in essential services rather than maintaining or improving them.

The ever-worsening effects of Government dictatorship is apparent in this legislation. Not content with the extraordinary powers that he took last year to interfere with the level of rate support grant, the Secretary of State, through clause 1 which we seek to delete, is now taking power virtually to determine the level of local authority rates. I challenge him to suggest a greater infringement of the power of local government.

What is the point of giving local government the power to raise revenue and to decide how that revenue is to be spent if the Secretary of State stands over it like a big brother saying "You cannot do this, you must do that. You must not spend your money on this, you must spend it on that. You must sell your houses, irrespective of the needs of the local community."? That kind of dictatorship, by means of legislation that forces councils to sell their houses or that interferes in local finance, makes it almost impossible in many instances for people in local government to continue to do the job that they were elected to do.

What is the point of having local authority elections? Soon there may be almost no point at all in having local government. In the elections held earlier this month it was interesting to see that many seats went uncontested. Is it any wonder, when the Secretary of State does not give people who serve in local government enough elbow room to fight for the people that they are elected to represent? Some good people might have been inclined to enter local government but, because of the discouragement of the Secretary of State, they now say that it is not worth the candle. They may decide to work hard behind the scenes and perhaps even to use extra-parliamentary means to get rid of the Tory Government.

Will my hon. Friend agree that the argument that local government democracy has little appeal to the Government has some validity if one looks at the election results? They clearly demonstrate that nobody votes for the Government, anyway.

Certainly very few. Even in Lothian, which the Secretary of State hoped to win by an overall majority because of his cheap electioneering gimmick prior to the election, the Tory Party got only a minority of seats and a minority of the votes cast.

May I turn nearer home, to Stirling district council, which covers part of my constituency? The same day that the Secretary of State announced a cut of £45 million in the rate support grant for Lothian, he also announced a cut of £1·5 million in the rate support grant for the Stirling district. That comes over and above what happened last year when Lothian regional council was one of those singled out for special hatchet treatment by the Secretary of State. Stirling district council was also one of those singled out for special hatchet treatment. At that time the Secretary of State reduced the rate support grant to Stirling district council by £700,000.

I remember trying desperately to organise meetings to have some form of negotiation and consultation on the matter between the Secretary of State and the council representatives. My hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) joined me. However, despite the Secretary of State's local knowledge—he lives there, or at least he has one of his houses there—he refused to meet council representatives to discuss what he intended doing regarding the council's finance. Eventually, after much persuasion from my hon. Friend the Member for Stirling, Falkirk and Grangemouth and myself, we managed to arrange a meeting in Dover House with elected council representatives, at least one council official and the junior Minister. The junior Minister—the office boy—was at that time the hon. Member for Edinburgh, Pentlands (Mr. Rifkind). He has since been sent to the Foreign Office where I believe he is in charge of Siberia, among other places. If he makes a close study of Siberia he might find that Scotland is becoming even worse than Siberia for local democracy. We have a Secretary of State who is assuming centralist dictatorial powers that even Stalin and the Stalinists would envy. That is the kind of Secretary of State for Scotland that we have. He is trampling all over the wishes of the local people, whether in Stirling, Lothian, Dundee or wherever.

In Stirling—perhaps the Secretary of State would stop giggling about the misfortunes of the people in Stirling district—the local authority accounts commission has, I understand, recently referred to the Court of Session the report of the local authority controller of audit to the effect that Stirling district council had, in his opinion, broken the law by refusing to hand back the £700,000 to the——

It being Ten o'clock the debate stood adjourned.


That, at this day's sitting, the Local Government and Planning (Scotland) Bill may be proceeded with, though opposed, until any hour.—[Mr. Brooke.]

Question again proposed, That the amendment be made.

I refer the Secretary of State to the relevant part of the controller's report, where he said:

"In my opinion, a local authority owes a fiduciary (held or given in trust) duty to the ratepayers from whom it obtains the monies needed to carry out its statutory duties. The council was acting within its discretionary power in not returning money to the ratepayers by means of a lower rate but by its failure to take the steps open to it to avoid a reduction of rate support grant it was in breach of the fiduciary duty which it owes to the ratepayers and therefore acted unlawfully".
I do not know whether the particular case is sub judice as the referral has been made to the Court of Session, and I do not want the Secretary of State to comment on that aspect of the matter if he feels that it would be against the traditions of the House to do so. But if the refusal of the local authority to hand back the money to the ratepayers is illegal, what is the need for this clause? Who is it in St. Andrew's House that advises the Secretary of State that his powers under last year's legislation are so inadequate that he has to come forward with even more draconian measures, which he hopes to take under the terms of the clause?

My hon. Friend the Member for Edinburgh, East (Mr. Strang) and others have referred to the specific case of Lothian regional council, and I do not want to add a great deal about that, except that it is not just a question of a proposed reduction of £45 million. It is a question of a possible massive reduction in educational opportunities for children, in the standards of social work services for the elderly, the sick and the disabled, as well as the creation of more unemployment. That is what is at stake. It is not just a reduction in financial terms; it means job loss and the loss of essential services. The Secretary of State hoped to achieve victory in Lothian region, but the Tories, with the help of the SDP-Liberal Alliance, defectors and what have you, managed only by the skin of their teeth to cobble together some form of administration. I wonder what will happen now.

The chairman of the Tory Party in Scotland is the man who, every time a ministerial vacancy crops up, hopes that he will be the lucky one. Unfortunately for him, the Prime Minister wants him to do the kind of essential job that only a blue-blooded member of the Scottish aristocracy is fit to do. That job is to rally the party faithful in Scotland—the few that are left.

Almost since he was returned to this House at the last general election, the hon. Member for Edinburgh, South (Mr. Ancram) has campaigned to get rid of the Labour administration in Lothian region. I suppose that the hon. Member is patting himself on the back now that that man Brian Meek has the convenorship, with the help of the defectors to the SDP and their collaborators in the Liberal Party, who managed to climb into bed with the Tory Party to form this administration.

Not so long ago I saw a film called "Life of Brian". There was an extract taken from the Sermon on the Mount which said:
"Blessed are the meek: for they shall inherit the earth."
I wonder what kind of earth Brian Meek will inherit from his pal the Secretary of State. I know that all that the people in Lothian region will get are more and more savage cuts in the education of their children and in the essential services that are required for the elderly, the sick and the disabled. That is what the Secretary of State has to offer to the people of Lothian, and if he gets his way he will try to shove it down the throats of all the councils in Scotland. I hope that the councils that are still fortunate enough to have a Labour majority will stand up and fight against the Secretary of State.

It will not be just Lothian and Stirling which have been singled out. If the Secretary of State can clobber them, who will it be next? My hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) referred to the list in The Scotsman today, and to the fact that Lothian and Stirling were by no means the worst in terms of percentage expenditure over the Secretary of State's guidelines.

How on earth does the Secretary of State arrive at these guidelines? As far as I know, he has never given any detailed mathematical calculation as to how he decides on the guideline for each local authority. I hope that he will be good enough to tell us how he decides that a certain local authority is £X or £Y million over his guidelines. On what criteria are the guidelines drawn up? Can he give us an example of the effect of the calculation of the guidelines on one authority? If it were not for the time, he could go through all the local authorities to tell us how this is done.

Looking through the list, it appears to me that there were only about half a dozen councils that did not breach the so-called guidelines. The two that were singled out—Lothian and Stirling—were by no means the worst. Orkney is 35 per cent. and Shetland 70·8 per cent. over the guidelines. Reference has been made to the special problems created by the oil development in Shetland. I remind the House that Shetland still has special powers to raise extra revenue from the oil development under the Zetland County Council Act 1974. Under the terms of that legislation the then Shetland county council, now the Shetland islands council, can raise revenue from the oil companies. I do not grudge Shetland that power, but has the Secretary of State taken that into account when assessing the guidelines? Oil development can be a bit of a help as well as a bit of a hindrance at times for local government.

Who else will be singled out? Aberdeen district council, is 22·1 per cent. over the guidelines. Skye and Lochalsh is not exactly Left-wing revolutionary territory. Perhaps the hon. Member for Inverness (Mr. Johnston) will give us the benefit of his views. His district council is 21·6 per cent. over the Secretary of State's guidelines. Sutherland district council is 22·6 per cent. over the guidelines, which is even worse than Lothian, if "worse" is the operative word. Cumnock and Doon Valley is 25 per cent. over the guidelines.

I shall give way to the hon. Member who represents Cumnock and Doon Valley.

I assure my hon. Friend that before he came into the Chamber I argued, I hope successfully, that the Secretary of State should not try to penalise Cumnock and Doon Valley again, as he did last year, because the guidelines were proved totally arbitrary and incorrect last year. I hope that the Secretary of State will bear that in mind in singling out authorities, many of whom challenge very vociferously the misleading figures that are put forward.

I was in the Chamber and heard my hon. Friend say that. The Secretary of State made some terrible blunders last year, not just with Cumnock and Doon Valley but with many other Scottish local authorities. I hope that he bears all this in mind when he considers the strong representations which no doubt have been made, not only by Cumnock and Doon Valley district council, but by my hon. Friend the Member for South Ayrshire.

My hon. Friend the Member for West Stirlingshire (Mr. Canavan) jumped to Cumnock and Doon Valley, but he missed out Bearsden and Milngavie, that other hotbed of Left-wing revolutionary Socialism, represented by my hon. Friend the Member for Dunbartonshire, East (Mr. Hogg), which is 18 per cent. over the guidelines. That is a remarkable figure for a totally Tory-controlled council—in fact, I do not believe that it has a member of another party represented on it.

I thank my hon. Friend the Member for Cathcart for drawing that fact to my attention. I was about to come to the authorities that lie partly in my constituency, and Bearsden and Milngavie district is one of them. There are fewer than six of my constituents in that district, but nevertheless they are very important people. There are also several hundred acres of land in my constituency that come into the Bearsden and Milngavie district. According to The Scotsman league table, that district is 18 per cent. over the Secretary of State's guidelines. As my hon. Friend the Member for Cathcart said, the political complexion of Bearsden and Milngavie district council, to my knowledge, has never been red revolutionary—perhaps extremist, but extremist to the right, not to the left of the political spectrum.

Then there is Strathkelvin district council, which also lies partly in my constituency. It is 18·8 per cent. over the Secretary of State's guidelines. Strathkelvin district council has the advantage of being Labour-controlled at this time, but I am sure that the people there would be horrified at the prospect of the Secretary of State singling them out for a savage reduction in the rate support grant that will affect many of their local government services.

I am therefore forced to the conclusion that this Government and this Bill are not motivated by reason, logic or accurate statistics. The motivation, if any, behind this legislation is sheer doctrinaire prejudice on the part of the Secretary of State and the Tory Party in Scotland. They claim that one of the greatest evils in public life today is over spending. By that, they mean too much public expenditure. They accuse local authorities, particularly Labour-controlled local authorities, of being almost the devil in disguise when it comes to overspending.

I do not want to make a party political point here, because it is more a matter of central Government vis-à-vis local government. Historically, central Government have been far more guilty of failing to keep within their target, their expenditure guidelines. They are far more guilty. if guilty is the right word, than local government.

I hope that the Secretary of State will at least admit that that is the truth. It will be an even bigger truth when we receive the bill for the armada that we have sent to the South Atlantic. That bill is increasing daily and the Government will have to meet billions of pounds of extra expenditure. That money will have to come from somewhere. The Government will, rightly, be criticised for overspending in that respect. Let the Government not point their finger at local authorities who are seeking to preserve far more essential services affecting people in their areas.

10.15 pm

The Secretary of State and other Ministers continually harp on about rate increases destroying jobs and say that the burden of rates is crippling industry, particularly manufacturing industry, to such an extent that it is leaving higher rated areas for the lower rated areas, or disappearing from the industrial scene altogether, thereby leading to a significant reduction in jobs. That is a myth that I shall expose. In a question for written answer my hon. Friend the Member for Blackburn (Mr. Straw) asked the Secretary of State for the Environment
"if he will publish in the Official Report a table giving the best estimate of rate payments by manufacturing industry, in £s million and as a proportion of manufacturing costs, excluding rates and taxes, for each year from 1978 to date."—[Official Report, 23 April 1982; Vol. 22, c. 163.]
The Under-Secretary could give only the figures to 1979. He said that the rates paid by manufacturing industry in 1979 totalled £925 million. Expressed as a percentage of manufacturing costs, the figure is 0·66 per cent. Less than 1 per cent. of the manufacturing costs of industry are taken up by rates.

How can the Secretary of State, or anyone else, argue that rate increases are a huge burden on manufacturing industry, that they are causing the de-industrialisation of Scotland and destroying jobs and industry. The truth is that the insane economic policies of the Prime Minister, the Chancellor of the Exchequer, and the Secretary of State are destroying industries of all sizes almost day by day in Scotland, and everwhere else. But the Government have the brass neck to try to pass the buck on to local authorities, particularly Labour-controlled authorities, who are fighting desperately to save and create jobs and to preserve essential services.

ar from destroying jobs, local authorities are often desperately trying to maintain services even if that means some increase in rates. Indeed, they are trying not only to maintain and improve those services but to improve employment opportunities. I am talking, not about meaningless, worthless jobs, but about worthwhile jobs. I mean not only jobs for teachers, lecturers and social workers as well as the important jobs of janitors, schoolcleaners and dinner ladies, but jobs in the private sector and in the construction industry.

As the result of massive cuts in local government expenditure the Secretary of State has thrown more and more construction companies out of business and has put more and more construction workers on the dole. What possible justification can there be for that? They are on the dole although their skills could be used to maintain and improve essential services.

What percentage of retailing and distributive costs do the rates represent?

If the hon. Gentleman tables a question to the appropriate Minister, he might get an answer. I gave the figure for manufacturing industry—[Interruption.] Indeed, 0·66 per cent.—a wee bit over one half of one per cent.—of the total costs of manufacturing industry are taken up by rates. Therefore, it is nonsense to complain that the rates drive industries away and destroy jobs.

I reiterate that the Government seem hell-bent on destroying local government and local democracy in Scotland. The Government have little, if any, mandate to impose such measures on the people of Scotland. They gained the support of only a tiny minority of the people of Scotland at the last general election, and they have become increasingly discredited in the eyes of the local people. That has been demonstrated by successive local government elections. It is a tragedy that when the Conservative Party was elected to Government—I hope that the truth is now beginning to dawn on those on both sides of the House who had their doubts—one of its first acts was to repeal the Scotland Act. They wanted to start with a clean slate so that they could bring forward more repressive measures with which to hammer the people of Scotland.

This is the type of legislation that would have been devolved to a Scottish Assembly under the Scotland Act. If we have meaningful devolution—as I am sure we shall have some day—it will be the end of such rubbishy, discredited legislation. With a Tory Whipped majority, the Government are shoving this legislation through the House against the wishes of the majority of the elected representatives of the people of Scotland. If we had real devolution, we should see real local democracy for the people of Scotland.

The hon. Member for Glasgow, Cathcart (Mr. Maxton) started the fashion of quoting Shakespeare. The only comment that I can make about his speech is that it was

"full of sound and fury, signifying nothing"
because there spoke the representative of a party which, in the local elections nine days ago, ended up by controlling three out of 12 regions, if one includes the three island authorities. [Interruption.]

Order. All other hon. Members have been heard in relative silence. We must give the Secretary of State a fair hearing.

If the Labour Party considers that three out of 12 is a great victory, I hope that it has many more such victories.

The hon. Member for West Stirlingshire (Mr. Canavan) has already done very well this evening.

The debate has come a little later than was intended, and some of the speeches drawn up by Labour Members had been planned as part of a great election victory. Unfortunately, that victory was removed and the debate has been a prime example of the Aunt Sally technique of debate, which is that if the subject matter is not interesting enough or does not have enough content to give one something to talk about, one must put up a new set of subjects and talk about them. We have not spent much time talking about the amendments, although the right hon. Member for Glasgow, Craigton (Mr. Millan) spent about one-eighth of his speech on them.

The debate is not about whether the Secretary of State should have the powers to curb the excessive and unreasonable spending of local authorities, and it is certainly not about the rate support grant settlement. We had a debate about that in February. I believed at one time that the Labour Party had purchased a video machine and that we were seeing a re-run of the right hon. Gentleman's speech on that occasion. However, it was not quite the same, for some very interesting reasons. In the brief time that I have available, I shall try to answer questions about the amendment and the questions that I was asked about rather wider matters, although I shall not go into the question of the Scotland Act 1978, at the request of the hon. Member for West Stirlingshire, because that would require a little more time.

If it were the case that the powers could be used against every local authority on every occasion for ever more, of course the Secretary of State of the day would more or less determine all the details of local authority expenditure. But I wonder whether anyone, including the right hon. Member for Craigton, has taken on board the extent of the powers. No Secretary of State can act against any local authority under the powers unless he can put forward a case and convince the House that that authority is incurring expenditure which is excessive and unreasonable. That is the point, as I am sure the right hon. Gentleman knows, that I made during an exchange at Question Time a few weeks ago. It is not sufficient that an authority has spent or is planning to spend over the guideline. No Secretary of State would persuade the House that an authority that is merely over its guideline was incurring excessive and unreasonable expenditure. If that point is once understood and taken on board, the remainder of the arguments that were made by Labour Members fall to the ground as being irrelevant. They do not apply.

Do I understand the Secretary of State to say that when, if he feels it necessary, he brings such orders to the House, no Whip will be applied?

10.30 pm

That is not a matter for me. I would not wish to rely upon that anyway, because I always rely upon the power of my argument. If I may say so, modestly, I have never had any difficulty and I assume that my arguments are effective.

The right hon. Member for Craigton made several comments, having said that he was not clear about the nature of the powers. He commented on the rate support grant settlement. I cannot discuss all that now, but I shall try to answer briefly many of his questions.

The right hon. Gentleman said that it was ridiculous to suggest that local government expenditure was out of control because the increases in the last two years were 1·6 per cent. and 0·2 per cent. It depends what one means by out of control. The guidelines and the requirements of the national economy worked out by the Government envisaged a reduction in spending. That is not surprising since we have been through a deep recession and the amount of money raised has had to be cut. Every business, family and individual in the country has had to reduce spending one way or another. Local government expenditure continues to move up when everyone else has to reduce expenditure. That means that local government expenditure is out of control.

I was interested that the right hon. Gentleman should mention rate increases. He said that massive rate increases were due to inflation factors not being correctly calculated in the rate support grant settlement. In a business, a family or in any body handling finances, if inflation is higher than the rate envisaged there is less money to spend. Anyone who has tried to run finances knows that. One reason why Britain's position has worsened over the years is that the public sector has been largely insulated from that essential discipline.

There is a more interesting side to the matter, which makes me wonder how much we should believe the right hon. Gentleman and his calculations. He does not appear to have them right. The right hon. Gentleman has made some categorical statements and forecasts. He said:
"The result is that there will be a considerable increase in rates in 1982–83."
That is a fairly safe suggestion.

He continued:
"However, I should be astonished if the overall increase in rates in 1982–83 is not over 20 per cent. or 25 per cent. I stand by that figure."—[Official Report, 10 February 1982; Vol. 17, c. 992.]
Very impressive. The right hon. Gentleman made his forecast, but how can he stand by it? What was the figure? The average increase in Scotland was only 15 per cent. [Hon. Members: "Only?"] That is a large discrepancy. I do not expect the right hon. Gentleman to get everything right, but some of what he says should be taken with a pinch of salt. and is what I usually do.

The right hon. Gentleman and hon. Member for South Ayrshire (Mr. Foulkes) talked of pupil-teacher ratios and schools being short of jotters, exercise books and rubbers. If that is so, it means that the local authority has decided to spend the money allocated to it on something else. The amount that is laid aside in the rate support grant settlement for these matters is the highest per head expenditure so allowed ever in real terms.

No one can get around that fact. If shortages of essential educational items exist, it is because the money is being spent on something else. That should be clearly understood.

The Secretary of State has allowed 4 per cent. for teachers salary increases in the current year. The actual award is 6 per cent. If that goes through, as I trust it will, it will cost the local authorities another £9 million not provided for. How does he expect the local authorities to save that money? If they save it by reducing teachers, another 1,000 teachers would be sacked. Is that what he wants them to do?

The right hon. Gentleman has raised just the point. The negotiations for those sort of salary increases are conducted on different bases according to the group. The right hon. Gentleman must bear in mind that those concerned with taking decisions on these matters must consider what money they have available. The right hon. Gentleman may have noticed that in that case the arbitrator mentioned, as one of the reasons for the decision taken, that he had to bear in mind what the local authorities were likely to have available to spend. That is exactly the point. The awards of the local employees are considerably above the 4 per cent. factor. Who on earth does the right hon. Gentleman think is going to pay for it, if those who are negotiating think that they can get away with incurring extra expenditure that they cannot afford? Until all those concerned in such negotiations realise that there is a finite amount of money available to pay for these things, and to make their decisions accordingly, we will have financial irresponsibility and the ratepayers and, ultimately, the taxpayers will be continually called upon to find sums that they know they cannot afford. The right hon. Gentleman found that to be the case when he was in office and he topic action on it. He has forgotten about it now and he will have a lot longer in Opposition to forget about it still further.

The Secretary of State is not answering the question. The matter went to arbitration. It is an arbitrator's award which the Secretary of State can ask the House to set aside. But if he does not ask the House to set it aside, £9 million must be found. How should the local authorities find that money? Should they cut the number of teachers? What should they do?

The right hon. Gentleman would be the first to object if I tried to lay down how individual local authorities should make their budget decisions. The right hon. Gentleman must not talk humbug about this. He knows that if I did that, he would be the first to complain.

The right hon. Gentleman also asked about a possible meeting with the new administration in Lothian region. there is nothing unusual about that. On several occasions, the previous administration asked for meetings with me and it got them. I had meetings with it and we discussed its problems. It was a helpful thing to do. The new administration asked for such a meeting, and we had it this morning. It was very useful. the hon. Member for Edinburgh, East asked what was the position now that there was a new administration. I told the new administration exactly what I told the old one. I said that the budgeted plans for expenditure are much too high and that I am awaiting a response to the letter that I sent to the council for its views on that matter.

I can assure the hon. Gentleman that there is no change in that position yet. The representative s of Lothian region explained to me that they understood that position and that they would be producing a reply to me as I have requested. That is a perfectly straightforward position and I hope that the hon. Gentleman will be satisfied about that.

The hon. Gentleman also asked whether the council would have absolute freedom to decide on the way it made its financial decisions on cuts and so on. I can confirm that that is exactly so. I have no intention of interfering in that sort of detail. The hon. Gentleman recounted some rather inaccurate memories of the calculations of posssible redundancies last year. The then administration did net refer only to the huge number of possible redundancies following on the initial suggestion that there might haw, to be a grant reduction of £53 million. I recall that when the reduction of grant was down to about £30 million, the then administration calculated that it would be necessary to create 15,000 redundancies. In fact, when the grant was reduced by £30 million the Lothian regional council achieved reductions of that order without introducing compulsory redundancies, which was much to its credit. However, it means that the scare stories were a load of rubbish.

Perhaps there was an element of inaccuracy in my recollection, but I am certain that there is in the right hon. Gentleman's remarks. I hope that he will recognise that even if there are no compulsory or even voluntary redundancies, there are between 2,000 and 3,000 fewer jobs in the Lothian regional council. I hope that he will recognise also that he will reduce still further the number of jobs available within the council.

Secondly, the Lothian regional council saved only £6 million through staff reductions following the cut of £30 million. Does he recognise that it will not be possible for the new administration to take up such a small proportion of the cut in staff costs?

That might be true. We are seeking to reverse the trend of over-spending that has been taking place for about seven years. The Lothian regional council's spending caused equal problems when the right hon. Member for Craigton was Secretary of State for Scotland. The reversal will be much more difficult and painful because it has been so long delayed. If action had been taken three years ago when it was first suggested, the council's spending could have been brought under control without large-scale redundancies.

The hon. Member for West Stirlingshire referred to the local accounts commission. That is an issue that relates to a later amendment and I shall not deal with it now. Secondly, he suggested that we are seeking to introduce new powers. The powers to penalise local authorities for excessive and unreasonable expenditure have existed for many years. I think that the right hon. Member for Greenock and Port Glasgow (Dr. Mabon) was one of those who introduced them in the Local Government (Scotland) Act 1966. In fact, the powers go back as far as 1929.

The original powers never needed to be used because until recently local authorities had not spent excessively and unreasonably. Secondly, the powers were retrospective and could be used only after excessive spending had taken place, which was unsatisfactory and unfair.

The Labour Party is saying that it is much more interested in helping to keep local authority expenditure up than it is in helping to keep rates down for those who have to pay them. That is a fair stance, but it is firmly ensconced in that position. I am content that that should be known as widely as possible. If that is known, there will continue to be election results that are favourable from my point of view.

If no amendment to the original powers had been made, the penalties—assuming that we have to have them—would have been unfair on the majority of local authorities in Scotland. They would be wholly unfair in view of the penalties imposed by the right hon. Member for Craigton. He had a general abatement in one of his years of office. That had to be operated by a straight across-the-board abatement. In such a case each local authority suffers a penalty, not in accordance with the amount it has overspent, but according to the formula by which rate support grant is distributed. It produces extremely unfair results. The advantage of the powers that I was granted by the House last year, which have a small amendment made to them in the clause we are debating, is that it enables there to be some element of fairness. It enables the big overspenders—when there are big overspenders—to be called upon to make an appropriate contribution towards the overall overspending.

10.45 pm

If Labour Members can accept for the moment that there have to be penalties they should address themselves to the unfairness of doing it across the board. In that case authorities suffer a penalty without direct regard to the degree of their overspending. Hon. Members should consider whether it is much better that we take action against the authorities which are the main overspending offenders. That seems to be much fairer and I believe that that would be the general view, although not very often expressed, among those involved in local government. I hope that the House will accept that as being a genuine point worthy of consideration.

Accepting the Secretary of State's argument that he now wants to be more selective and penalise the authorities that are the largest overspenders, can he tell us why he has taken and proposes to take no action against Shetland?

It is usually a mistake to give way to the hon. Member for South Ayrshire. I have made no such decision. I have made it perfectly clear that I am looking at the spending pattern of local authorities, and that there may be more authorities against whom I may have to ask the House to give me power to take action. I have not decided to exclude any authority. The two that I have mentioned are the only ones about which decisions have been taken.

On the Secretary of State's quite cogent argument on the question of equity, what is singularly lacking to buttress it is the fact that there has been no request from local authorities generally, including his own, for this kind of mechanism to be introduced.

I think that that is true. In the discussions that I have had with local authorities they have been much more concerned with trying to deal with the difficult problem of reducing expenditure. There has been no general request for such powers and most local authorities have said that they would rather not have such powers, but I have the responsibility of trying to be fair in the way that we have to reduce spending. That is not new. It has been done by all Governments in the past. the right hon. Member for Craigton had to do it. I am not sure whether the right hon. Member for Greenock and Port Glasgow had to, but if not he was fortunate. I maintain that if it has to be done it is better that it should be done fairly. The amendments are on a narrow point. The House will realise that if that provision in the Bill were removed, we should remove the clause that gives the Secretary of State the option—where a reduction has to be made in respect of a local authority—of returning that money to the ratepayers.

If that provision is removed it is another clear example of the Opposition's view that it is not important for the ratepayers to be relieved of excessive burdens when there is overspending. That is what the amendment means. If they vote on that all ratepayers in Scotland will be able to see clearly that the Opposition are not in favour of helping them with lower rates.

The second amendment would write in a requirement that local democracy should be taken into account, but most of those who voted in the recent local elections would agree that those who look after ratepayers are more on the side of local democracy than are those who continually want greater spending.

The third amendment questions what my Department does every year in sending to local authorities circulars explaining that certain detailed matters of account are left out of considerations of overspending. That is a technical matter. For example, housing is left out because it has its own support grant system. I see no advantage in introducing a muscle-bound procedure for something that is done simply by circular.

The fourth amendment deals with the quality of services. That is important, but much rubbish has been talked on this subject. It has been suggested by the right hon. Member for Craigton and others that no one can keep to the guidelines. Really? How did the Borders council manage to keep to them? How did Dumfries and Galloway keep very near to them? How did Grampian, a large region with heavy expenditure, manage to keep within 0·9 per cent. of the guidelines? How did Liddesdale manage to keep to them? How did Banff and Buchan and Gordon keep to them? How did Moray keep to them? How did Caithness keep to them? How did Ross and Cromarty keep within 2·9 per cent. of them?

Cunninghame did very well. It was only 3·1 per cent. above the guidelines.

Of course it has a good Member of Parliament. If those authorities can keep, or virtually keep, to the guidelines, how can the right hon. Member for Craigton argue that it is impossible? Several hon. Members argued that the level of services would be decimated, but I can give comparisons to show that that claim is also rubbish.

Expenditure per head per year is £394·13 in Tayside, £398 in Fife, £370 in Grampian and £371 in Central. All those authorities provide reasonable levels of services. Yet the Lothian figure for 1982–83 is £454. That is so far out of line that it brings me back to my main point.

It is ridiculous to describe the powers as destroying local democracy, ending local government, making it not worthwhile for people to stand for councils and so on. None of the powers applies to any council unless it comes into the category not of being over the guidelines or being a bit extravagant, but of incurring expenditure that can be described under statute as excessive and unreasonable and which the House can be persuaded is so. The powers apply to only the small minority of authorities that incur such expenditure.

There have been no such authorities in most years, but in the past two or three years a certain madness has gripped some local authorities that have gone over the top. I suspect that many Labour Members disapprove of that in private, though they do not like to say so. It is because of the exceptional cases that the exceptional powers have had to be introduced. I look forward to the day when they never have to be used again because local authorities think of their ratepayers' interests and keep expenditure under control.

The Secretary of State has just given a completely inadequate answer to the amendments that have been proposed by the Opposition. For him to argue that the powers that he is trying to take by the Bill are not unprecedented is absolute nonsense. If the necessary powers have existed since 1929, why has the Bill been introduced? Why did we have last year's Bill? Why did we have the Bill in the year before that?

Only the present Secretary of State has treated Scottish local authorities in the way in which they have been treated in the past two or three years. Not even previous Conservative Secretaries of State have taken such a dictatorial attitude. What is more, the right hon. Gentleman and his Conservative friends in local government in Scotland know it.

The Secretary of State said that the Borders had bee n doing well. In the election last week one of the leading Tories in the Border region quit the party because of the way in which the Secretary of State has been treating both that and every other region in Scotland. Moreover, the quality of the services has worsened, yet we must pay considerably more in rates for those inadequate services.

As to the Secretary of State's claim that he is being selective, last year there was both a selective reduction of rate support grant for and an overall penalty on every local authority in Scotland. This is being done not merely to the rate support grant. The housing support grant is receiving the same treatment. Every district council in Scotland is suffering a major reduction in housing support grant. That is why, in addition to rates being increased last year, there was a massive increase in rents.

It is hardly worth answering the Secretary of State with regard to individual local authorities. He knows that there is no justification, apart from political spite and prejudice, for singling out the two local authorities that he has so far chosen to penalise in 1982–83. He has not answered the points about Orkney and Shetland or about Lochaber and the rest. He has not the slightest intention of penalising Orkney and Shetland. If, for once in his life, he were honest with the House, he would tell us that now.

The Secretary of State held out Tayside as an example of a reasonable authority. It is 7·6 per cent. above his guidelines for this year. Moreover, it provides an inadequate range of services. That figure is considerably above the overspending which, according to the Secretary of State, there has been in the Strathclyde region. We know that he has not the slightest intention of penalising Tayside during the coming year under the powers of the 1981 legislation.

The existing powers are a major attack on local government in Scotland. They have been used with the maximum of political prejudice. The Secretary of State has shown that he cannot be trusted with the powers that he already has. That is why we are not prepared to give him the additional powers that he now seeks. I therefore ask my right hon. and hon. Friends to vote for the amendment.

Question put, That the amendment be made:

The House divided: Ayes 70, Noes 139.

Division No. 151]

[11.00 pm


Archer, Rt Hon PeterBooth, Rt Hon Albert
Beith, A. J.Boothroyd, MissBetty

Brown, Ron(E'burgh, Leith)Litherland, Robert
Buchan, NormanMabon, Rt Hon Dr J. Dickson
Callaghan, Jim(Midd't'n&P)McCartney, Hugh
Campbell-Savours, DaleMcKay, Allen (Penistone)
Canavan, DennisMcKelvey, William
Carmichael, NeilMacKenzie, Rt Hon Gregor
Cocks, Rt Hon M. (B'stol S)Maclennan, Robert
Cowans, HarryMcNamara, Kevin
Craigen, J. M. (G'gow, M'hill)McTaggart, Robert
Cryer, BobMcWilliam, John
Dalyell, TamMarks, Kenneth
Deakins, EricMarshall, D (G'gowS'ton)
Dean, Joseph (Leeds West)Maxton, John
Dewar, DonaldMillan, Rt Hon Bruce
Dixon, DonaldO'Neill, Martin
Dormand, JackPavitt, Laurie
Dunwoody, Hon Mrs G.Penhaligon, David
Eadie, AlexPowell, Raymond (Ogmore)
Eastham, KenRoss, Ernest (Dundee West)
Evans, Ioan (Aberdare)Sever, John
Ewing, HarrySkinner, Dennis
Foulkes, GeorgeSnape, Peter
Ginsburg, DavidStrang, Gavin
Grimond, Rt Hon J.Tinn, James
Hamilton, James(Bothwell)Wainwright, E. (Dearne V)
Hamilton, W. W. (C'tral Fife)Welsh, Michael
Harrison, Rt Hon WalterWhite, Frank R.
Hogg, N. (EDunb't'nshire)White, J. (G'gow Pollok)
HomeRobertson, JohnWilson, Gordon (DundeeE)
Howells, GeraintWoolmer, Kenneth
Hughes, Robert (Aberdeen N)Young, David (BoltonE)
Janner, Hon Greville
Johnston, Russell (Inverness)Tellers for the Ayes:
Lambie, DavidMr, George Morton and
Leadbitter, TedMr. Frank Haynes.


Alexander, RichardBruce-Gardyne, John
Alison, Rt Hon MichaelBudgen, Nick
Ancram, MichaelCadbury, Jocelyn
Arnold, TomCarlisle, John (Luton West)
Aspinwall, JackClarke, Kenneth (Rushcliffe)
Atkins, Robert (PrestonN)Cope, John
Atkinson, David (B'm'th,E)Corrie, John
Beaumont-Dark, AnthonyCranborne, Viscount
Benyon, Thomas (A'don)Dorrell, Stephen
Berry, Hon AnthonyDouglas-Hamilton, LordJ.
Bevan, DavidGilroyDover, Denshore
Biggs-Davison, SirJohnDunn, Robert (Dartford)
Blackburn, JohnEmery, Sir Peter
Bonsor, SirNicholasFairbairn, Nicholas
Bright, GrahamFairgrieve, SirRussell
Brooke, Hon PeterFaith, Mrs Sheila
Brotherton, MichaelFenner, Mrs Peggy
Brown, Michael (Brigg&Sc'n)Fletcher, A. (Ed'nb'gh N)

Question accordingly negatived.

Fletcher-Cooke, SirCharlesNeale, Gerrard
Fowler, Rt Hon NormanNewton, Tony
Gardiner, George(Reigate)Normanton, Tom
Garel-Jones, TristanOnslow, Cranley
Goodhart, SirPhilipOsborn, John
Goodlad, AlastairPage, John (Harrow, West)
Greenway, HarryPage, Richard (SW Herts)
Griffiths, Peter Portsm'thN)Parris, Matthew
Grist, IanPeyton, Rt Hon John
Gummer, JohnSelwynPollock, Alexander
Hamilton, Hon A.Price, SirDavid (Eastleigh)
Hamilton, Michael (Salisbury)Proctor, K. Harvey
Hampson, Dr KeithRenton, Tim
Hannam, JohnRhysWilliams, SirBrandon
Haselhurst, AlanRoberts, M. (Cardiff NW)
Hawkins, PaulRost, Peter
Hawksley, WarrenSainsbury, Hon Timothy
Hayhoe, BarneyShaw, Giles (Pudsey)
Heddle, JohnSims, Roger
Hurd, Rt Hon DouglasSpeed, Keith
Jopling, Rt Hon MichaelSpeller, Tony
Kellett-Bowman, MrsElaineSpicer, Michael (S Worcs)
Kershaw, SirAnthonySproat, Iain
Kimball, SirMarcusStainton, Keith
Knight, MrsJillStanbrook, Ivor
Knox, DavidStevens, Martin
Lang, IanStewart, A. (E Renfrewshire)
Lawson, Rt Hon NigelStradling Thomas, J.
Lee, JohnTemple-Morris, Peter
LeMarchant, SpencerThomas, Rt Hon Peter
Lester, Jim (Beeston)Thompson, Donald
Lloyd, Peter (Fareham)Thorne, Neil(IlfordSouth)
Loveridge, JohnThornton, Malcolm
Lyell, NicholasTownend, John (Bridlington)
Macfarlane, NeilTrippier, David
MacKay, John (Argyll)van Straubenzee, Sir W.
McNair-Wilson, M.(N'bury)Viggers, Peter
McQuarrie, AlbertWaddington, David
Major, JohnWalker, B. (Perth)
Marlow, AntonyWalker-Smith, Rt Hon Sir D.
Mather, CarolWall, SirPatrick
Maude, Rt Hon Sir AngusWaller, Gary
Maxwell-Hyslop, RobinWarren, Kenneth
Meyer, Sir AnthonyWatson, John
Mills, Iain (Meriden)Wells, Bowen
Mills, Peter (West Devon)Wheeler, John
Moate, RogerWolfson, Mark
Monro, SirHectorYoung, SirGeorge (Acton)
Montgomery, FergusYounger, Rt Hon George
Morgan, Geraint
Morrison, Hon C, (Devizes)Tellers for the Noes:
Mudd, DavidMr, Robert Boscawen and
Murphy, ChristopherMr, David Hunt.
Myles, David

I beg to move amendment No. 128, in page 3, line 40, at end insert—

'(10) For the avoidance of doubt it is hereby declared that any refusal by a local authority to reduce that authority's estimated expenditure following a report proposing a reduction in rate support grant approved by Parliament in terms of section 5 of the Local Government (Scotland) Act 1966 as amended by the Local Government (Miscellaneous Provisions) (Scotland) Act 1981 shall not be an unlawful breach of fiduciary duty on the part of that local authority and shall not be the subject of a special report by the Controller of Audit under section 102(3) of the Local Government (Scotland) Act 1973 and no action by the Secretary of State under section 104 of the said Act of 1973 shall follow from any such failure.'
We had a wide-ranging debate on the last group of amendments. This amendment is much more specialised and narrow in its range, although, strangely, it deals with a matter that my hon. Friend the Member for West Stirlingshire (Mr. Canavan) happened upon during his remarks.

We are dealing not so much with the future as in a sense with the past, because the amendment looks back at the year 1981–82, and in particular at the situation which has arisen in respect of the Lothian, Stirling and Dundee local authorities. It is a familiar series of events and one that I do not need to rehearse in any detail in this debate. Suffice it to say that the Secretary of State took it upon himself to decide that those local authorities had estimates that were excessive and unreasonable. He came to the House with the relevant and necessary orders and it was decided, against the fierce opposition of Labour Members, that those local authorities should be faced with the prospect of a clawback from their rate support grant during the financial year, or they would have to cut their estimated expenditure.

It is important to emphasise something which I certainly understood to be the position; that is, that the authorities had a choice. It was a weighted choice. The Secretary of State was under the impression that they would exercise that choice in a way that was acceptable to him, by making repayment or reimbursement to the ratepayers. As the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) said during many a weary hour of the proceedings on the Local Government (Miscellaneous Provisions) (Scotland) Bill, it was a choice that was to be left to local authorities. But what happened was that when local authorities exercised that choice and decided not to pay back, they discovered that they were to be penalized by the Secretary of State. There was no option of holding on to the grant which was not now to be used to fund the expenditure which had been cut, and there was no way in which that could be held against future rates in 1982–83.

I say that this is all of historical interest because the whole point of the first part of the Bill is to close that loophole and to ensure, in the view of the Secretary of State, that it will not happen again, because in future he will be able to make a direct rate reduction.

What worries Labour Members is that the Secretary of State decided, when there was no reimbursement of the ratepayers, to make a clawback out of the rate support grant in any event, and it is now being suggested that the failure to follow what the Secretary of State thought was the right course amounted to a breach of fiduciary duty. We have had a report from the controller of audit which suggests that there has been a breach of fiduciary duty by the Lothian, Stirling and Dundee local authorities, and that report has been passed to the accounts commission.

One of the byproducts of arbitrary and oppressive legislation is that it encourages a trudge to the courts. We have seen a deal of it south of the border and I fear that we may see a lot of it north of the border. We have seen people going to the courts for a decision on whether various actions by local authorities or by the Government have been ultra vires or in disregard of their statutory duties. I take no particular pleasure in that situation, but I am afraid that it will be a recurring and increasingly common theme.

The amendment is tabled in simple—almost narrative—terms. We are suggesting that, for the avoidance of doubt, the refusal by a local authority to reduce its estimated expenditure, following a report proposing a reduction in rate support grant, should not be taken as an unlawful breach of fiduciary duty and should not be the subject of a special report by the controller of audit and ultimately of action by the Secretary of State under section 104 of the Local Government (Scotland) Act 1973.

11.15 pm

It may be that this is all a bit academic because, as the House will know, we have had a special report by the controller of audit, which has already been passed to the accounts commission. Whether that is a difficulty with regard to the amendment is of little importance. We are anxious to know what will happen and what is in the Secretary of State's mind. As I understand it, there has been a special report, and now reference to the Court of Session for a judgment, presumably to try to establish in general terms what, under the law of Scotland, constitutes the fiduciary duty of a local authority to the ratepayers.

This is an extremely complex business, as we know from the English precedents. We have been following from afar, and are relieved that it is from afar, the complicated arguments that have resulted from the Bromley v GLC case, the transport case. Many of us are aware of some of the better known earlier English judgments, such as Prescott v Birmingham Corporation. There have been endless arguments, for example in the Prescott case, about whether a free bus travel scheme constitutes a gift to one section of the population at the expense of another and is therefore a breach of fiduciary duty, or something that is almost analogous to a trustee relationship between a local authority and its ratepayers who supply at least a percentage of the cash.

I have very little sympathy with the argument, which is based on a misunderstanding, about how much of the finance of a local authority comes from the domestic ratepayers. It is particularly the question of ratepayers that worries the Secretary of State and the House. As I understand the figures, the total percentage of local authority expense that comes from domestic rates in Scotland is about 13·5. All the rest comes either in. Government grant—55 to 56 per cent.—or from non-domestic ratepayers of one kind or another.

In any event, it seems to us—and this is the point of the amendment—monstrous that we should have a special. report from the controller of audit to the accounts. commission. There will then be an application to the Court of Session and there is a clear possibility, presumably under section 103, that there could be a surcharge on councillors as a result of the proceedings. I recognise that under section 104 it is possible for the Secretary of State to take no action if he believes that the council has acted reasonably. No doubt we could spend many hours, here and up and down the length and breadth of Scotland, arguing about what the word "reasonably" means in this context.

It would be an extremely damaging, embittering, decisive and counter-productive exercise to go down this road and get to a conclusion that might be logical, but might become inevitable, because of the entrenched prejudices that the Secretary of State has shown in his handling of local government affairs over the past three years. We want to save him from that. The amendment deals with a small group of councils which were faced with a force majeure and put in a position where they were told that they were spending excessively and unreasonably, despite the fact that they genuinely felt—and I have no doubt about the genuineness of their feeling—that they represented the interests of the electorate that had put them into power.

Those councils, having been told that they were spending excessively and unreasonably, were forced to cut that expenditure. They then found that the money that was saved could not be retained against expenditure in a future financial year. The noney disappeared back into the maw of the Treasury. If the Secretary of State is correct in saying that there was some sort of robbery of the domestic ratepayer, or of ratepayers generally, then the Secretary of State, who owes Lothian £30 million and who owes money taken from other local authorities, is guilty of a form of fiscal reset in terms of the local authority financial system.

After all the bitterness, friction and confusion, it would be a manifest tragedy and a dreadful mistake if we were to go ahead with a long and difficult legal process, involving Court of Session judgments, ultimately surcharge and all that that means in personal misery of the individuals concerned, and the removal from the realms of possibility of a return to the co-operation which the hon. Member for Edinburgh, South (Mr. Ancram), the chairman of the Scottish Conservative Party, hoped would soon return to Scottish local government.

If we were to do any of the things that are potentially involved in continuing the surcharge and the penal provisions of the 1973 Act we would make a great mistake, which would not be in the interests of the Secretary of State and certainly not in the interests of local government machinery. It is to avoid that that we have tabled the amendment. We seek to ensure that in the special and rather unusual circumstances that arose in the confusion of the use for the first time of the penal engine constructed in the Local Government (Miscellaneous Provisions) (Scotland) Act the matter should go no further. I believe that we are justified in doing so.

I want to mention briefly the case of Stirling district council, which lies partly in my constituency and which was one of the local authorities referred to in the report by the local government controller of audit.

The Secretary of State knows the details of the long story of the confrontation that he engineered against Stirling district council, going back a year ago when he singled out that council for special treatment under the Local Government (Miscellaneous Provisions) (Scotland) Act. He claimed that it had been guilty of overspending to an excessive degree. He refused to say in detail why it had been guilty of excessive overspending. He did not put up a good case to justify the penal measures that he attempted to impose on the council.

As I said on the last amendment, my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) and I made repeated submissions to the Secretary of State and the junior Ministers at the Scottish Office. We tried to mediate as reasonable men, but we found that the Secretary of State and his Ministers were very irrational people. It became increasingly obvious during the drawn-out confrontation that the Secretary of State was not interested in reaching a reasonable compromise.

The Stirling district council produced a reasonable alternative, which would have gone some way to meet the targets of the Secretary of State but which would not have necessitated the reduction in rate support grant that the Secretary of State seemed hell-bent on imposing. Despite meetings at ministerial level and at other levels, which my hon. Friend the Member for Stirling, Falkirk and Grangemouth and I helped to initiate, the Secretary of State stood firm. He imposed what was, in effect, a kind of fine, by withdrawing £700,000 in rate support grant from Stirling district council.

The council refused to hand money back to the ratepayers. The Secretary of State criticised that decision, in the House and elsewhere. We thought that that was the end of the matter. The Secretary of State never claimed that the district council was acting illegally. Never in the course of private or public discussions did the Secretary of State claim that the district council, by following either of the options open to it, was in danger of acting against the law. We thought that that was another unfortunate chapter in the sad history of local government, written mainly by the Secretary of State for Scotland. We thought that it was over and done with, that it was water under the bridge.

However, a report was then produced by the controller of local government audit in Scotland criticising the district council. Everyone has a right to criticise local government in general, or for certain decisions taken by a local authority, but in criticising the Stirling, Lothian, and Dundee councils the controller of local government audit said that in his opinion the councils had acted illegally. The matter has now gone to the Court of Session for a judgment. I hope that the Secretary of State, despite the sub judice rules, can give a helpful reply.

We all know who was Solicitor-General for Scotland at the time—the hon. and learned Member for Kinross and West Perthshire (Mr. Fairbairn). He should have been involved in fighting the case for Stirling district council because part of his constituency lies in the Stirling district. His standing in legal circles in Scotland is so low at the moment that he has to look for jobs in South Africa or defend mercenaries who attempt a coup in the Seychelles. Nevertheless, there must be someone in the Crown Office or the Scottish Office who should have advised the Secretary of State on what is legal and what is illegal, and given local authorities the appropriate advice. Why is it only at this late stage that the controller of local government audit in Scotland has reported that in his opinion the local authority was in breach of a fiduciary duty and was breaking the law?

The repercussions are extremely serious. If the Court of Session gives a judgment against the council it is not merely a question of publicly declaring that Stirling, Dundee, and Lothian councils acted illegally. My understanding is that the councillors who were party to the decision could be surcharged. Immediately the decision was announced by the controller of local government audit, the leader of the Tory opposition in Stirling district council made desperate inquiries to ascertain whether she and her colleagues could be surcharged. Apparently she was advised that the councillors who voted against the decision were not liable to be surcharged. That means that only 10 of the 20 councillors could be surcharged. Every Labour district councillor in Stirling district could be surcharged to the tune of £70,000.

Is the Secretary of State serious? Is that possible or likely? Is that the encouragement that he will give to those who often sacrifice much to offer themselves for public service? All the time they felt that they were acting in the best interests of those whom they were elected to serve. At this late stage they find that they could be surcharged £70,000 each. They probably could not raise £70,000 between them, let alone £70,000 each.

11.30 pm

Therefore, those people could be driven out of local government. Is that what the Secretary of State wants? Is he so thrawn, stubborn and vengeful that he wants to use the law to drive Labour councillors out of the positions to which they have been elected? As a result of the Bill, local democracy is at stake. We are not here to debate the rights and wrongs of the decision taken by Stirling district council, Dundee district council or Lothian regional council. However, if, as the Secretary of State argues, their decisions were against the interests of those who elected them—the ratepayers—the solution lies in the hands of those ratepayers or electors, through the system of local government election. The solution should not lie in the Secretary of State's dictatorial edict or with High Court judges or judges sitting in the Court of Session.

As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar), who has far more experience and knowledge of the law than I, said, it is unfortunate that both north and south of the border there is an increase in litigation on matters of local government. People run to the courts. There is something wrong with the legislation enacted by the House if an increasing number of local authorities or individuals run to the courts to get judgments about this, that and the other. It is surely indicative of the undue haste and lack of preparation by the Scottish Office, and the various departments within it, that such tatty, unclear legislation should reach the statute book. Some bloke who reads about it in the office of the controller of audit will then say "Aha, these people may have been acting illegally and may be liable to surcharge. Let us refer the matter to the Court of Session and see what the judiciary has to say."

Those are all important matters of principle and important matters for local democracy. The Secretary of State dodged a question in our last debate, but I hope that he will now give a considered reply. Where on earth do we go from here? Is not local government legislation in a hopeless mess, particularly that introduced by this Government? Yet the Government seem intent on introducing even worse legislation, which will make local government even less democratic.

With respect to the hon. Member for West Stirlingshire (Mr. Canavan), I did not dodge the question last time. I merely did not answer it because he asked it under the wrong amendment. However, I believe that I can reassure him.

We cannot accept the amendment, because it would pre-empt the function of the Court of Session in relation to a question of law quite properly arising under the existing statutory provisions. The controller of audit is under a statutory duty to make a special report if he is of the opinion that any item of account is contrary to law. His duty is contained in section 102(3)(a)(i) of the Local Government (Scotland) Act 1973. Having formed such an opinion, he has no option but to make a special report to the commission.

The commission's functions in relation to a special report are detailed in section 103 of the 1973 Act. In particular, the commission may
"if they think fit, and shall if so directed by the Court of Session, state a case on any question of law arising on the special report for the opinion of the Court of Session."
The commission has decided to state a case on the question of law raised and it is now for the Court of Session to determine it.

However, I hope that I can reassure the hon. Gentleman on one point about which he expressed some concern. I know only what I have read in the press about the matter. The Controller of Audit has questioned an item of account, not an item of expenditure. If that is so, I am advised that in any case a surcharge could not arise because it is questioning an item of account and not an item of expenditure. I hope that that reassures some hon. Members who may be worrried about the point.

We are all feeling our way a little on this, but it is a matter of some importance. The Secretary of State has obviously received advice on the matter and I appreciate the care with which he is informing the House. Can he tell us what action is open to him, because that is the key question? I can see that, by using section 103, we can get an opinion of the Court of Session, which may be of some general interest in terms of defining the law and the fiduciary nature of the relationship between the ratepayer and the local authority. The important point is that at some stage, under section 103, a report will come to the right hon. Gentleman and under section 104 some action can flow from that, which I understand can include an order that payments be made by the councillors to the local authority. Is the Secretary of State saying that that will not arise because of his presupposition of the nature of the Controller of Audit's report? If it cannot arise, whit action is open to him as Secretary of State under section 104, because presumably the process does not just run into the sand and come to a dead stop? Some options must be open to him.

I appreciate the hon. Gentleman's point. I must be a little careful in what I say because I have not seen the detail of the document. I have seen only what I read in the press and anything that I say this evening must be qualified by the fact that it cannot be absolutely definitive. The action that is open to the Secretary of State, assuming all the matters that the hon. Gentleman said that we should assume, depends on whether the Commission makes any recommendations to the Secretary of State. I am advised that if the position is as we believe from the press, surcharge could not arise.

However, I shall be grateful if the hon. Gentleman will not hold me to every detail because I am in the dark and I do not know the precise details of the present position. I certainly do not know what sort of report might be produced and whether the Commission would make any recommendations to the Secretary of State.

I have the Accounts Commission's press release, which was helpfully circulated. It says at the top:

"Special reports: Lothian regional council—rate support grant … Dundee district … Stirling district"
and so on. I went confidently to the House of Commons Library and discovered that those special reports do not appear to be available. I do not know whether that is normal, but it is unfortunate. Perhaps I could obtain them by begging copies from individual councillors, but it might be for the convenience of everyone if some effort could be made to provide those reports. No one would be prejudiced if we knew what we were debating.

I am not happy about the substantive point. The Secretary of State says that if a recommendation is made by the Accounts Commission action can be taken. On a cursory reading of the statute it appears that it is possible for a recommendation to be made for an order requiring any person found responsible for incurring or authorising expenditure over the period of the loss or deficiency,
"to pay to the local authority concerned an amount not exceeding the amount of the said expenditure … directing the authority to make such rectification of their account as appears to the Commission to be necessary."
Is the Secretary of State saying that that is not a matter of expenditure, but that the only option open to him is a direction to the authority to rectify its accounts, which would not have an impact on the individual councillors?

I am advised that such an event cannot lead to surcharge. If the Commission makes a recommendation to the Secretary of State, he has to decide how to respond, but there is no statutory obligation on him to carry out the recommendation in whole or in part. He has discretion. I understand that it could not lead to surcharge. I shall examine that more closely when I see the details of the recommendations.

The Controller has a duty to serve a copy of the recommendations on the authority or on any other person affected. The Secretary of State would be involved only later, if at all. The matter is for the controller of audit, the Court of Session and the interested parties.

It would not be right to legislate as suggested. I appreciate that we are discussing a probing amendment. The court must determine whether the Controller's opinion is well founded in law. That is right. There may be room for argument about whether the controller is right, but the judicial process and not an avoidance of doubt provision is the correct way to deal with the matter.

Whatever the nuances and complexities, it is clear that under section 104(2) of the 1973 Act the Secretary of State's power is discretionary. The Act states that before he can move against councillors or an authority he must be satisfied that the person or persons acted reasonably or in the belief that their action was authorised by law. In the case that we have in mind there was no intention to defy the law in relation, at least, to the payment back to ratepayers. There may have been a political decision, but we saw it as a political division and argument. It was not a matter of knowingly defying the law. In such circumstances, the use of the power under section 104(2) is inappropriate.

I note what the hon. Gentleman says. I wish to make no comment. I am not involved at this point. The Court of Session must decide whether the matter is within the law.

It is up to me to wait and see whether a report is given to me. If so, I shall carry it out according to statute in whatever way is appropriate when I see the nature of the report. I hope that the hon. Gentleman will be prepared to withdraw the amendment.

Amendment negatived.

11.45 pm

I beg to move amendment No. 7, in page 4, line 6 after 'been' insert 'wilfully'.

This is a narrower matter in the sense that it deals with the motivation of someone who may find himself in difficulties under clause 2. Clause 2 refers to the prohibition of using sums from loans fund to offset the effect of the determination of new rate.

Clause 2(2) states:
"If the Secretary of State is of the opinion that subsection (1) above, or any term or condition imposed under the proviso thereto, has been contravened the local authority shall, on such opinion being intimated to them, reimburse their loans fund forthwith or within such time as the Secretary of State may allow."
I accept that it is important to have machinery in clause 2 to force reimbursement where there has been sharp practice in the view of the Secretary of State in that there has been a deliberate attempt to borrow to offset the loss of revenue that has resulted from an order limiting the rate poundage and reducing the rate poundage that had been determined by the local authority.

One of the problems is that—I am sure that the Under-Secretary of State will accept this because it has been much canvassed not only in Committee but by local authority officials—there are sometimes substantial difficulties in determining when exactly borrowing is being done for that purpose. There is a cyclical pattern of borrowing in most major local authorities which is dictated by and is a response to the varying pattern in the collection of rates revenue. All major local authorities have to borrow on the revenue account to make up for the delay in collecting their rates.

An argument could arise over whether the borrowing had been an attempt to get around the shortfall following after an order had been made under the powers in part I, or whether it was merely an attempt to maintain a proper flow of revenue against the somewhat uneven collection of moneys from rates.

The amendment is an elementary precaution which in no way damages the Government's central approach. It is not a wrecking amendment and is not of great political significance, but it would put into the Bill a little safety for the local authority if it was made clear in subsection 2 that before a repayment had to be made the contravention of the ban on borrowing had been willfully breached by the local authority concerned, and not inadvertently through error, confusion or a lack of administrative tightness.

The amendment is merely designed to make it clear that before the Government can move in and order repayment in this way they should be satisfied that there was an element of wilfulness about the breach and that it would be on that basis only that the repayment could be ordered. That is a clear and helpful suggestion, and I hope that it commends itself to the Minister.

I fully understand the point that the hon. Member for Glasgow, Garscadden (Mr. Dewar) is making. He said clearly and fairly that the purpose of the clause is to prevent an authority from borrowing to make up the whole or part of the difference between the original rate and the redetermined rate, so compelling it to reduce expenditure. The hon. Gentleman has asked whether the Secretary of State will be able to distinguish between borrowing that is necessary for the day-to-day management of an authority's finances—I accept his contention that that is cyclical—and that which is intended to make good the loss of revenue that is caused by a rate reduction.

There are several reasons why the Secretary of State will be able satisfactorily to monitor borrowing under the powers provided in the clause. First, such action will require a deliberate decision by the council. Finance officers will be aware of the statutory position and will advise their councils accordingly. If a council were to persist in its instructions to its officers, the officials involved would no doubt seek explicit instructions to safeguard their position. In the extremely unlikely event that the council and the officials connived to contravene the prohibition, that would come to light through the auditors; scrutiny of the accounts.

The sums required to offset a rate reduction would be substantial and would no doubt attract attention. For these reasons there can be little room for doubt if an authority has contravened the prohibition or borrowing conditions. It must not do so wilfully and the hon. Gentleman accepts that. It is the authorities; business to ensure that they do not do so negligently or incompetently. I understand the hon. Gentleman's argument, but the amendment would create a loophole in the provisions and I fear that I cannot recommend its acceptance to the House.

Amendment, by leave, withdrawn.