With permission, Mr. Speaker, I should like to make a statement about public expenditure on the Scotland programme in 1983–84. The total for the Scottish programme, excluding agriculture, was announced in the Chancellor's autumn statement.

I have now made my allocations to programmes and I have completed my consultations with the Convention of Scottish Local Authorities about the rate support grant and housing support grant settlements. The debates on those orders will give hon. Members a full opportunity to discuss the settlements, and I do not want to elaborate on them now. The rate support grant order and report are being laid before the House today. It provides for a total relevant expenditure figure of £3,118 million and aggregate grants of £1,924·25 million. Provision for current expenditure within the total is £2,660 million, £25 million more than the provisional figure that I announced on 28 July. I shall say more about housing in a moment.

My total programme for 1983–84 now stands at £6,380 million; £127 million higher than the plan for 1983–84 set out in Cmnd. 8494, and £309 million more than the resources available for the current year. The figures are essentially on the same basis as the autumn statement. I shall circulate details in the Offical Report.

My programme is in two parts. There is a block of programmes within which I have discretion to allocate resources, the total of which is adjusted by reference to changes in English or English and Welsh programmes; and there are two programmes—agriculture and industry—which stand entirely outside the block.

The provision for the programmes outside the block is virtually unchanged from that announced last year, except for a reduction of £10 million in the provision for the land clearance and building programme of the Scottish Development Agency. There is every sign that the agency will be able to attract private capital to sustain this element of its programme.

In allocating resources to the other programmes, I have kept particularly in mind three priorities: our continuing commitment to law and order and the fight against crime; maintaining growth in the hospital and community health and family practitioner services; and the need to stimulate capital investment wherever possible. Otherwise, the provision that I have made generally allows for the continuation of existing policies.

Accordingly, the provision made for law, order and protective services is £446 million, about 10 per cent. more than the amount provided in the current year. The increase provides for the police service to be manned fully up to authorised establishment levels, and it allows for an increase in the manpower costs of the prison service and for growth in demand for legal aid.

The provision for health and social work is £2,051 million, an increase of 6·9 per cent. over the planned provision for the current year. For the health programme alone the increase is £108 million. Of this, about £80 million is for recurrent expenditure on hospital, community health, welfare milk and centrally managed health services. This should be sufficient to allow for improvement in these services to meet new demands, after pay and price increases have been met, and to permit a further redistribution of resources to health boards in accordance with the SHARE arrangements. Provision for social work is £314 million, an increase of £25 million—which is 8·6 per cent. overprovision in the current year. This recognises the growing demand for services for the elderly and other vulnerable groups.

The provision of £524 million for transport will ensure, among other things, continued work on major roads, such as the A1, A9, A74, A75 and A94.

In education, after allowance is made for the continuing decline in school rolls and the reduction in the national insurance surcharge, the provision that I have made should allow for the maintenance of planned staffing standards, provided pay settlements in 1983 are at a reasonable level. On the same basis, there should be room for modest expansion in further education places. I have also made provision for more places in the central institutions for advanced studies in the new technologies.

For housing, the provision is £656 million. I have again sought to reduce the general support to local authority housing revenue accounts through housing support grant, so as to make available the largest possible resources for capital expenditure, and I am continuing the housing expenditure limits system with a view to reducing the burden of housing support falling on ratepayers to about £9 million below this year's level. Most authorities will be able to maintain their full capital programme while increasing rents by less than £1 per week: only those who have consistently failed to respond to Government policies in this respect will require larger increases. As a result, I am glad to say that I have been able to provide, after account is taken of expected receipts, for the local authorities, the Housing Corporation and the Scottish Special Housing Association to have capital programmes at or above this year's level. Total gross capital expenditure will be about £540 million.

On capital expenditure generally, about £420 million will be available for local authority capital programmes, apart from housing, also after taking account of expected receipts. This is about £15 million more than the comparable planned figure for the current year. About a further £380 million will be available for the central Government capital programmes, including health, trunk roads and investment by the SDA and the Highlands and Islands Development Board. All in all, this amounts to a gross capital programme of about £1,340 million, the bulk of which will be spent on construction projects.

A feature of capital expenditure is the tendency for provision to be underspent. I have already taken measures to minimise underspending this year: I have removed all limits from spending by housing authorities this year on improvement and repairs grants, and supplementary consents of £17 million were given to local authorities in respect of other services. I hope that these measures will ensure an outturn for 1982–83 that will be well up to the plan, and we shall similarly make every effort in 1983–84 to see that the provision that we have made for capital programmes is fully utilised.

This statement is long and complicated, but unfortunately its overall effect is all too depressingly clear, as I shall demonstrate.

In the first place, is it not a fact that many of the figures quoted in the statement are absolutely meaningless because they are now given in cash terms and take no account of inflation? Worse, some of the presentation of the figures is deliberately misleading. I shall give one example. I imagine that the Secretary of State hopes that the overall effect of the statement will be a boost to the Scottish economy. For example, the right hon. Gentleman says in his third paragraph that his total programme for 1983–84 will be £127 million higher than the plan for that year, which was set out in the public expenditure White Paper published in March of this year. In fact, that £127 million includes £120 million for local authority spending, which is not included in the local authority guidelines, which the Secretary of State is asking local authorities not to spend, and on which he is threatening to penalise them if they do spend it. If we exclude that £120 million, the real figure for 1983–84 is almost exactly the same—within £7 million—as the figure that was published in March 1982 in the public expenditure White Paper, and will represent a reduction in public expenditure in real terms in 1983–84.

The Secretary of State said that we can debate rate support grant and housing support grant later. We shall look forward to those debates. On rate support grant, will the Secretary of State confirm what he knows is true, that if local authorities met his guidelines for expenditure in 1983–84, they would have to reduce their expenditure in real terms by about 7·9 per cent., compared with their budgets in the current year? Is it not also a fact that the rate of grant for rate support grant next year is being reduced from 64·2 per cent. to 61·5 per cent.? A consequence of those two facts is that if local authorities met the Secretary of State's figures for 1983–84, they would, for example, have to dispense with 6,000 of the teachers who are now employed in Scottish schools.

Surely the background to the housing support grant is that in 1980–81, only three years ago, the total housing support grant in Scotland was £288 million, and that in 1983–84 it will be only £72 million. That is less than a third in cash terms, and if we allow for inflation, the housing support grant for next year will be less than a quarter of the figure for 1980–81, which itself was a reduction on the figures under the Labour Government.

Is it not also a fact that 20 local housing authorities in Scotland will get no grant at all for 1983–84? Those authorities include major housing authorities such as Edinburgh, Dundee, Dunfermline, Falkirk, Dumbarton and Renfrew. Is it not also a fact that the assumed rent increases in Scotland, at an average of about £1·40 per week, are considerably higher than the 85p a week that is being assumed for England and Wales? For some of the major local authorities in Scotland, including Glasgow, for example, the increase to meet the Secretary of State's figures would have to be a 25 per cent. rent increase in 1983–84.

The Secretary of State gave the figure for total housing expenditure in 1983–84, but he was careful not to give the equivalent figure for 1982–83. Will he confirm that total housing expenditure for 1982–83 will be £741 million and for 1983–84 is projected to be £656 million—a reduction of nearly 12 per cent. in cash terms and considerably more in real terms? Therefore, we shall have a major housing crisis in Scotland. That is the background against which we can judge the frantic efforts of the Government to encourage local authorities to spend more in capital expenditure. No wonder they are making such efforts when there are 46,000 construction workers in Scotland at present on the dole and when building work is desperately needed.

When will the Secretary of State get it into his head that he will not get additional capital expenditure by local authorities unless he meets the revenue consequences of that capital expenditure? If he asks local authorities to reduce their expenditure in 1983–84 by 7·9 per cent. in real terms compared with this year's Budget, he will not get a boost to capital expenditure. Is he not aware that he is imposing even greater penalties on local authority housing by saying that unless they increase their rent levels to figures that he lays down he will cut their capital expenditure? Housing in Scotland has already lost nearly £50 million in capital expenditure in the current year and we shall lose the same again next year. That puts in proper perspective the simulated and artificial concern about housing in Scotland that has been expressed by the Secretary of State and other Ministers.

To sum up, the Government's attempts to curb public expenditure have led to a crisis of confidence in local authorities. They have led to cuts in essential services, particularly in housing, and have added to the disastrous unemployment figures in Scotland and to the slump there. Despite the careful presentation of the figures in today's statement, Government policies are continuing along the road that has already proved disastrous for Scotland.

I have a feeling that the right hon. Member for Glasgow, Craigton (Mr. Millan) wrote his speech before he had read the statement which I read out. For all that, he made a revealing contribution. Most revealing was his comment that the statement is meaningless because it is couched entirely in cash terms. There speaks somebody who has spent his life in the public sector and has never had to realise the real value of money and where it comes from. We are now talking in cash terms and this is real money. That means real money to the people who provide it—particularly the ratepayers.

We shall have a full opportunity to discuss the rate and housing support grants and I understand that the right hon. Gentleman is looking forward to that as much as I am. However, I shall make one or two comments on the points that he has made. He mentioned the £120 million extra which is added on, but unallocated, to local authorities' budgets. That was produced with great difficulty by my Department and my right hon. and hon. Friends in order to help those local authorities which have consistently failed, year upon year, to get anywhere near to the target that we have set them. It was designed to help them to find it less difficult to attain those targets this year.

The right hon. Gentleman merely exposes the background to his thinking when he criticises that as anything other than an attempt to help local authorities. Of course, it is not allocated to services because the objective is to try to reduce expenditure to the level aimed for. The right hon. Gentleman's remarks about guidelines were quite inapposite. He should bear in mind, as he found, that guidelines are entirely for the guidance of local authorities. The figures should not mask the fact that this settlement represents an increase of 9 per cent. in cash terms on last year's settlement figures. If those had been met, that would mean, allowing for a 5 per cent. inflation factor—which has been done—a real increase of 4 per cent. in what local authorities could spend. However, as they were far from achieving those figures last year, this will mean a reduction of 3 per cent. or 4 per cent. on the actual expenditure that they will probably have incurred. That is a consequence of the repeated failure of local authorities, year upon year, to get anywhere near the cash planning figures that were given.

The right hon. Gentleman's record on forecasts should be made clear. Last year he said categorically that he stood by the fact that there would be rate increases of about 25 per cent. The actual turnout was about 12 per cent. Therefore, he was only 100 per cent. wrong, which is not bad for him. The right hon. Gentleman is seeking to imply that there will be a £1·40 average rent increase in Scotland. That is rubbish. He knows that the vast majority of Scottish authorities—80 per cent. or 90 per cent.—will need rent increases of less than £1 a week. Those that have been particularly prudent in recent years will probably have even less than that. There are a few authorities which have been irresponsible, year upon year, and they will need higher rent increases. However, thanks to the Conservative Party, there is now an effective rent rebate scheme.

Finally, the right hon. Gentleman alleged that we were making frantic efforts to persuade local authorities to spend more. I should have thought that that would have had his support. We are not trying to increase capital spending over what has been provided, but trying to persuade local authorities so to organise themselves that they can spend the money which the Government have, with great difficulty, made available for them to spend. I hope that the right hon. Gentleman will give his help in encouraging them so to do.

The right hon. Gentleman has not disputed, or shown to be false, a single figure in the questions that I put to him, nor has he answered those questions. Therefore, may I ask him to answer one simple question? Does he expect local authorities to spend £120 million?

The £120 million is there to help local authorities achieve their total spending. However, I hope that they will not have to spend that £120 million. I would rather that they did not, as would every ratepayer in Scotland.

rose—

Order. I remind the House that we shall not debate this matter today. We shall only have questions on it. There is another statement and an application under Standing Order No. 9 before we reach the emergency debate. Therefore, I hope that questions will be brief and to the point.

Is the Secretary of State aware that it is highly unsatisfactory to have such an extremely important, but, as the right hon. Member for Glasgow, Craigton (Mr. Millan) said, inevitably highly complex matter such as this dealt with without any warning at all? Does he not agree that it would be much more sensible if hon. Members had 24 hours' notice so that we could have meaningful exchanges on the matter?

Does not the right hon. Gentleman agree that, given the level of unemployment, it is unsatisfactory that expenditure on social work is only keeping pace with inflation? It will obviously not do that in the health sector, since social work is to be 8·3 per cent. Does he not agree that if social unrest, which most people agree is related to unemployment, requires an increase of 10 per cent., social deprivation demands and deserves at least comparable treatment?

I am not sure that the House would agree with the the hon. Gentleman's first point. It is in response to the wish of the House that Ministers who are responsible for spending money make statements so that hon. Members can have an opportunity to cross-examine them. If a more detailed examination is required, there are Supply days, and so on, for that. However, I would be willing to fall in with any requirement of the House in that matter. I am anxious to give the maximum information to hon. Members to enable them to discuss this as well as they can.

I appreciate that in these times there are mounting demands on social work. On both the health and social work programmes, a small element of real growth is built in. I would wish it to be bigger, but at a time when public expenditure is extremely difficult to find it is very satisfactory that we have managed to find any growth at all and I am glad of that.

Is my right hon. Friend aware that Conservative Members welcome his statement today as a realistic and balanced package? However, will he tell the House how best he can ensure that the increases that he has announced today will be directed to improving services for people rather than merely increasing the costs and size of local administrations?

My hon. Friend is on a very good point. Everyone involved in the administration of such matters does his job to the best of his ability. However, on a comparable basis, considerably more employees per head are involved in local authority administration in Scotland than are employed south of the border. Nevertheless, for the sake of the ratepayers, there must be some scope for economies to be made in that sphere.

The Secretary of State referred with some satisfaction to the continuation of existing policies, but is he aware that that is the last thing that Scotland needs now? Will the right hon. Gentleman accept that if it were not for the returns from the Scottish oilfields, the United Kingdom might be obliged to file a petition for bankruptcy? Does he accept that neither he nor the Government have any mandate for applying such policies to Scotland?

The right hon. Gentleman has far less of a mandate than we have. He lost practically all his colleagues at the last general election. The vast majority of those who have to pay rates and taxes want their money to be used to better effect, and that is what the statement will help to do.

Is the right hon. Gentleman aware that the Labour Party has a mandate in Scotland? However, I shall return to one of the numerous points that my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) raised and which the Secretary of State has not seen fit to respond to. How can the Secretary of State expect local authorities to, as he would say, minimise underspending on capital projects when he will not provide for associated revenue expenditure? What is the point of building schools, hospitals and so on if the Government will not allow authorities to employ the staff to man them?

I do not know whether the hon. Gentleman realises that local authorities do not build hospitals. Anyway, that point does not apply. There is a considerable amount of capital expenditure that has no revenue consequences. Where there are revenue consequences, it is up to local authorities to use their finances better. It is not impossible to make savings in order to afford such things. I have had to make considerable savings within my programmes in the Scottish Office to help local authorities.

May I ask my right hon. Friend two questions? Will he draw the attention of Scottish local authorities to the experience south of the border, where, when local authorities have put tasks such as refuse collection out to competitive tenders, costs have fallen and efficiency improved? Will he also consider speeding up the building of the dual carriageway from the central industrial belt of Scotland to Aberdeen, which is the oil capital of Europe?

Of course I hope that Scottish local authorities will consider any means of saving ratepayers' money. If one of those options is the contracting out of some services, I hope that they will consider that seriously. We shall press on with the dual carriageway provision as hard as we can, but any constraint is likely to be caused by objections and procedures, rather than by finance. However, we certainly intend to proceed with the project.

Given the advice that the Secretary of State gave to the hon. Members for Edinburgh, South (Mr. Ancram) and Aberdeenshire, West (Sir R. Fairgrieve) will he be more specific about his statement's implications for local government manpower figures? How many manual workers' jobs, local authority officers' jobs and jobs in the private sector which directly relate to local authorities will be lost as a result of the statement?

I suppose that I would have to add to that calculation the number of jobs that would be gained in the private sector if there were to be a little easing of the rate burden. Hon. Members on both sides of the House should ponder on the only fact that I can give the hon. Gentleman. Scotland apparently employs per thousand of the population about 10 more local officials than are employed in England and Wales. That must be food for thought and there must be some scope for savings there.

Will the Secretary of State again confirm that the statement offers a reduction in real terms in the programme of the fiscal year to come, as opposed to that in the present fiscal year? The right hon. Gentleman speaks of underspending, but will he consider the decisions made in the current year and bear in mind that much of that underspend was due to the fact that the Scottish Office did not invoke the sanction referred to at the end of the statement earlier in the year?

The right hon. Gentleman's latter point is only partly true. The underspending is a function both of that sanction, and of the necessary administrative procedures which perhaps do not show early enough when an underspend is likely to occur. However, we are doing all we can to identify that earlier so that we can help local authorities not to underspend. The right hon. Gentleman's first point shows the value of expressing the figures in cash terms. By taking an assessment for inflation together with the figures for last year and the coming year, one can work out, according to the inflation factor that is put in—the Government's assessment at present is 5 per cent.—whether there is an increase in real terms. I agree, that on these few figures there does not appear to be an increase, unless inflation falls further than expected. However, it has been doing just that in the past few months.

After that irrelevant tirade from the right hon. Member for Glasgow, Craigton (Mr. Millan), may I compliment my right hon. Friend on the amount of money he has made available in real terms to local authorities, given the present economic troubles? Will he assure me that the rate support grant formula is fair to rural areas—by comparison with urban areas—given the cost of services in country areas?

I agree that that is an important factor. We continually try to refine the break-up of the rate support grant to ensure that the rural areas are treated fairly. I shall certainly consider my hon. Friend's point. I agree with his first point. If we can show that there has been a reduction this year—albeit small—in the amount of public expenditure in the programme, there will be a mighty cheer from every industrialist and ratepayer in Scotland.

Given that billions of pounds concerning the whole Public Expenditure Survey Committee strategy is involved in the never-ending commitment to the South Atlantic, will the right hon. Gentleman say whose side he is on? Is he on the side of the Foreign Secretary, who wants a solution, or that of the Prime Minister, who will not hear of it?

None of my programme is spent in the South Atlantic.

Despite my right hon. Friend's considerable efforts to curb the extreme excesses of a few local authorities in their expenditure of taxpayers' and ratepayers' money, does he not accept that many Socialist-controlled local authorities still spend much more than they should do? As a result, there is less in the total pool of resources available to all local authorities. Will my right hon. Friend accept that that sometimes has unfair consequences for those local authorities that have a historic track record of showing great prudence with ratepayers' money?

I entirely accept my hon. Friend's point. I greatly regret that when there is a large overspend, as there was again last year, even part of that money—and the Government have sought to recover only a small part—can be recovered only by means of a general abatement, which cannot but be unfair on those local authorities that have tried their best, successfully, to reduce expenditure. I hope that all local authorities will look at the matter together and realise that it is incumbent upon them to work within the context of the strategy of the Government of the day. That has always been accepted by the vast majority of local authorities.

rose—

Order. I propose to call four more hon. Members before we move on. I hope that their questions will be brief.

Is the Secretary of State aware that his statement is a recipe for further rate increases affecting all ratepayers, and for further rent increases that will affect all council house tenants? Why is the Secretary of State politically discriminating against council tenants in areas such as Stirling district, where the Labour-controlled council has deliberately tried a low rent policy to protect tenants from the Government? That council is now faced with blackmailing financial penalties from the Government unless it massively increases the rents. Why will some local authorities such as Falkirk, Cumbernauld and Kilsyth have to face the possibility of no rate support grant at all?

Stirling district may be trying to protect those who pay rent, but it may have forgotten that the rent rebate scheme ensures that rent payers do not have to pay a rent that they cannot afford, unless they are well-off rent payers—although I cannot readily think of any in that district. Those who are well-off might be helped by a general policy of low rates and would not be affected by rent rebates.

With regard to general policy on rates increases, it must be remembered that every penny spent by councils is found either from rates or taxes. We have to remember the interests of ratepayers and taxpayers, too.

Why are the Government spending more and more money each year on the law and order services to combat crime and less and less on services such as leisure and recreation, which might help to prevent crime? What response will the Secretary of State give to the district councils which have taken on total responsibility for leisure and recreation, account of which has not been taken in the rate support grant allocation? I hope the Secretary of State will take account of that and will give increased allocations to the district councils for leisure and recreation facilities.

Account has been taken of that in the rate support grant settlement. I hope the transfer will work out to be satisfactory in that respect. With regard to the balance between law and order and leisure and recreation, we would like to do more for all of these, but, if one has to choose, many people are anxious about law and order and would say that they would rather have a decent standard of law and order than extra leisure and recreation facilities.

When the Secretary of State met the Convention of Scottish Local Authorities did it explain that authorities failed to meet his targets because those targets were so unrealistic in the first place? Was the Secretary of State asked whether, in asking for lower manning levels in local government, he had

I am afraid that I cannot agree with the hon. Gentleman. Local authorities in Scotland are finding it difficult to hit anywhere near the target expenditure that we are laying out; they have, year on year, consistently failed to come anywhere near the expenditure targets laid by Government. Of course it makes it progressively more difficult each year to hit the targets if they do that. Each year I have tried my best to be helpful. This year, again, I have found extra money even by cutting my own programmes to make it easier for local authorities.

I appreciate the hon. Gentleman's point about employment, but there is no future for anyone in either doing or being paid for work that is not strictly necessary. If it is not strictly necessary local authorities should seriously consider, in their ratepayers' interests, getting their staffs down to a reasonable level.

With regard to the increase in rent arrears, we come back again to the undoubted fact that anyone who has genuine difficulty in paying his rates is well covered by the rent rebate scheme, which, incidentally, was violently opposed by Labour Members when we introduced it.

That is untrue. We did not oppose it.

The Opposition voted firmly against it. I was present as the Minister involved. The scheme fully covers anyone who finds genuine difficulty in paying his rent. That is the answer. If there are increases in rent arrears, reasonably well-off people must be refusing to pay their rent. That is a different matter.

With his announcement to withdraw housing support grant from Dundee, the Secretary of State must be aware that he has left Dundee with only two choices if it is to qualify for its full capital allocation. There must be either a substantial rates increase or a massive rent increase of £1·60 for council house tenants. Which of those options does the Secretary of State advise the council to pursue?

I would suggest that the district council bears in mind that in paying for its housing revenue account it has sources of income which begin with the rent payer and go on to the ratepayer and the taxpayer. That authority has consistently put too heavy a burden on the ratepayer and the taxpayer and not enough burden on the rent payer, who enjoys the benefit of the house itself, protected by rent rebates. That would be the correct policy to pursue.

Statement, Mr. Buchanan-Smith.

On a point of order, Mr. Speaker. With regard to Scottish Question Time, I know that you had trouble earlier with your geography of Scotland. You may know, Mr. Speaker, that Hillhead is in Scotland. I wonder why you did not think it appropriate to call the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) during Scottish Question Time.

I had better not comment on that.