To ask the Secretary of State for Scotland if he has any plans for reform of local government in Scotland.

My right hon. and learned Friend the Secretary of State has no specific plans at present affecting the future of local government in Scotland.

The last time the Tories met in conference in Scotland the Minister told them that any reform of local government could be justified only if it led to greater economy and efficiency and if it made local government more responsive to the needs of the Scottish people. Does the Minister accept that his poll tax reforms are less economical, as the collection will cost £28 million more every year than the present rating system? As they are demonstrably less efficient than rates as a mean of tax gathering, and as they respond to neither the needs nor the wishes of the Scottish people, who have overwhelmingly rejected them and despise them as a sop to the rich—which they are—does the Minister accept that he should either resign or stand condemned as a monumental hypocrite, which Opposition Members know him to be?

Order. The hon. Gentleman must withdraw the word "hypocrite".

Under your instructions, Mr. Speaker, I withdraw the word "hypocrite".

The purpose of the community charge was to introduce accountability. Reform of the rating system would not inevitably necessitate the reduction of local government to one tier. The hon. Gentleman referred to the Scottish Tory party conference. I am well aware of the representations from that party and many others, including representations from the hon. Member for Glasgow, Garscadden (Mr. Dewar) who said on 27 January:

"there is a case for a move towards a one-tier, all-purpose local authority below an assembly"—[Official Report, 27 January 1988; Vol. 126, c. 327.]

Further to the second point made by my hon. Friend, does he agree that while there might be a case for a modest change, the move to a single-tier system is simply a superficial gimmick which would increase costs and inevitably lead to a great deal of disruption? Does he further agree that the watchwords for Scottish local authorities should be "cost-effectiveness" and "increased accountability" through the community charge, not spurious schemes for structured reform?

My hon. Friend is right. If a case can be made for the reform of local government, it must be on the basis of more effective and accountable local authorities within the existing constitutional arrangements.

In view of the increasing interference by this over-centralising Government into the affairs of local government, is it any wonder that an increasing number of people in Scotland are concluding that the best way to restore and improve local democracy in Scotland would be to set up a Scottish parliament with economic as well as legislative powers, including the power to introduce a one-tier system of local government?

We have no plans for devolution. We do not want more government; we want better government.

If the Minister is really serious about striving towards greater accountability in the context of the poll tax or the reform of local government, will he consider the introduction of a sensible system of proportional representation? Is it fair that in the district elections in Edinburgh in May the Conservatives won only 23 seats, the Labour party won 33 seats and both parties secured only 36·5 per cent. of the poll?

The hon. Gentleman has mentioned an interesting case. More people in Edinburgh voted Conservative than Labour. However, I cannot give any undertaking to support proportional representation. We prefer the system in which people may vote for a person with a direct tie to his constituency and not to strengthen the party list system.

To ask the Secretary of State for Scotland what recent discussions have taken place between his Department and the British Steel Corporation concerning the future of the strip mill capacity at Ravenscraig steelworks; and if he will make a statement.

Following a meeting on 14 July, Sir Robert Scholey wrote to me confirming that, at present, there is no reason for the corporation to make plans to close the Ravenscraig hot strip mill.

Has the Secretary of State seen the headline in today's Glasgow Herald, which says

"MacGregor offers to look at Ravenscraig"?

Who by?

By the Prime Minister. That is the kiss of death from the black widow if ever there was one.

I notice that the hon. Gentleman has rejected the view of his hon. Friend the Member for Motherwell, South (Dr. Bray) about the splitting up of the British Steel Corporation. The BSC is performing extremely effectively at present and, to be completely fair, credit must be given to its management, who have found markets that will purchase the product made by the excellent work force at Ravenscraig. Such excellent teamwork offers the best short-term and long-term prospects for Ravenscraig.

Bearing in mind Ravenscraig's success in recent years, does my right hon. and learned Friend agree that any reduction in output in any part of the plant will have a detrimental effect on the Scottish economy? Will he do all that he can to encourage the British Steel Corporation to invest in Ravenscraig, to ensure the plant's long-term future?

I do not know whether a reduction in output would have a significant effect on the Scottish economy, as only 4 per cent. of the British Steel Corporation's products are utilised within Scotland. Ravenscraig's major importance is the employment that it produces for Lanarkshire. Investment has been made in the strip mill in recent years, and I believe that the Arthur Young report, which is often referred to by Opposition Members, said that there was no economic case for new investment in Ravenscraig at the present time.

Is the Secretary of State aware that the restrictive strategy of the British Steel Corporation is a continuing threat to Ravenscraig? It seeks to restrict capacity and output to force up prices to the limit that European competition will bear. While the immediate threat to the hot mill will depend on when the next dip in demand occurs, the threat to Ravenscraig will remain until the Government take action to impose on Britain's steel industry a genuinely competitive regime to which Ravenscraig can properly contribute.

The actions of British Steel's management have, in part, led to the hot strip mill, which some months ago was operating at reduced capacity, working flat out. Clearly, that steel could not be produced unless there were markets for it. It is to the credit of the management that those markets have been identified. Over the past few years the Government and the British Steel Corporation have insisted on rationalisation and modernisation of the industry, which is why we have a steel industry which, instead of making a loss of over £1 billion a year, as it did in 1979, is making a healthy profit. I am sure the hon. Gentleman will appreciate that a profitable steel corporation is a much better prospect for the long-term future of all its plants, including Ravenscraig, than one that makes a loss of billions of pounds a year.

How will Ravenscraig's prospects be affected by the elevation of a sudeten Scot—the hon. Member for Mid-Worcestershire (Mr. Forth), who has joined the Government and therefore left Scottish Question Time, for which we are thankful? Will not the anti-Scottish bias that is so evident among the British Steel Corporation's senior management now be accompanied by anti-Scottish bias in the Department of Trade and Industry?

Only the Scottish National party could interpret the appointment of a Scot to the United Kingdom Government as being to the disadvantage of Scotland. The hon. Gentleman has a lower opinion of his compatriots than have Conservative Members.

What calculations has the Minister made of the number of non-steel jobs that will be lost if Ravenscraig is closed?

Various calculations have been made, but as there is not the slightest prospect of Ravenscraig closing, certainly in the near future—or, I believe in the longer future—such questions are purely hypothetical. I have emphasised that Ravenscraig is of major importance to the economy of Lancashire. Clearly, there would be grave implications for the economy of the locality if Ravenscraig were to close. The combination of Government policy and the qualities of the industry's work force and management mean that there are no reasons to consider the closure of the strip mill or, in the next few years, Ravenscraig itself.

In the absence of my hon. Friend the Member for Mid-Worcestershire (Mr. Forth), who is deploying his excellent talents for the benefit of the whole of the United Kingdom, will my right hon. and learned Friend confirm that this year alone Ravenscraig has broken 16 production records, and that it has received £12 million of investment over the past three years? If that is kept up, will it not be the best guarantee of the continuation of Ravenscraig?

The Department of Trade and Industry's gain is a loss for Scottish Question Time, I will confirm what my hon. Friend said in the latter part of his question, and repeat the important rider that it would be of little value for Ravenscraig to have this superb maximum output if Sir Robert Scholey and his colleagues in management had not been working to find markets for that output. That combined effort by Sir Robert Scholey, his management team and the work force at Ravenscraig, has substantially increased not only the short-term but the longer-time prospects of Ravenscraig.

The Secretary of State might not have been so optimistic about the increased Scottish presence in the Department of Trade and Industry had he had the pleasure of reading the articles about Scotland written by the hon. Member for Mid-Worcestershire (Mr. Forth) for his local press, and the dismissive and wounding comments that he made about expenditure in Scotland. Will the Secretary of State be a little more specific and go a little further than he has so far? As he knows, the guarantee for the hot strip mill at Ravenscraig lasts only until 1989, and in view of his correspondence with Sir Robert Scholey and his suggestion that closure was not a possibility in the near future, will he give the guarantee that he conspicuously refused to give in the recent Scottish Grand Committee debate, and make it clear that there is no possibility of the mill closing in 1989 when the transitional protection ends?

My hon. Friend the Member for Mid-Worcestershire (Mr. Forth) was drawing attention to the level of Government expenditure in the constituency of Glasgow, Garscadden, compared with Government expenditure in Mid-Worcestershire. I can fairly say for my hon. Friend's point of view that there may have been a difference between the two totals to the disadvantage of his constituents.

To ask the Secretary of State for Scotland what consideration he has given to a wider definition and assessment of houses which are below tolerable standard.

My right hon. and learned Friend is currently reviewing the statutory tolerable standard as part of the proposed reform of the home improvement system.

Why is it taking the Secretary of State so long to review this matter when so much hardship is being caused to many home owners and council tenants in Scotland by the fact that their houses, which have leaking roofs and crumbling stone work, and are riddled with damp, do not come below a "tolerable standard" in his eyes? Why will he not accept the need for a housing condition survey, such as England and Wales have, to ensure that there is available to the House and the public of Scotland an appraisal of the terrible conditions in which so many Scots are housed today?

A housing conditions survey would cost about £5 million and that sum would have to come out of housing resources. Frankly, I would rather that local authorities had that sum now, and we believe that it would be better utilised on that basis.

Is my hon. Friend aware that the district council of Kincardine and Deeside has frozen all applications for home improvement grant? That has caused considerable confusion, especially as it has occurred so early in the financial year. Will my hon. Friend use his good offices and those of the Scottish Development Department to resolve the difficulties and confusion that have arisen so that those who have a genuine wish to improve their houses—some of which are below the tolerable standard—are given the proper opportunity to do so?

This year £625,000 was awarded as the non-housing revenue account capital allocation to Kincardine and Deeside Council, which represents 87 per cent. of its bid and is above the Scottish average. The problem for the district council is that it appears that it has over-committed the resources made available to it. We have already made it clear that officials will be glad to discuss the problems with the council as soon as it wishes.

Is the Minister aware that 250,000 Scottish people now live in damp and intolerable housing conditions? Is the Government's decision not to raise housing standards based on the fact that they cannot cope with present Scottish housing conditions?

It is extremely desirable that local authorities should carry out their own housing surveys. We are helping them to do so by sending out an information pack and a detailed brief on how best to conduct those surveys. The results of those surveys can be used in targeting resources to those areas that local authorities consider as priority areas.

If the Minister does not want to spend money on conducting a survey, will he make money available to councils, such as Edinburgh district, where all applications for home improvement grants have been frozen? Is he aware that that council has received more than 8,000 applications, some of which date back to 1983, which cannot be dealt with because of the Government's constant policy changes and because the Government will not make money available for essential repairs? That is causing misery and anger to a growing number of people.

The bid put in by Edinburgh district council this year for non-HRA spending was for £31 million and every penny of that bid was awarded to it. Since that time the district council has estimated that the cost of clearing the backlog of repairs is about £19 million more than it estimated a few months ago. Obviously we are giving careful consideration to that matter as well as to the problems of Glasgow. My right hon. and learned Friend and I are considering what can be done to assist those affected by Edinburgh council's astonishing miscalculation of the figures. We hope to make an announcement shortly.

Will my hon. Friend confirm that the total number of houses in Scotland below the tolerable standard has fallen—[HON. MEMBERS: "Reading".] Only the figures. That number has fallen from 121,000 in 1979, under the Labour Government, to 54,000 in March 1987. If those figures are correct—I suspect that my hon. Friend will be able to confirm that they are—will he assure the House that the question from the hon. Member for Edinburgh, South (Mr. Griffiths) was not planted?

My hon. Friend is absolutely right. The figures have fallen substantially, from 121,000 to 54,000. We rely on the latest figures from local authorities. Dundee, for example, recently said that it had 1,000 more below tolerable standard—BTS— houses. That is why the figure is 54,000 today.

Will the Minister live up to his responsibilities for once and acknowledge that a house affected by severe condensation, or a house with no bath or shower, is not a suitable or tolerable habitation for any Scottish family? Will he acknowledge that the official statistics, which were parroted by the hon. Member for St. Ives (Mr. Harris)—he is supposed to know about these things—are a scandalously complacent under-estimate of the number of squalid and unhealthy houses in which far too many Scots are compelled to live? Many of those houses are to be found in the Minister's precious private rented sector. What will he do about the shortfall in funds that local authorities need to deal with this scandalous problem?

It is highly desirable that local authorities undertake the surveys for which we have given them the expert information. Then they can identify how best to target resources on priority areas.

To ask the Secretary of State for Scotland what guidelines he has given to health boards with regard to the regrading of nurses.

To ask the Secretary of State for Scotland what representations he has received concerning nurse regarding.

The Scottish Home and Health Department issued written guidance covering organisational and implementation arrangements to health boards on 13 May. Copies have been placed in the House Library.

We have become used to cynical manipulation of the figures, particularly by Conservative Members, when we discuss the Health Service. Is the Minister aware that a substantial proportion of the nurses who were supposed to receive the recently announced pay award of 15·9 per cent., of which the Government made great play, will get less than half that trumpeted amount? What calculations has he made of how the award will be distributed? How many of those who will receive it will get less than the advertised amount?

Speaking of the manipulation of figures, the hon. Gentleman should be accurate. The figure is 15·3 per cent., not 15·9 per cent. I am sure that he wants me to be accurate.

In view of the Minister's announcement of his meeting with the nurses, will he give a commitment that he will make every possible effort to give positive reassurance to the nurses at that meeting that the principles of regrading will be honoured?

I shall be happy to give that assurance, of which I think the Royal College of Nursing is aware. We have taken steps to ensure that the health boards are given guidance and that management has enough training and expertise to carry out the grading review as quickly as possible. We expect it to be achieved by the end of October. A nursing sister with substantial clinical responsibilities on the ward will find that her real pay has improved by more than 50 per cent. since 1979 as a result of the Government's commitment to the Health Service and to nursing within it.

Does my hon. Friend agree that a 44 per cent. increase in the real pay of nurses in Scotland since 1979, the regrading exercise, the pay increase and the hospital building programme north of the border show a real commitment to developing a high quality Health Service in Scotland?

I am grateful to my hon. Friend. The Health Service has never been better funded and now has the biggest capital investment programme in its history. It has never had more doctors and nurses, and they have never been better paid. That is because of the success of the Government's economic policies in delivering the resources to provide that care. The last Labour Government failed the Health Service because their economic policies failed the nation.

The Minister has rattled off success stories in Scotland. Will he tell the House why it is that the nurses' representatives in the Health Service in Scotland do not accept the Minister's statement? Will he also give a guarantee that the actual cost of the regrading will be met by his right hon. and learned Friend the Secretary of State when it has been concluded? Will he answer the original question and tell us what guidelines he is giving?

The vast majority of nurses who eschew strike action are members of the Royal College of Nursing. The hon. Gentleman is referring to remarks made by the Confederation of Health Service Employees in Scotland. I deplore the campaign of rumour and innuendo that the confederation has mounted. It has suggested that nurses will be made redundant as a result of the regrading exercise. That is completely untrue. It has suggested that nurses' pay will be cut, which is also untrue. I can only imagine that such trade unions are piqued by the success of the Royal College of Nursing in delivering better terms and conditions for its members while not taking any part in strike action.

Bearing in mind that the Labour Government cut nurses' pay in real terms, does my hon. Friend agree that the present pay award has been well received by nurses? Is it not ludicrous that the Opposition should ask for an open cheque for the payment of the very large award that we have made, bearing in mind that the sum was recommended by an independent review body?

I agree completely with my hon. Friend. The 15·3 per cent. increase in the nurses' pay bill was calculated not by the Government, but by the review body. The Government gave a commitment to fund that cost, which amounts to £803 million for the United Kingdom and to £92 million for Scotland. That is a substantial additional resource for the Health Service, and a responsible Opposition should welcome that and give the Government credit for what they have achieved.

The Minister will know that to fund the review body awards, including that for the nurses in the regrading exercise, he allocated £21·6 million to the Greater Glasgow health board. Has he read the minute of the finance and general purposes committee of the Greater Glasgow health board of Tuesday 3 May? Item 53 is headed "National Health Service pay body awards 1988–89" and paragraph 2 reads——

Paraphrase it, please.

It was expected that the amount allocated—£21·6 million—would be £6 million less than the cost of the pay review body award. The minute goes on to say that the board would have to find the extra £6 million from its own reserves. Is that what the Minister means when he talks about fully funding the nurses' pay award? Why does the Minister constantly maintain that he will fund it fully, when he knows that he will not?

I have already explained to the hon. Gentleman that the sums were based on the estimates that were made by the review body. I must confess that I have not read the minute to which he referred. However, I can tell the hon. Gentleman that I have had no representations from the Greater Glasgow health board to that effect. Also, the board has taken the unusual step of refuting some of the scaremongering that has come from the trade unions and others. I am sorry that the hon. Gentleman chooses to associate himself with such action.

To ask the Secretary of State for Scotland what effect the new Scottish performance indicators package for National Health Service managers is expected to have on waiting lists.

The indicators will help to identify areas where management action is required to improve performance and to speed up the waiting list reductions, which have been stimulated by the extra money that I have made available.

Does my right hon. and learned Friend agree that, although the performance indicator package is welcome, we still have a long way to go? The National Health Service is still flying blind, in as much as the cost of inputs is largely unknown and the value of outputs is largely unassessed. We need to go rather further than we have.

Order. Make it brief, please.

—sell their services to the district health authorities. It is only in that way that we shall improve the Health Service in the long term.

I congratulate my hon. Friend on his ingenious way of publicising the document to which he referred. Naturally, I look forward to reading and studying its recommendations. The concept of an internal market within the Health Service is of increasing interest among those who work within it as a way of ensuring better service for the patients with the resources that are available.

I am sure that the Secretary of State, unlike his hon. Friend the Member for Tatton (Mr. Hamilton), is well aware that a package of statistics will not improve waiting lists in Scotland. Does he agree that one way in which they can be improved is to back the findings of the Select Committee on Social Services, which has a majority of Conservative Members, and provide the resources that we have identified the NHS needs to perform its work adequately?

I can assure the hon. Gentleman that the Scottish Office does just that. For example, in the course of the current year we have allocated an extra £2 million to deal with waiting lists, the very subject with which his question deals, and, as a consequence, the number of patients treated in 1988–89 has been increased by 16,000 out-patients, 6,000 in-patients and over 3,000 day cases. We are seeking to undo the damage caused by the industrial action in the NHS in Scotland in earlier years, which led to an increase in waiting lists of some 30,000.

To ask the Secretary of State for Scotland if he will make a statement on the further advice which his Department is issuing to Scottish poll tax payers in order to facilitate knowledge of exempted categories.

When registration officers send out the notifications in October and November to those whose names are on the register they will also send a supplementary notice detailing all the exemptions. This will enable people who may benefit from the exemptions to approach the registration officer about their entitlement to exemption.

Will the Minister concede that at this stage there is room for alteration of the exemptions? During the recess, will he suggest that one way to be exempt from payment is to put one's father or mother into a local authority nursing home rather than retain him or her in the family home? Will he promulgate that? In addition, will he say clearly that one of the tricks that the Government have deplored is to remove from the rating system certain fishing owners, at a cost of £1·5 million, while those who desire exemption because of severe mental handicap will have to go through the humiliation of registering that fact, through their offspring, patients or relations, with a general practitioner in order to have it recorded that they are "unfit" to perform civic functions? Does the Minister accept that the whole question of exemptions blows a hole in accountability and that a Government who had one scintilla of Christian conscience would not promote such a piece of legislation?

Some of the exemptions remain to be prescribed in regulations, but I see no reason for expecting any of the exemptions, or indeed any of the regulations, to lead to any change in the domestic residential arrangements of any family. The value of the fishing rates concession is equal to one fiftieth of 1 per cent. of total local authority current expenditure.

Has my hon. Friend seen the report in this week's Glasgow Herald, on 22 July, that 12 Scottish Labour Members of Parliament have said publicly that they will not pay the community charge? Therefore, will he give the hon. Member for Glasgow, Cathcart (Mr. Maxton), who said in the same edition that there was no split in the Scottish Labour party on that issue, an opportunity to come here and explain how he squares the circle?

I have read the article to which my hon. Friend refers. A battle is raging within the Labour party over the community charge, between those who think that they should obey the law and the 12 members of the law-breaking tendency. There is also one special class which embraces the hon. Member for Greenock and Port Glasgow (Dr.Godman), who intend to obey the law, but whose wife does not. I have to tell him that the joint and several liability provision will cater for that.

To ask the Secretary of State for Scotland what representations he has received in favour of increased Gaelic language programmes on television in Scotland; and if he will make a statement.

Anns na dha no tri bhliadhnaichean a chaidh seachad tha sinn air tagraidhean fhaighinn o bhuill uasal,comhairlean ionadail agus buidhnean Gaidhlig.—[Interruption.] If hon. Members would prefer——

What does that mean?

I did not realise that you did not have the Gaelic. It means:

"In recent years a number of representations have been received from hon. Members, local authorities and organisations representing the Gaelic community."

I thank the Minister for his sterling efforts. May I assure him that he does not sound any more acceptable to the Opposition in Gaelic than he does in English? Will he take this opportunity to welcome the recent publication by Comunn Na Gaidhlig—that is the correct pronunciation—"Towards a Gaelic Television Service"? Will he say what input, if any, the Scottish Office will have to the Government's White Paper on broadcasting, particularly the degree of influence it could exert to redress the imbalance with the United Kingdom so that Gaelic in Scotland can enjoy the same sort of broadcasting support as Welsh does in Wales? It is high irony that STV and Grampian are contributing towards the Welsh broadcasting service, but we do not have specifically designated funding in that way in Scotland.

I cannot anticipate what will be in the White Paper. We have received copies of the document to which he referred and we shall study its proposals with interest. The hon. Gentleman might acknowledge that the BBC and the independent television companies in Scotland are planning to increase the time that they make available for broadcasting. I know that there is still concern. The hon. Member for Argyll and Bute (Mrs. Michie) had a recent Adjournment debate and summarised that concern. We are sympathetic and we urge the Gaelic-speaking community to continue to put pressure on the broadcasting authorities, because it is a matter for them.

I congratulate the Minister on his admirable Gaelic and say "Meala naidheachd airson bruidhinn Gaidhlig agus rinn thu uamhasadh math."

What does that mean?

Those are the kindest words I have ever spoken to the Minister.

I thank the hon. Gentleman for his kind remarks.

Will my hon. Friend accept that 95 per cent. of Scottish people do not know a word of Gaelic and that they want television programmes that they can enjoy and understand in the lingua franca?

What my hon. Friend says is true. There are 80,000 Gaels in Scotland, which is about 2 per cent. of the population. However, there are concentrations in particular communities. I see no conflict between giving stimulus and support to the Gaelic language and providing the required wider programming interests through the broadcasting authorities. I believe that the development of new technology will enable more broadcasting to be achievable, and that is a matter to which I hope the broadcasting authorities are turning their minds.

To ask the Secretary of State for Scotland if he will meet (a) the Confederation of British Industry (Scotland), (b) the Scottish Council (Development and Industry), (c) Chambers of Commerce and (d) the Convention of Scottish Local Authorities to discuss the implementation of a uniform business rate.

The reform of business rates has been discussed with a number of Scottish business interests. No further meetings are planned at present.

I find it amazing that the Minister continues to be complacent as always when he knows, as he has said in the past, that the Scottish business community is substantially disadvantaged, so that a Marks and Spencer store in Falkirk pays £166,000 in rates and a Marks and Spencer store of similar size in York pays £32,000. It is universally agreed that, after the revaluation in 1990, Scottish business will be further disadvantaged. Neither I nor the business community can understand why the Government wish to impose a higher tax on Scottish business than will be paid in England and Wales. Why is the Minister being so complacent?

The complacency is on the other side, when one reflects that the hon. Gentleman was once finance convenor of Strathclyde region. One of the disadvantages that Scottish businesses face is as a result of the depredations of high-spending Labour-controlled local authorities. However, I am happy to assure the hon. Gentleman that Scottish businesses will derive consider-able benefit from the index-linking provisions in the Abolition of Domestic Rates Etc. (Scotland) Act 1987. If those provisions had been in force for the past five years, Scottish businesses would have had to pay £200 million less in rates than they have had to do.

To ask the Secretary of State for Scotland if he will make a statement about the prospects for manufacturing industry in Scotland.

The prospects for manufacturing industry in Scotland are extremely favourable, Manufacturing output in the final quarter of 1987 was 4·7 per cent. up on the previous quarter and I expect further strong growth this year.

Does the Secretary of State agree that it is important to manufacturing industry in Scotland that it should have available to it an efficient and economic electricity supply? Is he aware that today's Energy Select Committee's report on the Government's proposals for electricity privatisation is a devastating indictment of the proposals, showing them to be ill-thought-out and thoroughly muddled? It also shows that the so-called competition by comparison that the Government have claimed would keep down costs in Scotland is largely meaningless, that the proposals pose real dangers to Scottish consumers and, particularly, that Scottish consumers, including industrial consumers, may very well finish up by subsidising the export of Scottish electricity to England. Why does the Secretary of State not drop the proposals?

I have not yet had an opportunity to read the Select Committee's conclusions, but I understand that they question the value of continuing with vertical integration in Scotland whereby generation, production and distribution are in the same company's control. As the right hon. Gentleman shares the Government's view that vertical integration has been to the benefit of the Scottish economy, and as that will continue, I am surprised that he did not refer to that.

Does the Secretary of State accept that the adverse effect of the high value of the pound and of high interest rates is bound to be considerable on manufacturing in Scotland in general and on the woollen trade in the Borders in particular? Does he not receive a warning from this morning's trade figures, which show that we are on target, not for the Chancellor's £4 billion deficit at the end of the year, but, possibly, for a £10 billion deficit? Does the Secretary of State accept, therefore, that the Government's economic policy appears to be constructed on a pack of credit cards?

No, I do not, because, as the right hon. Gentleman will appreciate, if we returned to the levels of inflation that existed when he was in a pact with the Labour Government, the prospects for Scottish industry would be disastrous. Scottish industry and manufacturers are going through a period of unprecedented growth, which they recognise as being favourable to their interests and those of their employees. The alternative economic prescriptions that the right hon. Gentleman supported during the period of the last Labour Government would create a gloomy future for the textile industry in his constituency, as well as for Scottish industry as a whole.

Does my right hon. and learned Friend agree that the recent marked and welcome improvement in the performance of Scottish manufacturing industry comes through a growing awareness among the Scots people that the way to success and to compete against the rest of the United Kingdom is not through the Socialist dependency preached by all three Opposition parties, but through hard work, free enterprise and individual promotion—in other words, Thatcherism?

Yes.

May I help the Secretary of State by telling him that the Select Committee on Energy did not make the comment that he has reported to the House. Instead, it made the interesting point that vertical integration has been favoured in Scotland and not in England, and that no arguments, except that of historical convenience, have been adduced by the Government to justify that difference of approach. Does the right hon. and learned Gentleman accept that he cannot shrug off a Committee with a solid Tory majority, which has condemned in the most stringent terms as ill-thought-out and ill-considered the Government's plans to privatise the electricity industry? It makes the telling point that no real effort has been made by the Government to establish or argue that there will be any advantage for the consumer. It condemns in the most forthright way the atmosphere of hostility that has, for example, conditioned the Government's approach to the coal industry. Is it not clear that the Secretary of State will have to rethink his position following the devastating job that has been done by the Select Committee?

I recall that before every previous privatisation there have been those who have made exactly the same predictions, which have been found to be entirely incorrect when the results have been announced. Since the Government have announced their proposals for privatisation in Scotland—those for the electricity industry and the Scottish Bus Group, for example—we have found a tremendous increase in interest among the employees of the industries. Their main interest lies in the opportunity for them and their fellow workers to enhance their participation in the industries that are important to them.

To ask the Secretary of State for Scotland what assessment he has made of the impact on the Scottish economy of the recent order for three type 23 frigates from Yarrow Shipbuilders.

The order, together with existing work on frigates in the yard, will safeguard over 4,000 jobs at Yarrows well into the 1990s, with proportionate spin-off to the local and national economy. The Ministry of Defence estimates that the equivalent of 10,000 jobs, including those at Yarrows, will be sustained in the defence industry throughout the United Kingdom over the next four to five years.

Does my hon. Friend agree that the news that the jobs have been safeguarded is yet another sympton of the buoyancy of the Glasgow economy, which has led to the Glasgow commercial property market being one of the most vibrant in the United Kingdom? Does he further agree that the order makes it highly likely that Yarrow will be at the forefront of those tendering for the fourth frigate in 1989?

My hon. Friend is right to welcome the order and the success that it brings to the Clyde. It was won in fair and open competition. It is a tribute to the work force and its skills and to the forward-looking investment programme of the management at Yarrow.

Is the Minister aware of the excellent design assistance that has been given to Yarrow by the national engineering laboratory at East Kilbride? Will he share in the outrage that has been expressed throughout Scotland at the proposed sell-off of the NEL, and the secretive way in which it has been introduced?

I welcome the interest that has been shown in the national engineering laboratory by the number of applications that have been submitted. I believe that that will achieve a secure future for the laboratory.

Has the Minister spoken at any stage to his colleagues in the Ministry of Defence to ensure that further defence jobs of this nature come to Scotland? The defence procurement budget acts as a massive subsidy to the south-east and south-west of England. Would it not be more appropriate if more of the budget were spent in Scotland?

The hon. Lady is talking bigoted nonsense. Yarrow has seven Royal Navy ships on order or under construction. I wonder how many ships there would be in the Royal Navy of an independent Scotland.

To ask the Secretary of State for Scotland what steps he has taken to speed up the process of settling applications and claims for payment of regional grants.

A large intake of applications and claims were received in the period just before the scheme was closed to new applications. Additional staff have, therefore, been deployed in the regional development grants office in Glasgow. The number of cases dealt with is running at record levels, but some delay to applicants is unfortunately inevitable.

The Minister will recall that I wrote on behalf of Forbes and Whiteford Ltd. in my constituency —a small but successful firm—which has been held up for several months. Its application has been forwarded and it is waiting on the cheque. I appreciate that extra staff have been employed in the office to issue the cheques, but does the Minister share my anxiety that if small firms do not receive the money that they need up front for their small expansions there will be job losses? The number might be small, but they will be vital jobs that we require in areas such as Kilmarnock. Will further staff be deployed so that we can reduce the waiting time to weeks rather than months?

I understand the hon. Gentleman's concern, and I appreciate the difficulties confronting small firms. More than one year's applications were received by the Department within about three months. The case to which the hon. Gentleman refers is being considered at this time.

Would not more of the same reach the right parts faster if it were not for the regional policies of the TGWU, which seems to put the interests of its members in the prosperous south ahead of those of the unemployed in Dundee, but whose sponsorship money Opposition Members still seem keen to take?

My hon. Friend is absolutely right. It is also a cause of considerable regret that while the TUC supports the introduction of the employment training scheme, the STUC is resisting the scheme, which is designed to help the long-term unemployed in Scotland.

Does the Minister not accept that the RDG fiasco is another example of the mismanagement of the Scottish economy? Will he tell the House how many applications are still outstanding and when the backlog is likely to be cleared?

A considerable number of grants are outstanding. It is impossible to give the hon. Gentleman an exact figure, because of the movement that is taking place. I can tell him that over the past four months 2,000 cases have been cleared and that the clearance rate will accelerate further at the end of the holiday season.

To ask the Secretary of State for Scotland what discussions he has held concerning the privatisation of the Scottish Bus Group and the future of CalMac; and if he will make a statement.

My right hon. and learned Friend has met the chairman and deputy chairman and the board of the Scottish Transport Group. I have met the Scottish Trades Union Congress and the joint Scottish shipping services advisory committees. My right hon. and learned Friend is presently considering the future arrangements for CalMac and the pattern of privatisation of the Scottish Bus Group.

In view of the Secretary of State's reply to my right hon. Friend the Member for Glasgow, Govan (Mr. Millan) concerning the need for employee participation, will the Secretary of State provide general preferential arrangements for employee bids for the Scottish Bus Group?

Yes. We regard it as particularly important that management and employees are given the opportunity to acquire a stake in their own business, and consideration will be given to how best to encourage that. We are aware that a considerable measure of interest is already being shown by employees, as well as by management, in possible management/employee buy-outs. I hope that privatisation in this case will see a significant increase in employee participation.

Is my hon. Friend aware that the Scottish Transport Group and many of the people involved in the industry sincerely believe that privatisation should be on the basis of the existing companies and not on a structure which, perhaps, has purely theoretical merit? Will he assure the House that he will take those representations seriously? Does he agree that bus privatisation will present a major opportunity for Scots and Scottish institutions to take a stake in an important indigenous industry?

Certainly. The Secretary of State's decision was based on the advice of the Scottish merchant bank advisers, Quayle Munro, and has the prime purpose of increasing competition in the Scottish bus market to the benefit of the consumer and to boost enterprise and, in particular, employee participation.

To ask the Secretary of State for Scotland when he last met the president of the National Farmers Union of Scotland to discuss the current state of agriculture in Scotland.

My right hon. and learned Friend last met the president at the Royal Highland show.

I am sure that the Under-Secretary of State is aware of the disappointment in Scottish agriculture at the relatively small devaluation of the green pound—not least in the beef sector, where a date for it to take effect has not even been announced. Additionally, there are ever-increasing financial burdens as a result of higher interest rates. On the next occasion that the Secretary of State meets the president of the Scottish NFU, does he propose bridging what the president recently described as a yawning credibility gap between the Government's protestations that British farmers must not be disadvantaged and their inability to deliver?

The position on the green pound is that we achieved a settlement that was very good compared with other countries; only two other countries within the Community did better. As to agriculture's financial position, the hon. Gentleman may be aware that the latest bank figures show a fall in the burden of debt carried by farmers in Scotland. In the year to May 1988 it was down 3·5 per cent. in current money terms and down 7 per cent. in real terms. The figures show increasingly careful financial management among other farmers, which is welcome.

When the Minister met the president of the National Farmers Union, did he have an opportunity to discuss the massive cutbacks in research and development in agriculture? I believe that the total figure is about £75 million. Can the Minister tell the House how many jobs in Scotland will be involved in the cutback, and will he put in the Official Report all the institutions in Scotland that will suffer a cutback in employment?

The hon. Gentleman seeks to present a transfer of responsibility for funding from the state to industry as a cutback, for reasons best known to himself. The overall position on future levels of public spending on agricultural research and development is, as he knows, still under consideration, and no final decisions have been made.

Is my hon. Friend aware of the particular difficulties facing the pig industry in Scotland, particularly in areas such as Grampian, where it is an important part of the agricultural economy? Is he further aware that the problem is caused largely by the increase in overseas protein prices? This follows a very difficult period in relation to monetary compensation amounts. There is deep concern in the pigmeat sector in Scotland, as indeed there is throughout the United Kingdom.

As my right hon. Friend will know, one of the causes of concern in the pigmeat sector involved the removal of MCAs. He will also know that the recent settlement met our major objectives. It improves the competitive position of United Kingdom pig farmers relative to nine of the 12 member states, and virtually eliminates the pigmeat MCA gap.