With permission, Mr. Speaker, I wish to make a statement about local government finance in Scotland.

First, I wish to announce my decision on grant for Scottish local authorities in respect of 1990–91. In reaching that decision, I have had in mind the views expressed to me by the Convention of Scottish Local Authorities on its estimates of what it regards as required spending levels next year. I have also had in mind the substantial increase in the planned volume of spending by Scottish authorities this year, and the scope that undoubtedly exists for economies and efficiency improvements. A further factor is my undertaking given some time ago that—subject to parliamentary approval of the necessary legislative changes—I would make substantial initial progress next year in reducing the rate burden on Scottish businesses.

What I am announcing today is the total of aggregate Exchequer grant—that is, the total of specific grants and revenue support grant—that will be paid to Scottish local authorities for 1990–91.

I propose that aggregate Exchequer grant for 1990–91 should be set at £2,739 million. This is £242 million or 9·7 per cent. higher than the corresponding figure for this year. This figure, however, includes extra grant to allow business rates to be substantially reduced in line with the Government's stated objective of eliminating the difference in non-domestic rates between Scotland and England.

My new proposals on business rates, which I announced on 8 May, have been widely welcomed in Scotland, and we lost no time in presenting legislative proposals to the House on 14 June. I am happy to announce today that I propose that the rate bill for Scottish business next year should be reduced below what it would otherwise be by the sum of £80 million. The Confederation of British Industry has estimated the excess rate burden on Scottish business to be around £250 million, and we will therefore be closing that gap by almost a third in a single year. This represents very substantial progress. I know that this, together with the other steps that are being taken on harmonisation of valuation procedures north and south of the border, will be warmly welcomed by Scottish business and industry and by all those for whom the private sector in Scotland provides employment.

Local authorities will be compensated by increased grant of £67 million, which is included in the total figure of aggregate Exchequer grant which I have already given. As their contribution to this reduction in business rates, and in recognition of their welcome support for this policy, I am asking local authorities to recover the balance of £13 million by efficiency savings. This compares with total current expenditure for next year estimated by COSLA to be over £5,000 million. I am confident that it should be well within their capability to achieve these modest savings without threat to standards of service. My Department has already had useful discussions with COSLA on implementation of the new policy, details of which will be announced in the autumn.

The remainder of the total of aggregate Exchequer grant represents an increase of 7 per cent. on this year's figure. Taken together with business rate income, it should enable local authorities, if they are prepared to take a grip on their spending, to set community charges not significantly higher on average than this year's levels. I hope that many authorities will already have recognised their excessive budgeting for this year and, in the knowledge of the reasonable grant settlement that I am announcing today, will now plan for reasonable levels of spending and of community charge next year. Detailed proposals for grant distribution will be put to the Convention of Scottish Local Authorities for consultation, in the usual way, in the autumn.

I also wish to take this opportunity to announce a number of changes that I am proposing to make to the arrangements for administering the standard community charge in Scotland. As hon. Members are aware, the standard community charge is paid by owners, or long-term tenants, of houses such as second homes which are not used as someone's sole or main residence. I have received a significant number of representations about the standard community charge and recently received a paper from the Convention of Scottish Local Authorities outlining suggestions for change. I am quite clear that many of the problems that have arisen can be attributed directly to local authorities' decisions in almost every case to set their standard community charge multipliers at the maximum of two times the personal community charge, when they had been given discretion to set the multiplier anywhere between one and two.

Nevertheless, and in the light of the real problems that have as a result arisen, I have decided to make the following changes to the present arrangements. First, I intend to take powers to define certain classes of premises for which I will be able to prescribe a maximum multiplier. I will use that power to tackle, in particular, the very difficult case of the house that is unoccupied because the owner has to live with friends or relatives because of illness or infirmity. That is one situation in which a multiplier of up to two seems too high. If other categories of a comparable kind emerge, those powers will enable me to make provision for them.

I will also make provision to allow local authorities to determine, subject to certain conditions, their own classes of premises for which they could set different multipliers. That will allow them to take account of circumstances not covered by classes that I might prescribe, but which it is right should be the subject of local decision. That will give them, for example, discretion to set a different multiplier for the homes of old people in general who are living with relatives and for the homes of people obliged by their jobs to live in tied houses. Local authorities could also create other classes, depending on local circumstances; and a regional council would be able to set different maximum multipliers for its classes in different district council areas, something specifically requested by COSLA in the proposals which it put to me.

As a result, local authorities will have considerably greater flexibility in their operation of the standard community charge arrangements. I know, therefore, that the new arrangements will be welcomed. I am proposing that the necessary amendments to the Abolition of Domestic Rates Etc. (Scotland) Act 1987 to allow for the introduction of those changes should be made in the context of the Local Government and Housing Bill, and amendments to that Bill will be tabled. The changes will come into effect for the financial year 1990–91.

Lastly, I propose to redefine the boundary between domestic and non-domestic property so that single dwellings available for holiday letting are subject to non-domestic rating rather than the standard community charge.

These proposals tackle the main problems that have emerged in relation to the incidence of the standard charge and are a direct response to the concerns expressed by local authorities and others. I hope that local authorities will reciprocate by using the additional discretion that they have now been given.

This is clearly a significant statement. It is good to see some signs that the Government have been listening and, perhaps, even learning. The aggregate Exchequer grant is more generous than in some previous years. I hesitate, but it would be pleasant, to ascribe that to the increasing influence of the new chairman of the Tory party in Scotland. However, that is probably optimistic.

The increase of 9·7 per cent. sounds generous, but a number of caveats must be made. It includes the £67 million for the reduction in the non-domestic rate. I hope that the Secretary of State will accept that the true increase is about 7 per cent. As he knows, inflation is running at more than 8 per cent. at present, so there is certainly no way in which that could be said to represent an increase in the aggregate Exchequer grant in real terms. Will the Secretary of State accept that a great deal depends on the indexation of the non-domestic rate, which I understand is a question for the Chancellor? If that were to be below the retail prices index figure, it would directly affect a council's income.

I welcome the move to help the non-domestic ratepayer. The total allocated this year is £80 million. Will the Secretary of State give an estimate of the gap to be closed? I have seen figures for the subsidy required, which varies between £250 million and £400 million. No doubt, much depends on the harmonisation of rateable value and, as well as commenting on the gap, could the Secretary of State say a word or two about how that is progressing and whether it will be completed in the revaluation of 1990? In particular, can he say whether his approach, when using the £80 million, will sharply reduce the disparity in the central belt, where the non-domestic rate is highest, or whether he intends to reduce the differential, taking Scotland as a whole? What will be the impact of today's announcement on industrial derating? Will it be held at 40 per cent.?

I welcome any signs of flexibility on the standard community charge. Many—people all hon. Members will know of such cases in their constituencies—have modest second homes, perhaps cottages and flats, whose value is reflected in a low rate bill. They have suddently been faced with a massive increase of £400 or £500 with the arrival of the poll tax. I am glad that something has been done about the glaring injustice of an old person who moves in with relatives finding that his or her house is suddenly classed as a second home.

Am I right, however, in thinking that the general power to vary the standard charge between a multiplier of nil and two must be exercised on a district basis? For example, will a regional council be competent to decide that certain categories of houses, perhaps those that were below a certain rateable value in the last year of the old system, should attract a lower multiplier than others in the same district? If that is not so, regional councils will be put in the difficult position of having to take a blanket approach that will inevitably create anomalies.

Does the Secretary of State accept that it is almost impossible to reconcile the treatment of second homes, by means of what is unashamedly a property tax, with the poll tax, which is a form of individual taxation?

While we are dealing with injustices, can the Secretary of State say whether he has had second thoughts about Alzheimer's disease because of the strong medical case which suggests that there is no essential difficulty in assessing when the illness has reached the point when exemption is justified? Is not the present situation, where patients with exactly the same presenting symptoms are treated in different ways for poll tax purposes, completely indefensible? Will he move on that matter?

The Secretary of State and his PR department have worked hard to try to establish this as a generous settlement. In fact, it is worse than a standstill, and it does nothing to undo the damage done to essential services and to the fabric of local democracy in recent years. He will certainly have to do better.

I think that the last two sentences were the only part of the hon. Gentleman's comments that were written before he saw the statement, as they bore little relation to his other comments. I thank the hon. Gentleman for his opening remarks, which described the settlement as "more generous than in recent years". I appreciate that his view of recent years may not be the same as mine. Nevertheless, I think that, by his standards, that amounts to a compliment. I confirm that the increase, when one removes the element relating to business rates, is 7 per cent. The hon. Gentleman suggests that is not sufficient, but it was COSLA itself which said that that was what it needed.

indicated dissent.

It is no use the hon. Gentleman shaking his head. Mr. MacIver, the general secretary of COSLA, said that it required at least 7 per cent. to meet its needs—[HON. MEMBERS: "At least."]—and that is exactly what it has been provided with. [HON. MEMBERS: "When did he say that?"] I am happy to give that information. He was quoted in an article in the Glasgow Herald on 20 July as saying:

"We are certainly hoping for an increase of at least 7 per cent. for the coming year."

The Government have been happy to respond to that aspiration, and that is the least that we are entitled to claim.

The hon. Member for Garscadden welcomed the proposals on business rates. I am grateful to him for that. The figure—or the gap—that has to be accommodated is £250 million. The CBI in Scotland has identified that figure and the Government have endorsed it as their best assessment of the gap. Meeting that to the extent of £80 million in the current year is a massive step towards eliminating a discrepancy that has been caused primarily by the high level of Scottish local authority expenditure, which the previous Labour Government made no attempt to deal with. Distribution will be dealt with later in the year when we announce the distribution of grant available.

Industrial derating will continue until the gap between rating levels in Scotland and England is eliminated. The original purpose of industrial derating was to assist with that difficulty.

I welcome the hon. Gentleman's friendly comments on what the Government propose to do about the standard charge. I have to emphasis that what we are proposing is not a property tax—[Interruption.] No. As I explained, it is quite simple. The level of discretion available to the local authority will not depend on the kind of property that it is dealing with, but on the personal circumstances of the individual concerned. That is why it is consistent with the community charge principles on which we have put forward these matters.

The hon. Gentleman asked about Alzheimer's disease and whether the Government had anything to add on that matter. We have emphasised all along that if a method of dealing with the matter in a responsible way is identified in the way that my hon. Friend the Minister of State has explained on several occasions, we would have no objection in principle to seeking to accommodate people. I have nothing to say to the House today about that matter and I do not know whether it will be possible for such a distinction to be identified.

Does my right hon. and learned Friend acknowledge that the difficulties in which the hon. Member for Glasgow, Garscadden (Mr. Dewar) found himself underlined the success of the statement? I am sure that my right hon. and learned Friend will not be surprised if I concentrate on the standard community charge, on which I have campaigned and plagued him and our hon. Friend the Minister of State in recent months. I thank him warmly for his announcement. We are less worried about the classification of the charge as long as it moves in the right direction—as it does.

I should like to ask two questions. First, is my right hon. and learned Friend quite sure that it is right to leave discretion about some aspects with local authorities, given the way that local authorities have extracted the maximum that they are able to extract in the current year? Secondly, what is the position of people with a second home which may or may not be let but which may be held by someone of modest means who has not been paying much in rates? Will that be covered? If it is not, it should be.

I very much hope that even now local authorities will seriously consider whether they should insist on the maximum multiple or whether, as a generality, it would be appropriate to have a more modest figure. That option is available to them and I hope that they will take it. I thank my right hon. Friend for his warm welcome for the standard charge proposals. He explicitly asked about matters being left to the discretion of local authorities. We gave considerable thought to that question and think that it is appropriate that it should be left to local authority discretion.

As I sought to explain earlier, we are essentially dealing with the personal circumstances of individual standard charge payers. It would be difficult, either through primary legislation or by methods determined entirely by central Government, to distinguish in a way that would be sensitive to the personal circumstances of such standard charge payers. I am pleased that, in its paper to us, COSLA said that if given these powers it would wish to use them and would recommend to local authorities that they should be used for the purposes that I have indicated. Therefore, we have every reason to assume that local authorities will use the powers that they asked for and have been given.

We too welcome the sinner who repenteth. The Secretary of State will remember that only a month ago we moved a new clause to provide exactly this provision in the English Bill. It is a great pity that it was not accepted at that time. Some of us wish that the sinner would sound as if he repenteth. Does the Secretary of State accept that his repeated assertion that local authorities decided to apply a multiplier of two ignores the fact that the revenue support grant formula that he imposed assumed that they would apply that multiplier? In view of what the Secretary of State has said, will he say that if they do not do so in future they will not suffer under the revenue support grant system? As I understand it, if they had applied a multiplier lower than two in the past, they would have had to pass on the excess charge to all community charge payers at a level of perhaps £2 or £3 a head. Will the right hon. and learned Gentleman come clean and admit that that is so?

Secondly, I should like to ask about the 7 per cent. support assumption in the coming year. As we have not yet got the NALGO pay settlement and as inflation is already running at 8·3 per cent., is that assumption not yet another sign that local government will continue to be severely squeezed? Local authorities in my area which are careful spenders will strongly resent that. Will he explain how it is that under this system Scottish poll tax payers will end up facing an average of well over £300 next year, compared with the English average of £275 and the Welsh average of £175? How has the Secretary of State for Wales managed to screw more out of the Treasury than the right hon. and learned Gentleman got?

The right hon. Gentleman has asked me three questions, to which I shall respond. First, I am intrigued by this assumption that local authorities paid complete attention to the assumption in the rate support grant settlement with regard to the multiplier. If that was of such importance to them, I shall bear it in mind when determining what the assumption should be next year and we shall see what effect it has on local authority use of that discretion next year. I am grateful to the right hon. Gentleman for putting that proposition to me.

Secondly, the right hon. Gentleman referred to the NALGO pay settlements, which have not yet been resolved. Local authorities are the employers, so they have it in their own hands to determine what settlement they will agree to. I assume that COSLA had that in mind when it said that a 7 per cent. grant would meet its needs and that that was what it expected.

Thirdly, I am delighted that the right hon. Gentleman has asked me to explain the different assumptions that are being made about the likely level of community charge in Scotland compared with England and Wales. The reason is a simple one, which relates entirely to the different levels of local authority spending. Despite high grants from the Scottish Office—probably a level of grant that compares extremely favourably with either England or Wales—the expenditure of Scottish local authorities per capita is £978, while in England it is £773 and in Wales £776. That is for comparable services, eliminating services, such as water, that are carried out by local authorities in Scotland, but not in England. Therefore, for exactly comparable services, there is expenditure per capita of £200 more in Scotland than in England or Wales. Therefore, I say to local authorities, "Physician, heal thyself."

I congratulate my right hon. and learned Friend on his excellent statement. I ask him to remind Scottish local authorities that it was purely for political reasons that they used the multiplier of two. When he comes to see what comparable categories emerge in the orders that he proposes, will he use as general a concept as possible so that it is not restricted to individual types, such as those that he mentioned, but in general gives equity to all who deserve it and should not be paying such a high charge?

I agree with my hon. and learned Friend that the purpose of the discretion that has been made available is to deal with what both sides of the House would recognise are the particularly difficult cases—for example, an elderly person who might be living with a son or daughter, keeping his home empty for the time being while deciding whether he wishes to return to it, or a person who might have bought a house for his retirement but is still living in tied accommodation, or other such categories. When dealing with such cases, it is important that the full standard charge is not insisted upon. Local authorities have said that they would wish to use the discretion if they were given it to help in such cases and we are happy to enable them to do so.

If the Government are intent on introducing amending legislation on local government finance, will the Secretary of State also take the opportunity to introduce an amendment to stop the disgraceful practice whereby people are being hounded for the poll tax even after they are dead?

I ask the hon. Gentleman to address any such complaints to the local authority in which he lives. The local authority is not answerable to me for the way in which it chooses to go for any debts to which it may be entitled.

I warmly welcome what my right hon. and learned Friend said about business rates. which are of great importance to jobs and the competitiveness of Scottish industry. Was not my right hon. and learned Friend's generous rate support grant for this year simply followed by excessive increases in expenditure by far too many Scottish local authorities? Does not the success of what he has said about RSG, and his welcome moves on the standard community charge, depend on the assumption that Scottish local authorities will act reasonably? If that assumption is not fulfilled, there will be outrage in Scotland.

My hon. Friend can take some comfort from this: given that the increase in revenue support grant is equivalent to the projected level of inflation and at a figure that the local authorities themselves said corresponded to their needs, and if, as a consequence of the overall position, there is higher expenditure and there are higher community charges than necessary, the finger of responsibility can be pointed in only one direction. I believe that that will concentrate the mind wonderfully.

Surely, at 7 per cent., the settlement is below the rate of inflation and a poorer deal than the one obtained in England and Wales—especially at a time of high interest rates. It must mean a cut in local government services.

When making these changes, will the right hon. and learned Gentleman look into the problem of those with Alzheimer's disease and explain what is holding him back from doing something about the inherent unfairnesses in the legislation?

On the second point, I cannot usefully add to what my hon. Friend the Minister of State has said on several previous occasions.

On the earlier point, the hon. Gentleman should appreciate that the rate of inflation that is relevant is not the current rate but the projected rate for the financial year in question. That is presumably why COSLA itself has said that 7 per cent. is appropriate.

When removing the supposed anomaly in relation to the standard rate, will the Minister have a care? Apparently, it will apply prospectively in England and Wales but not retrospectively in Scotland, because people will have already paid on properties that the right hon. and learned Gentleman says should be excluded.

In relation to the point raised by my hon. Friend the Member for Falkirk, West (Mr. Canavan), I have today received a letter saying that the local authority in Fife has gone for a four-day period. A man aged 55 died in Kincardine, and the authority has gone for £3·21. W hat feelings must be in the mind of the man's widow now that the local authority has imposed that on her? The Secretary of State must not tell us that the local authority is doing this willingly; it is doing it because it knows that the Accounts Commission would be on to it if it did not.

That is not true. I seem to recollect reading of a similar case in Grampian region in which, once the authority had identified the circumstances, it immediately declared them a de minimis case in which the sum would not be requested.

The hon. Gentleman knows perfectly well that local authorities can use their discretion to decide whether the circumstances are such that they will not seek payment. Naturally, we would all hope that local authorities will apply appropriate sensitivity to cases of personal tragedy of this sort—it is within their power to do so. The local authority in the Grampian region, in circumstances with which the hon. Gentleman is familiar, did just that. I do not know the circumstances of his particular case, but if the local authority believes that it is justified to do so, it has complete discretion to act in the way that the hon. Gentleman has suggested.

Does not 'the Secretary of State understand the reason why £200 per head more is spent in Scotland than in England and Wales? It is because of his activities of the past few years in relation to local government services such as education, housing, roads and social work. We have more problems in Scotland with these local government services precisely because of the activities of the right hon. and learned Gentleman and other Scottish Office Ministers.

Why, having included a multiplier of two in the. legislation for the poll tax, does the Secretary of State now complain because local authorities are using that multiplier? He wants none of the blame for putting it in the legislation, but he now wants the credit for changing the legislation which he was responsible for imposing on local government in the first place.

As for the point raised by my hon. Friends the Members for Falkirk, West (Mr. Canavan) and for Dunfermline, West (Mr. Douglas)—the problem of the sending out of accounts to people who have died since the last payment of the poll tax—I want the Secretary of State now to give every regional and islands authority in Scotland, and its councillors, an absolute guarantee that if they do not charge this poll tax they will not be surcharged. The right hon. and learned Gentleman is obliged to provide such a guarantee.

On the hon. Gentleman's final point, questions of surcharge only arise—[Interruption.] I hope the hon. Gentleman will do me the courtesy of letting me answer his point. Such questions arise only when there is a recommendation from the Accounts Commission; but it goes without saying that if a local authority is faced with a personal tragedy, where the sums involved are very small, and it exercises its discretion not to seek payment of the account, I cannot conceive of any situation in which a Secretary of State would want to surcharge the councillors in question. I do not think that I can be more explicit than that in expressing my views.

The hon. Gentleman made comparisons with England and Wales. He tries very hard, but he knows perfectly well that the policies pursued by the Government apply to Scotland, England and Wales. Many Labour-controlled authorities in Wales appear to live with levels of expenditure not just marginally but dramatically—as much as £200 per capita—less than Labour-controlled authorities in Scotland. That cannot be explained on the basis of Government policy, which is consistent throughout the United Kingdom, although local authority expenditure is not consistent throughout the United Kingdom.

Does the Secretary of State not realise that the statement is bitter news to thousands of carers—[Interruption.] Conservative Members may laugh but this year those people are being driven from their original homes because they have chosen to move in with and look after disabled and elderly relatives, often leaving country dwellings for which the rates were under £100. They are now having to find up to £500 and £600 this year. Why does the Secretary of State not offer them more help now? By the time the statement comes into effect, they will have sold the original properties and will have no way back.

I would not be able to accuse the hon. Gentleman of humbug if he had put that proposition to Lothian regional council when it was contemplating applying the full multiplier with the full support of the hon. Gentleman and his Labour party colleagues.

If the Secretary of State thinks that 7 per cent. in Scotland is sufficient to cover the projected growth of inflation for next year, will he explain why it was necessary for his right hon. Friend to announce an 8·5 per cent. increase for England and Wales last week? Furthermore, will he explain why it is necessary to have a full-year transitional safety net to cushion the impact of the poll tax in England and Wales but not in Scotland? If he believes that the people of Scotland should remain part of a unitary United Kingdom, why does he persistently allow Scotland to be treated as an inferior, less deserving and less worthy part of the United Kingdom?

First, my right hon. Friend did not announce an 8·5 per cent. increase for England and Wales. Secondly, it is not only my view that 7 per cent. is sufficient; it is also the view of the Convention of Scottish Local Authorities. Thirdly, the hon. Gentleman appears to be completely ignorant of the fact that there is a safety net in Scotland, which is applied in much the same way as that for England and Wales.

While most of us in the House recognise that the Secretary of State has shown an element of flexibility on the community charge, perhaps his end-of-term report card should be stamped, "Could do better". Why has he not produced clearer definitions of the sole or main residence for individuals? That is particularly important in rural constituencies, where people who live away from home for the purposes of work are being charged standard rate community charge in their digs while paying the personal community charge at the family home.

Secondly, in regard to poll tax accounts being issued to families of the recently deceased, will he advise the House what he regards as a small amount, as in my constituency, the sum has been as small as £1·34? Is it not the Government's responsibility to give clear guidance to our regional and islands authorities on the matter, because the reply that I received from his colleague the Minister of State, who was then responsible for the community charge, said that councils must take account of what the auditors say? If the auditors recommend that the poll tax on the recently deceased has to be collected, the councils are placed in a difficult position. It is therefore up to the Government to produce clear guidance stating that poll tax will not be charged for the month in which a person died.

Naturally, I will give some thought to whether guidance to local authorities would be helpful, but the hon. Lady will appreciate that it can be only guidance and the local authority must take its own decisions in the light of the circumstances. Individual local authorities have already shown a willingness to use common sense and their discretion in this matter, showing that that is perfectly available to them if they choose to use it.

The hon. Lady also asked about sole or main residence, but she will appreciate that, in particular cases, that is primarily a matter for the community charge registration officer. Today I have said that local authorities will have much greater local discretion to deal with particular classes of situation, which may be a way in which to meet the point raised by the hon. Lady.

The Secretary of State said that the Government might be prepared to do something about the imposition of the poll tax on people suffering from conditions such as Alzheimer's disease if someone else can come up with some suitable suggestions. May I gently remind the Secretary of State that he is, whether anyone likes it or not, the government of Scotland? He is responsible for the poll tax and he is responsible for the unfair application of the tax on such people. I am sure that all of us welcome the fact that the Government have acknowledged that the standard poll tax is unfair and unworkable, although we are now left with multiple discretion among local authorities and the Scottish Office, which could make things even worse. Does he accept that the basic iniquity still exists, because a family on a low income in a small house will still pay more than Her Majesty the Queen with a second home at Balmoral castle?

On Alzheimer's disease, may I gently remind the hon. Gentleman that those suffering from that disease were liable for the payment of domestic rates for many years without the hon. Gentleman feeling obliged to argue that that was iniquitous or undesirable. [Interruption.] No, they did not get exempted if they were the ratepayers of the property concerned. Many people with Alzheimer's disease were obliged to pay domestic rates for many years and the Labour party never seemed to think that that was a matter against which it should campaign. The Labour party could at least have the integrity not to suggest that, somehow, such payment has only now become an issue because of the introduction of the community charge. We shall continue to consider the possibility of a proper system of assessment being devised. If that happens, we will then be happy to respond, but until we are able to do so, obviously there is nothing that I can add.

Does not the Secretary of State accept that the amount of money distributed to each local authority is the major factor in determining how high or low the poll tax is? Is he proposing to follow the example of the previous Secretary of State for the Environment by fixing the amount of the settlement in each case depending on the likely political fortunes of the Conservative party or is he prepared to treat each local authority in the same way? Is he aware that, had Lothian received the same safety-net arrangement as Strathclyde this year, the Lothian poll tax could have been between £60 and £80 lower than it is? Is he prepared to carry on rigging the figures in a desperate attempt to gain advantage in the regional elections next year in one of the few parts of the country where the Tories do not face an absolute rout?

Obviously, the hon. Gentleman could not find anything to say on the statement and therefore he wants to broaden the exchanges that we are having. He will know that it is a tradition in Scotland that matters of distribution are dealt with later in the year, after consultation with the Convention of Scottish Local Authorities. He will also know that, usually, the formula that is applied for the distribution is agreed with COSLA.

The hon. Gentleman seems to be blissfully unaware of the fact that the subsidy of certain Scottish local authorities continued for many years with the acquiescence and indeed, enthusiasm, of the hon. Gentleman and his hon. Friends. It is this Government who are, for the first time, eliminating that subsidy, but rather than doing it all at once we are phasing it out over several years. The hon. Gentleman was happy to live with a subsidy when there was one, but now complains because we are phasing it out and says that it should be phased out all at once. That shows that he changes his views as quickly as he changes his mind.

If the relationship between the Secretary of State and COSLA is as cosy as he seems to suggest why is it necessary for him to produce an obscure and selective comment from the Glasgow Herald to justify that assertion? Can he tell the House precisely what discussions he has had with COSLA and what it has said to him about his proposals? As part of that precision, when he talks about projections can he tell us the projected figure for inflation, because the House has not been told? What is the projected figure for wage settlements? We have not heard about that either. As the Secretary of State has referred to interest rates what projected figure does he have in mind for interest rates in respect of small businesses as well as local government? As we are anxious to hear what COSLA had to say, and as COSLA could not possibly have known about the Government's response to the Griffiths report, is there an extra ha'penny in the statement to recognise the new responsibilities for community care?

I have already said that certain of the preparatory work that may need to be done will be taken into account in the RSG settlement.

Our relationship with COSLA could never be as cosy as it was when the hon. Gentleman was its distinguished president, in the Government's early years. Clearly, the hon. Gentleman's departure from his local government responsibilities has inevitably had its effect. He asked me what COSLA's representations were. When I last met COSLA, it suggested, not only to me but publicly, that the Government were going to give it a grant increase of only 1·7 per cent. It went on record as saying that it needed at least 7 per cent. if it was to meet the needs of its local authorities. That is exactly what it has got. The hon. Gentleman should be the first to welcome that.

On the right hon. and learned Gentleman's latter comments on Alzheimer's disease, I remind him, although he surely needs no reminding, that the difference is that the poll tax is a personal charge, which, according to the Government's rhetoric, is accompanied by accountability by local government to the individual. I unreservedly welcome the relief that the right hon. and learned Gentleman's announcement will bring to those who care for the sick and elderly at home while the temporarily empty house is retained. The scandal is that it has taken three years of planning and four months of implementing the poll tax and will take another eight months of waiting for this cruelty to be addressed, under duress from the Opposition and local authorities.

Does the right hon. and learned Gentleman accept that the fundamental second home problem has still not been confronted by his statement because a district council will still be unable to differentiate between a second home single-end and a second home castle, and therein lies the endemic unfairness of the standard community charge?

The main reason why it has been necessary to respond in this way is that the local authorities throughout Scotland, with the honourable exceptions of Shetland Islands and Western Isles, have sought to impose the maximum standard charge, irrespective of the consequences to which the hon. Gentleman has referred. If those local authorities had not done so, these problems would not have arisen. The hon. Gentleman should reflect on that point.

With permission, Mr. Speaker, I should like to make a statement. Last December, I published the Scottish Enterprise White Paper on my proposals to integrate the functions of the Scottish Development Agency, the Highlands and Islands Development Board and the Training Agency in Scotland. I invited comments by 31 March 1989.

I have been delighted by the volume and constructiveness of the 420 responses and by the extent of support demonstrated. In reaching my decisions, I have sought to build on that support. There was overwhelming agreement for the principle of creating two new bodies, in which the functions of the Scottish Development Agency and the Highlands and Islands Development Board would be integrated with those of the Training Agency in Scotland.

Many welcomed the name "Scottish Enterprise", but some called for the retention of the names "Scottish Development Agency" and "Highlands and Islands Development Board", and there was strong insistence from the north, whatever title was chosen, to retain the word "Islands". We are creating a distinctive new structure which will be more than the sum of its parts and which requires a new identity. I have therefore concluded that the new bodies should be called Scottish Enterprise and Highlands and Islands Enterprise respectively. The SDA and HIDB logos are widely recognised, and I see merit in retaining them to provide an element of continuity, but that will be for the new bodies to decide, as will the way that they market themselves abroad.

There was virtual unanimity for the proposition that the network of local agencies, or enterprise companies, as we now intend to call them, should have a contractual relationship with Scottish Enterprise, in keeping with their private sector focus. The constitution of the companies means that there are important issues of public accountability, propriety, control of public expenditure and value for money to resolve, and I have asked my officials to seek ways of ensuring that public funds are properly safeguarded.

In the light of comments received, I am now proposing a network of 12 companies in the lowlands and eight in the highlands and islands. I have made available a map showing the proposed areas for each company, but where consortia feel that the map that I am proposing does not fit in with their ideas, I should, of course, be willing to consider specific proposals for variation. As regards functions, I can confirm that the full range of statutory powers that the SDA and HIDB now possess will be available for Scottish Enterprise and Highlands and Islands Enterprise, and I accept the recommendations that the latter should discharge the environmental role in the Highlands and Islands currently undertaken by the SDA.

I was impressed by the extent of support for devolving substantial powers relating to enterprise creation to the local enterprise companies from the outset, and against that background, my proposals now involve a major step in the direction of local delivery of economic as well as training functions from the start. We shall, of course, continue the SDA and HIDB policies of withdrawing in favour of private sector provision wherever that is practicable and sensible.

I found it a great attraction as an initial step in the SDA's approach that the enteprise companies should operate within spending limits that would enable them to take responsibility for the great majority of projects, and that responsibility for major projects outside those limits should he retained at the centre. I intend to apply that principle to both Scottish Enterprise and Highlands and Islands Enterprise. I intend also that the extent of delegation to local enterprise companies should be increased progressively.

The central bodies will have a strong strategic role and will therefore set the policy framework and monitor the local companies; design, develop and secure the implementation of projects and programmes, particularly in industry and enterprise development with an applicability across their areas; approve major projects that fall out with the companies' competence; and handle certain functional activities including major investments, inward investment attracted by Locate in Scotland, marketing and the design and implementation of major physical programmes. They will ensure that the Government's Great Britain-wide training policies and priorities are pursued and Government guarantees fully satisfied. They will also ensure that programmes in support of enterprise delivered on behalf of the Department of Trade and Industry are being satisfactorily discharged and provide central support services.

Local enterprise companies will have the following functions, depending on their capability and the spending limits agreed. In the Scottish Enteprise area, large and strategic projects apart, they will have SDA functions in respect of the development of property, land reclamation and environmental improvement projects, advice and assistance to business, and urban renewal. In the highlands and islands area, the same approach will apply to the range of HIDB functions. In both areas they will carry out the range of training functions presently delivered by the Training Agency's area offices and seek to stimulate greater involvement by employers in training. They will also have the scope to devise specific initiatives to meet local needs.

There will be differences in approach between the Scottish Enterprise area and the Highlands and Islands Enterprise area, reflecting their different population, geographical and other characteristics, but there will be an underlying consistency. I have asked officials to work up proposals to ensure that there is a clear framework within which the local enterprise companies are to operate, and that the companies have maximum flexibility, compatible with public accountability, to tailor their activities to local circumstances.

In the light of the comments received on two of the programmes at the interface between industry and education, I have concluded that the Training Agency's technical and vocational education initiative—TVEI—should now move to the Industry Department for Scotland and that PICKUP, the professional, industrial and commercial updating programme administered by the Scottish Education Department, should transfer to Scottish Enterprise and Highlands and Islands Enterprise.

The resources for the new bodies will initially be broadly those that would have been made available in total to the SDA, HIDB and the Training Agency in Scotland.

Turning now to management, many have suggested that an increase to 12 for the Scottish Enterprise board would offer considerably more scope, while retaining the efficiency advantages of a compact board. I propose a board of not less than nine and not more than 12 members inclusive of the chairman and the chief executive, who will be an ex officio member. I propose a similar approach to Highlands and Islands Enterprise but, in recognition of the fact that the number of those able to serve will be circumscribed by distance and sparsity of population, I propose a 7:12 formulation. There is broad support for our proposals that two thirds of the board should be drawn from the private sector and members of both boards will be chosen on a personal basis, for the contribution that each can make. We need the best people in their own right.

With regard to the boards of the local enterprise companies, we shall wish to see directors chosen for their individual contribution, reflecting the range of local interests. Two thirds will come from the private sector, and there will be a board of not fewer than nine or more than 12 in the Scottish Enterprise area and between seven and 12 in the Highlands and Islands.

However, the bigger the range of local interest that supports the company the better. I have been pleased by the enthusiasm expressed by the local authority sector, by education and training specialists, the voluntary sector and the trade unions for the objectives of Scottish Enterprise and their desire to be involved.

As regards staffing, it is important that staff are given a clear indication about their future. There are three aims to be fulfilled: Scottish Enterprise should have a single ethos and staffing structure, as should Highlands and Islands Enterprise; local enterprise companies should have as much freedom as possible to choose their own staff; and the arrangements should meet the best interests of existing staff.

I therefore propose that every member of staff employed by the Scottish Development Agency should be offered, three months before the establishment of Scottish Enterprise, employment on no worse terms with Scottish Enterprise, with scope for voluntary secondment to an enterprise company. I propose a similar approach for HIDB staff, As regards the training agency, every member of staff employed in Scotland should be offered, three months before the establishment of the new bodies, the choice either of employment on no worse terms with Scottish Enterprise or Highlands and Islands Enterprise as appropriate, with scope for voluntary secondment to an enterprise company, or alternatively of secondment to Scottish Enterprise or Highlands and Islands Enterprise, with up to three years to decide whether to transfer on the same basis permanently or to return to Civil Service. I am sure that the local enterprise companies will recognise the value of taking most of their staff on secondment terms from the skilled and experienced pool of existing staff, but they will also have scope to employ their own staff.

Finally, let me say how I now see the way ahead. I shall seek an early opportunity for legislation to bring Scottish Enterprise and Highlands and Islands Enterprise into being as soon as possible. As there is overwhelming enthusiasm for our suggestion that it might be possible to go ahead with some local enterprise companies in advance of legislation, within the next few weeks I shall be launching a prospectus which will invite the business community to form consortia to bid to become local enterprise companies in lowland Scotland. That will be followed by a prospectus for the highlands and islands. The companies will operate within existing legislative powers and within existing public expenditure provision. The number of consortia to be given the go-ahead at this time will depend upon the quality of bids. Consortia throughout Scotland are already making plans in the hope that the Government will take this approach. Their commitment has been a major factor in confirming to me the fact that our proposals for Scottish Enterprise are soundly based.

It gives me great pleasure to commend to the House these proposals, which have caught the imagination of the people of Scotland.

That statement might be described as hard going; it reminded me of stirring very thick porridge. The rather natty, glossy brochure containing the Secretary of State's statement also contains a photograph of the right hon. and learned Gentleman with the legend "The way ahead is clear". He could have fooled all of us this afternoon.

I accept that the statement contains important issues and deals with a part of our economy in which there is no doubt about the scope for improved performance. But as the Minister knows, Opposition Members have doubts about the structure of Scottish Enterprise and the decision to merge training and the key role of the SDA in one body.

Let me make it clear to the House that those doubts remain, but there is some evidence in the Minister's statement—if one reads it carefully—that he has listened, and it would be churlish not to acknowledge that. We will, however, want to be satisfied that the role of Scottish Enterprise will not blur or blunt the enterprise and investment role pioneered by the SDA in recent years. If the Government press ahead, it will be important to ensure that the enterprise companies are a success and bring about the revolution in training that is so clearly needed. We should certainly want to see that achieved.

It is right that the right hon. and learned Gentleman has agreed that Highlands and Islands Enterprise should be created on the lines outlined and that the environmental role should be transferred to it from the SDA.

I welcome the guarantees given to the staff who, I suspect, will nevertheless face an uncertain period in the months ahead.

I have one or two specific questions. The new boards are to be based on private sector involvement, and I note the Secretary of State's statement that there is "broad support" for that principle. I suspect that that is largely confined to the private sector itself. We now know that two thirds of the board directors are to come from private industry. Does the Secretary of State accept that there is real and understandable concern about the involvement of other interests? Does he accept that there is a genuine role both for local authorities and for trade unions? I note that there were some nods in that direction in his statement, but will he undertake that the participation of those other sectors will be a key factor in deciding on the suitability of a bid?

Will the right hon. and learned Gentleman note in passing the distinction between local authority involvement as such and simply the recruitment of a local authority figure to give colour to a board? Will board members be salaried, as recommended by the SDA in its representations? Will he also say more about the realities of the power structure? We understand that Scottish Enterprise will monitor the activities of the enterprise companies locally. Will they be allowed to take over the assets and investments of the SDA and Scottish Enterprise, as it will become, as the consortium bidding for the Lanarkshire franchise has requested?

I understand that there will be a delegation of projects to the enterprise companies below a certain cut-off point. What will that be? Will it be roughly along the lines presently operated for the regional bodies of the SDA? Will the right hon. and learned Gentleman also comment on the level of independence in policy making that will he given to Scottish Enterprise?

In defining the new body's duties, the right hon. and learned Gentleman said that it will

"ensure that the Government's Great Britain-wide training policies and priorities are pursued and Government guarantees fully satisfied".

Does that mean that the Department of Employment, as the lead body, will lay down all training policy? Will the local enterprise companies—I believe that this is very important—be able to tailor employment training and YTS to local needs? Without that flexibility, many people will think that all the talk about the practical devolution of power is no more than a sham.

Will the right hon. and learned Gentleman explain the remit of the national training task force and how it impacts on Scottish Enterprise, reporting, as it does, to the Department of Employment? Will he accept that the test will be what is delivered? We strongly support a Scottish solution to training policy, but we are not convinced that the independence of action that is required has been wrested from the Department of Employment by those plans. There must also be a willingness to fund innovation and local initiatives. Does the right hon. and learned Gentleman really believe that the present standstill budget, simply amalgamating the existing budgets, can do the job?

If my statement was a hard slog, the contribution of the hon. Member for Glasgow, Garscadden (Mr. Dewar) was a forced march. Nevertheless, I welcome the generally constructive tone of the hon. Gentleman's comments, and I will respond to his points.

I am happy to confirm that we see a genuine role for local authorities and trade unions; I referred to that specifically in my statement. We hope in the generality that salaries would not be required by the members of the boards in question, but there may be particular circumstances in which some flexibility would be appropriate, and we will consider them on their merits.

The hon. Member for Garscadden asked whether the enterprise companies would own the assets currently owned by the SDA in their localities. We certainly envisage that they will be able to have effective control of those assets. Whether the legal ownership should transfer to them is a more difficult matter, which we are considering at the moment.

The hon. Gentleman asked what would be the cut-off point for delegation to the local enterprise companies. I can confirm that that would be broadly compatible with the existing delegation that the SDA gives its regional offices. He asked whether the Department of Employment would be laying down policy on national training. The Government will lay down the policy and the Department of Employment and the Scottish Office will together determine the national framework of training policy. The national task force, to which the hon. Gentleman referred, answers both to the Department of Employment and to the Scottish Office in its advisory role. We certainly envisage that the local enterprise companies should have a significant flexibility and autonomy within their frameworks.

It would appear that the only major difference remaining between the Opposition and the Government is over the fundamental question as to whether the SDA and the Training Agency should be merged into a single body. The hon. Gentleman said that he has doubts about that structure and he said today, as he has said on a previous occasion, that the Labour party would prefer two free-standing bodies in Scotland instead of a single agency. He is in very lonely company in respect of that view.

The House might like to know that 297 respondents to the White Paper favoured a combination of the SDA and the Training Agency into a single agency and only 17, including the Labour party, expressed the view which the hon. Member for Garscadden has professed today. Therefore, the hon. Gentleman will agree that, although he is entitled to his view, it is not shared by Scotland. The overwhelming response from right across the industrial, political and economic spectrum in Scotland supports the Government's proposition and disagrees with the view that was expressed on behalf of the Labour party.

Will my right hon. and learned Friend agree that the hon. Member for Glasgow, Garscadden (Mr. Dewar) found it difficult to criticise his first statement and finds it impossible to criticise his second? I warmly congratulate my right hon. and learned Friend on spelling out in detail the Scottish Enterprise proposals which will be warmly welcomed in Scotland. What does he envisage as the role of enterprise trusts? There is considerable scope for enterprise trusts to continue their excellent work under Scottish Enterprise. Will my right hon. and learned Friend say how they will work?

Yes, I certainly see a continuing role for enterprise trusts. As my hon. Friend will be aware, they essentially deal with much smaller localities, rather than the larger geographical areas that are covered by enterprise companies. I have no doubt that the enterprise trusts, as they have already publicly said, will wish to be involved in encouraging local consortia to come forward, and be involved in other ways in continuing to stimulate the local economy in the constructive way that they have already demonstrated.

May I ask a constituency question first? As it is not clear what local enterprise companies Strathkelvin district council may be associated with, will the Secretary of State clarify the matter? Secondly, as the Secretary of State referred to the halcyon days when he arrived at St. Andrew's house as a young Minister, pro-devolution and all the rest, he might recall that, at about that time, there was a committee called the Stodart committee, of which I was a member. Based on the evidence that it received, it strongly supported the role of local government in industrial promotion and enterprise.

Has the Secretary of State received any evidence to the contrary? Does he accept that many local authorities in Scotland, including Monklands district council, feel that they have a contribution to make, that the Government are deliberately ostracising that contribution, that that is not in the interests of Scottish Enterprise or Scottish industry, and that the Stodart committee could have told the Government so?

On the two points that the hon. Gentleman has raised, first, Strathkelvin district council would come under the proposed Dumbarton enterprise company, and that is made clear on the map that is available to hon. Members. On the hon. Gentleman's second point, his comment is not fair. He will recall that, in the allocations that we gave local authorities for the current year, there was a particularly generous increase in the general services allocation for the purposes of industrial workshops in their areas. If that was not a recognition of the contribution that can be made in matters referring to the local economy, it is difficult to know what would be.

I welcome my right hon. and learned Friend's statement for the very constructive and full way in which he has responded to the representations that he has received. Will he say a little more about training? Does he acknowledge that there is not only a shortage of skills but a need for new skills in Scotland and that, in the midst of all the new business enterprise, the importance of training should be given a high priority? Is my right hon. and learned Friend getting a constructive response from the Convention of Scottish Local Authorities and the Scottish Trades Union Congress for his efforts?

Clearly, training is important. There are clear signs from the STUC and from the Convention of Scottish Local Authorities that, despite their original proposals to boycott the new training scheme that was introduced by the Government, they will seek to become involved in the enterprise companies, in the knowledge that that will involve co-operation in the delivery of training on the basis of the Government's current training policy. I welcome what appears to be a change of heart in that respect.

Is the right hon. and learned Gentleman aware that both his statements have been incredibly long-winded? It appears that he has a future as a speaking clock, because the enormity of the statements was barely concealed by the rapidity of his delivery.

I ask two questions. First, on the availability of business men to serve on the boards that are to be established, is he satisfied that there are enough competent people to go around and to make them work properly? Secondly, on Highlands and Islands Enterprise, is he satisfied that the differential that can now be provided is sufficient to make the area genuinely attractive to industry?

The speaking clock is universally recognised as both accurate and of great public benefit, so I am happy to be compared with it, if the hon. Gentleman chooses to do so.

In response to the hon. Gentleman's detailed questions, the original concern or scepticism of some people about whether the business community would come forward has been completely overtaken by the evidence now available to us. Even in anticipation of the statement, consortia throughout Scotland were already being formed with a view to coming forward as soon as the Government invite them to do so. That is extremely encouraging. The new opportunities available in the highlands and islands where, for the first time, training will be controlled locally by the Highlands and Islands Enterprise and local enterprise companies, are a dramatic change in the opportunity for the north of Scotland to control its own destiny.

May I congratulate my right hon. and learned Friend on his excellent statement this afternoon, even if it was a little complicated and long for the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) to understand before he fell asleep? Will he note that the new Perthshire enterprise venture set up with such enthusiasm in a partnership between private and public enterprise is an example of what his policies are achieving? Will he remind the House again this afternoon, and unceasingly, that these excellent advantages can be maintained only if we do not drive away investment—from wherever it comes—by having an Assembly, separation or differential taxation?

I certainly congratulate the Perthshire venture. It is an excellent example of the local business community and others coming together to help the local economy, and it is to be welcomed. My hon. and learned Friend's remarks are also correct. Clearly, anything that discourages investment is to be deplored and my earlier statement today on business rates will be another way in which the potential disincentive of higher taxation will be removed, to the benefit of our economy.

Exactly what will happen to the Dundee project, which is the only example in Scotland of a one-door approach to incoming industry within this new framework? It would be an absolute disaster if the project were simply absorbed into Tayside. How many of the 297 responses to the White Paper did not suggest that an emphasis different from the national emphasis on training was needed in Scotland, particularly given the experience of the previous mode B young people who find it extremely difficult to stay in training employment as it is presently structured?

I, too, am happy to acknowledge the great importance of the Dundee project. I sought to make it clear in my opening remarks that, apart from the matters delegated to individual enterprise companies, certain projects would continue to be dealt with by Scottish Enterprise, either because of their national significance or because of the size of the resources involved or the scale of the project. We shall consider existing projects and decide which should be in that category. Dundee may be one, but I should not like to come to a conclusion on that without studying the scale of the resources involved and other matters.

On the hon. Gentleman's final point, the 297 representations on the White Paper were about the basic question whether the Scottish Development Agency and the Training Agency should combine into a single agency. Two hundred and ninety-seven said that they should, and 17 said that they should not.

The Secretary of State said that his announcement would catch the imagination of the people of Scotland, but that will not be the case in the new towns in Scotland. Two weeks ago, the Secretary of State announced his intentions about the future of the new towns. It will be a matter of some concern in the new towns that no mention was made today of the relationship or the role of the new towns in these new enterprise agencies. Will the Secretary of State explain how the new towns will interface with the new enterprise agencies? Which body will have responsibility for the on-going development of the new towns prior to the dissolution of the development corporation boards?

I am sorry, but I am not sure that the hon. Gentleman is entitled to say that the proposals have not caught the imagination of the people in the new towns, because as far as I am aware they have been welcomed there as well. With regard to the precise implications—[Interruption.] I am talking about the responses to the White Paper. On the precise implications, the new towns and their successor local development companies may seek to join a local enterprise company as participants in a consortium, or may act as sub-contractors to local enterprise companies to provide specific local economic development services or, at the instance of Locate in Scotland, they may contract with Scottish Enterprise direct to provide sites for inward investment. Therefore, there are equally exciting and important opportunities for the new towns as well as for the rest of Scotland.

Does it not make a mockery of the so-called consultation process when, as the Secretary of State has said, after several hundred responses, it is clear that many of them have been ignored, and when he confirms that the boards of the local enterprise companies—as we hear they will now be called—are to comprise two thirds private sector nominees? Is it not far more important that the recommendations that were made in many of the responses to the consultation process, calling for local authorities, trade unions and the voluntary sector to be involved, should have been taken on board, and should that not happen before a Bill is brought to the House? I noticed that the Secretary of State referred to the general role of trade unions and local authorities, but will he spell out what that will mean, because I fear that that role will be woefully inadequate?

I am afraid that the hon. Gentleman is misinformed. There has been a wide welcome for the principle that local enterprise companies should have boards with two thirds of the members drawn from the private sector. That has not been a matter of controversy. The overwhelming number of representations received has supported that view. There has also been the view, which the Government have also accepted, that local authorities have a legitimate role to play in the enterprise companies. My statement acknowledged that point. I expect that, when consortia approach Scottish Enterprise in most of Scotland, they will come primarily from the private sector, but I shall be surprised if they do not also include local authorities, the voluntary sector and possibly trade unions and others.

Will the Secretary of State take steps to ensure that the mangement boards are not loaded in the same fashion as the health boards in Scotland have been loaded with Conservative or former Conservative supporters? Will he guarantee that a maximum will be set so that only two thirds of the management boards will be drawn from the private sector? I hope that the members of the management boards who are drawn from the private sector will he Scottish business men who live and work in Scotland.

On the point about the area enterprise boards overseeing certain projects, what would the Secretary of State consider to be a large project that would not necessarily be in their domain? Can he guarantee—I should welcome the formation of the enterprise areas a little less cautiously if he could do this—that the Cinderellas who have suffered under the redistribution of SDA grants and moneys before, such as Kilmarnock, will no longer fail to receive their fair share of the budget that is available centrally?

There should be two separate training bodies. One reason why we want a separate body for training is to ensure that training is properly carried out and, most importantly, that the business men who so anxiously want to manage these enterprises have the opportunity to play their part in what should be proper training. Furthermore, those who are training should be paid the appropriate trade union rates.

I agree with the hon. Gentleman that industry should be prepared to make its contribution to the cost of training. That is something that one hopes that industry will acknowledge and to which it will respond. On the hon. Gentleman's point about the membership of the boards of the enterprise companies, I agree that what we are looking for are senior figures from Scottish industry who will he able to make a major contribution to the work of the enterprise companies in their locality.

The hon. Gentleman asked for an example of a project which, despite its local impact, might be considered more suitable to be retained for central control. The Glasgow garden festival is an example. If the festival had been coming into existence under the future structure, although its impact was intended to be within Glasgow, the scale of the project would have justified its being dealt with by Scottish Enterprise rather than by individual enterprise companies. We shall have to consider individual projects and determine that issue on the basis of such criteria.

Yes, but why has the Secretary of State maintained the two-thirds business majority on the boards against calls for a genuine partnership between the public and private sectors, especially when those calls have come not just from every Opposition party but also from the National Federation of Self Employed and Small Businesses Ltd. and from Mr. Ron Lander, the chairman of the CBI's training committee in Scotland? Does not the fact that the Secretary of State has maintained the two-thirds majority betray the political bias behind the plans and show that they are a Tory solution to Tory needs rather than a Scottish solution to Scottish needs?

Why did the statement make no mention of the European dimension? Is it not the case that the Department of Employment processes applications for the European social fund, which is a major provider of training funding? Why has that role not been delegated to the Scottish Office or Scottish Enterprise? In the light of the Secretary of State's earlier remarks about the relative positions of the Scottish Office and the Department of Employment in relation to training, does he not remember that the White Paper announcing these proposals described the Department of Employment as the lead Department in these matters? Has anything changed?

It was described as the lead Department because it is the lead Department. There has never been any secret of that fact. It would be odd if it were not the lead Department, given that it covers such a large proportion of the population of the Unied Kingdom. This is not the occasion to have a debate on European matters, but I believe that my statement is free-standing in its own right.

In response to the hon. Gentleman's initial points, I advise him that he should study the representations before he makes a slight fool of himself——

I have the submissions here.

In that case, the hon. Gentleman has even less excuse for the questions that he has asked—[Interruption.] Yes, indeed, but the two-thirds private sector ratio has been widely accepted right across the spectrum of opinion. What people were quite properly——

What about Mr. Ron Lander?

The hon. Gentleman refers to one individual, as if one individual out of 420 should determine the course of the Government's response——

Mr. Lander is the chairman of the CBI's education and training committee.

Well, the CBI strongly supports what is in the White Paper. The fact that the hon. Gentleman has identified one individual who takes a different view shows the paucity of his case. The balance that the Government are proposing in the White Paper has been welcomed right across the political and industrial spectrum. The hon. Gentleman may not like that, but I am afraid that he will have to live with it.

Will the Secretary of State return to the point made by my hon. Friend the Member for East Kilbride (Mr. Ingram), and will he undertake to write to the chief executives or the chairman of the Scottish new town development corporations setting out in some detail the precise relationship between what is proposed and the existing development corporations? Could he then go a little further and deal with the question of the new development companies so that there is absolutely no doubt about the role of the new towns in the new context?

Yes, we will happily give such advice to the new town development corporations. The answer that I gave the hon. Member for East Kilbride (Mr. Ingram) related both to the existing new town development corporations and to the future local enterprise companies. We shall happily discuss the matter with the new towns so that there is a clarity of understanding about this matter.

If I followed the Secretary of State's statement correctly, he suggested that, as well as its training function, Highlands and Islands Enterprise will take on the environmental function from the SDA. Will he give an absolute guarantee that it will have a requisite increase in its finances for both those functions, so that its prime and legislative development role is not undermined or diluted as a result of the greater range of activity that it will have to undertake?

Secondly, I stress to the Secretary of State that at the weekend my hon. Friend the Member for Inverness, Nairn and Lochaber (Sir R. Johnston), in anticipation of this week's statement, met representatives of the CBI in the highlands and islands of Scotland. [Interruption.] I assure hon. Members that it was a perfectly open meeting. Those representatives of the CBI were exactly the kind of business men to whom the Secretary of State will be looking to make this a success. One issue about which they were anxious was whether this would lead to a diminution in the almost unique status of the existing HIDB within Scotland, as it is brought more on a par with Scottish Enterprise generally, and whether the potential is there for this to be a long-term disincentive or disadvantage for the highlands and islands as a whole. Will the Secretary of State address himself to that, too?

Yes. We have said that the initial funding of both the new agencies would correspond to the funding that currently goes to the various bodies that deal with those matters. In the case of the highlands and islands, if one combines, for example, the existing funding of the HIDB with that of the Training Agency in Scotland, we are talking of funding of about £50 million. I take the hon. Gentleman's point about the environmental aspect. We essentially wish to start from the position of replicating the existing funding in the highlands, wherever it comes from, and that will go to Highlands and Islands Enterprise.

On the hon. Gentleman's second point, I believe that he can be greatly reassured, because, far from being to the disadvantage of the highlands and islands, we are saying that major areas of policy and resources, which up to now have been carried out within the highlands from outside, will in future be determined within the highlands and islands themselves. For the first time, Highlands and Islands Enterprise will have many millions of pounds to spend on training in the highlands and islands—training which up to now has been run from Sheffield. That will now be with the local enterprise companies. There is the point, too, about the environmental functions of the SDA now being controlled from Inverness rather than from Glasgow. The hon. Gentleman and his colleagues can properly recognise what is being proposed as an exciting and substantial decentralisation of power to the highlands and islands.

The Secretary of State has tried hard to give the impression this afternoon of an entirely Scottish approach to the important area of training. Will he tell us whether the Department of Employment will continue to have a remit for training provision in Scotland, and, especially, whether the pilot schemes for the workfare-type jobs interview guarantee scheme will continue to go ahead under the Department of Employment, or whether it will be transferred to Scottish Enterprise? In any case, whoever has responsibility, will the Secretary of State guarantee that there will be comprehensive consultation with the local communities before implementation of that scheme?

There will be relatively few residual functions of the Department of Employment in Scotland, but, overwhelmingly, its current responsibilities are being transferred, with the appropriate resources, to the Scottish Office. There will be a continuing joint responsibility for national training standards in the United Kingdom as a whole, where both Departments will liaise in order to identify Government policy. Within that national framework, we accept that, both at Scottish level and in the various parts of Scotland, there will be substantial flexibility and local autonomy that has not existed up to now and will be a major feature of future arrangements.

Does the Secretary of State understand that these are very wide powers, which have been given to a very small number of people, drawn from a very narrow band of Scottish society, over a wide area of Scottish society and highly unrepresentative of Scottish society? That in itself requires the most extensive debate. The Secretary of State mentioned public accountability, but to whom will those local enterprise companies be publicly accountable? Will it be the local authority or the Scottish Office and, through the Scottish Office, the House? The Secretary of State did not mention Locate in Scotland, possibly because nothing is happening in relation to it. I would be grateful if he could confirm that. Finally, if legislation is required—when?

I shall take the hon. Gentleman's points in reverse order. My statement said that I envisaged early legislation to create Scottish Enterprise. However, even in advance of that legislation, much will be able to be achieved under the existing statutory position.

I am happy to confirm that Locate in Scotland is not affected in any way by the statement. Enterprise companies will be accountable to Scottish Enterprise in the first instance and, through Scottish Enterprise, to the Scottish Office and thereby to Parliament as a whole.

The hon. Gentleman said that those powers will be used by unrepresentative individuals. I ask him to compare what we propose with the existing situation and to see which he prefers. At the moment, the training powers are carried out by people answerable to the Training Agency's headquarters in Sheffield, while the SDA powers are exercised by officials of the SDA in the localities in question and are rarely considered in any depth by SDA headquarters. Compared with the status quo arrangements, a local enterprise company, which consists both of the private sector, and I am sure of local authorities and other local interests, will be considerably more representative and able to identify the needs of the local community than the existing arrangements, which, of course, have existed for a good many years.

Will the Secretary of State acknowledge that one of the intriguing aspects of discussing this initially with Bill Hughes was the fact that he suggested that money should be taken down to the local level? What appears to be happening is that we are creating multifarious bureaucracies. The real danger is that money, especially for training, will not get down to local level. How does he propose to devise a mechanism to obviate that?

Will the Secretary of State give us some indication of how those local companies will be registered? Will they be companies registered by guarantee, and will we, additionally, have an annual report on Scottish Enterprise and on Highlands and Islands Enterprise, too, so that we might have an opportunity of discussing those matters, appropriately in Scotland? One thing that we should keep an eye on and ventilate in Scotland is this proposed set-up.

I am happy to pay credit to Mr. Hughes for the stimulation that he, as well as others, gave to these ideas. These proposals represent a massive transfer of resources to the local level. At the moment, the effective decision on training are taken in Sheffield and those on the functions of the SDA in Glasgow. We are proposing a contractual relationship with enterprise companies, which have been brought out by the local communities, where they will not be carrying out simply a policy laid down by Government as agents. We would clearly not attract people of calibre to carry out someone else's policy. They will be given real decision-making powers in important areas, which is why the business sector and others have already responded so enthusiastically to what is proposed. I agree that those matters should be debated and discussed, for which there will be many opportunities. What is encouraging is that the public response to the White Paper has given rise not only to so many comments from so many quarters, but such a unanimous endorsement of what is proposed.

When does the Secretary of State expect Scottish Enterprise to achieve a reduction in Scottish unemployment to the level which existed at the time when the Scottish Development Agency was set up by the last Labour Government?

The hon. Gentleman will recall that, after the SDA was set up by the last Labour Government, unemployment—no doubt for other reasons—substantially increased during the remaining period of that Labour Government. It increased further during the early years of this Government, but I am pleased to say that it has been dramatically falling over the past two years and looks set to continue to fall. The Scottish CBI's latest survey shows substantial optimism in Scottish industry. No doubt that is because of a clear realisation that the hon. Gentleman is unlikely to be sitting on this side of the House in the foreseeable future.

My right hon. and learned Friend will be aware that Scotland has a unique history of skill training—that, certainly during the industrial revolution and afterwards, Scotland led the world in its level of skill training. Will my right hon. and learned Friend confirm that this new training arrangement will allow training to be conducted in such a manner that, if one wished, one could extend the training period to three years or more to give the opportunities for the levels of skills that are required to meet the needs of the future?

We certainly envisage that, increasingly, Government requirements will not be expressed so much in terms of the procedure and the detailed way in which training is delivered, as in terms of output and the results. If we are satisfied that enterprise companies are producing the results, the out-turn and the quality of training that is required, we shall be happy for them to have a significant flexibility and autonomy as to how they do that throughout Scotland.

On a point of order, Mr. Speaker. May I ask whether you have received any requests from Ministers to make a statement on the salmonella outbreak in Clwyd? There is considerable anxiety on Deeside and throughout that county. I believe that, before the end of the day, a statement should he made on this serious outbreak. We need to know whether the outbreak has affected 48 people in Clwyd, whether there are 13 hospital cases, whether there is a seriously ill pensioner and whether children are affected—

Order. The point of order is to me and to ask whether I have received a request for a statement. The hon. Member should not go into detail. I must tell him that I have not had such a request.

I was about to say to you, Mr. Speaker, that there is widespread anxiety in my constituency and in neighbouring constituencies. We want to know whether there are enough environmental health officers to assist locate the seat of the outbreak. We urgently want to know from Ministers what the Government are doing so that public anxiety can be allayed. Can you help to establish whether a Minister from the Welsh Office will come to the Chamber and make a statement about this serious outbreak of salmonella? Public opinion demands that that information be given.

I repeat that I have not had any request for such a statement. I am sure that what the hon. Gentleman has said will have been heard on the Government Front Bench. We never know what might happen tomorrow.

On a point of order, Mr. Speaker. You will have heard the Secretary of State for Health during Question Time yesterday make some insulting remarks that implied that my constituents are not fit to vote on whether they want hospitals to opt out of the National Health Service. Would you examine the record, Mr. Speaker, and consider asking the Secretary of State for Health to withdraw those deeply offensive remarks?

I must tell the hon. Lady that I was here and I did not hear any offensive remarks. In any case, the time to raise a point of order on a matter like that is when it occurred, not now. I cannot go back to it today.

Further to the point of order—

No—I am sorry, the hon. Lady's argument is not with me. She will have to find other ways to take it up.

Further—

No. I cannot hear it.

I beg to move,

That leave be given to bring in a Bill to compel parties providing essential services and involved in industrial disputes to seek arbitration.

The aims of this Bill are best attained by preventing those who are engaged in providing essential services from undertaking strike action, either on a full-time or part-time basis, while recourse to existing arbitration or tribunal procedures remain available to the parties to the dispute. This is certainly not a bash-the-unions exercise, but it is very much a protect-the-public measure.

We have come a long way since the days of Red Robbo and Jack Dash—the days of "I'm all right Jack"—and of scenes in factory car parks which involved a brief speech, a forest of hands in the air, and an immediate walk-out. Few doubt that such antics played a significant role in Britain's relative decline as an industrial power in the 1960s and 1970s. They certainly played a large part in the perceptions that many foreigners—including potential investors—formed of Britain's economic performance.

Few people would want those dark days to return. Even fewer would agree with the right hon. Member for Chesterfield (Mr. Benn), who said on June 19 this year:

"The Trade Union was born in illegality and it will be re-born in illegality".

At present, some groups, such as members of the police forces and the armed forces have no right to strike. Also, doctors, dentists and nurses have their pay settled by review bodies, although there must be some concern about the inflationary aspects of some of the awards.

I was encouraged by the reply given by my right hon. Friend the Prime Minister to a question asked by my hon. Friend the Member for Ilford North (Mr. Bendall), who is in his place, last Thursday. She said:

"We are looking at the possibility of further legislation and examining European legislation which usually includes some protection against unions in the public sector going on strike. European legislation and history tend to be very different from ours, but we are looking at it all to see whether we can learn something from it. … With due respect, I do not think that it would make much difference to have only one union. It is much more complicated than that, but I hope to bring forward in the future any proposals that we may have."—[Official Report, 20 July 1989; Vol. 157, c. 514.]

I am quite sure that any such proposals will be positive and realistic and will build on the substantial trade union reforms over the past decade, which have met with the approval of the vast majority of the British electorate. One effect of these proposals is that strike action is legal only after a democratic ballot. It logically follows that, where trade union members have authorised strike action, there is greater legitimacy for them to do so.

I suggest that it is for the employers and the unions to decide whether they want to accept the Advisory Conciliation and Arbitration Service, either as an arbitrator or as a conciliator, and whether to accept pendulum arbitration or no-strike deals.

There has been much comment recently on the negotiation of no-strike deals, which typically involve single union deals, such as that between the Electrical, Electronic, Telecommunications and Plumbing Union and Japanese new technology companies, often on new green-field sites. The agreements prohibit industrial action while the disputes procedure is being followed. If the agreed procedures fail to resolve the dispute, an independent arbitrator, sometimes ACAS, either must or may be called upon to make a final decision.

Some agreements specify the use of pendulum arbitration, whereby the arbitrator must choose between the employer's offer and the union's demand rather than strike a compromise between the two.

any industrial relations experts point out that there is not much difference between a no-strike agreement and the type of collective agreements involving peace clauses and provision for arbitration which have been negotiated in many industries in the past.

Perhaps the present situation is best summarised by a recent article on single-union deals in the Industrial Relations Review and Report dated 27 June 1989. It said:

"There is nothing new about peace clauses or disputes procedures which set out the steps through which disputes and grievances must proceed".

It continued by analysing the 1984 workplace industrial relations survey and found that nearly 80 per cent. of unionised workplaces had such arrangements. In many cases, these arrangements are specifically referred to as procedures for the avoidance of disputes.

It is difficult to see why the public should be inconvenienced where these procedures are adopted. The right hon. Member for Blaenau Gwent (Mr. Foot) said in a television interview on 11 December 1974:

"naturally the trade unions see their clearest loyalty to their own members but the social contract is their free acknowledgement that they have other loyalties to the members of other unions, to pensioners, to the lower paid, to invalids and to the community as a whole".

It is interesting that loyalty to the community as a whole came last. The convenience and needs of the public always seem to come last during industrial disputes. I suggest that it is the duty of the House to ensure that the needs of the public come not last, but first in order of priority.

Like other hon. Members, I have recently received a letter from the secretary of the National Union of Railwaymen that stated, in its second paragraph:

"I am only too well aware of the considerable inconvenience caused to the travelling public by the current industrial problems so let me begin by emphasising once again that the NUR is anxious to achieve the earliest settlement of the dispute".

Later in the same letter comes the statement:

"We have consistently argued that ACAS is the necessary and appropriate forum for such negotiations".

What that letter does not, and cannot, explain is why it is necessary to have a strike, such as the one today, while both the tribunal and ACAS procedures are still available to the parties concerned. As my right hon. Friend the then Secretary of State observed on 30 June:

"Use the established procedures if you are so keen for a settlement—start talking and now. The British public is waiting."

I am well aware that other countries have different approaches to these problems. As Mr. Philip Bassett observed in the Financial Times as long ago as 2 January 1986:

"In West Germany … it is illegal not only to break an agreement, but also to encourage others to do so. In the US, all agreements are legally enforceable and most contain elaborate grievance procedures and no-strike peace clauses. In France agreements are enforceable as civil contracts."

Until major legislation is introduced—that was mentioned in our 1983 manifesto—and until our position on those major issues is made clear, we surely cannot continue to allow the public to be blackmailed. The man or woman on the tube, on the railway or, quite literally, on the Clapham omnibus, should not face strike action until all procedures to avoid such strikes have been exhausted. Some 80 per cent. of unionised workplaces already have peace clauses for disputes procedures. The very least we should ensure is that those engaged in providing essential public services should not strike before such procedures have been fully explored. It is the duty of this House to protect the public.

This is yet another attempt by Tory Back Benchers to restrict or take away the right of employees, especially those in the public sector, to take strike action. It was interesting that the hon. Member for Stroud (Mr. Knapman) made no reference to the wages of those involved in today's dispute. Even alter an 8·8 per cent. increase, many railway workers would have a basic wage of £116 a week before tax. I note that the hon. Gentleman is a partner in a family firm of builders. He is a member of a Lloyd's underwriting syndicate. He is an associate partner in a firm of chartered surveyors. What income does he take home, and how does it compare with some of the railway workers who take home less than £100 a week, which often includes overtime?

No group of workers takes industrial action lightly, although I do not expect Tory Members to understand that. Some of my hon. Friends take the view that Tory Members are opposed to all forms of strikes. Perhaps that is a slight exaggeration, so I shall make the qualification that they are opposed to all forms of strike action—unless it happens to take place in eastern Europe.

The very powers that the hon. Gentleman advocates were, in fact, part of the emergency provisions of the Industrial Relations Act 1971—a very discredited piece of Tory legislation. There was a dispute, as a matter of fact, on the railways in 1972 and strike action was to be taken. The then Secretary of State for Employment applied to the National Industrial Relations Court—we all remember that body—which granted a cooling-off period of 14 days. That is exactly what the hon. Gentleman is now advocating.

During those 14 days, the union complained that there was only minimal negotiation with the employers. The Government then ordered a postal ballot of all those eligible to take strike action. Some 85 per cent. of NUR members voted, and of those, 84 per cent. voted in favour of industrial action. The Government, realising that the game was up, authorised British Rail to go beyond the previous offer, and fresh negotiations soon resulted in a satisfactory settlement. I do not know whether the hon. Gentleman has done his homework and whether he is aware of what happened in 1972. Nevertheless, it demonstrates that what he advocates has already been tried. It could not prevent strike action, and the Government recognised that a further offer was necessary.

The hon. Gentleman is keen on arbitration. Is he aware that there has been arbitration in the Civil Service since the 1920s? Since 1982, however, the Secretary of State has refused the Civil Service unions permission to go to arbitration, always arguing that, as there was no further money on offer, there was no purpose in arbitration.

In a democratic society, the employers and the unions should negotiate for the kind of agreement that they want. The hon. Gentleman referred to various existing agreements, and that is fine, but it is surely for the employers and the trade unions, as part of the collective bargaining process, to agree on the procedures that they want, whether it be arbitration or something else. ACAS plays an important role, but that role would undoubtedly be discredited if compulsory arbitration was imposed. The current problems do not call for compulsory arbitration; they call for a recognition by the Government that many workers, including those in the constituencies of Tory Members, are deeply dissatisfied with what they take home. That is part of the reason for the large amount of industrial unrest at present, and more so because of the rising inflation rate.

It is no good dismissing those people as troublemakers and anarchists who want only to cause the public the maximum inconvenience. It is nothing of the kind. As I said earlier, no group of working people takes industrial action lightly, and certainly those employed on the railways have not done that. Strikes are part of the price that a society pays for remaining free and democratic—[Interruption.] Tory Members may jeer, but they should remember that in the Soviet Union and Poland, as those societies improve and reforms are undertaken, the working people have resorted to the strike weapon. The only way to end strikes is through a dictatorship. Hitler, Mussolini and Stalin had their ways of dealing with industrial disputes, but in a democratic society people should have the right to take industrial action if they so wish.

What the hon. Gentleman advocates in his Bill, far from resolving industrial unrest, will only further aggravate it. It is all part and parcel of the determination of Tory Members to take away the right to strike action from workers in the public sector. We will oppose the Bill in the Lobby.