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MacKay, Andrew (E Berkshire)

Maclean, David

McLoughlin, Patrick

Mans, Keith

Marshall, John (Hendon S)

Martin, David (Portsmouth S)

Maude, Hon Francis

Maxwell-Hyslop, Robin

Mayhew, Rt Hon Sir Patrick

Miller, Sir Hal

Mills, Iain

Mitchell, Andrew (Gedling)

Mitchell, Sir David

Monro, Sir Hector

Moore, Rt Hon John

Morris, M (N'hampton S)

Moss, Malcolm

Moynihan, Hon Colin

Neubert, Michael

Nicholls, Patrick

Nicholson, David (Taunton)

Nicholson, Emma (Devon West)

Norris, Steve

Onslow, Rt Hon Cranley

Oppenheim, Phillip

Page, Richard

Paice, James

Patnick, Irvine

Patten, John (Oxford W)

Pattie, Rt Hon Sir Geoffrey

Peacock, Mrs Elizabeth

Porter, David (Waveney)

Raffan, Keith

Redwood, John

Rifkind, Rt Hon Malcolm

Roberts, Wyn (Conwy)

Shaw, Sir Giles (Pudsey)

Shelton, Sir William

Shephard, Mrs G. (Norfolk SW)

Shepherd, Colin (Hereford)

Smith, Tim (Beaconsfield)

Spicer, Michael (S Worcs)

Stanley, Rt Hon Sir John

Stern, Michael

Stevens, Lewis

Stewart, Andy (Sherwood)

Sumberg, David

Taylor, Ian (Esher)

Taylor, John M (Solihull)

Taylor, Teddy (S'end E)

Thompson, D. (Calder Valley)

Thompson, Patrick (Norwich N)

Tracey, Richard

Trippier, David

Trotter, Neville

Twinn, Dr Ian

Waddington, Rt Hon David

Walden, George

Walker, Bill (T'side North)

Waller, Gary

Ward, John

Wardle, Charles (Bexhill)

Warren, Kenneth

Watts, John

Wells, Bowen

Whitney, Ray

Widdecombe, Ann

Wilkinson, John

Wilshire, David

Winterton, Mrs Ann

Wood, Timothy

Yeo, Tim

Tellers for the Noes :

Mr. Alan Howarth and

Mr. Tom Sackville.

Question accordingly negatived .

Further consideration adjourned.-- [Mr. Maclean.]

Bill, not amended in the Committee, (and as amended in the Standing Committee), to be further considered this day .

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Rate Support Grant (Scotland)

12.28 am

The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton) : I beg to move

That the Rate Support Grant (Scotland) Order 1989, dated 24th May 1989, a copy of which was laid before this House on 25th May, be approved.

I appear before the House for the first time with my new responsibility for local government finance in Scotland. It is an opportunity to present good news. The purpose of this order is to adjust grant entitlements for Scottish local authorities for previous years, in the light of more up-to- date information on expenditure during those years. The main point of note is that, in the year just ended, 1988-89, authorities reduced their expenditure, as against their original budget figures, by £48 million, as a result of which, if the House approves this order, we will return to them about £70 million in rate support grant. There are also minor adjustments of grant for 1987-88 and for 1986-87. The Convention of Scottish Local Authorities has of course been fully consulted about the contents of the order, and welcomes it.

Authorities' budgets for 1988-89 were £3,742 million--£136.5 million above guidelines. As a result, the House approved a year ago the Rate Support Grant (Scotland) Order 1988, under which the grant apportionments were reduced of those authorities budgeting above guideline. Of the total excess over guideline of £136.5 million, £116 million, or 85 per cent., was accounted for by Strathclyde and Lothian regions alone. The tariff of grant penalties imposed last July was, when compared with the huge budgeted overspending and also when compared with tariffs in some earlier years, moderate. It imposed modest penalties on authorities which were budgeting slightly over guideline, and which might most easily be persuaded to reduce their spending during the year. The penalty tariff increased substantially for authorities budgeting at 4 per cent. or more over guideline, because it was on those authorities that the greatest pressure needed to be exercised.

The judiciousness of this penalty tariff is well demonstrated by local authorities' response, as evidenced in their provisional outturn figures for this year. Overall spending has been reduced by £48 million by comparison with the original budget figures, and, among authorities that have reduced their expenditure most significantly, Strathclyde has secured reductions of £17 million and Lothian of £20 million. Those two authorities are therefore the major beneficiaries of this evening's order, under which, and subject to the House's approval, they will have returned to them £48.1 million and £23.8 million respectively. Other notable beneficiaries of tonight's order are Fife region and Edinburgh and Glasgow districts. Some authorities--notably Central region and Stirling and Cunninghame districts--have regrettably increased their spending at outturn, and so their penalties are increased.

By comparison, the grant adjustments in respect of 1987-88 and 1986-87 are minor indeed, and reflect simply minor adjustments to those authorities' accounts in the light of the most up-to-date information on their spending in the relevant financial years.

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I should now like to turn briefly to details of the order. It makes adjustments to grant penalties for the last three years of rate support grant, using the penalty tariffs previously applied to each of those years.

First, the order increases rate support grant for 1988-89 to take account of reductions in spending at provisional outturn stage. As a result, rate support grant will increase from £1,897.8 million to £1, 967.5 million. Strathclyde region has reduced its spending excess over guideline from 5.1 per cent. at the time of the 1988 order to 3.97 per cent. and will recover £48.1 million in grant. Similarly, Lothian has reduced its excess from 9.71 per cent. to 4.85 per cent. It will recover grant of £23.8 million. Details of the original 1988-89 penalties and of how they are now being revised are given in appendix 2 of the report, the revised penalties being shown in column 6 of the table to appendix 2 to the report with adjustments to grant payments set out in column 9.

For 1987-88, final or near final outturns show a small decrease in spending. The effect of this is to reduce penalties by £0.2 million. Details of the adjustments to penalties are shown in column 6 of table II of appendix 3 to the report.

For 1986-87, final or near final outturns show a small increase in spending, which has the effect of increasing grant penalties by £0.03 million. Details of the adjustments to penalties are shown in column 8 of table II of appendix 4 to the report. There will be a continuing need to adjust grant for each of those years in the light of up-to-date information.

As for next year--1990-91--representatives of COSLA met my right hon. and learned Friend the Secretary of State last Monday, 3 July, and discussed the prospects for spending next year. They said that they expected their spending to go up by at least 7 per cent.--although this was on the basis of simply accepting this year's budget levels and adding their estimate of inflation. I would hope they can do better than that by looking at scope for economies and for greater efficiency and value for money. COSLA recognised that there might be something in this and it is encouraging-- though in all the circumstances no more than mildly encouraging--that COSLA now proposes to open discussions with the accounts commission about the commission's future programme of value-for-money studies. I very much hope that that dialogue will be productive.

In the meantime, my right hon. and learned Friend will be reflecting on the discussions with COSLA last Monday and will take them into account when reaching conclusions on a revenue support grant settlement for 1990-91. It is hoped to make a statement on this before the House rises.

It is tempting to say more and to range wider on the subject of local government spending in Scotland, but I shall resist that temptation until I have had the chance to meet representatives of local authorities. For our immediate purposes, the order is good news for local authorities, it has been strongly welcomed by COSLA, and I commend it to the House.

12.36 am

Mr. John Maxton (Glasgow, Cathcart) : I welcome the Minister to his new role as poll tax spokesman, although I must tell him that Edinburgh Members of Parliament with small majorities do not do too well as poll tax spokesmen. The last one lost his seat, and the Minister

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may have the same problem at the next election. His new responsibilities are due to a shift in the power structure of the Scottish Tory party. I am delighted to see the new deputy leader of the Tory party in Scotland in his place, even though the new leader is not in his.

We welcome any money that the Government give local authorities, although the Minister's argument that this is some act of generosity on his part is laughable. This is money that local authorities should have had in the first place. It should never have been lost under a penalty scheme that should never have existed.

We welcome the end of the grant penalties. The system ended in Scotland only on 31 March this year, when it also ended in England and Wales. So poll tax levels in Scotland have been affected by the clawback, but England and Wales will enjoy a whole year without penalties, which means that the poll tax there next year will not be affected as it was in Scotland.

This order does not return all the money due to the local authorities. It represents only the partial return of clawback money, and a small number of authorities have lost out.

We welcome this money, however meagre it is and however late in the coming. Our local authorities need it to spend on the services that they provide.

This rather late and short debate may be an historic moment for the House. This may be the last rate support grant order for Scotland. When we return to power and introduce a new local taxation system, we shall not call it the rate support grant system.

12.39 am

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