House of Commons Hansard Debates for 2 Dec 1992

Column 265

Public Expenditure (Scotland)

3.30 pm

The Secretary of State for Scotland (Mr. Ian Lang) : With permission, Madam Speaker, I wish to make a statement about public expenditure in Scotland.

My right hon. Friend the Chancellor of the Exchequer announced the Government's expenditure plans in his autumn statement on 12 November. On the same day, I announced my decisions for aggregate external finance for local authorities. I am publishing today details of the council tax transitional relief scheme which will accompany the introduction of the council tax in Scotland next year. As a result of settling the final details of that scheme, I have been able to increase the level of aggregate external finance available for distribution to local authorities from 3.2 per cent., as previously announced, to 3.5 per cent. I am also able to announce how I propose to allocate the remainder of the resources available for my programmes in Scotland. As usual, a table summarising my decisions will appear in Hansard. Full details will be included in my departmental report, which will be published in February. My right hon. Friend made it clear that the Cabinet had set a remit for the public spending round which would keep public expenditure under firm control. The resulting overall settlement has, as a consequence, been a tight one. Nevertheless, the net public expenditure resources available to me for allocation in 1993-94 amount to no less than £13.45 billion. That is around £1 billion higher than last year's settlement and the largest ever annual spending total available to my departments, not just in cash but in real terms.

Our commitment to continue to fund growth in the health service in real terms, year by year, is an important one. But this year, with a tight public expenditure settlement, that is a demanding target. However, I am glad to say that, despite the tight limits on total resources and the priority given to economic recovery, I have once again been able this year to make substantial provision for the national health service and to plan for real growth in its funding. In 1993-94 the health programme will amount to more than £3.75 billion of net expenditure, an increase of £151 million over plans for the current year, and a real terms increase of 1.4 per cent. At that level, expenditure on the NHS in Scotland will be 47 per cent. higher in real terms than in 1979-80. That amounts to an all-time record of £744 per head in Scotland.

In deciding the disposition of the reminder of my resources among my various responsibilities, my first priority this year has been to invest in Scotland's economic recovery and longer-term growth. The House is already aware of the additional £340 million economic package for Scotland announced as part of my right hon. Friend's autumn statement. The promotion of economic recovery is also at the heart of the expenditure plans that I am announcing today. Provision of national roads over the next three years will enable the programme of investment which we published last year to proceed as planned. More than £233 million will be invested in 1993- 94, a 2 per cent. increase in real terms over plans for the present year. In addition, there will be new opportunities for the private sector to invest in Scotland's transport infrastructure. Resources available for local authority roads and other transport

Column 266

programmes, including forecast receipts from the European regional development fund, are expected to increase in real terms to £206 million.

The private sector-led local enterprise companies have a central role to play in promoting enterprise development, training and environmental recovery throughout Scotland. The LECs are actively encouraged to seek private investment and their strength is not accordingly to be measured solely by the level of their public funding. This year there has been understandable speculation that, to help fund other programmes, Scottish Enterprise's budget would have to be cut--a cut of 10 per cent. has been quoted in the press. It is true that the training budget, which represents Scotland's share of the funding for programmes in Great Britain, has fallen. It is none the less right in the present economic circumstances that the Government should back the LECs' development efforts with substantial resources. I am happy therefore to announce that the budget for the enterprise and environment functions of the Scottish Enterprise network will increase by £27 million in 1993-94 compared with plans for the present year. This is an increase of almost 11 per cent. in real terms.

In addition, the LECs are attracting an increasing share of the available grants from the European regional development fund which are additional to the expenditure allocations announced today. As a result the total cash resources available to the Scottish Enterprise network are expected to exceed the £455 million planned for the present year. Provision for Highlands and Islands Enterprise will be maintained at £78 million and is expected to rise to over £80 million once forecast ERDF receipts are taken into account.

In seeking to ensure that, within a tight overall settlement, the resources at my disposal should, so far as possible, be directed towards stimulating economic recovery, I have ensured that, across my programmes as a whole, my plans provide for gross capital expenditure totalling over £2.5 billion next year and an aggregate of £7.8 billion over the survey period. Together with European regional development fund grants, this enables a higher level of activity to be undertaken in real terms for 1993- 94 than previously planned. Spending on agriculture and fisheries is vital to the rural economy. Provision will increase in 1993-94 by some £141 million. That is 43 per cent. growth in real terms compared with plans for the present year. These increases reflect the outcome of agreement earlier this year on reform of the common agricultural policy, which switched the emphasis from commodity price support to direct payments to farmers.

Investment in education is the key to longer-term economic strength. The budget of the Scottish Office Education Department will be increased by 80 per cent. to nearly £1.2 billion next year, reflecting not just growth, but also my new responsibilities for the older Scottish universities and my new direct funding

responsibilities for further education colleges in Scotland. Adjusted for these transfers, provision for education will rise by 5 per cent. in real terms next year with further real terms growth thereafter. Scottish participation in higher and further education will be maintained at record levels following the substantial increases of recent years.

I am also able to invest substantially in a better environment. Expenditure on environmental programmes will amount to £485 million. Provision for the water and

Column 267

sewerage programme over the survey period amounts to some £728 million. This represents a doubling in the programe over five years. Local authorities will be able to add to these resources grants obtained from the European regional development fund.

In housing, local authority expenditure on private sector improvement grants will increase by 1.5 per cent. in real terms while expenditure on council housing can be maintained at the level of expenditure per house provided for in this year's provisional allocations. The resources available to Scottish Homes represent an

Column 268

increase of £31 million in its investment resources compared with this year's plans--a real terms increase of almost 7 per cent. The plans which I have announced today provide for the highest ever level of funding for Scottish Office programmes. They permit continuing real improvements in the provision of public services. They provide a framework for jobs and economic growth. I commend them to the House.

Following is the table :

Column 267

£ million

1992-93

estimated

outturn 1992-93

planned

provision 1993-94

planned

provision 1994-95

planned

provision 1995-96

planned

provision

gross net gross net gross net gross net gross net

Central Government's own expenditure (including public corporations other than nationalised industries) and local authority capital expenditure

Agriculture, fisheries and food 337 331 304 300 444 441 490 480 530 520

Industry, energy, trade and employment 626 544 617 535 615 530 630 580 650 600

Roads and transport 431 431 418 418 406 406 420 420 440 440 Housing 1,031 668 1,040 665 1,020 664 1,050 700 1,060 710 Other environmental services 488 387 477 376 485 361 490 360 500 370

Law, order and protective services 432 406 429 403 470 448 480 460 500 480

Education 636 636 628 628 1,167 1,167 1,220 1,220 1,270 1,270 Arts and libraries 49 49 47 47 54 54 60 60 60 60

Health 3,761 3,643 3,725 3,615 3,888 3,766 4,060 3,940 4,200 4,070

Social work services 62 62 62 62 63 63 70 70 70 70

Other public services 222 180 222 180 222 185 240 190 240 190 Total Central Government and local authority capital 8,073 7,337 7,968 7,229 8,834 8,085 9,200 8,470 9,500 8,760

Grants from the European regional development fund -- 0 -- 0 -- 120 -- 120 -- 120

Central Government support to local authorities' current expenditure -- 5,203 -- 5,198 -- 5,207 -- 5,420 -- 5,590

Nationalised industries financing limits -- 32 -- 32 -- 35 -- 20 -- 20

Total expenditure within the Secretary of State's responsibility -- 12,571 -- 12,458 -- 13,446 -- 13,990 -- 14,450

Forestry Commission -- 99 -- 99 -- 94 -- 100 -- 100

Total-- -- 12,670 -- 12,558 -- 13,540 -- 14,080 -- 14,550

Notes

1. 1992-93 and 1993-94 rounded to nearest £1 million. 1994-95 and 1995 -96 rounded to nearest £10 million.

2. Figures may not add due to rounding.

3. Central Government support to local authorities comprises revenue support grant, grants to local authorities for specific purposes, and income from non domestic rates.

4. Provision for industry, energy trade and employment includes that for tourism.

5. Provision for agriculture includes £96 million (1993-94), £102 million (1994-95) and £148 million (1995-96) included in the MAFF/IBEA programmes in the autumn statement but which forms part of agricultural spending in Scotland.

6. Comparisons between 1992-93 and 1993-94 are affected by transfers to Education from DFE and grants to local authorities and to grants to local authorities from DSS in respect of higher and further education and care in the community.

7. For 1992-93 expenditure financed by grants from the European regional development fund was included in the relevant programme total.

Mr. Henry McLeish (Fife, Central) : Is the Secretary of State aware that, four days after his second anniversary in the post, when facing the longest recession since the 1930s, with business and consumer confidence at rock bottom, this statement does not begin to deal with the real issues facing Scotland? It will do nothing to allay fears about unemployment, to help boost the economy, or to improve the quality of public services.

Column 268

The casual listener today might have been forgiven for thinking that Christmas had come early. When we consider the sleight of hand, manipulation of the figures and the inclusion of enormous transfers from other Departments, a very different picture will be revealed, which will put a different complexion on what has been announced. Any statement on expenditure must be assessed against the fragile condition of the Scottish economy.

Column 269

The Secretary of State claims that there has been a real terms increase of 4 per cent. The Treasury says that, if one excludes transfers, there has been only a 1 per cent. increase in real terms. Will the Secretary of State clear up that confusion and confirm that he set out to use a different set of figures in his press release on 12 November, which was not a presentation shared by the Treasury? The Secretary of State has virtually said that money is flowing from the Scottish Office into every nook and cranny of Scottish life. In that case, why is there a cut of 5 per cent. in real terms for industry, a cut of 8 per cent. for roads and transport, a cut of 3 per cent. in housing, and a cut of 9 per cent. in other environmental services? The right hon. Gentleman can tell us when he responds why his figures simply do not add up. The tables are more accurate than the Secretary of State's rhetoric.

Secondly, the Secretary of State talked about a £340 million recovery package. Will he confirm that next year all that we will get is £23 million of housing investment by Scottish Homes, and that that is the extent of his £340 million recovery package? If that is so, it does not begin to address the key issues which Labour Members appreciate but which are constantly ignored by the Secretary of State and his complacent friends in the Scottish Office.

Thirdly, will the Secretary of State tell the House why he has surrendered on the Barnett formula? For 13 years we have been led to believe that that is quite important and that it had an impact on the quality of public services and the volume of expenditure. Now the Secretary of State would like us to believe that the Barnett formula did not mean a great deal. He should come clean and tell us what it means in terms of future funding and expenditure.

The real tragedy of the statement, stripped of its hype and hypocrisy, is that it will do nothing for jobs, nothing for unemployment and nothing to tackle homelessness and the rising crime rate throughout Scotland.

When unemployment has risen in the past two years by 23 per cent. to nearly a quarter of a million, why has no emergency employment programme been announced in the statement? Have the Government given up on the unemployed? Are they not concerned about the one in four young Scots between the ages of 16 and 24 who are out of work? Is the Secretary of State not concerned about the one in 10 of our working population who are also out of work? By their actions today, the Government have shown that they have no interest in the unemployed. The chief executive of Scottish Enterprise is alarmed about what might happen to his budget, but today we have been treated to the simplistic notion that the Secretary of State is increasing the budget. Would the Secretary of State like to come clean and tell us about the training elements of Scottish Enterprise, which he conveniently forgot to mention in his statement and his presentation to the House?

Training is a crucial item of the budget and the statement. One quarter of training places have been lost in the past two years. Nearly 9,000 young Scots are without a youth training guarantee. Surely the Secretary of State should come clean on the extent of the cut because it is vital for young people and adults and for Scotland's economic recovery.

Will the Secretary of State also consider that, in Scotland, 12 people are chasing every vacancy?

Column 270

Bankruptcies have increased by 280 per cent. in the past two years. Faced with all that, why is the industry budget being cut by 5 per cent?

We have had no better definition of insanity in public policy than this afternoon's statement. Problems are mounting by the day and the budget for investment is declining by the day. It simply makes no sense, and the Secretary of State should comment on that. The Opposition are not convinced that Scottish Enterprise has a healthy future in the hands of the Conservative party. Budget cuts are being imposed, morale is at rock bottom, and we now see the appointment of another representative of that cosy clique of Conservative cronies, Mr. McKay, the chairman of Scottish Enterprise. When will that placement approach to politics in Scotland stop? We need people who will tackle the Scottish Enterprise budget problems properly and who do not have such close affinities with the Conservative party.

Another issue that did not surface in the statement was crime. Why has the crime rate increased from 900,000 in the past two years to more than a million, yet the statement specified no figure to show why--

Madam Speaker : Order. As crime was not specifically mentioned in the statement, I remind the hon. Gentleman that the procedure restricts him to questioning the statement.

Mr. McLeish : The law and order issue is contained in the table that accompanies the statement, so it is germane to the Scottish Office's current expenditure, Madam Speaker.

When a crime is being committed every 30 seconds in Scotland, we should have a response about what the Government intend to do about the rising crime wave. Have they simply given up once again on crime, which stalks our streets and houses in Scotland?

The final point that was not dealt with in the statement was that of homelessness, which is now at record levels with 39,500 households having registered with local authorities as homeless. Why is there no vigorous improvement in investment in house builds? It cannot be right that nearly 100,000 Scots, according to the Government's latest figures for the past year, are now without a home. Why, therefore, has 3 per cent. been cut from the housing budget in today's statement?

Local government expenditure is also crucial because, once again, tucked away in the tables accompanying the statement is a 3 per cent. cut in the cash going to local authorities. Will not that mean that the 1.5 per cent. pay issue will simply disappear and that we shall have a pay freeze? Will it not mean the underfunding of care in the community, and council tax being set at artificially high levels because of the meanness of Government funding? Is it not a potentially lethal cocktail to suggest that vicious capping of local authorities will accompany inadequate funding to ensure that council tax levels remain reasonable at the expense of services and jobs? The statement is not worthy of the problems in Scotland. The Secretary of State well knows that, when the transfers from other Departments to the Scottish Office are excluded and when we consider the increasing need in housing, crime and the economy, the statement will receive

Column 271

no support from the Opposition. I urge him, even at this stage, to reconsider the unemployed and to give them a priority which, until now, they simply have not had.

Mr. Lang : I know that figures are not the strong point of the hon. Member for Fife, Central (Mr. McLeish), but he should take a closer look at the figures before making such comments.

I am glad that the Opposition have accepted my proposal that the Scottish Grand Committee should meet to discuss the statement, because it covers many important issues that deserve debate. I assure the hon. Gentleman that my announcement, with all the real terms increases that I have listed, will lead to improved public services. There is no question of sleight of hand. For that, we look to the hon. Gentleman who, less than a month ago, suggested that the Government's spending on Scottish Enterprise was set to fall from £373 million to £340 million next year. The resources at Scottish Enterprise's disposal next year will be £455 million, which is rather different.

The hon. Gentleman suggested that capital allocations to local authorities would fall from £826 million to £810 million. The figure is likely to be nearer £900 million, so the hon. Gentleman has a bit of homework to do. He also questioned the unadjusted real terms increase--in other words, whether allowance was being made for the transfer of programmes to Scottish Office responsibility. Unadjusted, the programme expenditure increase is 5 per cent. in real terms, plan on plan. However, after taking out provision for higher education and care in the community, the increase is not the 1 per cent. that the hon. Gentleman suggests ; it is a 2.7 per cent. plan-on-plan increase.

The hon. Gentleman spoke about Scottish Enterprise and about a cosy clique of cronies. Perhaps he was thinking of Monklands. He mentioned morale in Scottish Enterprise. He should speak to it following my announcement because it has had its enterprise and environment functions budget increased by £27 million, a rise of 11 per cent. in real terms. That returns Scottish Enterprise's total spend, after the reduction in the training budget to which I referred, to broadly the same level as for the current year. That is very different from the hon. Gentleman's figures.

The hon. Gentleman asked about roads and transport and suggested that there were cuts. The roads and transport programme will increase by 5 per cent. in cash terms and by 2 per cent. in real terms. The hon. Gentleman failed to take account of the European regional development fund share which will be allocated to those programmes in the year ahead.

The hon. Gentleman asked about the change in the Barnett formula. The updating of that formula took account of the population changes since it was introduced arising from the 1991 survey, thus bringing it back to the same broad level intended by the then Chief Secretary, Mr. Barnett. The impact on this year's total programme is about £12 million, which is less than one tenth of 1 per cent. of the total. Anyone who contrasts that with the £340 million package that I was able to secure outwith the block will begin to realise that I have secured about 10 times as much by that means.

The hon. Gentleman derided the £340 million package as though it had only one small component involving the Scottish Homes budget, but it comprises £70 million of resources in the current year for schools, hospitals, roads and a range of other areas which we have now spelt out

Column 272

and published. It also includes the writing off of debt inherited from Scottish Homes' predecessors, and that will release about £70 million over the next three years. It also included the reduction of £68 million this year, carrying forward to future years, in Scottish business rates.

That is the emergency employment plan for which the hon. Gentleman called, and that and the more than £2.5 billion of capital spend will help to generate jobs and stimulate the economy.

The hon. Gentleman spoke about the law and order budget. We have not given up the fight against crime. That is why we are increasing the law and order budget by 11.6 per cent.

Mr. Bill Walker (Tayside, North) : Does my right hon. Friend agree that the substitute striker for the Opposition Front-Bench team, the hon. Member for Fife, Central (Mr. McLeish), was offside for most of the game? He failed to understand or realise that in order to score goals he must make statements that will stick. Has the hon. Gentleman failed to notice how, since 1979, the Conservative Government have increased spending on the health service over and above the rate of inflation by 47 per cent.? Has he failed to notice that we are now spending much more on the environment, which has been targeted in the way that people want? Has he not noticed that the shift in emphasis on the way that Scottish Homes is to be financed will make a substantial contribution, especially in rural areas, to funding? All that is against the background of a world recession. My right hon. Friend is to be congratulated, not condemned.

Mr. Lang : I am grateful to my hon. Friend. He is quite right to point to the increase in expenditure on the health service in Scotland of 47 per cent. in real terms since 1979-80. That is dramatic evidence of our long-term commitment to improving the delivery of public services. My hon. Friend might also have said that expenditure on health in Scotland is 24 per cent. higher per head than in England. My hon. Friend is also right to draw attention to the environment budget. He may like to know that the budget for Scottish Natural Heritage is being increased to £36 million, a 5 per cent. real terms increase over the current year. The Scottish Homes budget is also being increased. My hon. Friend will also be pleased to know that there is provision in these figures for expenditure of £4 million on raspberries over the next three years.

Mr. James Wallace (Orkney and Shetland) : Can the Secretary of State confirm that there is no increase whatever in the Scottish Enterprise budget for this year? What guarantees can he give that the increase announced for the environment and enterprise will not have to be siphoned off to allow the training guarantees to be met? Will he confirm that there is no increase in the budget for Highlands and Islands Enterprise? How can he justify that given the loss of jobs at Ardersier, Nigg and Dounreay?

The Minister implied that there would be a make up from the European regional development fund. Have those figures ever before been included in the statement, or is it just that he needs to put them in to give a gloss to the statement? Is he aware that the loss of the Barnett formula will continue year after year and the one-off that he managed to secure this year as part of an overall United Kingdom package will not make up for that?

Column 273

Mr. Lang : I am happy to reassure the hon. Gentleman. The Scottish Enterprise budget has been increased on enterprise and environment functions by 11 per cent. in real terms, which makes up for the reduction in the Scottish Enterprise share of the Great Britain training budget. As to the budget of Highlands and Islands Enterprise, that will be over £80 million next year, higher than it is this year, and it may be as high as £83 million or £84 million, depending upon how much ERDF resources it receives.

The hon. Gentleman said that ERDF resources had not been included in the past. On the contrary, they have always been included. This year, we have responded to Commissioner Millan's request that they should be seen transparently and separately. Therefore, they are published separately in the tables. That is why they are shown in that way.

Mr. Phil Gallie (Ayr) : I share with my right hon. Friend the despair that he must feel at times at the Opposition's constant gloom during statements. Once again, he has confounded--[ Hon. Members :-- "Question."]--he has confounded all of their expectations by increasing --[ Hon. Members :-- "Question."]

Madam Speaker : Order. Hon. Members are asking that questions be asked. I hope that the hon. Gentleman will ask a direct question, and I also hope that hon. Members in all parts of the House will be ready with their questions, not comments. I call Mr. Gallie to ask a question.

Mr. Gallie : Is my right hon. Friend aware that there is great joy in Scotland at the continued drive towards the uniform business rate and the good use to which the £340 million mentioned in the Chancellor's statement is to be put? Will he join me in reminding Opposition Members that it was a Conservative Government who introduced the idea of the enterprise trusts in Scotland? Does he agree that there is a continuing commitment from him and his fellow Cabinet Ministers towards enterprise trusts?

Mr. Lang : I am happy to assure my hon. Friend of our continuing support for the good work done by enterprise trusts, working well with local enterprise companies. I am also grateful for his welcome for the business rates reduction of £68 million that I was able to announce for next year. That will bring to £348 million the resources put into bringing down business rates from the high levels set mainly by Labour- controlled local authorities to levels comparable to those in the rest of the United Kingdom.

Mr. Jimmy Wray (Glasgow, Provan) : The figures used by the Secretary of State are misleading. If he were to tell the House the truth, he would have to calculate the figures going back to the level of 1978-79 prices. The Convention of Scottish Local Authorities states quite clearly--

Madam Speaker : Order. The hon. Gentleman heard me say a moment ago that I am not open to debate and comments. I am interested only in direct questions.

Mr. Wray : Is it not the case that, since 1978-79, there has been a cut in revenue support grant of £47 million, totalling over the years £600 million, with a total cost cumulatively, accordingly to the gross domestic product deflator, of £1.8 billion overall?

Mr. Lang : Next year, the support that I shall give to local authorities through the aggregate external finance

Column 274

will be £5.2 billion. That is a higher figure than ever before. It represents an increase of 3.5 per cent. over the current year.

Mr. Raymond S. Robertson (Aberdeen, South) : I congratulate my right hon. Friend on his statement. I assure him that, unlike Labour Members who came here ready to carp and criticise before they had even heard what he had to say, the people of Aberdeen will not be so dogmatic or blinkered, and will welcome the statement. Will he confirm, preferably in words of one syllable, that the statement sets out the largest amount of public spending ever announced in the House by any Scottish Secretary of State, not just in real terms or cash terms but in any terms?

Mr. Lang : I am happy to assure my hon. Friend that this is a record statement in every way. Coming as he does from Aberdeen, which has two universities, my hon. Friend will be pleased to hear that we have increased education provision by 5 per cent. in real terms, and our assumption for higher education numbers will increase from 100, 000 this year to 107,000 next year.

Dr. Jeremy Bray (Motherwell, South) : What consideration has the Secretary of State given to training programme cuts and their effects on Lanarkshire in particular? During the coming financial year, the training support for Lanarkshire steel workers received from European Community funds will expire. Is the right hon. Gentleman aware that the contribution to overheads will therefore bear heavily on the training provided for young people and for workers who have lost their jobs, who have never had the benefit of European Community funds?

Next Section

Home Page