House of Commons Hansard Debates for 17 Feb 1993

Mr. Bill Walker (Tayside, North) : On a point of order, Madam Deputy Speaker. Can you confirm that, under successive Governments, it has been in order for the appropriate Minister to reply to a debate in the House? The practice being followed today and on other days is no different from that of a previous Labour Government. Madam Deputy Speaker : Yes.

Mr. Stewart : I am grateful, Madam Deputy Speaker. Perhaps we may continue with the debate. My right hon. Friend the Secretary of State is here, so may we ask Opposition Members to stop making idiots of themselves?

This is the annual opportunity for the House to debate the settlement for Scottish local authorities for the year ahead. I begin by making it clear that both orders have been the subject of full consultation with the Convention of Scottish Local Authorities, which raised no detailed issues on either of them.

I shall deal first with the main order under debate, the Local Government Finance Order, which represents the final stage of the 1993-94 settlement, details of which my right hon. Friend announced to the House on 12 November.

My right hon. Friend said that aggregate external finance for next year had been set at £5,165.1 million, which represents an increase of 3.5 per cent. in total on the

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1992-93 figure. Because of the announcement of an extra £15 million on 2 December, the COSLA briefing uses the original 3.2 per cent. figure, but the corrected figure is 3.5 per cent., after the adjustments for the transfer of responsibility for further education colleges from local to central Government from 1 April 1993, and excluding the £63.4 million that was included in the settlement to meet the cost of care in the community and independent living fund responsibilities, which Scottish local authorities will assume from 1 April.

The settlement is accordingly fair and reasonable, especially in the light of the continuing fall in the rate of inflation. As hon. Members will no doubt have read in the COSLA brief, the figure cannot be regarded as "unrealistic".

As the report to the order explains, aggregate external finance has three components.

Mr. John Maxton (Glasgow, Cathcart) : The Minister may intend to comment on this, but can he say how much the Government are allowing for non-collection of outstanding poll tax, and the result for local government finance ; and also how much is included for the implementation of the council tax?

Mr. Stewart : We have certainly allowed for the implementation costs of the council tax, and have allowed more than the councils' estimates. I shall come to that later. To answer the hon. Gentleman's first question, aggregate external finance is related to local authority expenditure and not to non-collection.

I must explain to the hon. Gentleman and to the House how AEF is broken down. It has three components. The first is the provision for specific grants. For 1993-94, that provision is estimated at £397 million, and a breakdown of that estimate among the various specific grants is given in appendix B of the report.

The second component of AEF is what is described in the Local Government Finance Act 1992 as the

"distributable amount of non-domestic rate income",

which, for 1993-94, has been set at £1,186 million. That represents my right hon. Friend's estimate of the total business rates payable to local authorities next year. That estimate is based on the 1993-94 rate poundages that my right hon. Friend announced on 14 January. Those poundages take account of the reduction of £68 million in the total amount of rates payable by Scottish business next year, as the next stage of the Government's policy of harmonising rate poundages north and south of the border as quickly as resources allow.

Mr. Maxton : How long will it take?

Mr. Stewart : The hon. Gentleman knows that our objective is to bring rates into line in 1995 or shortly thereafter. I can reassure him by saying that, so far, Scottish businesses have saved the equivalent of £350 million a year as a result of the Government's policy. That is a substantial sum, which has been warmly welcomed throughout Scotland by businesses large and small.

Mr. Jimmy Hood (Clydesdale) : Am I right in assuming that the figure of £350 million that the Minister has just given includes the £68 million for the coming year? A letter from the Scottish Office gives a figure of £280 million up to the end of 1993. If the figure given by the Minister includes next year's amount, it may be misleading. I am sure that the Minister did not intend to mislead the House.

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I have received a complaint from Clydesdale district council about the arbitrary way in which the Secretary of State has decided that local authorities in Scotland will have to make a £12 million contribution to the Government's uniform business rate policy. Regardless of what the Minister says about consultation with the Convention of Scottish Local Authorities, I am assured that there has been no consultation on the UBR policy. The Government have taken arbitrary action and have told local authorities that, without being consulted on it, they will have to contribute £12 million to the Government's policy.

Mr. Stewart : The consultation to which I was referring was the formal consultation on the orders. Obviously, COSLA is frequently consulted. The hon. Gentleman is correct to say that we have consistently asked local authorities for a small contribution from efficiency gains to the policy of bringing rate burdens north and south of the border into line. The main reason, historically, for the rate burdens being different has been the high level of expenditure, and therefore local taxation, in Scotland compared to England.

Mr. Hood : The Minister referred to a "small contribution". Is he saying that 15 per cent. of the total cost of Government policy is a small contribution? I suggest that 15 per cent. is a high contribution.

Mr. Stewart : If one considers £12 million in relation to the total expenditure of Scottish local authorities, it becomes apparent that it is a small contribution.

The hon. Gentleman asked me for a detailed breakdown of the figures. The reduction in 1990-91 was £80 million, with, on top of that, £100 million in 1991-92, £100 million in 1992-93 and, as the hon. Gentleman rightly said, £68 million in 1993-94.

Next year, there will be a change in the way that non-domestic rate income is treated. Under the 1992 Act, non-domestic rate income is to be pooled in Scotland with effect from 1 April, following the pooling in England and Wales in 1990. Under the pooling arrangements, Scottish local authorities will continue to be responsible for levying business rates, but the rates income collected will be paid into a central pool and distributed to authorities as a per capita amount based on the resident population of each authority. With the agreement of COSLA, non-domestic rate income will be distributed to regional and islands authorities only. That will simplify the administration of the pooling arrangements for both local authorities and the Scottish Office. District councils will no longer have to maintain non-domestic rate income accounts. The effect of distributing NDRI to regions and islands only is that districts will receive their AEF support solely in the form of rate support grant and specific grants. Districts will obviously receive proportionately more RSG and regions proportionately less RSG than would otherwise be the case. But I must emphasise that no authority will lose in terms of its overall level of AEF as a result of the new method of distributing NDRI.

Mr. Malcolm Chisholm (Edinburgh, Leith) : I understand the complications of comparing this year's aggregate external finance with last year's, because of

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changes such as community care and the funding of further education, but those factors should be common throughout different regions. Therefore, why is aggregate external finance down by 0.8 per cent. in the Lothian region and up by 2.8 per cent. in the Borders region? Is that to do with band D equivalent properties, or is there another explanation for the variations?

Mr. Stewart : The overall figure for AEF, after taking account of the factors to which the hon. Gentleman referred, is up by 3.5 per cent. If he looks at the table, he will find that, in relation to grant-aided expenditure, Lothian is the equalising authority because it has a lower GAE figure per head than other regions. That factor in turn affects the total. As it happens, Eastwood is the equalising authority among district authorities. That is why Eastwood has a zero figure.

Mr. Chisholm : Is the Minister saying that Lothian region is receiving less money because there are more properties in higher council tax bands? If he is, does that not cause a problem, given that we know that, although property is more expensive in Edinburgh, the people who live in those properties are not always better off?

Mr. Stewart : It is a two-stage process, which I shall explain for the benefit of the hon. Gentleman and, indeed, the House. The revenue support grant totals £3,582.1 million for 1993-94. There is a full explanation in the report, but I shall summarise it for the hon. Gentleman.

The first stage is to equalise differences in authorities' spending needs as determined by the client group methodology--which is where Midlothian is the equalising authority. That methodology is reviewed regularly and agreed with the convention in the district committee of the working party on local government finance. Each authority's relative spending need is reflected in its grant-aided expenditure assessment figure.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley) : The Minister is a much wiser man than the junior Agriculture Minister, and I am grateful to him for giving way. In the context of the calculation of the needs element, does he agree that districts such as Cumnock and Doon Valley are disadvantaged by it? Such districts contain a large number of rural communities, each with its own cemetery, sports centre and so on, so revenue costs are much greater than they are for city areas. Not enough account is taken of that. Secondly, Cumnock and Doon Valley has very high unemployment--almost 20 per cent., and I would not be surprised if tomorrow's figures show that it exceeds 20 per cent. That is appalling, and because of the requirement to keep within Government guidelines, Cumnock and Doon Valley has had to keep its budget down and cannot appoint an economic development officer to help to bring new industry to the area. Are not such areas seriously disadvantaged by the criteria that the Minister has just described?

Mr. Stewart : From time to time, we do receive complaints from authorities about the criteria, but those criteria are carefully assessed, not by the Scottish Office acting alone but with the expertise of COSLA's technical experts on the distribution committee. A range of primary and secondary indicators are used, and the sparsity of population in an area is certainly taken into account.

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As for Cumnock and Doon Valley's budget, the council will, on my calculations, be able to increase its estimated budget by just under 2 per cent. this year without hitting the capping level.

Mr. Foulkes : That is precisely my point. Cumnock and Doon Valley desperately needs jobs. The Minister and the Secretary of State have visited it, and they know the priorities--of which an economic development officer was one. But because of the Secretary of State's guidelines, the council cannot appoint such a person. Does the hon. Gentleman agree that that disadvantages the authority ; and cannot something be done about it?

Mr. Stewart : It is open to Cumnock and Doon Valley, through COSLA, to go directly to the distribution committee and say that it does not believe that the factors in what is a highly technical calculation are entirely fair. That is how the authority should seek redress. That is the first stage in the process. The second stage is straightforward, although it involves a change from the procedure adopted in the past few years. That is the point to which the hon. Member for Edinburgh, Leith (Mr. Chisholm) referred. Before, the amount of AEF remaining after the equalisation of spending needs was distributed to authorities on a straight per capita basis related to the number of community charge payers in each authority. That meant that there was an equalisation of spending need and an equalisation of resources among authorities. If they all spent, therefore, at GAE level, they could all set the same level of community charge. This principle of equalisation of resources continues to apply, but with the replacement of the community charge by the council tax with effect from 1 April, the second stage procedure has had to be changed. Instead of distributing the remainder of AEF on a per community charge payer basis, the amount involved is allocated to authorities in proportion to the number of council tax band D equivalent properties in each authority. That answers the question asked by the hon. Member for Leith.

The effect of this change is to swing AEF support away from high-value property areas to lower-value property areas, but the principle underlying the distribution remains the same as under the community charge. It is that, if all authorities spend at their GAE level, they should all be able to set the same level of council tax.

Mr. James Wallace (Orkney and Shetland) : Can the Minister confirm that COSLA's briefing figure that Shetland's maximum budget increase for the forthcoming year is minus 37.4 per cent. is correct? How does he expect the local authority to start to deal with that? When the Minister deals with the islands, will he explain the following? How will the new pooling arrangements for the business rate operate, given that these are circumstances in which our per capita distribution will not be high but large sums of business rates have been paid in the past because of the presence of our oil terminals?

Mr. Stewart : As the hon. Gentleman says, the rate for the islands council is the same as the English rate. The objective is to bring other business rates that are above the English level down to the English level. The hon. Gentleman's council is in a rather unusual situation.

The hon. Gentleman may also be interested to learn that we have introduced changes to the special islands

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needs allowance, following representations from the Western Isles council. I can confirm that we asked independent consultants to examine the way in which the special islands needs allowance was calculated, and we accepted their recommendations.

The provisional capping principles to which the hon. Gentleman referred are not dealt with in these orders, although the provisional principles announced by my right hon. Friend the Secretary of State showed the need for substantial reductions in expenditure for Shetland. But my right hon. Friend has already said that he would be prepared to accept a standstill budget. The hon. Member for Clydebank and Milngavie (Mr. Worthington) will be aware that the same applies to Clydebank.

Mr. Thomas Graham (Renfrew, West and Inverclyde) : How much assessment has the Scottish Office done of the loss of revenue from which many councils have suffered because of the huge number of company bankruptcies? We are extremely worried about that.

Mr. Stewart : The hon. Gentleman is right to say that non-domestic rate income can vary considerably from original estimates : it can go up or down. That is covered in the Revenue Support Grant (Scotland) Order 1993. The purpose of that order is to redetermine the amount of RSG payable to each Scottish local authority for each of the years 1990-91 and 1991-92.

These redeterminations are necessary in the light of the so-called AEF guarantee--an agreement with COSLA to guarantee the combined non-domestic rate income and RSG figure notified to each authority at the time of the issue of the distribution proposals for the year in question. Such a guarantee is necessary because it is extremely difficult to calculate exact business rate income until such matters as valuations, appeals, empty properties and so on are dealt with. RSG can be increased or reduced in the light of experience. Adjustments have been made, and 45 authorities will receive more RSG and 20 will receive less as a consequence.

Next year's settlement is very fair and reasonable, and substantially above the rate of inflation. COSLA's original bid was made when inflation was considerably higher than it is today. The settlement is made against the background of the Government's policy on public sector increases, in the range of 0.5 per cent. to 1.5 per cent.

COSLA has said that the figures are not unrealistic, and with the scope that always exists for efficiency savings, there will be no need for cuts in services and jobs of the kind that are the subject of the scare stories that we hear every year. I commend this realistic settlement to the House.

7.50 pm

Mr. Tom Clarke (Monklands, West) : I mean no disrespect to the Minister--to coin a phrase, I regard him as being a nice guy--but as an ex- president of the Convention of Scottish Local Authorities, and as an ex- vice president under George Sharp, I may say that if the Government had sent a less senior Minister than the Secretary of State for Scotland to meet COSLA, it would have asked for the Secretary of State. The House has the same right. I am greatly surprised that the Secretary of State is unable to be present for this important debate,

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although he was courteous enough to write a note to me. I hope that the Secretary of State will be present for future debates. This debate is about the Government's attack on Scotland--on our services and on our people. The measure unveiled by the Secretary of State is a betrayal of our children and their teachers, our elderly folk and their carers, and our public services--which have the support of the majority of the population of Scotland, no matter their means or how they vote. To suggest, as the Secretary of State did, that the settlement is either fair or adequate is not believed even by Tory councillors in Scotland, never mind anyone else.

In the 1980s, the Government cut the number of home helps, meals on wheels, teachers, libraries, and many other services that we Scots cherish, and the Secretary of State's announcement today means that cuts will continue into the 1990s. Doubtless that is welcome news to some of the right hon. Gentleman's hard-line colleagues, whose hatred of public services is on record--but almost every Scot will greet today's news with sadness and anger.

Mr. Bill Walker : I imagine that some of the hon. Gentleman's barbs are directed at people like myself. It is difficult to follow the hon. Gentleman's logic. At what point in the past 14 years has there been a reduction below the rate of inflation in public support for local government? Unless the hon. Gentleman can demonstrate one, he is misusing the word "cut".

Mr. Clarke : I hope to demonstrate that inflation is not itself a sufficient guide. Other elements, such as the obligations that the Government place on local councils, must be considered. We heard tonight, for example, that from April greater community care demands will be imposed on councils. The spectre of unemployment also makes demands on local councils, as do unpredictable problems such as flood damage. That ought to be recognised.

Mr. Hood : Got him!

Mr. Clarke : Even in education, we are making considerable progress.

The settlement is less than generous. COSLA's document indicates that it regards the settlement as penal--that is a strong word to use--and continues the Government attack on local democracy that we have seen for more than a decade, on crucial services, and on jobs--particularly on the eve of tomorrow's announcement, when we expect to hear that unemployment is a great deal worse.

Today's short debate is inadequate in terms of conducting Scottish affairs. This three-hour debate will end with a Division that will influence every individual, family and household in Scotland. That makes the case, if ever one needed to be made, for a Scottish Parliament, supported by the overwhelming majority of the Scottish people, that will have the right to consider such matters in detail and at length, with the representatives of each community involving themselves in the subsidiarity which the Scottish people endorse but which the Secretary of State has not yet recognised.

Mr. Phil Gallie (Ayr) : If there were a Scottish assembly, would not that place a massive charge on the people of

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Scotland--and take cash away from the useful services that could and do need to be provided for the people of Scotland?

Mr. Clarke : The best people to decide that are the people of Scotland. They have made it plain that important, essential matters such as the settlement we are debating tonight, law and order, education, the fire service, roads, planning, infrastructure, employment, and promoting Scotland in Europe ought to be given far more consideration than a three- hour debate allows.

Mr. Gallie rose --

Mr. Clarke : No, I will not give way to the hon. Gentleman again. As time is so limited, it would be impertinent of me to keep other hon. Members from catching Mr. Deputy Speaker's eye, having made the point that we have been given too little time.

The order represents power for one man--a man who is unable to be with us this evening. I refer to the Secretary of State for Scotland. It would not be so bad if the right hon. Gentleman represented Scotland in the Cabinet, but he appears to represent the Cabinet in Scotland. That is as unacceptable as the figures in the settlement, which adds to the numerous problems heaped on local councils, without the Government paying any regard to the difficulties that local authorities must confront.

The poll tax was rejected by the people of Scotland but was still imposed upon them, and it cannot be properly collected. That is no way to run any local government service. Any consultations with local authority representatives should lead the Government to taking the same view.

At the end of December 1992, non-payment of the poll tax totalled £478 million--more than 17 per cent. of the sum billed in the first three years of the tax. How can one run a local government system when central Government have devised an approach to finance that leaves such huge amounts uncollected? That total is heading for £498 million--50 per cent. uncollected--in the coming year. How can local authorities fund the services that they want to provide, including the industrial development to which my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) referred when, because of the Government's absurd system, the revenue to do that is not there?

The fact is that the Government have spent millions upon millions on trying to bail themselves out of the results of the poll tax. What could the local authorities have done with that money? They could have spent it on libraries, education and the police, for instance. The Government's handling of local government finance has been a disaster--an administrative nightmare--not just for finance departments, but for every department in every council in Scotland. The Government, of course, will go on promising lower bills ; even tonight we have heard a promise about the council tax which is yet to materialise. At the same time, the Government will continue to blame local authorities for the inevitably reduced delivery of services- -at a huge cost to the people of Scotland.

This order is being presented against a backdrop of rising unemployment, and a Scottish economy that is much weaker than the Scottish people want it to be. It is a backdrop of more poverty in many parts of Scotland ; a

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background of hopelessness and homelessness. All that the Government offer far too many of our people is the prospect of cardboard homes and cardboard hopes.

Inevitably, social work departments face greater demands, even before the community care changes mentioned by the Minister land on their laps in April. According to today's Scottish Daily Record , every hour of every day someone is given a P45. If that is true, it will inevitably lead to greater demands on the housing, education and social work departments of local councils. It is clear that those demands cannot be met within the constraints imposed by the Government.

Why is the Secretary of State setting such devastatingly harsh capping levels? It is plain that he did not secure the agreement of the Convention of Scottish Local Authorities. In 1992, he allowed the resultant budget above grant-aided expenditure to reach 6.5 per cent. ; this year, he proposes a mere 2.25 per cent. He has been told that that represents only half the sum identified by councillors of every party everywhere in Scotland as the amount required even to maintain existing services, let alone deal with the numerous burdens newly imposed on them by the Government. Fairness seems to be absent from the Government's proposals, as the Scottish people are increasingly recognising.

Councils now have to address enormous problems in their planning departments as they seek to provide local people with the best possible education opportunities, and to deal with housing problems such as damp and condensation. They desperately want to deal with such problems, but they are being denied the necessary resources. No one believes that the Secretary of State has preserved the Barnett formula. For every £100 that is being spent, we have lost £1.10. The cost for Scottish local authorities is becoming horrendous. Imagine what local authorities could have done to improve schools, housing, roads, lighting, libraries and so forth if we had maintained the principle of that formula. Those vital matters are not being addressed.

The Secretary of State and the Minister have boasted about consultation. We want concrete evidence that the Government are prepared to listen to what is said to them during those consultations.

Mr. Stewart : I am astonished that the hon. Gentleman should refer to the Goschen-Barnett formula in this context. Aggregate external finance per head of the Scottish population is no less than 47 per cent. higher than it is in England. If the Barnett formula were applied, Government support for local authorities in Scotland would be a great deal less than it is now, not more.

Mr. Clarke : The Minister, and the Government, will have to work hard to persuade COSLA of that. COSLA itself made the point that the Government are providing £16 million less than it asked for road projects, £14 million less than it asked for law and order and protective services, £5 million less than it asked for libraries and museums and £21 million less than it asked for leisure and recreation. Above all, the Government are providing £8 million less than it asked for the urban programme that is so vital now, when unemployment is growing. The Minister has a great deal of missionary work to do if he is to persuade local authorities that the change in the Barnett formula will not apply to them.

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What options face local authorities in Scotland? They are some of the most difficult that councils have ever had to face. They are confronted by the possibility of eliminating some services altogether, cutting existing services and even making employees redundant. Lothian council's capping limit for 1993-94 was set at £588.386 million, against which expenditure now stands at £608.034 million : there is a gap of £19.648 million. That is the amount by which budgetary expenditure will have to be reduced if Lothian is to avoid capping.

Strathclyde is having to reduce its budgetary expenditure by over £20 million ; Central region is having to find reductions of over £8 million ; Fife region is £11.53 million short of the amount needed to maintain the provision of services, even at the current level, without anticipating the demands that will be made next year. Even in Edinburgh, the Secretary of State's case is so weak that the Tory councils have rejected his budget, because they were unable to find the £5 million that he ordered them to find without devastating services to a capital city.

Opposition Members speak with considerable support from all political quarters. Strathclyde's education department faces a proposed cut of some £10.74 million, which is bound to have a devastating effect on provision for schools in the form of teachers, books and materials. The Government will then criticise education establishments for the fact that children are under-achieving, but the blame lies with an Administration who have constantly underfunded education. In that and other respects, the past is catching up with them.

Mr. Graham : May I mention something that really upsets me? A young man in my constituency has an autistic kid, and cannot secure a school place for him because Strathclyde has not enough money to provide places for such children. The Government keep telling us that they are treating local authorities fairly, but they are treating young handicapped folk in a despicable fashion.

Mr. Clarke : As always, my hon. Friend has made his point extremely well.

It was this Government who, in the early 1980s, increased local government funding below the rate of inflation. I was involved in the negotiations that took place then. Let me say, with great respect to the Secretary of State that the Secretaries of State with whom we dealt then may have been a bit more heavyweight, and may have given a little more thought to the subject that he has managed.

The Government's past approach has forced councils to cut their funding. Now, the current Government are faced with the reality of what earlier Ministers have done. Those who were only five or six in the early 1980s but who are now 15 or 16 are paying the heavy cost of the Government's considered but unacceptable policies of that time.

Mr. Stewart : The hon. Gentleman referred to his time with COSLA. He will recall the 1977-78 settlement of the previous Labour Government, when he was vice president of COSLA. The president of COSLA said :

"To have been told by the Secretary of State the percentage grant was being savagely cut by 4 per cent. was something none of us expected."

Mr. Clarke : I look forward to arranging a meeting between the Minister and Sir George Sharp, whom he has just quoted. The first thing that Sir George would tell the

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Minister is that if we received the same settlement for Fife tonight as we secured that night there would be joy indeed and, to coin a phrase, we would be asking the people of Scotland to rejoice. The Government's settlement falls far short of anything that Bruce Millan or Willie Ross achieved.

Mr. Jimmy Wray (Glasgow, Provan) : Is my hon. Friend aware that Strathclyde must cut £20 million from its budget? Is not the amount that has been allocated to Scottish local authorities a scandal given that the Government spent £16 million in a weekend on the European summit in Edinburgh?

Mr. Clarke : I do not know whether the Secretary of State will be here later to reply to my hon. Friend's point, but if he is it will be interesting indeed.

The order has been proposed, unlike the period when George Sharp was president of COSLA and I was vice president, at a time of deep recession. Public expenditure should be part of the infrastructure to deal with that serious problem. Proper investment should be made in education and training, in building homes and improving schools and in providing better roads and lighting. There should be a response to the problems within our community, and I am extremely concerned that after April councils will be expected to take up those problems--part of the social security budget, indeed, is being transferred to them--and to exercise the role of enabler rather than provider. But so great are the demands on social work and other departments, especially given the problems of the elderly and of demography, that local councils will not be able to provide the package for community care--home helps and contact with health boards to provide occupational therapy and physiotherapy, which are vital to a strategy for community care. It should be made quite clear that the problems facing councils at the moment, considerable though they are, will intensify because the order simply does not recognise those problems. The work of and demands on local authorities will increase, but their resources simply will not match.

How do the Government respond to people's concern about law and order, which is hardly reflected in the order? Their 1992 manifesto contained a commitment to legislate on offensive weapons but made no mention of water. Today, they are concentrating on privatisation but doing nothing to reassure the community about safety in the streets. As we consider the order, albeit in a debate that is unacceptably limited, let us be clear that it is a direct attack on disabled people by forcing cuts in home helps and services and on our schools and education by underfunding our teachers. It fails all the people who are afraid to go out or stay in because the Secretary of State has not given the chief constables the resources that they need to tackle crime in virtually every region of Scotland. Today's announcement offers no hope for Scotland's homeless, for our children, for senior citizens or for those without jobs. Today, the Secretary of State had the opportunity to invest in Scotland's local services, in local people and in local communities. He had the chance to invest in Scotland, but his party has no vision, no policies and no support in Scotland. Scotland has no faith in his party or its discredited policies either.

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8.15 pm

Mr. George Kynoch (Kincardine and Deeside) : I listened to the hon. Member for Monklands, West (Mr. Clarke) and began to wonder whether we were discussing the same figures as I have before me. He stated that he was once vice president of COSLA. [ Hon. Members :-- "President."] I beg his pardon : president of COSLA.

The hon. Gentleman should therefore have read COSLA's briefing paper, which it has circulated to all hon. Members. The first paragraph says :

"Having regard to the present rate of inflation, an overall increase in AEF of 3.2 per cent. (4.8 per cent. when Care in the Community funds are added), cannot be regarded as unrealistic", Yet the hon. Gentleman said that the order is an attack on services in Scotland and, as usual, talked down good news for Scotland--a 3.2 per cent. increase when inflation is 1.7 per cent.

Mr. Chisholm : The crucial issue is not the level of aggregate external finance but the reductions that will have to be made in services because of the penal capping limits. Reductions in services have been proposed for more than half the local authorities in Scotland. Lothian is a classic example, where £20 million is being taken out of the budget. Last year, it was the second lowest spending council per head, not because it wanted to be but because of the inadequate level of support that it was receiving. That is the reality.

Mr. Kynoch : The hon. Gentleman talks about capping. Some councils are obviously overspending. Had they spent more carefully in previous years, they would not be suffering from these problems.

Mr. Worthington : Will the hon. Gentleman give way?

Mr. Kynoch : No, I am going to make progress and talk about expenditure.

Aggregate external finance is 3.2 per cent. COSLA states that expenditure of 2.25 per cent. is permitted within these figures. The Government talk about 2.6 per cent. By my simple arithmetic, if the Government's public expenditure constraints on wage increases of 0 to 1.5 per cent. are observed, overall costs can increase by 2.6 per cent. Wages in local government account for about 60 per cent. of expenditure. If that is true, the other 40 per cent. can incur rises of almost 4 per cent., at a time when inflation is 1.7 per cent., yet the Opposition talk about cuts. That may be simplistic, but simplistic ideas are often the best. If councils were to look simplistically at giving taxpayers value for money, they would give better services.

Mr. Hood : If everything is as rosy as the hon. Gentleman seems to believe, will he tell the House of any local authority in Scotland that is employing extra workers, rather than laying them off?

Mr. Kynoch : The hon. Gentleman should consider my local authority of Kincardine and Deeside which, I believe, intends to increase its staff in the coming year. One could also consider Kincardine and Deeside in relation to another issue, although I do not wish to detain the House because I know that many hon. Members wish to speak. I refer to non- domestic rates.

I very much welcome the fact that we have made a further move towards the rate applicable south of the border. The figures in COSLA's briefing document show

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that in 1990-91, the percentage variation between Scotland and south of the border was about 64.6 per cent., but the projection for 1993-94 is only 26.4 per cent. That is clearly a move in the right direction.

Having been lobbied by numerous businesses in Scotland, and only yesterday by the chemical industry there, about concern over the introduction of the uniform business rate throughout the United Kingdom, I believe that the quicker we can make the move to get things level, the better it will be for business.

Let us consider the figures more closely and examine the variances, which average 26.4 per cent. It is interesting to note that Kincardine and Deeside is level with the average applicable south of the border. I believe that the same applies to Shetland and Orkney. Glasgow, however, is about 43.6 per cent. at variance with the rest of the United Kingdom. In fact, the central belt of Labour-dominated councils are all at the higher levels of variance. I suggest that there is a message in that.

Central belt councils, which are largely Labour dominated, must get their house in order and use the funds and opportunities that are being given to them this year wisely and sensibly in the best interests of the ratepayer and the local taxpayer.

8.21 pm

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