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Scotland? Does he recognise that it is regarded by business men, at least in the Caithness and Sutherland chamber of commerce and others, as being inimical to their economic interests to seek to govern at local level the half of Scotland that is based and centred upon Inverness?

Mr. Lang : the hon. Gentleman has a point of view which he expresses clearly, but some of his hon. Friends do not hold the same view. Under the decentralisation that we propose, all those services--the vast majority of local services in the Highlands came before from the Highland Region--will now come again from a Highland council, but they will be decentralised in a way which will lead to a much closer link administratively between the council and its local areas. The existing Highland regional council is already doing a great deal of work in preparation for that.

Mr. Charles Kennedy (Ross, Cromarty and Skye) rose

Mr. Archy Kirkwood (Roxburgh and Berwickshire) rose --

Mr. Lang : No ; I must make further progress. I will give way later.

I do not propose today to use up the House's time in describing at length all the provisions of the Bill. With 169 clauses, it obviously includes a great deal of detail, which we will, I hope, debate thoroughly in Committee. I would, however, like to spend a few moments on the principles which underpin our proposals for local government and for water.

Taking local government first, I have already touched on the support which many commentators have given to single-tier local government over the years. However, I think that it is important to reiterate exactly the three key objectives of the single-tier structure proposed in the Bill.

First, we want local councils to be strong, and, in local government, strength comes from being accountable. The ability of the public to call their local authority to account--through the ballot box or otherwise--will be improved beyond recognition where all local government responsibilities rest with a single council in an area. More accountable local government means more powerful local government.

Secondly, we want the delivery of local services to be improved. The fact that one organisation will have responsibility for the full range of services will be a major step forward on service delivery. The benefits of having social work and housing brought under one roof are well known and much anticipated, but many other areas of policy, such as leisure and recreation and education, environmental health and trading standards, will benefit from a single-tier structure. Thirdly, we want a less bureaucratic, more flexible and efficient structure of local government. The rationalisation of local government outlined in the Bill will soon start to yield savings--savings which cannot be ignored. That has been confirmed by every submission that we have received from a local authority on the matter, and Professor Percy, chairman of the independent organisation the Local Authority Accounts Commission, stated :

"In our view, the unitary authority structure favoured by the Government's White Paper on Local Government Reform provides a better way of delivering that service. We believe reform will be effective in the long term, and in the short term, once the legislation is through, all of us must get down to making it work."

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Mr. John McAllion (Dundee, East) : The Secretary of State mentioned the importance of having a single lead authority in charge of the various functions that will be given to local authorities. He knows that he has just embarked on an ambitious care in the community policy. He has placed the social work departments of regional councils, such as the social work department of Tayside regional council, as the lead authorities in charge of that policy. The proposed reform will create three different social work departments in the Tayside region. Which of those will be the lead authority in implementing care in the community? Instead of making the system clearer and more accountable, the Secretary of State is taking steps that will make it far less accountable. It will be far less clear who is in charge, who will implement the policy and who will be responsible if it does not work.

Mr. Lang : I am grateful to the hon. Gentleman for drawing attention to a very important policy which we have devolved from central Government to local authorities--care in the community. The hon. Gentleman is wrong in his understanding of the position on social work, and in his conclusion. The benefit of having social work handled in one unitary authority is that it will be possible to interrelate action on the social work side with action on the housing side. One of the strongest criticisms of the bizarre relationship between the top tier and the bottom tier of the present system concerns the lack of co-ordination between housing policy and social work policy.

Mr. Kennedy : Following the point made by my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan), will the Secretary of State clarify how any of the principles that he has just enunciated can be realised in the context of the highlands? The principles will be rendered null and void as a result of the size of the area. Will he confirm that Touche Ross based its estimates on average council sizes of 60? That would be a reduction of two thirds in the number of councillors that the Highland region has at present. If the figure is increased to anything resembling the reckonings in the White Paper, there would be more than 130 councillors, which would be more than Strathclyde has at the moment. The Prime Minister described that regional council as a monstrosity. The right hon. Gentleman's proposal is a complete illogicality.

Mr. Lang : The Highland region will still have only a little more than 200,000 people in it. Of course it is a geographically large area, but everyone recognises that Sutherland, for example, with a population of 15,000 or 16,000, could not constitute a single authority in itself, although it might do geographically. I know that the hon. Gentleman and some of his hon. Friends disagree on the detail of what the Highland region should look like. Our proposal will give the most efficient, the most accountable and the strongest local government that we can create for that very important part of Scotland.

Mr. Kirkwood : It is obvious from the interventions that the Secretary of State has already accepted that the most burning issue in the minds of most hon. Members is the boundary map at the end of the process-- [Interruption.] What does the rest of his speech contain? I

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hope that he will take time to set out exactly how the Committee stage and the subsequent stages in the House of Lords will arrive at the final boundaries.

Is the Secretary of State aware, for example, that there is now a unitary alternative for south-east Scotland, the Lothians and the Borders? It has been proposed that West Lothian should be a free-standing unitary authority, and that Midlothian and East Lothian should be put together. That would leave Berwickshire in the Borders region, where it belongs. Will the Secretary of State tell the House on Second Reading exactly how he anticipates that these questions, which are vital for hon. Members, will be resolved during the passage of the Bill?

Mr. Lang : The hon. Gentleman has served on many Committees, and he knows the form. The boundaries are dealt with at an early stage of the Bill. I expect that a Back Bencher, perhaps the hon. Gentleman, will table amendments affecting precisely the areas on which he has just touched. That will enable the Committee to debate the matter and to reach a conclusion. Thereafter, there will be a chance to return to these matters on Report. The Bill then goes to the House of Lords and back to the Commons if necessary.

We have every opportunity. I look forward to debating these issues, because I acknowledge that the borders and boundaries are important. Scottish National party Members showed clearly during the hon. Gentleman's intervention that not everyone shares his view that those issues are the most important.

Mr. Thomas Graham (Renfrew, West and Inverclyde) : If the Secretary of State believes that his Government are proposing the new, democratic way forward for councils in Scotland, why does he not acknowledge that the proposals for East Renfrewshire council have been utterly rejected by the people? In a democratic vote, 82 per cent. of the people in Ralfston rejected them, 91 per cent. voted against them in Dykebarr and 78 per cent. rejected them in Barrhead, Neilston and Uplawmoor. Those figures are in an official document from Renfrewshire district council. If the Secretary of State is determined to have genuine democracy, should he not listen to the people?

Mr. Lang : The hon. Gentleman will have an opportunity to debate that matter further as the Bill progresses.

Mr. John McFall (Dumbarton) : I look forward to that.

Mr. Lang : Yes, I look forward to it, too.

I recognise that there are concerns about change to a single-tier structure that are signalled in the Bill. I fully acknowledge that there will be a measure of disruption during the transitional period. That is not in itself a reason for not proceeding with the reform. Just because something involves change, it is not an excuse for shying away from it.

It is the Government's view, backed by many in local government, that the transition is a perfectly manageable process, and that, with early and committed action by local government, the disruption can be minimised. I have no doubt that, given the professionalism of many local government staff, the hurdles which will undoubtedly emerge can be successfully negotiated without undue disturbance to the delivery of services.

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Mr. Tam Dalyell (Linlithgow) : Who did the Secretary of State have in mind when he referred to the many in local government who back his proposals?

Mr. Lang : I am referring to many people in local government at official level and at elected level, to all the submissions that we have received from local government, to all the delegations that have been led by Members of both sides of the House who have been to see myself and my hon. Friend the Minister for Local Government and Planning. The hon. Gentleman will discover, as the Bill progresses, that there is widespread support for single tier--an issue on which his party fought the election on a manifesto that contained such a commitment.

Mr. Phil Gallie (Ayr) : May I urge my right hon. Friend not to name as requested by Opposition Members all the people who have communicated support for his excellent proposals? Please do not name those people, because many of us want to speak during the debate.

Mr. Lang : I am grateful to my hon. Friend. I believe that quite a lot of the names are already available in the House of Commons Library. We have published our reports on the submissions that we have had in the response to the first consultation paper.

Mr. John Maxton (Glasgow, Cathcart) : Will the Secretary of State give way?

Mr. Lang : I really must make some progress. This is an important debate, and I have a lot to say to the House.

A number of provisions have been included in the Bill specifically to aid the transition process. They include clauses that provide for the appointment of a staff commission--clause 12--which allow the establishment of one or one or more residuary bodies--clause 18--and of a property commission--clause 19. The clauses relating to staff and property transfers have all been drafted to allow local government the maximum flexibility in determining the most appropriate arrangements.

Dwelling for a moment on those provisions, we are fully aware that local government staff represent authorities' most valuable resource, and the Government are concerned to mininise the disruption that staff may face. The great majority of staff, of course, will simply transfer to the new authorities on their existing terms and conditions. We shall be considering carefully over the months, hopefully in discussion with local government and staff interests--if they are prepared to talk to us about the interests of their staff--the arrangements which will apply to those staff for whom there will not be an automatic right of transfer. The staff commission will also have a role to play once its members are appointed, and we will listen carefully to what they have to say.

Still on the question of facilitating the transition, clauses 55 and 56 provide respectively for the provision of information from the old authorities to the new authorities and for the establishment by existing authorities of joint working committees to prepare for the effective operation of the new authorities.

It is therefore ironic that, while the Government have taken considerable steps to assist local government in managing the transitional period, and will continue to do so, the very organisation which was established to assist and represent local government--the Convention of Scottish Local Authorities--has chosen to adopt the posture of the ostrich, bury its head in the sand and be as

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obstructive as possible. Its attitude is short-sighted, short-term and ultimately damaging, not only to local government, but to staff and those who most depend on its services.

I should like to take the opportunity of today's debate to call on COSLA to decide at its meeting on Friday to call off the policy of non co-operation, in the interests of good local government and the people of Scotland. I know that it is difficult for it to admit how seriously it has miscalculated, and that it must regret its short-sighted posturing and the way in which it has split its members and paralysed its own organisation.

Its policy has failed, but it is time to look forward, not back. I for one shall not seek to make any political capital from-- [Interruption.] --no political capital at all from COSLA's climbdown, whenever it comes. I hope that Opposition Members will urge it, as I shall, to get it over and done with, and to do it now.

Inevitably, some concerns have been expressed, and I do not dismiss them, but, again, the Government's task is to distinguish them from the often ill -thought-out and generalised protectionism that argues only that the present system is perfect and that any change must by definition be detrimental. I find such arguments deeply unconvincing. They are not arguments to which the forward thinkers in local government subscribe. They frequently seem bound up with the self-preservation of those who articulate them and find little support among other authorities that are thinking seriously about how to deliver efficient and effective services after reorganisation.

Mr. Andrew Welsh (Angus, East) : The Minister began by saying that he believed in a local focus and local democracy. Why, therefore, is he creating three giant water boards that are neither local nor democratic ? As a Cabinet Minister, he voted in favour of a £7 billion green dowry to English water authorities. Will a similar green dowry be given to Scottish water boards, or does he believe only in putting public money in private pockets ?

Mr. Lang : The hon. Gentleman will remember that some adjustment was made to the finances of the Scottish Office when the changes were made in England. I shall deal with the water industry shortly. I was mentioning authorities that are looking imaginatively at alternative means of service delivery and are investigating the possibility of co-operation among authorities and between authorities and the private sector. The Bill contains much to encourage authorities to adopt new approaches to service delivery in a range of areas.

Of particular importance is clause 57, which clarifies the legislation in relation to the ability of local authorities to trade with and provide services on behalf of each other. As the Scottish Labour party has said :

"All-purpose authorities assist the development of local government as an enabling co-ordinator at the centre of a network of providing agencies Local authorities should be able to develop their enabling role, frequently acting as the commissioning agency rather than the direct provider of services".

Again, I wholeheartedly welcome its conversion to our way of thinking.

Part II provides for the setting up of the three new public water and sewerage authorities and the customer protection body heralded in the White Paper. The first 10 clauses of part II and schedules 7, 8 and 9 establish these new bodies and set out their duties, powers and constitutions.

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The new structure that will be put in place for the delivery of those vital services will achieve two crucial objectives. It will make maximum use of existing resources through economies of scale, and it will deliver necessary new resources on the best terms possible.

The backdrop to restructuring was described in detail in the consultation paper. The requirements to maintain and renew existing infrastructure and to build new plant to cope with quality obligations are well known and widely accepted and they carry a projected price tag of some £5 billion over the next 10 to 15 years. The challenge outlined in the consultation paper was how to sustain this scale of capital programme without an intolerable cost falling on Scottish customers.

Mr. Dennis Canavan (Falkirk, West) : The Secretary of State spoke earlier of the importance of accountability through the ballot box. At present, members of water authorities in Scotland are directly accountable through the ballot box. How many of them will be under the proposals in this rotten legislation?

Mr. Lang : Water authorities will be accountable to me as Secretary of State and, through me, to Parliament. If we were not to make this change and there were to be 28 water authorities, with widely diverging costs for water and sewerage, people would take a pretty poor view of their local authority's handling of their interests if they had to pay almost twice as much for their water.

I believe that the proposals in the Bill meet the challenge that we have set. They acknowledge the strength of feeling expressed in the consultation that services should remain in public hands and, at the same time, promote partnership with the private sector for the ultimate benefit of the customer.

Under the Government's private finance initiative, I look to those new public authorities actively to form partnerships with the private sector to provide the new treatment works and other investment that is required. This will happen without the public purse taking the strain. The authorities themselves, however, will remain public authorities directly answerable to the Secretary of State, and through me to the House.

I call attention in particular to the provisions establishing the customers council. This will be a powerful voice on behalf of the consumer and will exercise a particular role in the setting of charges as well as monitoring service standards. The council will ensure that full expression is given to the principles of the citizens charter in the operation of the restructured services. These proposals are designed to deliver the most efficient and most cost-effective water and sewerage services possible.

Restructuring was inevitable as a consequence of local government reform, and it has afforded us the opportunity to align water and sewerage services to the demands of the future. The status quo was never a realistic option. Twelve authorities currently deliver services, but multiplying this number to 28 makes no economic sense. We have produced sensible measures in response to circumstances, and we shall vigorously defend them in Committee.

Mr. Malcolm Bruce (Gordon) : The Secretary of State said that the new boards will be accountable through him to the House. Will he assure the House that, when hon. Members table questions to him, he will answer those specific questions in this House and not duck out and pass

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them back to bodies that are not directly accountable? Will he answer direct questions put to him directly in this House?

Mr. Lang : We shall answer questions in the same way that we answer them in relation to other comparable bodies. We shall remain accountable in respect of the water authorities as we do with the other bodies.

The Bill represents a comprehensive and concerted attempt to address the need for local government reform. However, the Opposition are so busy facing Janus-like in both directions that they seem unwilling to face up to any of the real issues. I hope that those on the Opposition Front Bench will today clarify where they stand. In the general election, the Opposition supported reform and talked of "powerful, new single-tier authorities." Yet in last November's debate on the Gracious Speech, they claimed that reform was "completely unwanted, totally unnecessary." Which do they really believe?

Dr. Norman A. Godman (Greenock and Port Glasgow) : Will the Secretary of State give way?

Mr. Lang : I will give way to the hon. Gentleman in the hope that he might answer that question.

Dr. Godman : I will answer that question if the Secretary of State answers a question that I put to him honestly and directly. Because of the Bill's complexity and its implications for every citizen in Scotland, should not the Secretary of State refer it to a Special Standing Committee by way of Standing Order No. 91?

By that means, now that the Bill has been published, at least those people who are deeply concerned about the Bill and its implications would have the opportunity to express their concerns, which have been expressed to me over and over again in Inverclyde. Will the Secretary of State refer the Bill to a Special Standing Committee, which would allow interested parties to be cross-examined by hon. Members?

Mr. Lang : No, we will not, because we have already had nearly three years of consultation on the reform of local government in Scotland. We have had more consultation papers, more submissions, more meetings with local authorities and delegations and others, and more debate in this House on these measures than on any that I can remember in my entire time in Parliament. The people of Scotland now want us to reach a decision.

From representations that we have received from many Opposition Members, I know their views and how keen many of them are to move on to implement single-tier authorities. However, I want to know more about the Labour party's position.

Mr. Maxton : Will the Secretary of State give way?

Mr. Lang : No, I will not give way at the moment.

On the one hand, the Opposition call for "powerful, new single-tier authorities", while on the other they claim that they are "completely unwanted, totally unnecessary." They claim that our reforms would strip powers from local authorities. However, the only substantial service that we are transferring, to other public authorities, is that of water and sewerage.

As I have pointed out, we recently transferred the very important community care service to local authorities. Yet Labour seems to be prepared to contemplate reforming local authorities only if it also sets up a Scottish Parliament

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--and where would such a Parliament draw its powers but from local government? In the shadow of a Scottish Parliament, local government would be a very sadly diminished institution, whether of one tier or two.

Then there are the costs of reform. We have made our position clear. There will be initial costs which we calculate at less than £50 million net over the first three years and for which we are providing additional resources. Thereafter, net savings will grow and will continue year after year, reaching as much as £1 billion within 15 years. As the main costs are for redundancies, the higher the initial costs turn out to be the higher must be the subsequent savings.

Of course, as it is decisions by the new authorities that will decide the precise figures, we cannot be exact about them at this stage. However, nor can anyone else. But it is interesting how different perspectives lead to different interpretations of the figures.

Where authorities--especially Labour-controlled authorities--are making a case for their own retention under the new structure, our figures are suddenly presented as pessimistic--over-estimating costs and under- estimating savings. Only once the element of self-interest is removed, where the motivation is to discredit the reform process, are our figures portrayed as optimistic. All that leads me to believe that our figures are about right.

The hon. Member for Hamilton and his number-crunching friend the hon. Member for Fife, Central (Mr. McLeish) are all over the place on costs. On 8 November, the Scottish Labour party published a briefing paper which said that local government reorganisation would cost £200 million. Three weeks later, in The Herald, the hon. Member for Hamilton said that local government reform would cost at least £500 million. That is a rate of inflation which even the previous Labour Government did not surpass. It would also make nonsense of anything that the Labour party had to say about the costs of local government reform.

There is a curiosity at the heart of the costs debate. In the Labour party manifesto, which provided for the establishment of single-tier councils, there were no reservations about the costs of reform. Nor have we at any stage subsequently heard any mention of the cost factor in the Opposition's proposals, whether those proposals are just to restructure local government or to set up a Scottish Parliament as well. Yet, oddly, the Government's proposals are, once again to quote the hon. Member for Hamilton, "extremely costly".

I would be very interested to know what it is that is likely to differentiate the costs of the Government's proposals from those of the Labour party. The only significant difference that I can think of is that, under our proposals, the taxpayer will not be obliged to bear the costs of the establishment and maintenance of a Scottish Parliament. In all other respects, I would welcome an explanation from the hon. Member for Hamilton how a policy which, in his hands, is a manifesto commitment, suddenly, when implemented by the Government, becomes "extremely expensive".

There are, therefore, inherent and fundamental weaknesses in the Opposition's case, which they must address if they are to present a credible case to the people of Scotland. On the one hand, they argue that reform is too

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costly, while on the other they are themselves committed to a concept of single-tier local government and, in addition, a Scottish Parliament.

They cannot argue that the status quo is an option, if they hold to their earlier manifesto pledge to create "powerful, single-tier authorities". They cannot hold to their manifesto pledge if they claim, as they do, that the reform is "completely unwanted" and "totally unnecessary". I expect that we shall listen in vain today for some straight talking on that matter from the hon. Member for Hamilton.

Dr. John Reid (Motherwell, North) : I refer the Secretary of State to the most important phrase that he has used so far. On costs, he said that the matter becomes clear only when "the element of self-interest" is removed. Does he not understand that, on such an important issue for the people of Scotland--the tier of government which is nearest to them, which is probably more sympathetic and which is less bureaucratic than any other- -it is precisely the self-interest of the Tory party in conducting the investigation and consultation that is at issue?

Does he not understand that, when a party refuses not only an independent commission, like the Wheatley commission, but even a semblance of independence under a Standing Committee, the people of Scotland have every reason to doubt the objectivity of the exercise that has been carried out? Would it not be better to follow the strictures that the Secretary of State imposed on others, and remove his own self-interest, that of the hon. Member for Eastwood (Mr. Stewart) and that of his party? He might then have a shred of legitimacy in his proposals.

Mr. Lang : Since the Opposition fought the last election promising single-tier local government and they now regard it as expensive, unwarranted and totally unnecessary, it is the objectivity of the Labour party that is called into question.

Against the unprincipled and ill-thought-out position of the Labour party, one thing stands out : the Government have acknowledged the problem with the present local government structure. We have defined the problem and we have had the courage to tackle it. The proposals represent a comprehensive and cohesive attempt to get to the root of the structural problems which are currently inhibiting local government.

I fully expect the Bill to be thoroughly debated, and rightly so. I can assure Opposition Members that we will listen carefully to all the arguments that are presented as it passes through all its stages, but I will do so alert to the weaknesses of the Opposition's case and their failure to present a credible alternative.

We want to get back to basics in local government. While opposition parties offer only double-talk on single-tier, we want to get on with this much- needed reform. We want local authorities that are local. We want local authorities that have authority. We want local councillors who are at last able to perform the complete function of local councillors. We want local authorities and councillors who can ensure the coherent and efficient provision of all local services in their area. In that way, we shall help to restore a true sense of local community and local identity and give a new impetus to the growth of strong local democracy.

The Bill will achieve those objectives, and I commend it to the House.

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4.29 pm

Mr. George Robertson (Hamilton) : Over the weekend, I began to wonder exactly how much trouble the Prime Minister was in with his "back to basics" policy. We heard the Secretary of State for Scotland repeat the phrase "back to basics" this afternoon. Yesterday, when I read the Sunday newspaper that said that only the Secretaries of State for Scotland and for Health supported the Prime Minister in his "back to basics" campaign, I realised exactly how deep a hole the Prime Minister is in.

This is a bad Bill. It is bad for Scotland, bad for democracy and bad for local government. It is even bad for the Government, who are apparently in their death throes. The Bill does nothing for the people of Scotland. It will do much harm to them and to their lives. Once it has done that, the people will pay for it with poorer services and the disruption and confusion of local government. They will then pay again through their pockets. The Bill will be an expensive fiasco.

This reorganisation will be paid for by higher taxes. At the last election, the Government said that they would lower taxes. Higher taxes than we expected will be imposed by those who promised lower taxes but who instead give us higher taxes with every month that passes.

This is a wholly unwanted and unnecessary reorganisation, and it will be costly.

Mr. George Kynoch (Kincardine and Deeside) : Will the hon. Gentleman give way ?

Mr. Robertson : As the hon. Gentleman seems to be trying to climb the ladder of progress in a party that is declining, I will give way.

Mr. Kynoch : If this reorganisation is unwanted and unnecessary, can the hon. Gentleman explain why, on "Scottish Lobby" on 11 December 1993 he said :

"The current structure could benefit from a review--a major review" ?

What is it that he now thinks is unnecessary in the way of a review ?

Mr. Robertson : The hon. Gentleman--I hope that this will help his career--precisely makes the point. We want a review. A review is necessary. If a review concludes that changes are needed in local government in Scotland, that is something that the House should properly consider, not this gerrymandering mess dreamed up by a few individuals in the Scottish Office. No independent review has been undertaken. No royal commission has been ordered which would allow the people of Scotland to give their views and to have them considered.

This reorganisation will be a distraction. It will drive a wedge between the people and those who govern them. It will reduce accountability and increase the rule by that spreading unelected, unresponsive Tory phenomenon --the crony-stuffed quango. It will dramatically centralise power in St. Andrew's house and increase the dead weight of bureaucracy. It is an attack on democracy. Ministers who started by proclaiming it now ignore it. They started by boasting about it, but they will scarcely defend it in public now. It is just like the poll tax. Not long ago, the Secretary of State defended and proclaimed the poll tax, which came out of the same stable of crazy ideas. A so-called reform of local government was supposed to be the efficient, cost-effective answer to that continuing rebuff to

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Conservative pride in Scotland, the elected Labour council, but it is now the neglected child of the Government's legislative programme ; it has been locked away in a dark room and is now a source of acute embarrassment. Rightfully and justly, the Government are ashamed of this legislation.

The Government cannot walk away from the consequence of their continual self-serving meddling with the institutions of democracy in Scotland. Twist them as they will--bend, break and remould them as they will try to do--at the end of it all is the ballot box, and the Government cannot and will not escape the message which will come from that.

On 5 May this year, there will be ballot boxes all across Scotland and people will have the choice : they will give their verdict on this shoddy, politically corrupt, anti-democratic, wasteful and irrelevant piece of legislation, which they will assuredly reject, just as when they get the chance they will reject this rotten, sleazy and shambolic Administration as well.

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