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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. Copies of my statement and the table accompanying it will be available in the Vote Office when I sit down.

In his Budget statement, my right hon. and learned Friend the Chancellor of the Exchequer announced the Government's overall expenditure plans. I am now able to announce how I propose to allocate the resources available for my programmes in Scotland. Full details will be included in my departmental report, which will be published in March.

We have been successful in controlling inflation. Inflation this year will be around 2 per cent.--half the level predicted a year ago. Low inflation will continue. Thanks to that, spending power in 1995-96 will be 2.5 per cent. higher than we expected when making provisional spending plans last year. We cannot let that feed through into a higher level of real spending, without jeopardising our broader objectives of sustained growth free from inflation. Firm control over public expenditure is therefore an essential discipline and one that we are determined to maintain.

Against that background, the resources available to me for allocation next year at over £14.25 billion represent a very fair settlement. In cash terms, there is an increase of about £250 million over this year's planned spending. The total budget will be more than 1 per cent. higher in terms of spending power than the previous, provisional plans for that year. My allocation is equivalent to spending of over £6,200 for every home in Scotland--nearly £120 a week.

In order to increase the cash available to meet my top priorities, my plans release resources by reining back on the cost of government, and by taking advantage of the increasing scope for private investment in capital projects.

In line with our general policy outlined in the White Paper on the civil service, I am pursuing substantial efficiency savings in my Departments. The Scottish prison service is a special case and will receive extra cash while being set demanding efficiency targets. The cost of running my other Departments will reduce over the next three years by more than 10 per cent. in real terms. Increases in pay will be fully funded by efficiency savings, allowing services to the public to be maintained.

I look to local government to follow central Government's lead. Support of local authorities' current and capital expenditure accounts for 47 per cent. of all Scottish Office expenditure. Local government has benefited equally from the fall in inflation. It must play its full part in reducing the cost of government and in the drive for efficiency improvement. With local authority staffing levels having increased by over 2,000 in the year to June 1994, with an increase of no less than 9 per cent. in central services staff, there is clearly scope to do so.

On Budget day, I announced my decisions for local authority spending in 1995-96--both Government-supported expenditure and aggregate external finance. Within that, I have made provision for a range of new burdens and for the financial effects of local government reform, including specific provision next year for local

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authority elections. I shall make separate provision for the operating costs of the new authorities in their shadow year. My plans for local authority capital spending are contained within the relevant programme totals. They assume that local authorities will take full advantage of the private finance initiative. At this time of transition in local government, it is important to limit the burdens that the new councils will inherit. I am therefore tightening up aspects of the capital control regime. From 1 April 1995, notional receipts created by the lease of assets to third parties will no longer entitle authorities to incur extra capital expenditure. In addition, with immediate effect, the cost of assets funded under what are known as covenant schemes will score in full against capital allocations in the first year.

In other respects, the capital control arrangements are unchanged. Scottish local authorities retain the significant benefit of being able to augment allocations by the full amount of actual receipts generated in the same year. With aggregate capital provision of £880 million a year, and capital spending from all sources likely to exceed £1.2 billion next year, the resources available to local authorities for investment remain substantial.

I also announced on Budget day the introduction of a unified business rate poundage for Scotland at the same level as in England, thus successfully completing our objective of harmonisation. The continuation of poundages at the English level will ensure a level playing field. That has been welcomed by Scottish business. Maintaining harmonisation after future revaluations will not be a burden on Scottish expenditure programmes. I also announced transitional arrangements to phase in the effect for businesses faced with significant changes in their rates bills. The Exchequer will provide £72 million in support of those arrangements.

I now refer to individual programmes. Public investment in Scotland's roads and transport infrastructure will exceed £1.2 billion over the next three years, bringing the total public investment since 1988-89 to nearly £2.3 billion. As a result of the high investment in the national roads programme in recent years, the central Scotland motorway network is almost complete. The dualling of the road between Perth, Dundee and Aberdeen is now complete, and exceptional progress has been made on upgrading the A74. At present, there are £370 million worth of national schemes under construction in Scotland. Public spending on that programme will be nearly 6 per cent. higher in real terms next year than it was in 1988-89. Work will proceed on improving the major routes such as the A74, the M8 and the A1. My plans also maintain my commitment to shipping services to the west and north of Scotland.

At more than £2,850 million over the next three years, the gross resources available for housing allow me to meet the resource planning assumptions for capital expenditure by local authorities and to recognise their funding requirements for care in the community projects. They also maintain high investment in house condition through improvement grants, and enable Scottish Homes to maintain the development programme in 1995-96 at about the current level. Provided that local authorities and Scottish Homes target their resources on key national priorities, ensure maximum value for money, and are

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imaginative in attracting private investment, we shall continue to make good progress in tackling Scotland's housing needs.

There will be extra cash available next year for priority public services. I am able again to meet fully our commitment to provide for an increase in real terms in the public expenditure devoted to the national health service in Scotland, year on year. In 1995-96, net expenditure on health in Scotland will exceed £4.1 billion, which is £13 million or 3.6 per cent. more cash than our plans for the current year.

That will mean that, over this year and next, spending on the health service will have increased by 3.2 per cent. over and above inflation. At that level, expenditure on the NHS in Scotland next year will be at an all- time record high of nearly £800 for every man, woman and child in Scotland. Furthermore, I am increasing the allowance for community care within the local government settlement next year to around £180 million. Taken together with the growth in expenditure on the health programme, that should enable the needs of the Scottish people for care in the community to be fully met. The maintenance of law and order and the protection of the public continue to be prime concerns for the Government. We have invested substantial public expenditure in the law and order programme, increasing spending by 25 per cent. in real terms over the past five years. Measures taken to improve value for money and to target resources on the essentials--such as civilianisation to release police officers for operational duties--are now bearing fruit. To keep up the momentum, I have maintained previous spending plans and allocated an extra £20 million over the next three years. That will ensure that we can build on the progress already made.

Most expenditure on social work in Scotland is the responsibility of the local authorities, and I have provided some £16 million in the local government settlement in recognition of new burdens. With regard to the social work expenditure within my own direct control, l have been able to provide for an increase in 1995-96 of some £1.2 million over planned spending for the present year. In addition to providing for all on-going services, the increase will allow me to provide for the initial set-up costs of the new children's reporter administration and also to give additional support to voluntary organisations.

Rural Scotland will continue to benefit from further substantial increases in support for agriculture, which will increase by £63 million next year-- nearly 10 per cent. after allowing for inflation. The rural environment will also be a priority, with Scottish Natural Heritage receiving a budget of more than £120 million over the next three years.

Provision for historic buildings repair grants will be increased to £12 million a year. To complement support for the natural and built heritage, funding for the arts will exceed £220 million over three years, allowing a start next year to the main construction phase of the new museum of Scotland. There will be an increase of nearly 3 per cent. in the budget of the Scottish Arts Council.

Education and training are priorities for the Government and for me personally. The education budget of the Scottish Office Education Department will exceed £1.35 billion next year. In a tight survey for local authority capital, I have chosen to maintain capital provision for school-building at more than £70 million in

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all three years. Numbers of students in higher and further education will continue to rise next year in line with the Government's objectives.

Earlier this year, I assumed policy responsibility for training in Scotland and am now able to plan training and vocational education on an integrated basis. I recently published the consultation paper, "Training for the Future". I am happy to announce that my plans make provision for training and vocational education expenditure of around £30 million over the next three years to fund the new measures proposed in that document. Detailed decisions will be announced in the new year in the light of the responses to the consultation paper.

My plans once again give high priority to enterprise development. In total, I have allocated more than £1.8 billion for expenditure on industry, enterprise and training over the next three years. Within that total, I have allocated £467 million to the Scottish Enterprise network for 1995-96. Those resources will allow the enterprise network to invest in training as well as to promote its other key objectives of enterprise development and environmental improvement. The environmental budget of Scottish Enterprise will include specific provision of £3 million a year to improve brownfield land in Glasgow for housing development. For Highlands and Islands Enterprise, I have allocated a budget of £77.3 million. I am making ample provision for continued encouragement of inward investment, and I shall support the development of a new strategy for tourism with an additional £1.5 million, an increase of nearly 10 per cent., for marketing Scotland as a tourist destination.

The Government are determined to keep a firm grip on public expenditure so that the economy continues to improve. Improving the efficiency of delivering services is a policy that should apply throughout the public service--in my own Departments, in local government, in the national health service and in other public bodies. In that way we shall give good value to the people of Scotland for the £14.25 billion that this Scottish Office budget represents. We shall protect key public services and, by strengthening the business environment and our skills base in particular, we shall lay secure foundations for Scotland's future prosperity.

Mr. George Robertson (Hamilton): So far do the figures of the Secretary of State for Scotland depart from reality, I am tempted to think that it is almost a conjuring show--Tommy Cooper without the laughs--with horrible consequences for the people of Scotland. The public expenditure statement is nothing short of a personal humiliation for the Secretary of State for Scotland and it is a hammer blow for Scotland, which will mean fewer jobs and much worse service provision. The right hon. Gentleman lost in Cabinet the argument about the second increase in VAT on fuel--perhaps to be saved by his hon. Friends tonight. Now he has been subjected to what can be described only as a public expenditure mugging by the Chief Secretary to the Treasury.

The Secretary of State described the settlement as fair. If it is fair, why is total Scottish spending over the next three years to fall by more than 4 per cent. in real terms, according to the Government's Red Book, while spending in Wales will fall by only 3 per cent., overall United Kingdom spending will fall by less than 1 per cent. and

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spending in Northern Ireland will stay the same? Why is Scotland being short-changed yet again? Will the right hon. Gentleman kindly explain that?

Even this Government, who have elevated duplicity and fiddling the figures almost to a management science, cannot conceal the true extent of their economic failure and waste. Will the right hon. Gentleman confirm that even the Treasury's figures show that total public spending in Scotland will fall by £600 million in real terms over the next three years? Does he acknowledge that when the figures are adjusted for inflation, spending on housing, for example, will be cut by £125 million--almost 20 per cent., one fifth, of the housing budget--over the next three years?

How can the right hon. Gentleman avoid being aware of the devastating impact of cutting housing budgets at a time of record homelessness? Since 1978, 400,000 homeless applications have been made. Even the Government's house condition survey shows that more than half a million Scottish houses suffer from damp and condensation. In those circumstances, how can he possibly defend such massive cuts in housing finance?

Let us look at where else the axe will fall over the next three years. The right hon. Gentleman intends to hack £50 million in real terms--3.5 per cent.--from the education budget, which is already sorely pressed. What price the value of our schools, education and training, never mind the nursery education to which we are told the Government are now committed?

The right hon. Gentleman intends to cut a huge hole in the roads budget. He has not itemised where the cuts will be, so perhaps he will now tell the House which road programmes will be lost through a cut of 13.5 per cent. in real terms over the next three years. There are to be cuts in the arts, in law and order and in training. All those programmes will be cut in real terms over the next three years. Is not it true that social work services also will be cut by 5 per cent. in real terms over the next three years? Yet local authorities now have the increased burden of community care and the new children's legislation. Thousands of old people will be coming out of hospital and back into the community. In addition, the problems of drugs and alcoholism will have to be met from the fast-diminishing budget.

How on earth can the Secretary of State boast with a straight face about increases in health service cash? There is a mounting health problem in Scotland, including the tide of drugs and all that that brings. Yet today he proposed a real terms increase over three years of only 0.6 per cent.-- less than 1 per cent. in real terms for Scotland's health budget. Next year, the real increase in health service spending in Scotland will be only £14 million--less than half the £30 million poured down the Health Care International drain, and that is on one failed private hospital alone.

Those are swingeing cuts by any standard and they will mean even more misery for Scots on top of the seven new Tory taxes imposed in the last two Budgets. If that were not bad enough, today's cuts in council cash mean that Scottish taxpayers can expect savage cuts in local services as well as increases in council tax bills. The figures for council spending which the Secretary of State has just announced will deepen the cash crisis already hitting Scottish local government. Is not it true that Government

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support next year will be cut by £133 million in real terms, at a time when councils must pick up a huge tab for reorganisation that is unwanted, unnecessary and has been foisted on them, and are facing additional responsibilities for care in the community?

Is the Secretary of State aware that Strathclyde regional council alone has calculated that the cuts plus capping will mean a drop in its budget of £107 million this year and a 25 per cent. increase in council tax? We can expect the same story all over Scotland--more broken promises, more taxes and worse services.

Ministers tell us that money must be saved, so why are they prepared to waste more than £700 million on reorganisation that nobody wants, that is completely unnecessary and that was designed only for Tory party self- interest? Ministers say that they are strapped for cash, so why did they waste £30 million of taxpayers' money on a private hospital that went bust fewer than 112 days after the Secretary of State officially opened it?

Ministers bleat unconvincingly about sound public finance. Do they not remember that they squandered more than £14 billion of taxpayers' money on the poll tax? If an elected council wasted money on such a monumental scale, the Secretary of State for Scotland would be calling for surcharging.

The statement offers precious little hope to the 220,000 unemployed people in Scotland or to the 75,000 who have been unemployed for more than a year. Neither will it do anything to enhance business confidence or to boost the already ailing recovery. Scotland will pay dearly for the economic failure and waste of this lame-duck Government.

The Scottish people have been lied to by a Government who promised them lower taxes and higher spending, but who gave them higher taxes and lower spending. They are sick and tired of the Government's incompetence. This is in no way a fair settlement. It is a bad deal for Scottish business and short change for the Scottish people.

Mr. Lang: The hon. Gentleman talked about a conjuring show, but it is he who is up to tricks--the same tricks as he tried to play on the House a year ago, when, in response to my public expenditure statement, he said:

"The cost of living in Scotland will rise sharply and all our public services . . . will be cut substantially."--[ Official Report , 8 December 1993; Vol. 234, c. 316.]

The reality is that inflation is 2 per cent. and not the 4 per cent. that the hon. Gentleman assumed. The increase in cash terms for all our programmes-- [Interruption.] Opposition Members may not like the facts, but I will not allow the hon. Gentleman to get away with his conjuring tricks. It is the hon. Gentleman who is facing humiliation.

The cash increase was 3.8 per cent, and the real terms increase across the whole Scottish Office expenditure programme, after allowing for the rise in the cost of living, was 1.8 per cent. Under this year's formula, the Scottish Office block remains as it was, with Scotland receiving 10.66 per cent. of spending in England under comparable headings. That formula was introduced by a Labour Government and has been updated in the light of population changes. The hon. Gentleman made comparisons with Wales, Northern Ireland and England, but they bear no relation to reality. If he will examine the table in the Budget day announcement made by my right hon. and learned Friend the Chancellor, he will find that Scotland is placed well

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in the middle of the various spending Departments. Moreover, the spending programme that I announced today, far from embodying the cuts that the hon. Gentleman tried to portray, will be more than 1 per cent. higher in terms of spending power than previous spending plans this year.

I told the House that over the next three years, spending on roads and the transport infrastructure will be no less than £1.2 billion, which will lead to a total of £2.3 billion since 1988-89. A whole range of roads is under construction at present, and more are about to start. In the summer of 1995, the Eaglesfield-Kilpatrick-Fleming section of the M6 will be completed; in December this year, the Cleuchbrae-Dinwoodie Green section; in December 1995, the Eaglesfield phase; in February 1996, the Newbridge-Edinburgh road; in the autumn of 1995, the Skye bridge, built with private sector money; and so on. When one reflects on the Labour party's plans to cut road spending, it is, to put it mildly, misleading to the country for it to pretend that we should be increasing it further.

Last year, there was a cash increase of 3.9 per cent. in the housing programme. Over the next three years, £2.8 billion will be available for housing. That will enable very considerable progress to be made, including in the next year some £300 million towards dampness and condensation.

The hon. Gentleman asked about education. He might like to reflect on the fact that, in the current expenditure year, resources have increased over the 1993-94 outturn by no less than 9.9 per cent. in cash terms and by 7.8 per cent. in real terms, on top of which our plans for next year allow for an increase of 3.7 per cent. in cash terms--a very substantial commitment to education, which would enable higher education to continue to expand.

The hon. Gentleman raised social work, and referred particularly to community care. He might like to know that the resources in housing authorities for community care will rise next year, from £25 million this year to some £45 million to £50 million, that the spending for Scottish Homes on community care will rise from some £78 million in 1993-94 to £82.5 million in 1994-95, that the budget for social work, providing inter alia for community care, will rise from £345 million to £390 million, and that the total new resources for local authorities for community care will rise from £170 million to £241 million--a rise of some 40 per cent. So the hon. Gentleman had better have another look at his figures and come back into the real world. As for the arts programme, let me reassure the hon. Gentleman that we have plans to increase spending for the Arts Council by some £700, 000, and spending for the Historic Buildings Council for Scotland is up by some £300,000, enabling both those important bodies to make considerable progress.

The spending power of local authorities will be 1.5 per cent. higher than was planned a year ago--an increase in cash terms of £103 million in Government support and expenditure. If local authorities paid the same attention to efficiency in the way in which they deliver services, as my staff in the Scottish Office are doing, their numbers having reduced by some 35 per cent. in the past 15 years compared with a 5 per cent. increase in local authority staff--indeed, local authorities have had a staff increase of 2,100 in the past year alone--they would find that greater resources were available to apply to local services.

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This is a good settlement in a difficult year, during which it has been necessary to control public expenditure. I look to all Departments that spend the public's money to spend it in the most efficient way that they can.

Mr. Bill Walker (Tayside, North): Is my right hon. Friend aware that my constituents will welcome his comments on efficiency saving, law and order, business rates, agriculture and tourism? They will, of course, be concerned that he did not find in his proposals a method of looking at a flood prevention scheme for the Tay valley, or, indeed, the upgrading of the single carriageway parts of the A9, which have been prone to accidents. Other than that, my constituents will feel that it is a good proposal in difficult economic circumstances world wide.

Mr. Lang: I am grateful to my hon. Friend and take note of his concern about flood prevention, which is a matter to which my Department is giving attention.

My hon. Friend particularly welcomed the progress that has been made in business rates. He was right to do so, because as a result of contributions from both the Scottish Office block and the Treasury in recent years, rising to £440 million, we have now eliminated the discrepancy in business rates that has arisen from the high spending of Labour-controlled authorities in the past, and have brought the average Scottish poundage down from 58.1p in 1991-92 to 43.2p, and it will now remain harmonised with the uniform business rate in England. That is a major achievement. The average poundage this coming year alone will be down by 11 per cent. or 5.3p. That will have a major benefit for Scottish business.

Mr. James Wallace (Orkney and Shetland): Is not it a rule of thumb that when the Secretary of State compares next year's expenditure with spending on some arbitrary date in the past, he really means that spending will be less than it has been in the current year? How much of the increase in local authority staff to which the Secretary of State referred is due to local authorities' having engaged part-time non-manual staff to clear up the poll tax mess and introduce the council tax? Is not it the case that, after 18 years of cutting back the fat, local authorities are now being asked to hack into the backbone of public services and put up council tax? In short, the message that the right hon. Gentleman's statement sends to the people of Scotland is, "Pay more, get less."

Mr. Lang: The hon. Gentleman is talking nonsense, as he will realise if he looks at the figures. Local authorities have continued year by year to increase staff numbers, which are now higher by several thousand than they were when the Government took office. Authorities constantly tell us that we are taking powers and responsibilities away from them; but the number of Scottish Office staff has fallen by more than 30 per cent. in the past 15 years, while the provision of local government services has continued to rise.

In the past year alone, the increase in the provision of central services was no less than 9 per cent. I look to local authorities to use the substantial resources that they are being given, which account for no less than 47 per cent. of the total Scottish Office block of £14.25 billion. That

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is more in cash terms than authorities have ever had before, and I look to them to spend it efficiently and responsibly.

Mr. Raymond S. Robertson (Aberdeen, South): Does my right hon. Friend agree that until the Labour party comes clean about how much it will spend, where it will find the money and what it will spend the money on, its media whingeing will continue to have more than a whiff of insincerity about it? Will my right hon. Friend confirm that, despite a very tight public expenditure round, he has been able to increase resources to help the fight against crime in Scotland while at the same time maintaining our manifesto commitment to the national health service in Scotland?

Mr. Lang: I am grateful to my hon. Friend, and I can confirm both those points. The law and order and protective services budget will have increased by 25 per cent. in real terms over a five-year period, and spending next year will increase by £11 million as compared with last year. That will enable the fight against crime to continue--a fight that the figures now show to be increasingly succesful. I can also reassure my hon. Friend that spending on the national health service next year will be 53.2 per cent. higher, in real terms, than the level that we inherited from the Labour party. Last year's increase was 2.9 per cent. in real terms, and we anticipate a cash increase of 3.6 per cent. next year--substantially above the likely rate of inflation.

Mr. Norman Hogg (Cumbernauld and Kilsyth): Is not the Secretary of State simply engaged in a conjuring trick with the roads figures? Does not he appreciate the importance of transport infrastructure to west central Scotland, where we are trying to secure inward investment to sustain jobs? In that context, will he say something about the proposals for the M80 motorway between Stepps and Haggs? When will all the planning procedures and so forth be completed, and when can we expect the road to be constructed?

Mr. Lang: The hon. Gentleman will know better than many hon. Members how much progress has been made in road building in central Scotland. He will appreciate that the planning procedures and other details are not matters entirely for me; let me point out, however, that the 1994-95 programme was increased, in cash terms, by 5.6 per cent. on the outturn for the previous year. That is a real terms increase of 3.6 per cent., and represents a substantial commitment. The programme that we are now implementing will provide for 10 new trunk road starts over the next three years.

Mr. Phil Gallie (Ayr): Does my right hon. Friend consider the words of the hon. Member for Hamilton (Mr. Robertson)--who suggested in a whining, whingeing way that there should be more public expenditure in Scotland--consistent with the hon. Gentleman's intention of entering the Lobby tonight to vote against a tax measure whose aim is to support and sustain existing public expenditure levels?

Mr. Lang: I can only agree with my hon. Friend. Indeed, Labour Members--who constantly cry out for higher expenditure--never offer us a suggestion of where

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that expenditure should come from. If they were being honest with the House today, they would either explain how they would raise the money through more taxation or higher borrowing, or explain where they would make cuts to make the increases that they demand.

Mr. David Marshall (Glasgow, Shettleston): Does the Secretary of State accept that, despite the best efforts of Glasgow district council and Strathclyde regional council, Glasgow on its own cannot solve the serious problems facing the city, having as it does eight of the 10 constituencies with the highest unemployment in Scotland? Will the Secretary of State tell the House how this settlement--the worst for 20 years--can possibly benefit the people of Glasgow?

Mr. Lang: Apart from anything else, I announced in my statement over £9 million over the next three years for brownfield sites in Glasgow for the benefit of housing. Also, I am committing substantial resources to the industry, enterprise and training budget, much of which will find its way to Glasgow. In the current year, the increase was no less than 12.9 per cent. in cash terms over the previous year's outturn and we shall continue to commit £1.8 billion over the next three years to that important programme. Glasgow will undoubtedly benefit from some of that.

Mr. George Kynoch (Kincardine and Deeside): Does my right hon. Friend accept that my constituents in Kincardine and Deeside will recognise that he has made a fair settlement in a tight expenditure round and will welcome his emphasis on the efficient delivery of services--something that the Labour party does not seem to understand? In that context, and in view of the welcome 3.6 per cent. increase in health spending, will he be willing to review the funding arrangements by region to take account of efficient delivery of services and growth in population?

Mr. Lang: I can assure my hon. Friend that, in the distribution of resources, great care will be taken to reflect the needs of the different parts of Scotland. Not only is the overall health budget increasing by the figure repeated by my hon. Friend, but he might like to know that the programme for hospital and community health services will increase substantially next year. A figure of £201.9 million is scheduled for that, compared with an outturn in 1993-94 of £160 million. Family health services are budgeted to increase by 15.6 per cent. in cash terms during the next financial year.

Mr. Thomas McAvoy (Glasgow, Rutherglen): The Secretary of State will recall that I have had considerable support from his junior Ministers on the problem of toxic waste dumping in my constituency. The Under-Secretary, the hon. Member for Dumfries (Sir H. Monro), has said that the Scottish Office will play a role in clearing up the sites. Despite that, when it came to the Secretary of State's turn to do something about it, he maintained a bureaucratic attitude and has allocated no extra money for the problem. Does he feel no shame that his uncaring attitude is putting at risk the health of my constituents?

Mr. Lang: If that were my attitude, I would feel shame, but as it is not my attitude, I must rebut the hon. Gentleman's charge. I have already told him about the £3 million per annum for brownfield sites in Glasgow. I can also assure him that the environment budget of Scottish

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Enterprise will be nearly £83 million in 1995-96 and from that substantial resources will be used for the sort of dereliction and contamination to which he referred.

Mr. Dennis Canavan (Falkirk, West): How can the Secretary of State possibly justify misspending £30 million of public money on a private hospital in Clydebank while there are proposals for the closure of thousands of beds for frail elderly patients throughout Scotland, including the proposed closure of Lochgreen hospital in my constituency and the loss of 155 beds at Bellsdyke hospital? Is not the Government's hidden agenda to shift more and more frail elderly patients out of NHS hospitals and into the private sector where they can be exploited, even to the extent of their homes being sold over their heads?

Mr. Lang: The hon. Gentleman is absolutely wrong. The Health Care International hospital was funded out of the regional selective assistance budget at a time when it was not part of the Scottish Office block. Therefore, the hon. Gentleman's intervention on that is irrelevant to today's decisions. It did not come out of the health service budget and we need no lessons on health expenditure from the Labour party since we have increased health expenditure over and above the rate of inflation by no less than 53 per cent. in the past 15 years.

Mr. Jimmy Wray (Glasgow, Provan): Does the Secretary of State agree that it is difficult for hon. Members to consider the percentages that he has given us unless we get an analysis? Does he further agree that his Government have created the problems in housing and crime and that that is why we have the extra expenditure? I noticed that he never said how many jobs would be created when he spent his money on trade and industry.

Mr. Lang: I am sure that the hon. Gentleman will welcome the fact that, in each of the past two years, crime has fallen by substantial percentages. We are determined to give authorities the resources to ensure that that continues. The hon. Gentleman might like to reflect that, in the past five years, some 47,000 jobs have been either created or protected by our inward investment programme, largely funded by regional selective assistance, for which the budget next year will be substantial.

Dr. Norman A. Godman (Greenock and Port Glasgow): May I offer my sincere thanks to the Secretary of State for his continuing commitment to the mental illness specific grant? I should like more, but there it is. Why is it, however, that he and his officials continue to ignore in such a disgraceful way the housing needs of disabled people? May I remind him that many of those people, particularly wheelchair users, are unable to enter the housing market because of their low incomes? Why do he and his officials continue to ignore those people's needs?

Mr. Lang: We have not ignored the needs of disabled people when it comes to housing. The hon. Gentleman will know about the large number of small urban renewal initiatives to which we have committed resources. I understand that he has a Margaret Blackwood housing association arrangement in his constituency. I am grateful to him, however, for his remarks of appreciation on the mental illness specific grant. He might like to know that, having increased that grant from £10 million to £14

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million last year, we shall increase it to £18 million next year--a 28 per cent. increase. That will mean that, over a four-year period, the grant will have increased sixfold.

Mr. Andrew Welsh (Angus, East): Does the Secretary of State concede that the budget increase is less than the inflation rate and that it comes as part of a three-year plan of cuts that amount to £600 million? At a time of greater demands through care in the community, local government reorganisation and the Children (Scotland) Bill, which will be soon, something must give if cuts are made. What is that something? Will he state whether the Highlands and Islands Enterprise money is in addition to, rather than a replacement for, objective 1 cash? Is the Scottish prison service settlement simply a prelude to privatisation?

Mr. Lang: The answer is no to the last question and yes to the question before that. On the other questions, the figures that we announced today are more than 1 per cent. higher in terms of what that spending can buy than the provisional spending plans of a year ago.

Mr. John Home Robertson (East Lothian): I am grateful to the Secretary of State for his reference to the A1 road, but we shall keep an eye on that one. The rest of the news, however, seems to be an unmitigated disaster. Will he deal specifically with housing? As 40,000 Scots are becoming homeless every year, is there anything in the package that will add to the supply of affordable rented housing in Scotland?

Mr. Lang: Yes, and as for disasters, let me remind the hon. Gentleman, since he is involved in farming, of the announcement of substantial increases, amounting to some £63 million, to the farming sector next year. [Hon. Members:-- "What about housing?"] I am coming to housing. The hon. Gentleman said that it was an unmitigated disaster, but he might like to reflect on his farming constituents' interests, about which, presumably, he knows a little. The programme should generate about £170 million in private finance for housing, in addition to the resources going into it. Scottish Homes will have enough to produce about 8,300 housing units overall--300 more than its target for this year.

Mr. Gordon McMaster (Paisley, South): How can the Secretary of State possibly justify the fact that, although tens of thousands of Scottish families live in damp, decaying and cold houses, he intends to cut the housing budget by 19.4 per cent. over three years? Will he confirm that, on one and the same day, he intends to lead at least most of his Scottish colleagues into the Division Lobby to impose VAT on fuel at 17.5 per cent. while taking away the resources to give people in Scotland warm, comfortable and dry houses?

Mr. Lang: The hon. Gentleman cannot have heard me announce the figure of £300 million for dampness and condensation. On VAT on fuel, he will have heard my right hon. and learned Friend the Chancellor of the Exchequer announce substantial further increases in benefit for pensioners, for people on other benefits and for people in need. The increases include those in severe weather payments and the substantial increases in tax allowances. If the hon. Gentleman takes account of all those resources, set against a background of falling fuel

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prices as a result of privatisation, he will recognise that the needs of the people to whom he referred will be well met.

Mr. Jimmy Dunnachie (Glasgow, Pollok): Will the Secretary of State refer back to the question asked by my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall) about funding for housing in Glasgow? Recently, the Minister with responsibility for housing--the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton)--toured my constituency. He was so dismayed by the condition of the houses that he immediately awarded £1.1 million to Pollok. He agreed that it was insufficient and thought that Pollok should receive far more, but he was, unfortunately, unable to deliver. What has the Secretary of State to say about that?

Mr. Lang: The hon. Gentleman's constituency received a supplementary allocation and his figures wholly disregard the fact that, under the housing revenue account, housing resources between last year and the current year increased in cash terms by no less than 6.8 per cent. and that the non-HRA housing figures increased by 7.8 per cent. in the same period, which is a real-terms increase of 5.7 per cent. The figures that I announced today will enable the housing gross provision to be maintained.

Mr. Tony Worthington (Clydebank and Milngavie): Too many of our children are educated in rundown and crumbling schools. Is the Secretary of State aware that the £70 million that he announced today for capital building this year is in real terms half of what it was in 1979? Does he agree that that is a confession of failure?

Mr. Lang: No, I certainly do not agree. If I examine the spending figures under the previous Labour Government and recall the 30 per cent. cuts that were imposed right across the board, not even by Labour Chancellors but by the International Monetary Fund acting on behalf of common sense and responsibility in place of the then Labour Government, I reflect that I need no lessons from the Labour party.

Mr. Malcolm Chisholm (Edinburgh, Leith): Does the Secretary of State agree that aggregate external finance to local authorities is to increase by only 0.64 per cent. and that, once transferred community care money is stripped out, the minuscule cash increase disappears altogether? Given that the Government's GDP deflator is 3.25 per cent., does he admit that it is, in fact, a massive cut and will he state publicly that any cuts in council services and any increases in council tax beyond 3.25 per cent. are entirely due to the Government?

Mr. Lang: No. I will not admit that that is a massive cut. The hon. Gentleman is making the same mistake as

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his hon. Friend the Member for Hamilton (Mr. Robertson). Last year, the GDP deflator at this time was around 4 per cent. and the inflation rate was around 2 per cent. This year, the GDP deflator is 3.25 per cent. and the inflation rate at present is running at 2 per cent. Provided that inflation does not rise to the levels that the hon. Gentleman is assuming, the figures that he cited are incorrect. The hon. Gentleman should also reflect on the fact that aggregate external finance is 45 per cent. higher per head in Scotland than in England.

Mr. Thomas Graham (Renfrew, West and Inverclyde): The Secretary of State will be aware that in all our constituencies there are growing queues of people looking for homes. In the latest payment round, the Secretary of State allocated Renfrew district four houses for the homeless. Today's announcement means that thousands of people will continue to be homeless. When will the misery queue end? When will the Government act to ensure that the people of Scotland have a future, a home and the right to live in comfort?

Mr. Lang: The hon. Gentleman is exaggerating. Gross expenditure on housing in 1995-96 will be maintained at 1994-95 planned levels in cash terms. Expenditure per house continues to rise in cash terms--from £667 per house in the current year to no less than £717 at the end of the three-year survey.

Mr. Brian H. Donohoe (Cunninghame, South): How much has been made this year from the sale of the assets of the industrial sites in the five new towns? How much does he intend to get from such sales next year and what does he intend to do with the money?

Mr. Lang: The figures do not form part of the public expenditure announcement that I am making today, but I have made substantial provision for the new towns to enable them to complete their task as they approach wind-up.

Dr. John Reid (Motherwell, North): The biggest concern of the people of Scotland, and the greatest blight on Scotland, remains unemployment. Far from helping to reduce unemployment, today's statement will increase it. When the Secretary of State says that wage increases will be fully funded out of efficiency savings, does not that mean that by definition there will be fewer services, or the same level of services with fewer people providing them? In other words, one person's wage increase will be another person's redundancy notice. Given the present level of unemployment in Scotland, does the Secretary of State think that that is a sensible policy to follow?

Mr. Lang: The hon. Gentleman's analysis is wrong; I am talking about the more efficient delivery of services. However, he may like to know that the enterprise budget of Scottish Enterprise--£155 million for the forthcoming year--will allow it to assist many companies and to help to create or safeguard about 42,000 jobs.

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