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10.30 pm
The Parliamentary Under-Secretary of State for Scotland (Mr. George Kynoch): I congratulate the hon. Member for Glasgow, Springburn (Mr. Martin) on securing the debate. It has secured a significant turnout of Opposition Members--a rare occurrence--and I should like to mark the attendance of my Scottish Office ministerial colleagues and my right hon. Friend the Member for Dumfries (Sir H. Monro).
The debate is timely because, earlier today, many hon. Members were present when we tried to have a briefing about some of the facts behind the local government finance settlement to allow a more informed debate. The House will shortly have the opportunity to debate the order, which, if approved, will enable my right hon. Friend the Secretary of State to pay revenue support grant and the non-domestic rates distributable amount to the 32 new Scottish councils next year.
As usual, the hon. Member for Springburn has spoken with considerable feeling on behalf of his constituents. His speech clearly merits a serious response, and that is what I intend it should receive. Before I deal with the position of Glasgow city council, I remind the House of next year's overall Scottish local government finance settlement, which has two main elements.
The first is the level of Government supported expenditure, or GSE, which is the Government's view of what authorities need to spend to pay debt charges and deliver services. The second element is the level of Government support for that expenditure, which is known as aggregate external finance, or AEF. For next year, GSE has been set at just over £6.168 billion, an increase of 2.3 per cent. on the current year's figure after adjusting for transfers of responsibility between central and local government, so that a like-for-like comparison can be made.
AEF has been set at just under £5.369 billion, an increase of 2.9 per cent. as compared with the current year. In cash terms, the increase in AEF is just over £148 million. That increase is £26.5 million more than the Barnett formula consequences of the English local government settlement. That may sound technical and complex, but it means that £26.5 million has been diverted from other Scottish expenditure programmes to give local authorities more.
The hon. Member for Springburn referred to a figure of £15.9 million in Wales. My right hon. Friend the Secretary of State for Scotland was well ahead of my right hon. Friend the Secretary of State for Wales by getting the extra £26.5 million included in the settlement given to local authorities.
One might find it difficult to believe it from the reaction of the Labour party and the Convention of Scottish Local Authorities, but there is no doubt that Scottish local authorities have been treated favourably. This is at a time when both the Government and, although I sometimes doubt it, the Labour party, accept the need to constrain public expenditure.
Mr. Jimmy Wray (Glasgow, Provan):
Will the hon. Gentleman give way?
Mr. Kynoch:
I want to try to get through my speech.
The levels of both GSE and AEF have been increased by significant amounts. That is before any account is taken of the scope for councils to make efficiency savings.
Next year, the level of GSE for Scottish authorities will be 30 per cent. higher per head of population than the comparable amount for English authorities. The level of AEF for Scottish authorities will be no less than 43 per cent. higher than that for English authorities. Yet we continue to hear arguments that the Government are starving the new councils of resources.
The hon. Member for Dundee, East (Mr. McAllion) has claimed that the councils need an extra £395 million to avoid what he calls "spending cuts". There are two main points to be made in relation to that claim. First, it is totally misleading to talk about spending cuts. All the new councils will be able to increase expenditure next year by at least 2 per cent; the majority will be able to increase spending by more than 3 per cent.
Secondly, those who argue that authorities should be able to spend £395 million more are really saying that GSE should be increased, not by 2.3 per cent. but by 8.9 per cent., which is more than three times the current rate of inflation. Those who argue that councils should be permitted to increase expenditure by £395 million more than the level of increase that the settlement already provides for either want council tax levels to be increased by 40 per cent. more than would otherwise be the case, or AEF to be increased by nearly 11 per cent.
The second option of increasing AEF could be achieved only by cutting one or more of the other Scottish Office block programmes, such as the national health service, to which the hon. Member for Dundee, East referred, industry or higher education. We would not be talking merely about a minor redeployment of resources between programmes. To provide anything like an extra £395 million for local government, major surgery would be required in other expenditure programmes. The reality is that the level of the Scottish block resources is finite, and that more for local government means less for other programmes.
The hon. Member for Hamilton (Mr. Robertson) was quoted in The Scotsman newspaper last Saturday as having said:
Glasgow city council has received a settlement for next year which, first, gives it a level of AEF of just under £830 million. That is no less than 82 per cent. per head of population higher than the average level for English authorities. Glasgow has by far the highest per capita level of AEF of all the mainland councils. Only the three islands councils have higher levels, as a consequence of their small populations.
Secondly, the settlement enables Glasgow to increase expenditure next year by £40 million, as compared with the level of planned spending in the city in the current year by Strathclyde regional council and Glasgow district council. That is an increase of nearly 5 per cent.
Mr. Wray:
Will the Minister give way?
Mr. Kynoch:
I want to get through the points that I would like to make to the hon. Member for Springburn.
The council has claimed that it will have to "cut" expenditure by £68 million to come within its capping limit. The council is in fact saying that it would like to increase spending next year by nearly £110 million, or more than 13 per cent., but it has been prevented from doing so by the Government's decision to retain capping. I find the figures astonishing, but I must ask the hon. Member for Springburn whether he can explain why the council thinks that it is necessary to increase spending by between four and five times the rate of inflation.
As we are genuinely interested in devolving greater power to local authorities, we decided with some reluctance to retain capping, but it is now clear that it is just as well for council tax payers in Glasgow that we did, because an extra £68 million of expenditure by the council would have added around 55 per cent. to what the council tax level would otherwise have been.
Local government reorganisation has highlighted the fact that Glasgow has been cross-subsidised by most of the rest of Strathclyde, in terms of both spending levels and council tax levels. Many argue that higher spending levels in Glasgow reflect higher need--however, the formula for distributing resources among authorities, which is agreed with COSLA, already takes account of its greater spending needs.
That is precisely why the council receives by far the highest per capita level of AEF of all the mainland councils. I have already referred to the fact that it is 82 per cent. higher than the average level for English authorities. Both the Scottish Office and COSLA are committed to a review of the distribution formula, but there is no evidence that the existing formula is flawed.
The hon. Member for Springburn referred to libraries, museums and art galleries. I point out to him that the formula for distribution and support for libraries, museums and art galleries is adjusted not only for the population of Glasgow but includes commuters and tourists. The same applies to street clearing, to refuse disposal and to leisure and recreation. There is a weighting in the formula to take account of the points that the hon. Gentleman raised.
"a Labour Government would not be able to offer a pot of gold to local government or anyone else."
It is a pity that the reality of the Scottish block and formula arrangements was not appreciated more widely on the Opposition Benches, and that the hon. Member for Hamilton persisted in failing to recognise the favourable treatment that local authorities had received in this year's block allocations.
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