HC Deb 28 February 1994 vol 238 cc693-756

6.9 pm

The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart)

I beg to move, That the Local Government Finance (Scotland) Order 1994, a copy of which was laid before this House on 17th February, be approved.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

I understand that with this it will be convenient to discuss the following motion: That the Revenue Support Grant (Scotland) Order 1994, a copy of which was laid before this House on 17th February, be approved. This is the annual opportunity for the House to debate the Scottish local government finance settlement for the year ahead. It is common ground across the Chamber that it is an important debate for several reasons. Local authority services are clearly crucial to all those who receive them, be they the youngest or the oldest in our community.

The debate is also important because of the huge amount of money that is distributed under the orders that we are considering. The total sum involved is £5.3 billion. That represents about 40 per cent. of the total Scottish Office budget or, to put it another way, £1,034 for every man, woman and child in Scotland from the United Kingdom and business taxpayers. The figure of £1,034 compares to the English figure of £709 and the Welsh figure of £835. So the figure in Scotland is 46 per cent. higher than that in England and 24 per cent. higher than that in Wales.

The background to the two orders is provided in the reports on them, but I hope that it will be helpful to the House if I briefly summarise the position. I shall deal first with the main order, the Local Government Finance (Scotland) Order 1994. It represents the final stage of the 1994–95 settlement, details of which my right hon. Friend the Secretary of State first announced to the House on 30 November. He said that Government-supported expenditure—the total of grant-aided expenditure and the provision for loan and leasing charges—had been set at just less than £6,014 million and that aggregate external finance had been set at £5,272 million for next year. Those figures represent increases of 3.52 per cent. and 2.41 per cent. respectively on the 1993–94 figures, inclusive in both cases of the amounts being transferred to local authorities for the second year of their community care responsibilities.

The Local Government Finance (Scotland) Order 1994 deals with the distribution of aggregate external finance—AEF—for next year. As the report to the order explains, AEF has three components. The first is the provision for specific grants. For 1994–95, that provision is estimated at £421.5 million, and a breakdown of that estimate among the various specific grants is given in appendix B to the report.

The second component of AEF is the distributable amount of non-domestic rate income, which for next year has been set at £1,109 million. That estimate takes account of the 1994–95 rate poundages which my right hon. Friend also announced on 30 November. Those poundages, in turn, took into account a further reduction of £60 million as part of the Government's policy of harmonising business rate poundages north and south of the border.

Mr. Tam Dalyell (Linlithgow)

Do the figures take into account the costs already incurred of setting local government reform in motion?

Mr. Stewart

Yes. The order provides an additional £5 million for local government reorganisation. As the hon. Gentleman will appreciate, the major costs and savings will come in years subsequent to the order.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

It would be helpful if the Minister could elaborate on the exact basis on which the £5 million was calculated. It is important to know how much of the expenditure he envisages would take place in the next financial year. It would be helpful if he could set out briefly—I think that we have plenty of time—the types of expenditure that he expects to be incurred in the coming financial year.

Mr. Stewart

Certainly. As the hon. Gentleman will know, we sent out a circular to Scottish local authorities asking for an estimate of the costs of local government reorganisation in the forthcoming year. The costs mainly relate to information technology. As I said in answer to the hon. Member for Linlithgow (Mr. Dalyell), the main costs and savings will come in future years. We thought it right to allow a small increase in expenditure for costs in 1994–95. As the hon. Gentleman will appreciate, most costs will come in years thereafter.

Mr. Foulkes

We are talking about 1994–95, which goes on, as I understand it, right until the end of March 1995. It seems to me that £5 million is a small amount. From the discussions in which the Minister has been involved in the Standing Committee considering the Local Government etc. (Scotland) Bill, it seems likely that by the beginning of 1995, local authorities—whatever structure we ultimately decide—will be involved in fairly substantial expenditure around February and March 1995. I wonder whether information has been made available to the local authorities on which they can make reasonable judgments about what the expenditure is likely to be.

Mr. Stewart

Of course there will be substantial extra expenditure in the financial year 1995–96. The expenditure in 1994–95—the financial year that we are dealing with this evening—is likely to be very limited. No local authority suggests that it will incur other than preparatory expenditure. The hon. Gentleman is correct that, in 1995–96 and 1996–97, the picture will be different.

I informed the House last year that, with the agreement of the Convention of Scottish Local Authorities, it was proposed to distribute non-domestic rate income to regional and islands authorities only. That meant that district councils would receive their AEF support solely in the form of revenue support grant and specific grants. I am happy to say that those arrangements have been accepted by all involved and it is proposed to continue them for next year.

The third component of AEF is revenue support grant, which for 1994–95 totals £3,741.5 million. A detailed explanation of how AEF for next year has been distributed to individual local authorities is contained in the report to the order. It may be helpful to the House if I briefly summarise the procedure, the object of which is to equalise both for variations in authorities' assessed need to incur expenditure and for their tax base. There are broadly two stages in the process.

Mr. George Robertson (Hamilton)

Broadly?

Mr. Stewart

There are exactly two stages in the process. The first stage is to equalise differences in authorities' grant-aided expenditure assessments—GAEs—as determined by the client group methodology. That methodology, which is reviewed regularly, is agreed with COSLA in the distribution committee of the working party on local government finance. A little more than £1,303 million of the AEF total is used to equalise differences in GAE assessments.

The second stage of the procedure is to equalise for differences in each authority's tax base—in other words, their ability to raise revenue locally. The balance of AEF remaining after equalising for differences in the GAE assessments is allocated to authorities in proportion to the number of council tax band D equivalent properties in each authority area. The sum of £3,927 million is distributed in that way.

The principle underlying the distribution procedure is that if all authorities spent at the level of GAE assessment, they should all be able to set the same level of council tax. In practice, there is often a significant variation in the levels of tax because some authorities decide to spend above GAE and others below. Variations in tax levels, however, are not the result of the aggregate external finance distribution system being used to reward or to penalise certain authorities. Any claims of that sort made in previous debates—I am sure that they will not be made today—betray a lack of understanding of the system and the extent to which COSLA is fully consulted about the mechanisms that I have summarised.

Mr. Gordon McMaster (Paisley, South)

Is not taking the council band alone into account a rather crude way to assess the tax base of an area and the impact on local authority expenditure? That crude formula alone will not take into account the fact that an area with many houses in the council band might also have been affected by unemployment or have a high level of poverty.

Mr. Stewart

The hon. Gentleman's argument is incorrect because of the two-stage process. Unemployment is an indicator in relation to the provision of a number of services and that is set out in detail in the distribution formula. If there were only one stage, the hon. Gentleman would be correct, but, because of the needs part of the procedure, indicators such as unemployment and deprivation are fully taken into account in the distribution of the grant.

Mr. Phil Gallie (Ayr)

Can my hon. Friend advise me whether COSLA has offered any constructive arguments on a change to the formula which would improve it, if that were possible?

Mr. Stewart

The formula is constantly reviewed with COSLA. It is perhaps inevitable that authorities do not always wholly agree with the consequences of the formula because they are affected in different ways.

I certainly pay tribute to the very professional expertise commanded by the distribution committee of COSLA and the Scottish Office, as hon. Members who have studied the client group methodology in detail will be the first to attest. I see that the hon. Member for Glasgow, Garscadden (Mr. Dewar) is agreeing with me and I am sure that he studied it year in and year out when he was the shadow Secretary of State for Scotland. The methodology is extremely technical and sophisticated and I pay tribute to those who work very hard to improve it in the light of continuing representations.

Mr. Dalyell

Before we leave the subject of the professional expertise of COSLA, to which the Minister rightly pays tribute, if it has so much professional expertise, why does the Scottish Office challenge its estimates for costs of up to £720 million for local government reform? Does he accept that that COSLA figure was put together not by a group of Opposition politicians, but by precisely the type of experts to whom he is paying tribute; for example, David Chynoweth, who was president of the Chartered Institute of Public Finance and Administration last year? Is it not dangerous to give such fulsome praise to COSLA's expertise—praise which is justified, in my opinion—but to say that it has its sums all wrong on another aspect of local government reform? The Government cannot have it both ways.

Mr. Stewart

I do not accept that figure. When I paid tribute to the convention's technical expertise in one area, I do not think that anyone would imply that I necessarily meant that we accepted every figure that it produced on every subject under the sun. I merely said that the distribution formula is extremely complex and sophisticated and I paid due and proper tribute to those who worked very hard to ensure that the formula reflects changing circumstances; it changes from year to year.

Mr. Gallie

I apologise to my hon. Friend for intervening again. If I heard him aright, he not only complimented those who were technically involved from COSLA, but also people from the Scottish Office. That office has come up with different figures for local government reform to COSLA, so the argument is balanced. Perhaps my hon. Friend should acknowledge that and advise Opposition Members of that fact.

Mr. Stewart

My hon. Friend is right, as always.

We are considering the distribution of the grant, which is done according to a formula agreed by the distribution committee. Both Scottish Office and COSLA officials do much extremely technical work. That does not mean that COSLA, by agreeing the distribution, necessarily agrees with the total, which is a different matter. COSLA is entitled to its view on that.

I do not think for a moment that the second order is controversial. The Revenue Support Grant (Scotland) Order 1994 redetermines the amount of revenue support grant payable to each Scottish authority for each of the years 1990–91, 1991–92 and 1992–93. Those are the three years covered by an agreement with COSLA to adjust, either up or down, the level of RSG payable to each authority in the light of any variations between the estimate of non-domestic rate income and the amount collected.

Hon. Members will appreciate, I am sure, that the amount can vary from the estimate because of changes in buildings, empty buildings and so forth. The introduction of pooling of non-domestic rate income—NDRI—from 1 April 1993 removed the need for the agreement to continue beyond 1992–93. With pooling, adjustments to the level of NDRI are made administratively.

The order provides for the level of RSG for 1990–91 to be increased by £26.6 million; for the level of grant for 1991–92 to be increased by £39.7 million; and for the level of grant for 1992–93 to be reduced by £34.5 million. All those adjustments are necessary in the light of the latest returns of non-domestic rate income collected by authorities for the three years in question. Overall, as hon. Members will doubtless be delighted to hear, the order provides for a net additional payment of £31.8 million to authorities. Clearly, there are swings and roundabouts as far as individual authorities are concerned.

Mr. John McFall (Dumbarton)

And if the hon. Member has anything to do with it, Eastwood will always be on the roundabout.

Mr. Stewart

I do not think that it is.

I do not believe that the second order is controversial in any way. It has been fully discussed with COSLA. The settlement to Scottish local authorities provided for in the main order is entirely realistic, given the present low level of inflation, the Government's approach to public sector pay and the public expenditure situation and I commend both orders to the House.

6.29 pm
Mr. George Robertson (Hamilton)

This will be an interesting evening, because we have started the debate earlier than anticipated. Hon. Members will therefore have a good opportunity to discuss the orders.

We can also reflect on the fact that, although the Secretary of State has come to join us, he still manages to duck out of dealing with local government issues, as he did during Scottish Question Time last week. At the weekend, it was noticeable, however, that when he was debating with, or should I say when he was being attacked by, Conservative councillors, at a conference he managed a few remarks about the conduct of the Standing Committee considering the Local Government etc. (Scotland) Bill, although he has not even popped his head around the door of the Committee. He is, presumably, receiving detailed reports from the Parliamentary Under-Secretary, the hon. Member for Eastwood (Mr. Stewart). Great debate and dissent are undoubtedly caused by them.

Mr. Gallie

rose

Mr. Robertson

Perhaps the hon. Member for Ayr (Mr. Gallie) has occasionally bumped into the Secretary of State in the Corridor and has put down a few amendments as a result.

Mr. Gallie

Given the hon. Member's words of welcome to the Secretary of State, it would be churlish if Conservative Members did not mention the presence of the hon. Member for Glasgow, Garscadden (Mr. Dewar) on the Opposition Front Bench. I am sure that the hon. Member for Hamilton (Mr. Robertson) will benefit greatly from his hon. Friend's advice on, and sound knowledge of, local government.

Mr. Robertson

I have no doubt that if the hon. Member for Ayr turned his mind to it, he could turn that intervention into an amendment for the Committee tomorrow, because his ingenuity seems to have absolutely no limit.

My hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) is, of course, welcome to join us. A trip down memory lane is never bad for people. I am sure that he will enjoy the debate, just as he always enjoyed the previous ones. In fact, he is probably one of the few people who enjoy such debates.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

He is the only person.

Mr. Robertson

Yes, that may well be true.

My hon. Friend the Member for Garscadden is certainly welcome, because he never shirked or dodged the column in dealing with important issues, especially those concerned with local government.

I must admit that many a heart dropped when a study of the Order Paper revealed that the House intended to discuss the Local Government Finance (Scotland) Order 1994 and the Revenue Support Grant (Scotland) Order 1994. Frankly, the Minister with responsibility for local government has just revealed the deathlessness of the prose and the complexity of the concepts as he explained different components of the aggregate external finance levels compared with the Government's supported expenditure levels.

That explanation left the House of Commons more than cold in its appreciation. It also has the unfortunate effect of leaving the Government in the advantageous position of putting their figures forward as the truth—something which anyone with half a mind on the past would automatically dismiss.

The Minister told us that this is a good settlement, but he has said that every single year, just as his predecessors have in the past 15 years. It is no more true this year than it was in the previous ones. Why should the Minister change the script; after all it is recycled year on year? A few different civil servants may be involved and Ministers may go round in circles, but, each year, we are given the same speech about more cash being available for local councils and that, as a result, council tax, poll tax bills and rate levels should fall across Scotland. As the Opposition know only too well, Ministers are not telling the whole truth.

The truth, buried deep in the figures, is not just a matter of interpreting dry, obscure statistical complexities, but means money, which comes from the pockets of the people of Scotland. They are expected to shell out more money and more taxes. All those taxes are new ones, which are a direct result of this incompetent Government. Whatever Ministers say tonight—they have sold us this stale, unconvincing justification year on year—the minimum estimated effect of the orders will be an extra 10 per cent. on council tax bills across Scotland. The Convention of Scottish Local Authorities has authoritatively estimated that that is equivalent to £1.20 a week on average council tax bills.

Mr. Stewart

Can the hon. Member therefore explain why the biggest Labour district council in Scotland, Glasgow, has just announced that it will reduce its council tax by 3.8 per cent?

Mr. Robertson

As the Minister has said, there will obviously be swings and roundabouts. Because of the differentials involved and a number of other factors that apply, there will be differences of view about the figures. But the estimate, published this morning by the same professional officials whom the Minister has praised up to now, means an extra £1.20 a week on every council tax bills. That is equivalent to an additional 10 per cent. on top of all the other added expenditure which results from the Government's policies.

Mr. George Kynoch (Kincardine and Deeside)

Would the hon. Member care to ponder on the fact that another Labour-controlled regional council, Grampian, has said that it intends to freeze its council tax levels? I wonder whether he attaches a lot of credibility to COSLA' s figures.

Mr. Robertson

There are not many Conservative Members present, but I hope that they will come up with examples of the good housekeeping of individual Labour local authorities, which have been able to act in that manner in the face of the settlement and the circumstances dictated by Ministers. Those Labour local authorities have been able to do that because of the sheer professionalism of their approach. I shall explain, however, that the figures mean that it will be difficult for those authorities to uphold that behaviour.

Mr. Alex Salmond (Banff and Buchan)

May I take the hon. Member's remarks as something of a compliment to the Scottish National party's financial convenor of Grampian region?

Mr. Robertson

The hon. Gentleman can take it any way he wants.

The Government say that the aggregate external finance level will be up 2 per cent. this year, but when one takes away transferred moneys from the other purses of Government—from the careers service, which has been transferred, and the care in the community cash, which has been transferred to local authorities from the Department of Social Security—that level is down to 0.97 per cent., on the Government's own estimates. That is an increase of less than 1 per cent. in the aggregate external finance, the totality of Government support to local authorities.

That is the estimate before one takes into account inflation. If one takes away the Government's own estimate for inflation, which is published each year in the Red Book, as it was in the unified Budget, Scottish local councils budgets will be down this year by 2.91 per cent. That is almost 3 per cent. down not just on their current budgets but on those for last year. That means that, based on the figures for last year and not even on those on which the budgets that they reasonably proposed for the following year were based, a total of £148.8 million will be taken out of local authority budgets. In other words, almost £150 million will be taken out of local government budgets which are already stretched to breaking point. The consequence will be simple, brutal and unavoidable.

Mr. Kynoch

rose—

Mr. Robertson

I should like to make more progress, as Ministers would say, before I give way again.

The consequences of that reduction will be job losses, service reductions and an increase in council tax. All that is due to a direct, dictated, ordered, forced and even desired consequence of the Government's direction from the centre. At least £1.20, on average, will be added to council tax bills.

That will be on top of an extra £10 a week which, from April, every family will have to pay for the broken promises on national taxation for which the Government are responsible, and on top of the cost of VAT on fuel, which will come into effect on 1 April. More taxes will be set on more taxes. All of them are the price to be paid by taxpayers as a penalty for the incompetence and the deceit of the Conservative party, which told the people two years ago at the election that it would reduce taxes year on year.

The simple message behind those complicated figures is, "The Tories pick your pockets and then waste the money that they have taken". I wondered whether I could draw an analogy with Robin Hood, who stole from the rich to give to the poor, or with the sheriff of Nottingham, who stole from the poor to give to the rich. But the Government are acting like "East End Hood", who steals money from everybody and then loses it. That is the reality of the additional taxes which the Government are now imposing. They are picking the pockets of the Scottish people with extra taxes all the time. In return, we get less: fewer services and jobs, and longer dole queues.

The bulk of the 300,000 people employed in local government in Scotland face a year in which the Government estimate that inflation will run at 3 per cent. The Chancellor has published that estimate in the Red Book. Where is the justice in saying that people face 3 per cent. inflation plus all the tax increases that will be heaped on them, but no increase in pay? It is yet another gift from this high-promising Government.

The Government say that all that is fiction and exaggeration. They say that they have provided local councils with a pot of gold and that tax increases, service cuts and job losses are down to individual local council decisions. I say that that is hogwash.

There are few Tory local authorities, but Stirling and Kyle and Carrick district councils are flagship Tory authorities which perform the role of shop windows for the Tory councils of tomorrow. Two weeks ago, Stirling district council fixed its council tax level, reducing it by between £34 and £100. In its headline making that announcement, the local newspaper, the Stirling Observer, made it clear what the price was. It said: Jobs are lost to pay for tax cuts". The loss of at least 18 jobs and huge increases in charges will be the price paid by those in Stirling district who will enjoy a reduction in council tax.

The hon. Member for Stirling (Mr. Forsyth) does not participate in many Scottish debates. He does not enjoy a walk down memory lane and, as a begetter of the poll tax, there are few highways and byways in Scottish debates which he would like to visit. But the same edition of the Stirling Observer quoted him as saying: The councillors and officials of Stirling district must be the toast of my constituents tonight". Some celebration for the 18 people who were to lose their jobs as a consequence of that decision, those who would pay up to 200 per cent. more to let a hall in Stirling district, or those who would have to pay more to bury their dead in the area because of the rise in burial charges.

The Stirling Observer has not taken a partisan view. Indeed, the hon. Member for Stirling has received much favourable publicity from it over the years. But in its editorial opinion that week, Mr. Alan Rennie said: Perhaps the district council should line up the 18 people whose jobs are to be axed and explain to us and them why they are surplus to requirements. Then line up the people who are expected to assume many of their functions overnight. I'm fed up with those who treat ordinary people as pawns in a political game or as mere figures in an accountancy exercise. There may be champagne corks popping in Conservative party HQ but elsewhere this budget is like a glass of flat beer. Interestingly, the story did not end there. The following week, the saga continued in the editorial opinion. Mr. Rennie told his readers: One of the first calls to my office on Wednesday morning came from MP Michael Forsyth, who felt that I had been unclear in my criticism. How touchy of the Minister of State, Department of Employment. Anyway, Mr. Rennie analysed the comments and other points put to him and concluded: So I am going to stick to my guns. It's not the Observer that is playing politics. That charge lies at the door of the ruling Conservative group on Stirling District Council. And it is my readers who will suffer the consequences. Just wait and see. Mr. Rennie adequately makes the point about a council that has contracted out its legal services and handed them over to Professor Ross Harper in Glasgow, with a loss of jobs in the district and a legal challenge for unfair dismissal; contracted out its grass-cutting service with disastrous consequences; and spent £60,000 on designing a new logo and corporate identity for the district council. I heard it described as: a Lego man for a loco council". The council has made itself a national laughing stock as a consequence.

Given that grimy, unattractive shop window for Tory councils, it is small wonder that there are so few Tory councils around to talk about. But there is one more—the district council based on Ayr: Kyle and Carrick. It is still strong and is run on the Stirling model of champagne-popping, job-slashing, charge-increasing and standard-dropping councils. But Kyle and Carrick council is slightly more sinister at the edge because it now flouts the law as it seeks to break agreements that were freely entered into and contracts that were legally adopted. It seeks to dump existing contracts and the people who were party to them, and to sack loyal local workers and bring in contractors from Spain to handle the cleansing contract for the area. Loyal, decent, hard-working human beings will be dumped by those Tory fanatics—the loony right of Scottish politics—as they try to squeeze through some European loophole and illegally break signed contracts.

That example, not the statistics of the aggregate external finance, is the true face of the Tory party in dealing with local government.

Mr. Gallie

Will the hon. Gentleman advise the House how Kyle and Carrick district council has flouted any law, contractual or other? Is he aware that an announcement has only just been placed in the Journal of the European Communities and that no contracts have been placed? Certainly, no contract has been placed with a Spanish company, yet the hon. Gentleman seems to have the inside story. Can he put up the evidence? If not, he should come off that track.

Mr. Robertson

The hon. Gentleman has been involved in all those shenanigans and probably knows more than anyone else. Instead of posing questions, he would be well advised to provide answers. The House and the electors of Kyle and Carrick need to know whether those contracts, which were freely entered into, will be broken.

Mr. Foulkes

Is my hon. Friend aware that Kyle and Carrick district council announced that it would cancel a contract that had one to two years to run with the in-house tenderer for cleansing and refuse? Once that was announced, it was revealed that, prior to the announcement, five separate meetings had taken place between Provost Gibson Macdonald and its officials and the Spanish company, FOCSA. Does that not smell of a rat and some kind of collusion or corruption?

Mr. Robertson

The words "rat" and "smell" certainly come to mind. There is little doubt that something funny is going on in Kyle and Carrick district council. There is certainly an intention to break a contract freely entered into with local workers. No doubt the law courts will ultimately adjudicate on whether the law has been broken or whether the council has found a loophole that will allow it to break the law. What is clear, however, is that there has been a breach of faith with local people who are adequately providing a service but are going to be mercilessly dumped because of blind ideology.

Mr. Gallie

It is courteous of the hon. Gentleman to allow me to intervene again. He has suggested that something funny is going on in Kyle and Carrick district council. I read a newspaper article at the weekend which, under the headline "Spend, Spend, Spend", said that the council tax was being frozen. There is certainly something going on—it is very good news for the people of Kyle and Carrick.

Mr. Robertson

It is difficult to know what to make of that. If the hon. Gentleman is adopting "Spend, Spend, Spend" as his slogan—

Mr. Gallie

It is not my slogan.

Mr. Robertson

All I can tell the hon. Gentleman is what we know about the council's attitude to agreements and contracts, and to its local people, who will draw their own conclusions. There is little doubt that the Conservative party is setting out its stall in the area, and it is a wholly unattractive one.

The Tory principles—higher taxes, broken promises, fewer jobs and bargain basement services—adopted by the Stalinists of the Scottish Conservative party—

Mr. Stewart

Ha, ha!

Mr. Robertson

The Tory Stalinists are not going to stop there. Those who dissent from the one nation, one party idea get the chop. The hon. Member for Eastwood may roar with laughter, but I should like to draw his attention once again to the case of Colonel Frank Saunders. That should wipe the smile off even his face.

Mr. Stewart

I have heard the story before. I have great respect for Colonel Saunders, whom I have known for a long time. The hon. Gentleman talks of the Stalinist tendency. Who does he have in mind as Stalin?

Mr. Robertson

That is an open question—which could be answered by anyone who cares to fill in a postcard and send it to St. Andrew's house. [HON. MEMBERS: "The Minister is Stalin."] Well, it is certainly not the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton). I cannot imagine him leading that tendency, although he might be playing the part of a quiet Beria. If so, he has not yet disclosed the fact.

As we all know, Colonel Frank Saunders has nothing to do with chickens of either the fried or the cowardly variety. He serves as leader of the Tories on Central regional council. He is therefore a man of no small distinction. He lives in Stirling district and is a constituent of the hon. Member for Stirling. He has been an active Tory for more than 52 years, and a councillor in Stirling for more than 30 years. Yet the colonel said, when the tap on the shoulder came in the night, in words evocative of eastern Europe: After being told of the decision I asked if I was being dismissed because I had failed as a councillor. But I was told that it was because I didn't support the local authority reform proposal. So he bit the dust, because he did not agree with the new architecture.

I took a self-denying ordinance to the effect that I would not quote Councillor Brian Meek again. In a recent article he said that he wanted to be paid lineage if he was to continue to be quoted endlessly in the House. I fear that I must quote him again, however. Councillor Meek of Edinburgh district council had this to say about Colonel Saunders: He was deselected. Because, it seems, Frank Saunders disagrees with the Government's plan to reform local councils, particularly as they affect Central region, he has been booted out. I support the move to one-tier authorities. Nevertheless I am concerned that the price of speaking one's mind"—

Madam Deputy Speaker (Dame Janet Fookes)

Order. According to my information, we are discussing financial matters tonight, not the reform of local government.

Mr. Robertson

Of course you are right, Madam Deputy Speaker. Colonel Saunders would agree with you: he agrees with most of what the Conservative party is doing. He would probably agree with the orders that we are debating. We are talking about the financial base for local government in Scotland—a huge figure which the Minister outlined in his speech. It is extremely pertinent to this debate to know the policies of the councillors who will spend the money that Parliament, presumably, will vote through at the end of this debate. I assure you, Madam Deputy Speaker, that Colonel Saunders' fate is of immediate relevance to these orders.

Councillor Brian Meek went on to say—

Mr. Stewart

Will the hon. Gentleman give way?

Mr. Robertson

First, it is worth quoting Councillor Meek, a close friend and buddy of the Minister. [Interruption.] I use the word "buddy" in its broadest possible sense. He said: Are we not big enough, not magnanimous enough to recognise the sincerity and integrity of Frank Saunders, an active member for 52 years? Are we supposed to be speaking puppets? Perhaps the Minister would like to answer that question.

Mr. Stewart

I am sure that the hon. Gentleman is just about to go on to the case of the four Labour councillors who have been suspended from the party in Monklands.

Mr. Robertson

They have not been deselected as candidates. The party is entitled to its own disciplinary procedures, but we are talking about a man with 52 years' service to the Tory party, 30 of them as a councillor. He is a man of enormous distinction in Scottish local government and he has been deselected. I am quoting here the views of another Conservative, not my own views.

Madam Deputy Speaker

Order. The hon. Gentleman is now well off the point. He has made his point, and we must move on.

Mr. Robertson

I bow to your guidance, Madam Deputy Speaker. I should add that Colonel Saunders, from whom I am about to depart, is not alone in his disenchantment with this butchery.

Mr. Raymond S. Robertson (Aberdeen, South)

Will the hon. Gentleman give way?

Mr. Robertson

I trust that the hon. Gentleman does not intend to trespass against what Madam Deputy Speaker has just said.

Mr. Raymond S. Robertson

Far from it. The hon. Gentleman has championed the cause of deselected councillors. Will he come to my constituency and champion the cause of Labour councillor David Falconer, who has just been deselected for not toeing the party policy line?

Mr. Robertson

The hon. Gentleman will have to tell us what party policy was involved—

Madam Deputy Speaker

Order. I do not wish to know. Please continue.

Mr. Robertson

I think that you, Madam Deputy Speaker, have saved the hon. Gentleman from the embarrassment of the irrelevance of his comparison. I notice that even he did not try to defend the decision to boot out Colonel Saunders.

The disenchantment with the butchery of Scottish local government all across Scotland is not confined to the leader of the Tory group on Central regional council. Many people are now realising that this gerrymandered upheaval, done without the consensus of, or demand by, the people, without a review and on a crazy and impractical timetable, will cost them a packet. The new gerrymander tax is going to be substantial—yet another tax on the people of Scotland for Tory convenience. We do not have to take my word for that; it might be thought slightly partisan, despite the fact that it is accurate and dispassionate. Let us look at the report in yesterday's Scotland on Sunday about the Association of Scottish Conservative Councillors. Kenny Farquharson's article begins: Scotland's Tory councillors yesterday sent a warning to Scottish Secretary Ian Lang that he has badly underestimated the price to be paid for the reorganisation of local government. It is not the Labour party, or even the suspect professionals of COSLA, who are telling the Government that they have underestimated the costs, but Tory councillors themselves. That is extremely relevant and pertinent. The Secretary of State for Scotland is quoted as saying: The Labour leadership has lost the argument on the costs of reform". He went on to describe our claims as "extraordinary and wild". The Secretary of State was told by the Tory councillors—

Mr. Gallie

On a point of order, Madam Deputy Speaker. We seem now to be discussing the cost of the reform of local government in Scotland rather than the revenue support grant. Could you give me guidance on that?

Madam Deputy Speaker

I am making the presumption that the hon. Member for Hamilton (Mr. Robertson) is connecting the two.

Mr. Robertson

Absolutely. If the hon. Member for Ayr had bothered to listen to the speech of the Minister, he would realise that there is specific inclusion in the orders for the transition costs to move into the new local authority structure. What I am saying is not only relevant but highly inconvenient for the hon. Gentleman if he chooses to believe the sort of nonsense that is peddled by his Front Bench.

It is interesting that the councillors are being quite specific. They said in Scotland on Sunday: Yesterday's meeting of Tory councillors said Lang was deceiving himself over the true cost. The article then quotes Jim Evans, the chairman of Berwickshire district council and the association's new chairman, as saying: We are a little bit more cynical than the Government about these things. The Government's centrepiece—their plan for reorganising local government based on saving public money—was torn into tatters by a Conservative councillor speaking at the weekend, but speaking the truth. All he is telling Ministers is what everybody else in Scotland knows and what we have been telling the Minister for weeks since the White Paper was published; it will cost more than the Government says, and substantially more at that.

I can remember the words of Mr. Arthur Bell—another bosom buddy of the Minister—

Mr. Stewart

A party colleague.

Mr. Robertson

A party colleague of the Minister. He is a senior Conservative and has carried the blue flag of the Conservative party in Lanarkshire—no mean feat—for many years. Last November, addressing a seminar at Strathclyde university's business school and speaking in relation to the claims made by Ministers on savings at that time, which they put in the range of £120 million to £196 million, Mr. Bell said: If anyone came to me with a gap as wide as this I would be amazed. I would not wish to make major changes in my business without being more accurate. Mr. Bell and the Association of Scottish Conservative Councillors are all saying it, and are saying it loud and clear.

I look around me for Conservatives who are willing to speak the inconvenient truth, who are willing to run the same risks as Colonel Frank Saunders and spell out to the country precisely the consequences of what the Government are doing. I have yet another example. I think that it would be exhibit C in this case. It is an article by the right hon. Member for Shropshire, North (Mr. Biffen), published in The Guardian—of all newspapers—on Saturday, and entitled Colonel Blimp and the rural revolt". I do not know who that could be describing, but the article is about local government reorganisation south of the border, which is different from that north of the border, because the south was at least given a review and people there are arguing publicly about it. The timetable has gone completely haywire and very little is happening as a consequence. The right hon. Member for Shropshire, North, who, after all, was a Cabinet Minister—Chief Secretary to the Treasury and, later, Leader of the House—before departing office, said: In the first instance there is no popular demand for such changes, and much cynicism about the supposed benefits and certain increase in costs. There we have it, authoritatively from the words of the Tory's themselves, the real insiders, a former Chief Secretary to the Treasury; a prominent Lanarkshire Conservative supporter; and from the Association of Scottish Conservative Councillors. All said that the Government have got it wrong and that the savings that they are projecting are implausible, contrived, hopelessly optimistic and, indeed, plain fantasy. So, too, are the figures that are supposedly included in the orders for the transition costs of reorganisation. This year, £5 million is allowed, with £25 million next year and a final £15 million in 1996–97.

Those figures are unrealistic and wholly inadequate for what is being asked of councils today. After a month in Committee—I know that we are not allowed to debate in the Chamber what is happening in Committee—we still do not know what the boundaries will be for the new councils that the Government intend to set up, because a deliberate Government decision has been taken to leave as many of those issues as possible wide open for the future. We are only 13 months away from the first elections to these authorities, yet nobody in Scotland definitely knows what all the boundaries will be or even how many councils will actually—

Madam Deputy Speaker

Order. There is a boundary in here of what is relevant, and the hon. Gentleman is trespassing over it.

Mr. Robertson

I fear that the figures for the transition costs of local government reorganisation are pretty fundamental to the orders, because if they are as seriously underestimated as we believe that they are—as all the documentary evidence shows that they are—the settlement that has been made to Scottish local authorities this year will seriously embarrass them, cause a loss of jobs, increase council tax levels and mean a reduction in services.

It is extremely important that we try to establish here and now precisely what the Government are playing at and how they can pretend to have finalised the details of local government reorganisation to the extent that councils are told that they must live within £5 million this year for transition costs in a reorganisation that is now hopelessly ambitious—although ambitious is the wrong word to use—in its timetable and construction. There is only one way in which the Government can be right: if they are to start dismissing large numbers of people in local authorities. The Secretary of State was quoted as saying at the weekend, again in Scotland on Sunday: Of course, there will be transitional costs. But by far the larger part of those costs will result from the rationalisation of staff. So the greater the short term transitional costs, the greater the long-term savings from single-tier councils. What he is saying is that the more employees that councils sack, the greater will be the longer-term benefits. That is the only way in which the circle can be squared. But to do so, he will have deliberately to challenge the assurance that was given by the Prime Minister last October to Councillor Charles Gray, when he said: We do not anticipate that local government reform will result in widespread job losses and redundancies. The Government now have a serious obligation to people in Scotland to explain how these fantastic savings will be made in the existing structure without the kind of job losses that the Secretary of State appeared to be signalling at a conference at the weekend. The COSLA figures that were produced quite clearly demonstrate—

Mr. Kynoch

Will the hon. Gentleman give way?

Mr. Robertson

No, I wish to end my speech so that other hon. Members may contribute. It would be unfair if I went on for too much longer.

The COSLA study on costs, as my hon. Friend the Member for Linlithgow (Mr. Dalyell) said, is compiled by the same experts, who, it would appear, are the only ones apart from the Minister's advisers who understand the detail of what he was talking about this evening. Those people, who received his plaudits and congratulations, are the same people who have put together this authoritative study on the cost of local government reorganisation. It cannot be applauded on the one hand and dismissed whole-heartedly on the other. Their estimates are based on experience. They are based on hard-headed experience of what has happened in previous reorganisations. Their analysis is based on reality, not on what is convenient for the present Government. People will listen to them before they will listen to any Minister saying anything. Even the mid-point of their analysis reveals half a billion pounds of transition costs, and precious little in the way of long-term savings.

This whole exercise in butchering local government means a bad bargain for the Scottish taxpayer, which, moreover, is completely unnecessary—all for a local government structure that no one believes will last. It has neither the durability nor the stability to survive the test of time.

Mr. Dalyell

Did my hon. Friend observe that, when he made assertions that many of us consider to be correct, the Minister just shook his head? Will my hon. Friend invite the Minister to explain the methodology of the Scottish Office, and why he thinks that my hon. Friend is wrong about this important matter?

Mr. Robertson

The Minister's silence is due to the irrefutability of the arguments that have been advanced. If Ministers were expected actually to tell the truth about the methodology involved in transition costs—thinking of a figure and halving it—and in savings—thinking of an even more implausible figure and doubling it—I do not think that their credibility would be very great. I rest my case, as I know that my hon. Friend does, on the words of the new chairman of the Association of Scottish Conservative Councillors: he said that even he, one of the faithful, felt cynical about what the Government were doing.

Mr. Kynoch

Will the hon. Gentleman give way?

Mr. Robertson

I am bringing my remarks to a conclusion. The hon. Gentleman should wait his turn.

The orders are hopelessly inadequate for Scottish local councils. They will lead to cuts in services, the destruction of jobs, the lowering of standards and increases in council tax bills across the country. At the end of the debate, what Councillor Brian Meek so prosaically called the "speaking puppets" may well deliver a majority: that is a reasonable assumption and forecast—much more accurate than some of the Government's forecasts. I suggest, however, that in the Scottish regional elections on 5 May, when the people have a chance to make their voices heard in ballot boxes across the country, the Government will receive a profoundly different message.

7.12 pm
Mr. Bill Walker (Tayside, North)

We have just heard the hon. Member for Hamilton (Mr. Robertson) allegedly addressing the order. In truth, he did everything but that. First, he tried to deal with the situation on the basis of personalities in Scottish politics. That was all right, as long as he was dealing with personalities who, in his eyes, wore Conservative colours; but, as soon as he began to discuss personalities who sailed under the Labour flag, he did not want to know anything about it.

For instance, the hon. Gentleman did not believe that people could be expelled, or simply taken off the list of candidates, because they did not conform to policy. He says that that has happened to one Conservative candidate. As he and I know—as everyone in political life knows—it is possible to fall foul of the establishment from time to time; hon. Members sitting behind him have experienced that problem, and it has been experienced by at least one Conservative Member, whom I know very well. There is nothing new about that.

Why did the hon. Gentleman use that point in evidence this evening, of all evenings? We are discussing a revenue support grant figure that is far in excess of inflation, but the hon. Gentleman failed to mention that; all he did was talk about people and personalities. Rather than dealing with the issue before the House, he spent his time trying to become the darling of the Scottish media by naming names, among other things. It is called tactical and strategic thinking.

The man is an amateur. We very much miss the real contribution made by the hon. Member for Glasgow, Garscadden (Mr. Dewar), who would have done tonight what he has always done—analyse the content of the order, and explain why he did not agree with it. His speeches down the years have always been worth listening to, because we could always be sure that he had done his homework thoroughly, and he would always unearth aspects that required consideration. That was not the case tonight; the hon. Member for Hamilton has done a sad disservice to both his party and the people of Scotland.

It is about time we began to think about this impostor—for that is what the hon. Gentleman is. He is no longer wearing the mantle of the Labour party, and carrying on its crusade; he is now conducting a personal campaign that he hopes will give him publicity and media attention. He hopes that we will call him the great saviour of the Labour party in Scotland.

I have news for him: I think that exactly the opposite will happen. I think that both those sitting behind him and the Scottish media will realise that there is nothing there. The hon. Gentleman has not done his homework on the revenue support grant order; if he had, he would recognise—as I have—the massive increase for three authorities in my constituency—Perth and Kinross, Angus district and Tayside region.

I accept that authorities are never given enough money, but we have a very low real inflation rate at present. Moreover, Tayside region has received a substantial increase, from £171,379,938 in 1990–91 to £245,157,226 in 1992–93.

Mr. Kynoch

Unfortunately, the hon. Member for Hamilton (Mr. Robertson) would not let me intervene earlier; I suspect that he would not have liked my intervention, because it was not very convenient. I believe that 60 per cent. of local government expenditure is on labour. If the Government's guidelines on self-financing wage increases are adhered to, significantly more will be available in the revenue support grant than the hon. Gentleman has suggested.

Mr. Walker

I thank my hon. Friend for that telling intervention.

I am always interested and amused by Labour's claim to be the party that will somehow give the people of Scotland better value for money. Labour does not address the key issue: can services be provided more cost-effectively so that people receive a better service having paid less?

As has been clearly demonstrated in many other contexts—especially as a result of privatisation—when attitudes are changed, it is possible to achieve substantial reductions in manpower, for example. I hope that the objective of all employers is to secure the best possible value for customers—in this instance, for electors and council tax payers.

I do not apologise for hoping that employers will do that, and will achieve better results. Unquestionably, when there is a move from labour-intensive to more capital-intensive activities, we expect a reduction in revenue costs. That is the real objective of heavy investment in new, modern capital equipment, which is taking place throughout the western world so that it can be competitive. I have never understood why people should think that local government is any different in that regard.

As for the benefits received by Angus district and by Perth and Kinross, the 1990–91 figure for Angus was £3,995,821; it has risen to £8,282,606. The figure for Perth and Kinross has risen from £5,301,063 to £10,459,773. Of course I acknowledge that that contains an element of inflation, along with additional duties and responsibilities.

Having taken all that into account, I believe that central taxation, which is paid for anyway by the taxpayer, contributes in real terms more than the rate of inflation towards the running of the three authorities in which I am interested. Consequently, I have no problem in supporting the order, and I hope that the Labour Members who will speak will address it.

7.19 pm
Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

I am grateful for the opportunity to speak in the debate, although fellow members of the Committee that is considering the Local Government etc. (Scotland) Bill might think that it is taking masochism a little too far. We sit all day until late at night on Tuesday and Thursday, and I see some familiar faces in the Chamber today, including that of the hon. Member for Tayside, North (Mr. Walker). We are taking masochism to a new form of supermasochism. Those of us who have been involved in local government, who are concerned about it and committed to it, and are anxious to ensure that services continue, believe that it is important to participate in today's important debate.

I want to advance a serious and, I hope, non-partisan argument before I make some of my more partisan comments. I am sure that the Minister, having received representations from local government, will appreciate that there is a feeling that dealing with local government expenditure on a year-to-year basis does not allow for proper planning. I know that it may be understood that the sum that a local authority receives for the following year will be similar to that of the previous year, plus allowances for inflation. There is a growing feeling, which I hope has got through to the Minister and the Department of the Environment, that a rolling programme for capital and revenue expenditure would be sensible. A rolling programme exists, to some extent, for capital expenditure. It would be helpful and useful if such a programme were considered for revenue expenditure, although I understand that that would always be provisional and subject to all sorts of qualifications. I hope that the Minister will consider that and ensure that there is more long-term planning in local government. That was my non-partisan argument, to which I hope that the Minister will respond.

Some services will be under tremendous pressure as a result of the revenue support grant settlement and the other related order. I am glad to see my hon. Friend the Member for Edinburgh, Leith (Mr. Chisholm) here today. He knows that I used to be the chairman of the Lothian regional education committee. He was one of our excellent teachers before he came to Parliament to waste his time.—[HON. MEMBERS: "Oh!"]—like the rest of us.

Mr. Robert Hughes (Aberdeen, North)

My hon. Friend has inadvertently given the impression that my hon. Friend the Member for Edinburgh, Leith (Mr. Chisholm) is wasting his time here. That is not the case. He is doing an excellent job and his constituents should be aware of that.

Mr. Foulkes

I am sorry—I chose my words incorrectly. I am doubly grateful to my hon. Friend the Member for Aberdeen, North (Mr. Hughes). All three of us are experiencing the frustrations of Opposition. My hon. Friend the Member for Leith will find it much more satisfactory after we have won the next general election and we are in power and pressing forward with new developments. I know that he experiences the frustration that I feel.

It worries me that our expectations of the education system and its provisions, not only in Lothian but across Scotland, have been depressed in the past 15 years by the Government. When I was chairman of the education committee, we were expanding education, reducing the staff-pupil ratio and developing community schools. We had just developed Wester Hailes school, the Wester Hailes education centre and Deans community school. We were talking about increasing resources and keeping schools across the region open for 24 hours a day, seven days a week. We wanted the improvements to be spread throughout the region and community and we had a great vision for education.

Mr. Gallie

I assume that the hon. Gentleman is referring to the late 1970s. Was not the rate support grant considerably cut in 1978 and 1979 by the then Government?

Mr. Foulkes

I can recall that period very well: we were in the process of expanding community schools in Lothian region. The resources were made available and, compared with today, those were rosy days. I have noticed that my former right hon. Friend the Member for Leeds, East, now Lord Healey, is appearing on posters. We think back on his days as Chancellor as the golden days. What is happening today, particularly in education, causes great concern.

I do not know whether it is happening in other constituencies, but school buildings in my constituency are being maintained and painted less and less frequently. Their maintenance has been substantially reduced—that is poor long-term planning. The planning is being done on a short-term basis, which creates tremendous problems for school buildings. Regional councils are under pressure to close schools. That pressure comes from the Minister and the Scottish Office Education Department, the name of which has been changed for reasons that I do not understand—I used to call it the Scottish Education Department. I live and work in Strathclyde region. The pressure is on that local authority to close schools, to save money and to cut its revenue.

Let me take a random example from the south side of Ayr. When three or four primary schools in the region were half empty and, under pressure from central Government, Strathclyde regional authority attempted to rationalise its procedures and proposed to close Castlehill primary school, everyone, including the hon. Member for Ayr (Mr. Gallie), was up in arms. When that happened I also complained that the concerns of the parents should be met. Strathclyde region is being put under pressure by the Government to make savings—that subject relates to today's debate. We need to realise the consequences. Sometimes I feel that, when we consider the orders, the documents of the Convention of Scottish Local Authorities and the figures, we do not understand what they mean on the ground. They mean fewer and less well-maintained schools. Pressure is being put on half empty schools to close.

I want to deal with the subject of the staff levels, which will cause my hon. Friend the Member for Leith to think back. The hon. Member for Kincardine and Deeside (Mr. Kynoch), in a well-timed intervention, said that he welcomed the concept of self-financing wage increases. What does that mean? It means that if, for example, teachers claim for and receive a wage increase above the level of inflation, which they richly deserve—I hope that they receive a sensible and reasonable increase—the regional council will have to find the money elsewhere. Inevitably, that means either saving money on school buildings and maintenance, which means cuts and closing more schools, or sacking and cutting the number of teachers. That will result in an increase in the staff-pupil ratio or a reduction in the number of specialist teachers. The Government cannot have it both ways. If we have self-financing wage increases, it will mean that people will be sacked or that buildings will not be properly maintained.

Mr. Kynoch

Has the hon. Gentleman heard of increasing efficiencies in other sectors where there may be scope for savings? Cuts need not be made in productive sectors.

Mr. Foulkes

We considered that matter. I spent some time pressing the staff of Lothian regional council to find efficiencies. If the hon. Gentleman understands the education budget, he will know that more than half of it goes on teacher salaries. A substantial amount goes on other important staff such as janitors, who are responsible for the security of the buildings—I am sure that the hon. Gentleman would not want to do away with them—school cleaners, and a range of jobs. All efficiency savings that could have been made have been made.

In my experience in the education service, no further savings can be made without cutting back the direct provision of services.

Mr. Bill Walker

With the hon. Gentleman's extensive knowledge—it certainly occurred during his period when he was in charge of those matters at Lothian region—he will know that one way to make changes and savings is to close schools in which the numbers of pupils fall below economic levels. The other way, which is often the result of that, is not to replace teachers who retire or who give up for whatever reason, and often that can be linked to the changes in school numbers and so on. The hon. Gentleman must know that there are always ways to do such things.

Mr. Foulkes

Let us take the two examples that hon. Gentleman mentions, because he is helpfully participating in the debate. Let us take closing schools. Of course that is one way to do it, but those who are most vociferous about proposals to close schools are Conservative Members of Parliament. No one could have shouted louder than the hon. Member for Ayr about the closure of Castlehill school, yet it happened as the direct result of the policies of the Conservative Government. That is the hypocrisy that we see—

Mr. John McAllion (Dundee, East)

Two-faced.

Mr. Foulkes

I am not sure whether I am allowed to say that. That is the two-faced attitude that we see from Conservative Members.

Mr. Gallie

Will the hon. Gentleman give way?

Mr. Foulkes

I am already dealing with one intervention.

Let us take the second point, about retirement. If one has a single-stream primary school with seven classes of about 30 pupils and one teacher retires at the age of 60, one has to replace that teacher. One cannot have composite classes all the way up of 35 or 36 pupils. In secondary schools, if one gets rid of specialist teachers one reduces the quality of education. There is a limit, therefore, and that limit on savings has not just been reached, but passed.

Mr. Gallie

The hon. Gentleman must realise that my main objection to the way in which Castlehill school was closed was that it was not half-empty—it had about 70 per cent. occupancy of pupils. Strathclyde region took an overnight decision. One moment it promised new build, the next minute it came up with a closure. That is not sound management. On another point, the hon. Gentleman—

Mr. Foulkes

The hon. Gentleman is wrong. I said in Committee that I find it difficult to deal with the hon. Gentleman because he makes so many misstatements. He says things that just are not true and it is very difficult to deal with people who do that. Strathclyde went through a long consultative process because there are a number of—

Mr. Gallie

On a point of order, Madam Deputy Speaker. I certainly did not make a statement that was not true, in spite of the words of the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes).

Madam Deputy Speaker

That is not a point of order for the Chair because the Chair is not responsible for the accuracy of the content of speeches or remarks made.