| Local Government Settlement
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The Chairman: Order. Before I call the hon. and learned Member for Orkney and Shetland (Mr. Wallace), I remind the Committee that members should ask short questions and the Secretary of State should give short answers. I would also be grateful if hon. Members addressed the Committee through the Chair which means that they should look at me occasionally. Mr. James Wallace (Orkney and Shetland): In the spirit of our moderatorial lunch at Dover house, I say to the Secretary of State that although I am about to disagree with him on several points, I shall try not to do so in a disagreeable manner. This is the 15th Scottish public expenditure statement, and the first from a Labour Secretary of State, since I was first elected to the House. Regrettably, it is the 15th Tory public expenditure statement that I have heard. As we know, the Government made a big thing before the election of their intention to don the straitjacket that the previous Secretary of State for Scotland, Mr. Michael Forsyth, had cast off. Although the Secretary of State may protest by saying that he has lengthened the sleeves by granting a bit more to education and the leg by granting a big more to health, it is none the less an ill-fitting garment for Scottish public services. There are two ways in which the Secretary of State scores over his Tory predecessors. First, he has made provision for getting the devolution plans under way, a move that I am sure will be warmly welcomed by all members of the Committee. Secondly, while we all remember how Tory Ministers used to pretend that they were increasing expenditure when we all knew that they were cutting it, the Secretary of State has made no bones about the pain that he is inflicting. That reminds one of those headmasters who used to say, "This will be painful, but it will hurt me far more than you". We want to identify the nature of that pain. An increase of £270 million in a budget of more than £14.6 billion is an increase of less than 2 per cent. the rate of inflation. We welcome the provision for pre-school education, which is more likely effectively to deliver such education than the voucher scheme that it replaces. However, in the light of the backlog of repairs and maintenance, which was calculated over 18 months ago at about £0.5 billion, does the Secretary of State really believe that an average of £6.7 million for each of the next four years to tackle that backlog and to improve information technology will be adequate, given the scale of the problem? Am I right in saying that the money for pre-school education will be ring-fenced, but that local authorities will be able to spend the other money that they will receive for education in ways that they think will best meet the educational needs of their areas? Does the Secretary of State accept that, notwithstanding his announcement today, more teachers will be made redundant, that there will still be insufficient money for books and materials and that, in some hard cases, some schools will still have to close? When does he expect to start delivering the smaller class sizes in P1 to P3 that the Government promised in their election manifesto? We all know the value of higher education to the Scottish economy in addition to its intrinsic value of producing a well-educated Scottish population. The Secretary of State said that he was holding the higher education grant at a standstill in cash terms, which I am sure will be welcomed in as much as it is not a cut. However he did not make the same admission about the increased resources for further education. Will that figure be a cut in terms of what it will buy? The Secretary of State knows that, at the election, my party campaigned for £200 million per annum to be invested in education through a 1p increase in income tax. We still think that there is a substantial case for that investment in Scotland's education because even with the amount announced today, local authorities will have to find money from their budgets to maintain basic education. Every pound spent on education means £1 less to spend on the police, on social work or on implementing the recommendations of the Pennington report, for example. The problems will still exist. On industry, I welcome the Secretary of State's announcement of an increase in the Scottish Enterprise budget. However, he was silent about the Highlands and Islands Enterprise budget, except to talk about the agency's role in training and the new deal. Will he say what that budget will be next year and whether that will represent a cut or an increase in real terms? We welcome the amount being made available for tourism. As the right hon. Gentleman would expect, I welcome the amount being spent on ferries, which confirms the announcement that he made in July in relation to Orkney and Shetland. I also welcome the additional amount for Caledonian MacBrayne, which I think is to meet safety requirements. In dealing with not just Scotland's remoter areas but many parts of the country where agriculture is fundamental to the local economy, will the Secretary of State say what additional support he plans for farmers? Given that, this week, his Department made a provisional estimate of a 20 per cent. fall in incomes this year; and in the light of the fact that a statement is currently being made on the Floor of the House that will lead to further difficulties for Scotland's farmers, what additional support will be made available to help that beleaguered section of the community, which makes a valuable contribution to Scotland's economy? On health, can the Secretary of State confirm the figures that the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) gave in a written answer to my hon. Friend the Member for Gordon (Mr. Bruce)? If we compare the expenditure estimated in the Conservative Government's Budget last November for this year and next year with what is now proposed, the additional amount for Scotland will amount to only £4.4 million in real terms over the two years. As we know from the Budget, the amount for next year will come from the contingency reserve. Some people who work in hospitals have said that every year now they receive an emergency grant to meet the winter crisis that emergency grant has almost adopted the status of a recurring grant. When the contingency reserve for next year no longer applies, how does the Secretary of State hope to maintain the same level of expenditure on health in succeeding years? We do not want to have to go backwards after the contingency reserve has been raided. I come to local government. As the hon. Member for Strathkelvin and Bearsden said yesterday at Question Time, investment in housing can lead to long-term benefits in health, education and tackling crime. Why, then, has so little been done to reverse the serious cuts in the housing budget made by the previous Government? Does the Secretary of State accept that housing is indeed an investment that can pay long-term dividends and would therefore be worthy of far more investment than has been planned? What is his position on the 75 per cent. repayment of sale of capital assets, particularly in relation to council houses, which the Secretary of State for Defence, the right hon. Member for Hamilton, South (Mr. Robertson), described on this occasion last year, when he was shadow Secretary of State for Scotland, as a draconian imposition on local authorities? Will that draconian imposition remain during the forthcoming financial year? As to the local authority budget, there will be an increase in aggregate external finance of 0.6 per cent., which is self-evidently lower than the rate of inflation. Given that local authorities, as we all know, are being given more and more responsibilities, there will inevitably have to be council tax increases, service cuts or increased charges for such services as meals on wheels. The Secretary of State estimates a 7 per cent. increase in council tax whereas, last week, the Chancellor of the Exchequer published a document among the pre-Budget report publications that estimated an increase in council tax for the forthcoming year of more than 10 per cent. Will the burden of that be borne south of the border or[Mr. James Wallace] will the final figure be closer to 10 per cent. than to 7 per cent? The Government were elected on the promise that they would not increase taxation. Scottish people must know that, when their council tax bills come through their letter boxes next spring, that promise will be broken. A tax increase is a tax increase, no matter how it is put forward. At least income tax has the merit of relating what people pay to their ability to pay. The people of Scotland will find the Government out when they realise the scale of the tax increases that they will have to pay to receive a limited if, indeed, any increase in services. Mr. Dewar: I am under instructions to be brief and I will do my best to be so. I do not want to accuse the hon. and learned Member for Orkney and Shetland (Mr. Wallace) of being uncharitable, but he is slipping into the Opposition mould with a determination and vigour that I find a little pathetic. The £270 million increase in the settlement on which the hon. and learned Gentleman poured such scorn represents a substantial increase about £50 for each person in Scotland. Considering the plans that we inherited and the increase of 0.5 per cent., which we have now improved to 2.4 per cent., surely he recognises that that is a real achievement. I said earlier that we cannot do everything at once and that we are undertaking a slow and developing process. The hon. and learned Gentleman should recognise that it is important to be making sustainable improvements over a period. We cannot wave a magic wand in this business, and we cannot do all that we want to do; we must live within our restrictions. But the £146 million for education, the £106 million for the health service and the £50 million for housing that we have found represent substantial and impressive improvements. I shall now deal with some of the other points raised by the hon. and learned Gentleman. On housing, it is worth remembering that we had to find not only the £50 million to which I referred, but the £30 million to which we were committed by the previous Administration in connection with the repaymentof the Scottish Homes debt. We have found room in the budget for more than £80 million for housing. The empty homes initiative will receive £7 million, £35 million will go into the new housing partnerships and £5 million will go into energy efficiency. It is easy to say that more money should be going into such areas. I recognise that, but given the record that we have inherited, our start has been sensible and rational. The hon. and learned Gentleman referred to capital receipts. They will be considered in the comprehensive spending review, the outcome of which I cannot prejudge. Money will be spent on nursery education; it is ring-fenced as it should be. Because of the area that he represents, I appreciate his worry about the present agricultural problem. The statement made by my right hon. Friend the Minister of Agriculture, Fisheries and Food concerned a serious matter and followed the recommendations of the Spongiform Encephalopathy Advisory Committee. It will result in the deboning of beef for consumption. We are all aware of the difficulties that will arise for the farming community. Most of the expenditure and difficulties under this budget relate to European funding and are not dealt with in the statement, but we recognise that problems are occurring. No one will deny that. I stressed that the figure of 7 per cent. was an average figure and one that we wished to hold to; the decisions made by individual councils will determine where they fall on the range either side of that average figure. No one can expect uniformity, but the figure is realistic, given the settlement that I made earlier. The important point is that the settlement outlines an average council tax figure very similar to that predicted by our predecessors, but it is of course a settlement that includes a much more generous allocation for local government services. People in Scotland will recognise that a balance has to be struck. We could go to one end of the range and murder services to reduce council tax. From the logic of the general political position of the hon. and learned Member for Orkney and Shetland Liberal Democrats say that it is important to maintain services by raising taxes he should be loudly complaining that the figure of 7 per cent. is too low.
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