[BILL 138.] SECOND BEADING. (Hansard, 4 April 1878)

§ MR. SCLATER-BOOTH
, in moving that the Bill be now read a second time, said: I am sorry at this late hour to 609 detain the House on what I fear will be a dry and uninviting subject. At the same time, it is one which is, this year, more than usually connected with the Budget which we have just been discussing; and it is, I think, convenient that the attention of Parliament should be drawn, as early as possible to the question of local as well as Imperial finance. The Resolution, upon which the Bill is founded, was passed at so late an hour that it was impossible for me to make a complete statement in detail upon the subject.

§ MR. SPEAKER
No doubt it would be more convenient if hon. Members had the Bill in their hands; but I am not prepared to say that the right hon. Gentleman is out of Order in moving the second reading.

§ MR. SCLATER-BOOTH
I think the hon. Gentleman will find that he has been no loser by not having seen the Bill, because there are other stages at which its provisions can be discussed, and the discussion can be more conveniently taken in Committee. At the same time, I may say that the Bill has been in the Vote Office during this afternoon, where it can be had by hon. Members. I now desire, in the first place, to explain the provisions of the Bill, and to state the reasons which the Government have for asking for the particular sum of money which is required. I will afterwards, with the indulgence of the House, and in accordance with the practice of the last two Sessions, endeavour to place before it, as shortly as I can, what is the condition of indebtedness of the local authorities of this country at the present time, and also what has been the amount of charge, under several heads, upon the ratepayers during the past 12 months. I find, from the Report of the Public Works Loans Commissioners, which was issued last summer, that, by the Act of Parliament under which they were then operating, there was placed at the disposal of the Commissioners the sum of £4,000,000, to be advanced to local authorities within the financial year ending June, 1877. It 610 appears, also, that of that sum, £2,426,000 was advanced, and, in addition, a balance in hand, unexpended under previous loans, of £802,725. Therefore, during the year to which I have alluded, there was advanced by the Public Works Loan Commissioners to local authorities the total sum of £3,249,602. The Act of 1877 authorized that a grant should be made of £4,000,000 to the Commissioners for making advances to local authorities during the year beginning April 1, 1877, and concluding June 30, 1878. This sum of £4,000,000 is now practically expended three months short of the time for which it was granted. Although, as I stated last year in introducing this Bill, £4,000,000 was to be granted, £10,000,000 had been asked for by various local authorities having a right to ask for public money. It was anticipated that only four-fifths of the money would be taken, and, accordingly, it was estimated that £4,000,000 could be relied upon as representing the real sum which would be actually called for within the year. That Estimate, so far, has proved to be correct, as £4,000,000 has been found to be practically sufficient. It is now proposed by this Bill to authorize a grant to the Commissioners from the Exchequer, of £6,000,000 for England, and £800,000 for Ireland, for the service of the current year. The sums of money asked for by the local authorities on the 31st of December last were double that amount—not less than £12,000,000. At the same time, acting upon the experience of last year, but assuming that a larger proportion than four-fifths will be required, it is estimated that one-half, or £6,000,000, will be issued. As stated by the Chancellor of the Exchequer, in his Budget speech, the cases in which the Public Works Loan Commissioners are required to advance money at exceptionally low rates of interest are—(1), to urban and rural sanitary authorities under the Public Health Act; (2), to urban authorities or town councils, with a population exceeding 25,000 inhabitants, under the Artizans and Labourers Dwellings Act; (3), school boards, under the Education Act; and (4), harbour authorities. The interest is to be charged at the rate of 3½ per cent in most of these cases, except as far as it may be necessary to secure the country against loss. The rules laid 611 down by the Public Works Loan Commissioners, under their exceptional or saving provisions, divide the loans to be advanced into three categories—namely—(1),those advanced for a period not exceeding 30 years, are charged at 3½ per cent; those advanced for 40 years, at 3¾ per cent; those advanced for between 40 and 50 years, at the rate of 4 per cent. There is, I understand, very little use made of loans coming under the second category; but it seems that a considerable sum of money—not less, I think, than £200,000 —was advanced in the year 1876–7, at the rate of 4 per cent. I have stated that the applications for money have amounted this year to not less than £12,000,000; but we have, apart from previous experience, reason to believe that £6,000,000 will be really required, because we know that, under the Public Health Act, the sum of £3,093,000 has been sanctioned; under the Artizans and Labourers Dwellings Act, £1,100,000; under the Education Act, £1,673,400—making a total sum of £5,866,400. The sum, also, of £800,000, has been inserted for Ireland, as the amount of money required to be advanced by the Board of Works in Ireland. It will be readily seen, by what has already been stated by the Chancellor of the Exchequer, how very important it is that other sources should be found, if possible, for obtaining these advances of money than the Imperial Exchequer. My right hon. Friend the Chancellor of the Exchequer has already alluded to the provisions of the Local Loans Act of 1875, as having facilitated the loaning powers of local authorities. That Act provides for the issue of various kinds of securities, which are divided into four classes. First of all, there may be nominal debentures; secondly, debentures payable to bearer; thirdly, Terminable Annuities, the principal and interest to be discharged by annual instalments; and, fourthly, in certain cases there may be the issue of Debenture Stock. Official sanction may be given to the issue of these securities by the Local Government Board, in which case the securities cannot be disputed; and, in certain instances, trustees are permitted to invest. Now, this Act is being brought into operation with insufficient effect, considering the facilities which it was intended to give. In the first year after the passing of the Act, the amount 612 raised under it was not more than £3,000; but during last year it rose to £200,000; and the whole of this money was raised at 4 per cent, or within a fraction of 4 per cent. Now, a sum of not less than £200,000, being for the extended period above mentioned, was advanced under the Sanitary Acts by the Public Works Loan Commissioners, at the rate of 4 per cent. Therefore, it seems a toss-up, as it were, whether, so far as amount of interest is concerned, local authorities had gone to the open market or the Public Works Loan Commissioners in respect of these particular advances; and I cannot help hoping that, as time goes on, recourse will be had more freely to the open market. Further, I find that, amongst the applications which will be made during the coming year, there is one item of £215,000 for Burial Boards. This amount will be advanced in the ordinary way by the Commissioners, at not less than 5 per cent, to those authorities. But it is open to them to proceed, under the Local Loans Act, and to avail themselves of the advantages offered by its provisions; and, so far as that is done, it will be, I hope, in diminution of the call upon the Public Exchequer, and of the charge upon the ratepayers in respect of public cemeteries. I do not wish to weary the House by describing the various advantages which might be derived from a more free and general adoption of the provisions of the Local Loans Act; but I may say that I have caused a Memorandum to be prepared in the Department over which I have control which will, no doubt, be found useful to hon. Members who may choose to apply for it, as it will give, in a compendious form, all particulars necessary to be known by the public authorities who have power to borrow under the Act. As a matter of importance bearing upon a clause in this Bill, I may state that, under the original Public Works Loans Act of 1875, the Local Government Board were required to satisfy themselves that the money asked for was applied to the purposes for which it was intended. That power has been freely exercised, and in several cases it has been ascertained that some misapplication has occurred chiefly by the payment of interest out of the capital sum advanced. But, in case of any such mis- 613 takes or shortcomings, there is no power given by the Act to the Local Government Board to secure the replacement of the money misapplied. It is now proposed by clauses in this Bill that power shall be given to require the replacement of the money so misapplied. There are two other clauses in the Bill to which, perhaps, I ought to allude; because, as has been observed by hon. Members, the Bill has not long been in their hands. One is a clause empowering the Treasury to compound a debt due from the Epping rural sanitary authority; the other gives power to cancel arrears of a loan due in respect of Wigan church. With regard to the latter case, a decision was given in the House of Lords two years ago, declaring that, in consequence of the lapse of time and change of circumstances, the churchwardens and church rates of the parish were no longer liable to repay the remainder of the loan and interest. It would take me a long time to go through the particulars of those cases; but they are fully set out in the clauses of the Bill. The Epping case is a most unfortunate one. It has been progressing for some years, and the end of it has been that, subject to the approval of the Treasury, the Public Works Loan Com missioners have compromised the debt due to them for the sum of £5,000. It can-not be denied that great care is required in sanctioning advances, whether through the medium of Provisional Orders, as practised In the Public Departments, or through the agency of private Acts; because it has been found that, after power has been given to raise certain sums of money for the execution of particular works, they are shortly found to be insufficient, and further application for additional capital is made. I will give an illustration of what has occurred in my own recent experience. By a private Act, passed two years ago, a sum of £30,000 or £35,000 was taken with a view of providing a certain district in Lancashire with water. The water was, undoubtedly, needed; plans were prepared, and Committees of both Houses of Parliament were satisfied as to the propriety of the expenditure. Only two years have elapsed, and not only has the £35,000 been spent, but a debt of £30,000 more has been incurred by the local authority; and it is estimated that it will take an addi- 614 tional £40,000 before the water so urgently needed can be provided. I mention that case to show how important it is that Gentlemen, serving on Committees upon Private Bills as well as the Public Departments, should be extremely careful in investigating the grounds of the estimates when they are asked to sanction the measures proposed. I need say no more of this Bill, except that it will have the effect of placing the Public Works Loan Commissioners in possession of funds, by which they will certainly be able to carry on their operations for another 12 months, probably until the summer of 1879. The hon. Member for Birmingham (Mr. Chamberlain) need be under no apprehension that the Government desire to place any check upon the issue of these funds, subject to the regulations provided in such cases. Whether the rate of interest in future should be placed, under certain circumstances, at a higher figure than has been paid in the past may be a question; but, at present, I see no reason to anticipate any change in that respect, as the local authorities have a right, under the Sanitary and other Acts, to borrow money at 3½ per cent. Now, Sir, I will take advantage of this opportunity to lay before the House some account of the financial progress which has been made by the local authorities of the country during the past year. I shall not weary the House with so many details as I have given on a former occasion, because I think many of the observations which I have made before will be still fresh in the minds of hon. Members. I will begin by expressing the great satisfaction which I feel at the admirable disposition which has been displayed by the local authorities to fulfil the requirements of the Act of last Session, which requires all returns to be made up to a uniform date. The estimate I made of the local debt 12 months ago was £105,500,000, or, in round numbers, £105,000,000, and the actual amount of loans outstanding at Lady Day, 1877, was £105,702,588, so that there was only a difference of £202,588; and, dividing the additional amount of loans into the three well-known categories, we find the loans charged upon rates during the year to have been £5,425,676; those charged on tolls, £556,376; and those charged 615 on duties £45,000; making a total of £6,027,052. The average of the loans in previous years was, as nearly as possible, £7,000,000; therefore the amount last year was pretty much in accordance with the average. I do not intend to trouble the House any further in reference to the loans raised on tolls and dues; but I will confine myself to those which were charged on the rates. In 1876, the total amount of loans charged upon the rates was £70,644,174; and, in 1877, we find the amount is £76,089,850; being a net increase of £5,445,676. The chief items of increase were the Metropolis debts, which showed an increase of £630,941; urban sanitary debts, £3,033,356; and school board loans, £1,644,970. I may remark there was a decrease on county loans of £138,273; and of the total outstanding loans charged upon rates—namely, £76,089,850, the boroughs, including the Metropolis, owe no less than £60,485,000—and this is exclusive of burial and school board loans. And now as to the ability of the boroughs to bear these charges. I will mention that, as far as I can ascertain, the loans charged on the rates of the Metropolis are between £18,000,000 and £20,000,000;whereas the annual rateable value of the Metropolis is £23,000,000. Therefore, the charge is less than one year's rateable value. Excluding the Metropolis, and taking 10 of the largest and most populous boroughs in the Kingdom, I find they have a rateable value of £11,957,632; while the debt is £20,706,843, or not quite two years' rateable value; but in these debts are included the loans in respect of valuable properties in waterworks and gas. I will give the House a few details as regards particular towns. Brighton, outstanding loans, £661,056, rateable value, £543,140; Bristol, outstanding loans, £462,919, rateable value, £719,237; Birmingham, outstanding loans, £2,811,824, rateable value, £1,352,556; Liverpool, outstanding loans, £4,083,577, rateable value, £3,019,941; Salford, outstanding loans, £1,019,785, rateable value, £750,229; Manchester, outstanding loans, £4,707,678, rateable value, £2,229,187; Bradford, outstanding loans, £2,826,132; rateable value, £772,291; Leeds, outstanding loans, £3,376,804, rateable value, £1,033,133; 616 Sheffield, outstanding loans, £244,578, rateable value, £827,205; and Newcastle-on-Tyne, outstanding loans, £502,490, rateable value, £710,613. Now, of course, these are places in which it is true that the debts do not really mean money out of pocket, and in respect to which there is no return whatever; but they include the ownership of valuable properties, such as gasworks and waterworks, which have been acquired. It may be said, putting these 10 largest boroughs aside, that the remaining municipal boroughs, with a rateable value of £32,823,841, have a debt of only £26,455,865, or about three-quarters of one year's rateable value, and in several of these cases the authorities are possessed of valuable property in gas and waterworks also. Even if we take the whole of the rate-able property in England and Wales, we find that it is, in round numbers, £120,000,000; while the total debts charged on the rates are, in round numbers, £76,000,000; or a little more than three-fifths of one year's rateable value. The financial condition of the several local authorities for the year ending Lady Day, 1878, may be computed as follows:—Loans outstanding at Lady Day, 1877, £105,702,588; deduction for repayments of principal, £4,800,000; leaving a total of £100,902,588. Then we know that loans have been sanctioned by the Local Government Board, and those are as follows:—Sanitary Authorities,£3,093,806; Artizans'Dwellings, £1,100,000; Boards of Guardians, £245,500; authorized by Local Acts, £3,479,500; Education Department, £1,673,400; Metropolitan Board of Works, £1,252,000; Burial Boards, £215,200; total, £11,059,400, which, if added to the total which I have stated just now, will make £111,961,900; and, deducting the outstanding loans for 1877, there remains an increase of £6,259,400. The indebtedness of the country at the present time may, therefore, be estimated at £112,000,000, which is considerably less than one year's rateable value. I was asked last year by the hon. Member for Liverpool (Mr. Rathbone), to distinguish the increase of debt between the urban and the rural sanitary districts. Now, the loans sanctioned during the year ended Lady Day, 1878, are as follows:—To urban sanitary authorities, £3,979,446; 617 to rural sanitary authorities, £214,360; and, including the amount sanctioned by the Local Government Board under local Acts, the whole estimated increase of debt is £11,000,000, of which not less than £9,500,000 is due to urban districts. As to the £3,479,500 for loans under local Acts during the last year, I may mention that a very large proportion was for remunerative undertakings, such as water and gasworks. Thus— Blackburn, water, £430,000; Leeds, gas and water, £550,000; Longton, gas, £100,000; Newcastle-on-Tyne, tramways, quays, &c., £300,000; Ramsgate, water and gas, £171,000; and Warring-ton, gas, £200,000. These are the results of Acts of Parliament passed during last Session, and no doubt there will be other Acts of Parliament of a similar character passed in future Sessions. I think it may be interesting to the House to know what has been the operation of the Artizans Dwellings Act so far as it has gone. I find that for the year ending Lady Day, 1878, the loans under it were—Birmingham, £1,000,000; Liverpool, £50,000; Swansea, £25,000; and Wolverhampton, £25,000; making a total of £1,100,000. There are other applications which are under consideration, and there is no desire but to meet these applications in the spirit in which they are made; and, after what I have stated, I think the House has no reason to be dissatisfied with the readiness which the authorities have shown in our great towns to avail themselves of the provisions of the Act. I now come to the rates levied for the year 1876–7, and these amounted to £23,617,511, being a net increase, over the preceding year, of £917,852. The principal items of that increase are as follows:—Highways, £23,402; Metropolis Management, £92,714; Urban Sanitary, £263,759; School Board, £443,145; and Boroughs, including the Police, £131,492; making a total of £954,512. The increase in the highway rates is attributable to the disturnpiked roads; and of the urban sanitary rates, in a great measure, to new rates, such as gas and water rates, brought into the account. I cannot say much as to the prospect of a diminution under several of these heads in many of our large towns in which the population is rapidly increasing, and where they are 618 still in a backward condition as to gas and water supplies. With respect to the educational rate, I think the case is somewhat different. The Act has been put in rapid operation, especially in London, and large sums of money have been raised in a short time, and the country is now being fully supplied with school accommodation, so that we may hope the time will soon arrive when we shall see a diminution of that amount. I. need hardly say more in further illustration of what I have said of the real power of the local rates of the country to bear this increased charge, than to mention that the rateable value of the country in 1873 was only £109,200,000; in 1874, £111,770,000; in 1875, £115,703,000; in 1876, £119,000,000; and last year, £124,546,000. So that, while the indebtedness has largely increased, there has been a rapid increase in the annual rateable value of the property of the Kingdom. One of the causes of the large increase in the rateable value of the country is that during the last year, under the provisions of the Rating Act, 1874, applicable to game, woods, and mines, new property to the amount of £1,500,000 has been brought into rating. I apologize for having brought these figures before the House; but I think it was necessary that I should make them public; and my right hon. Friend the Chancellor of the Exchequer has been of opinion that, whether agreeable or not, they should be brought under the notice of Parliament, because a great deal of alarm has arisen from hon. Gentlemen not knowing really what these loans are. This Bill has more than a local interest, because it deals with questions specially demanding the attention of Parliament. Last year I illustrated, by a comparison between rates and taxes, the indifference which this House has sometimes shown to the imposition of new burdens, when taking the form of rates rather than taxes; but that is only another way of expressing the truth, that the House has no fear of new burdens being added except those which are added with its knowledge and consent. Still, great changes in local taxation have been made without the real knowledge of Parliament, and I wish that Committees on Private Bills were more uniformly guided by 619 fixed principles as to the terms and security for the expenditure and appropriation of money. I now beg to move the second reading of the Bill.

§ MR. DILLWYN
thought it was scarcely in Order for his right hon. Friend to have brought forward this Bill on the present occasion, inasmuch as it had not been distributed; and it was a measure of such magnitude that they ought to have its provisions before them. He did not propose now to discuss whether the Bill was a good or a bad one; he objected to their proceeding with the second reading on the ground that important Bills ought to be distributed before they were allowed to pass that stage. It was a pernicious principle to take the second reading as a matter of course. He therefore moved the adjournment of the debate, and hoped that the Government would accede to it.

§ MR. MONK
seconded- the Motion. The statement they had just heard was most interesting, and contained much valuable information; but it was very desirable that information, based upon a complication of figures, in order to be understood, should be seen in print, especially when there were so many figures to be considered. He was somewhat astonished that after the previous ruling from the Chair the right hon. Gentleman should have taken the exceptional course he had. Although the Bill had not yet been delivered to Members, he had been able to obtain a copy from the Vote Office. It was a most important measure, for it enabled the Public Health Commissioners to advance no less a sum than £6,800,000, and it affected the position of debts already owing by sanitary authorities in England. Under these circumstances, and until the Bill was in the hands of Members, he hoped the second reading would not be pressed.

§ MR. GOLDNEY
observed, that the Bill was the most important measure 620 that had been before the House for some time. About one-sixth of the National Debt had been already advanced to boroughs, on some of which the sums lent amounted to one-tenth of the whole value of the rateable property. Many applications for loans, it was stated, had to be refused; and some localities being unable to pay, had had to ask the Imperial Government to meet their obligations. A very important clause in the Bill repealed the existing provision giving the Government a preference charge on the rates in respect of these advances. Another question arose on the mode of lending now adopted by the Government. If loans were made for periods less than 40 years, 3½ per cent was charged. But if 50 years were given for the repayment, 4 per cent was the rate of interest paid. There was thus a direct inducement on localities to lighten their burdens by laying on posterity the task of repaying a portion of these debts. It was an unjust system, for posterity would have its requirements as well as the present generation. The matter required very serious attention, and he hoped, if the Bill were passed, it would be referred to a Select Committee. A general Report ought to be made of the incubus laid bylaw upon property, and some method devised of controlling the expenditure of independent local authorities. If the present system were allowed to continue, the time would come when local taxation would become so burdensome, that a portion, at all events, of the debts would have to be remitted by the Imperial Government.

§ MR. SCLATER-BOOTH
said, it was very desirable, and almost necessary, that the Bill should pass into law before the Easter Recess, and money must be provided to meet the obligations of the Government. It would be a great convenience to take the second reading then, and to discuss the clauses in Committee.

§ SIR CHARLES W. DILKE
said, that the House ought not to allow any Bill to be read a second time until it had been delivered to Members. That was the only intelligible rule, and the departure from it would lead to discussions like the present, whether the Bill were thought of sufficient importance to be distributed or not.

§ Mr. SCLATER-BOOTH
said, the rule to which the hon. Baronet had referred was a good one, and he should be sorry to depart from it. At the same time, he must ask the House to remember the necessity which existed to pass the Bill before the adjournment for the Holidays. Considering the objection now raised to the second reading a valid one, the Government would not press the Bill.

§ MR. KNIGHT
said, the public Works Loans Act was the least objectionable way of borrowing money for local works of England, because it necessitated the Public Works Commissioners seeing that the money was spent for the purposes for which it was borrowed. A great deal of the money borrowed by local authorities was under the Local Loans Act, 1875. Under that Act, the large sums thrown on the county rates by the new County Government Bill would also be borrowed. That Act did not compel the Local Government Board to see how the money was spent; all they had to do was to see that the property upon which it was lent was sufficient. A long statement had been made as to the £112,000,000 now borrowed on local securities in different parts of the Kingdom. Much of the money borrowed had been wasted—millions had been spent in pouring the filth of the towns into the rivers—millions had now to be spent in getting it out again. He would add to that the fact that in some cases the rates already pressed with an almost crushing weight on the taxpayers. In Reading, the taxes were now 10s. 6d. in the pound; and the town required to borrow far more money to complete its sanitary works. Half the rental of the town was already swallowed up in such rates, and yet the debt was increasing. The remedy proposed was to take in portions of the surrounding country. It was an ordinary way out of the difficulty; and, on the part of the country, he objected to it. The amount spent by the local authorities in engineering experiments would soon rival the National Debt. The Public Works Loans Act was not so objectionable as the Local Loans Act, because it appointed Commissioners to see that the money borrowed was properly applied.