SECOND READING. (Hansard, 19 February 1885)

§ MR. W. M. TORRENS,
in moving that the Bill be now read a second time, explained that the object of its promoters was to substitute a rule of law for the settlement of the charges of Water Companies in the place of the present capricious process. It was desired to introduce into the Act of 1847 the principle of a statute passed at the 887 instance of the right hon. Gentleman the Member for Ripon (Mr. Goschen), which laid down that charges similar in nature to those made by Water Companies should be levied upon the basis of assessment. If this amending Bill were passed there could no longer be any question about the meaning of the "net annual value," which the decision of the House of Lords in the celebrated case of "Dobbs v. the Grand Junction Waterworks Company" made the only recognized standard of charge for Water Companies. Many disputes had arisen over this decision; and it was alike in the interest of the public and the Companies that the question of a recognized standard should be settled on some intelligible principle. He was willing this year, as last, to accept an Amendment limiting the operation of the Bill to the Metropolis; and he understood the Government had no objection to support that alteration.

§ SIR HENRY HOLLAND
said, he regretted that the Bill had been unexpectedly brought on that afternoon, as he had not got his papers with him, containing the figures and other details upon which he based his opposition to the second reading; but he hoped, by the indulgence of the House, to be able to convince them that it should not be passed. He strongly opposed the second reading on behalf of all those shareholders who had invested their money in full reliance upon the Acts by which their powers and dividends were secured. The Bill, as it stood, applied to Provincial Water Companies as well as to the eight Metropolitan Companies; and he would later on point out the manifest injustice—an injustice which was admitted last year—which would thus be inflicted upon the Provincial Water Companies. But he opposed now mainly on behalf of the Metropolitan Companies, who had invested an enormous capital in securing to London and the suburbs a good supply of water. He ventured to state, without fear of contradiction, that both as regards quantity and quality of the water thus supplied, London was as well or better off than any other of the great capitals of Europe. As many adverse criticisms had been passed upon this point, he 888 would, by leave of the House, say a few words in support of his view. In the first place, as regarded the quantity supplied, it was as large as in any other town; and ho need only point out that during this last summer of exceptional heat and drought, during which many places, such as Bradford and Manchester, had been reduced to such extremities, the full supply to London had never failed, to show how well these Companies had performed the duties imposed upon them by the Acts which it was now sought to repeal. In the second place, as to the quality of the water supplied. The low death rate of London, which compared so favourably with other great towns, was in itself a proof—and a convincing proof—that the water supplied could not be as bad as it had been represented by those who had not studied the question. The truth was that, in a great number of cases where complaints had been made of the water, the water had not been analyzed as taken from the main; but it had often been standing in cisterns, of which many had not been cleaned for years, and of which many were open to the foul atmosphere and dirt of London. As regarded water taken from the mains of the Companies, he desired to point out that, for several years, the official analysis supplied to the Local Government Board had been supplied by Dr. Frankland alone. Now, Dr. Frankland was a very able man, but he had always set himself against the Thames water, although in this view he was opposed to many skilled Members of different Committees and Royal Commissions; and he (Sir Henry Holland) could not help thinking that that rooted dislike to Thames water had, unconsciously to himself, coloured Dr. Frankland's Reports; and that he had made statements as to the sanitary condition of the water which a closer analysis would not have justified. This, at all events, was the opinion of the Water Companies; and, at last, finding that the public were, as they thought, wrongly, though not unnaturally, influenced by these Reports, they determined to have the matter more thoroughly investigated and brought before the public. They appointed, therefore, three gentlemen of equal eminence with Dr. Frankland, and equally well known as skilful and careful analysts—namely, 889 Dr. Tidy, Dr. Odling, and Professor Crootes—to make not only monthly analyses of the water, such as Dr. Frankland had made, but daily analyses. Their Reports had been most favourable as to the purity of the water and its freedom from insanitary condition; and he hoped and believed that these Reports, though unofficial, had greatly tended to disabuse the public mind upon this important point. He claimed also for these Companies that they had most loyally performed the stringent conditions and obligations which had, from time to time, been imposed upon them by the different Acts of Parliament which gave them the powers under which they worked, and secured to them the dividend upon the invested capital. Upon that point, he had no hesitation in referring to the present and late Presidents of the Local Government Board. And not only had they performed those statutory obligations, but they had gone further, and had endeavoured to give full effect to all the recommendations and suggestions made from time to time by the Local Government Board, and by their very able officer, Sir Frank Bolton, who had the charge of supervising the supply of water to the Metropolis. He would venture to give one instance of this in the case of the Grand Junction Water-works Company, of which he (Sir Henry Holland) was a Director. One of the main points urged by the Local Government Board upon the Companies was to substitute, as far as possible, "constant supply" for "intermittent supply." Now, in 1880, the Grand Junction Water Company had only 10,000 houses on constant supply, and some 34,000 on intermittent supply. But in the year 1884 the numbers were almost reversed, and they had nearly 32,000 houses on constant supply, and only some 18,000 on intermittent supply; and by the last Return, in February of this year, the number of houses on constant supply had increased to over 33,000. He had troubled the House with this defence of the Companies, because, though they were not directly attacked upon these points by the Bill, yet if they had failed to perform the statutory conditions and obligations, their case would not be so strong as it was at present against the proposed interference with those rights to which 890 those conditions and obligations had been attached. How did the case stand with respect to that Bill? For the purpose of settling the rent for water supplied by the Companies, the Acts had adopted the term "annual value;" but it was not specified how that value was to be ascertained. The practice of the Companies, acting under legal advice, had been for years to act upon the assumption that "annual value" meant "gross" annual value; and he must remind the House that their construction of the Acts was upheld by the Court of Appeal. But the House of Lords, the final Court of Appeal, decided, in the case referred to by the hon. Member opposite (Mr. W. M. Torrens), that "annual value" meant "net" annual value. Immediately following upon the decision, the Companies set to work, and had a revaluation of every house supplied by them with water made in accordance with it; and it was some proof of the care and fairness with which the revaluation was made by the officers of the several Companies, that the complaints had been so very few in proportion to the number of houses—he believed some 750,000 or more, though, unfortunately, he had not the exact figures, owing to the absence of his papers. Of these complaints many were in respect of increased charges for non-domestic purposes; and there was no doubt that these charges had up to that time been rather laxly made, and that the Companies had, to some small extent, endeavoured to recoup themselves by looking more closely into these charges. But a great number of these cases had been already settled by arrangement, and a great many more would have been readily settled by the trial of one or two test cases, so that there was no need of the Bill to settle disputes, so far as this class of complaints were concerned. The larger number of complaints and disputes had, however, arisen from persons endeavouring to set up the parochial assessment as the net annual value within the meaning of the Acts. But after the various decisions of the magistrates against these attempts, they would, probably, in a short time have ceased. The Bill was, however, framed to help these complaints; and he (Sir Henry Holland) objected to it on three grounds. First, that it was in direct contravention of the decision of the House of Lords, and, 891 therefore, of existing Acts, by which the rights of the shareholders had been guaranteed; secondly, that it was against the views of a Committee of that House which sat in 1851 and 1852 to settle the Metropolis Water Bill; and, thirdly, that it would be unfair and unjust in its operation, and confiscatory of the rights of the shareholders of these Companies. Now, as to the first objection, he would not ask the House to rely upon his own opinion, because he was in a position to state to them the opinion of that eminent Law Lord, Lord Bramwell, who was one of the Judges in Dobbs's case. Not having his papers with him, he could not quote the exact terms of the letter which Lord Bramwell sent to The Times in May, 1884; but he was certain he was correct in saying that Lord Bramwell wrote that the Bill must have been brought in under some misapprehension as to the effect of the judgment of the House of Lords; that "annual value" in the Act meant real actual net value; and that the "annual value" settled by parish authorities was always lower than the real annual value upon which the Companies were entitled to charge; and that this difference between it and the lower charge the Bill proposed to confiscate. Ho would add that in this same letter Lord Bramwell established his (Sir Henry Holland's) third objection to the Bill as he stated that this Bill was an invasion of property and a confiscation of the rights of the Water Companies secured to them by Act of Parliament. Surely the House would pause before granting a second reading of this Bill, upon so strong an opinion of such an eminent lawyer. As to his second objection to the Bill, it was to be observed that a very strong Committee of the House sat in 1851 and 1852 upon the Metropolis Water Act, and the whole position of the Companies was brought before them. The Committee approved the term "annual value;" but examined into the way in which that annual value was to be tested. Witnesses of great experience, not only connected with the Companies, but independent witnesses, such as Mr. Lee, the experienced surveyor, gave strong reasons for not adopting parochial rating as the fair test; and the Committee must have been satisfied with these reasons, or they would have pronounced in favour of this test. They 892 would have so defined "annual value," or agreed that it should be fixed by the parish valuation. As to his third objection, he had already cited Lord Bramwell's opinion; but he would point out that the Bill in its present shape applied to all Water Companies, Provincial or Metropolitan, as did the Bill of last year. But that was proved to be so unfair to Provincial Companies, owing to the admitted lowness of parish assessments, and to the want of uniformity in such assessments, that the Amendments proposed by the right hon. Baronet the President of the Local Government Board (Sir Charles W. Dilke), which limited the operation of the Bill to the Metropolitan Companies, were accepted by the promoters of the Bill. Now, that was a strong reason against allowing a second reading of a Bill which proposed an injustice, which was condemned last year; but it was also a strong reason, as he would now proceed to prove against the Bill even as amended, as proposed last year. It was an admission that parish valuations proceeded on no uniform plan, and that such valuations were below the true valuations, and as regarded the Metropolis, this want of uniformity was remedied by the Metropolis Valuation Act of 1869. That Act prescribed uniform scales of deductions; it defined the principles of assessment; and secured a fair rating. Now, if the Amendments had been to the effect that the rental for water supplied within the Metropolitan area should be tested by the parochial valuations within that area, instead of making the Bill apply to the Metropolitan Companies generally, the Companies might have grumbled, but the ground of complaint would, to a great extent, have been cut from under their feet, because the parish valuations within the area of the Metropolis Valuation Act were, upon the whole, fairly made; there was a quinquennial valuation provided, so that any unfairness of rates could be remedied; and, moreover, a simple form of appeal was provided. But the Amendments accepted by the promoters of the Bill last year made the Bill apply to all the Metropolitan Companies generally, and they made the parish valuations the test of "annual value" in ail the districts which they supplied with water, whether within or without the area covered by the Metro- 893 polis Valuation Act. That that was very unfair to the Companies was really admitted by the right ton. Baronet the President of the Local Government Board; for, in reply to a deputation last year, he admitted that outside the Metropolis valuations were undoubtedly lower than in London; but lie added that they formed a mere "drop in the ocean," and that be did not think there could be any substantial grievance under that head. This was, in fact, an admission that the Bill, as amended, would be unfair to the Companies if they had any considerable interest or rentals outside the Metropolitan area. Now, as a matter of fact, their interests were not a drop in the ocean, but very large indeed outside that area. Again, in the absence of papers, he had to trust to his memory; but he believed that out of 120 square miles supplied by the Companies, 90 were outside the Metropolitan Act area, and that the number of houses outside that area were largely increasing, while the number within that area remained much the same. There was, then, a substantial ground of complaint against the Bill, even as agreed to be amended last year. On these grounds he trusted that the House would not assent to the second reading of this Bill; but if it was to be granted, he trusted that, at all events, it would not be granted unless the promoters agreed to refer it to a Hybrid Committee before whom the Companies could be heard by counsel, and before whom their case could be fully shown by evidence.

§ SIR WILLIAM HARCOURT
said, his hon. Friend (Sir Henry Holland) stated that his object was to defend the Companies against the charges made against them; but then the object of his hon. Friend behind him (Mr. Torrens) was to enable the public of London to defend themselves against the charges made by the Water Companies. This Bill had nothing to do with the purity of the water of London. He consumed a great deal of it internally and externally; and the fact that he was still alive was proof that the water was not absolutely poisonous. The question raised by this Bill was a simple one—it was, whether the constantly-increasing charges made upon the consumers by the Companies were fair or not? His hon. Friend opposite said that he had 894 Lord Bramwell on his side. Well, he had great respect for Lord Bramwell; but they knew that he had strong views on the rights of property. He was in favour of the full pound of flesh; and he probably would have given a decision in favour of Shylock. There was a great grievance, which had been removed in certain cases by the indomitable pertinacity of Mr. Dobbs; but that was done at an enormous cost. It was idle, in view of the Dobbs case, to say that the Companies had never charged for anything that they were not entitled to charge. It had been proved that they had. This Bill provided for the cases of those who could not defend themselves against the charges which the Companies thought right to impose. This was the grievance; and there could be no doubt it was felt to be a monstrous injustice that the Water Companies should be allowed to increase their charges by an immense percentage. The object of the Bill was to define clearly what was the annual value upon which the Companies should base their charges. It was a Bill to provide a cheap and easy means of determining that annual value by simply going to the rate book. To call it confiscation was an abuse of terms. As he understood it, it would provide an impartial settlement of disputes between the Companies and the consumers, and prevent the former increasing their charges at will. The method proposed for this purpose was an inexpensive one, which a poor man could adopt; and he, therefore, should support the second reading of the Bill.

§ MR. SCLATER-BOOTH
said, he was disposed to think that within the Metropolis the Bill would operate fairly; but beyond that he was not prepared to go. He wished to point out that the decision of the House of Lords in Dobbs's case had been by no means an unmixed good, inasmuch as, under the rule laid down in that case, his assessment, and those of many other residents in his neighbourhood, had been increased by about 25 per cent. He did not think the Bill, as it stood, was fit to become law; but if his hon. Friend would assent to certain Amendments being made in Committee, no one would be better pleased with the Bill than he (Mr. Sclater-Booth). The subject was one of great difficulty; and he did not think it could be satisfactorily solved, 895 except by the Government themselves introducing legislation.

§ MR. J. G. HUBBARD
said, he was of opinion that if the operation of the measure were confined to the Metropolis it would be unobjectionable; but if applied to Provincial areas it would create much hardship. In many instances the Provincial Assessment Committees, in making their assessments, had undervalued property by 10 per cent. Therefore, it would be perfectly right that the Bill should be confined to the Metropolitan area, as contained in the Metropolis Local Assessment Bill. He trusted the day was not far distant when a Member of the Government would bring in a measure which should reconcile the conflicting measures adopted by various portions of the country in the matter of assessment, and bring one clear and concise measure forward which would put our valuation system upon a fair basis for both local and Imperial taxation.

§ COLONEL MAKINS
said, that he should oppose the Bill, on the ground that it would be a measure of confiscation as far as regarded the water supplied by the Metropolitan Water Companies to districts outside the Metropolitan area. He opposed the Bill on general grounds as well, as it proposed to re-enact, detrimentally to the Companies, agreements made with them by Parliament.

§ MR. EDWARD CLARKE
remarked that he hoped that the Bill would be passed this Session, inasmuch as it was most desirable that some fixed rule of valuation should be adopted, instead of each particular case having to be fought out between a wealthy Company on the one hand and a poor tenant on the other. He did not believe the Bill was one of confiscation, as some had asserted. The point that was really at issue had been fairly put, for within the area of the Metropolis Assessment Act there was a strict and accurate valuation which had been agreed to by the Companies concerned; and, as far as the valuation existed, those Companies ought to be reasonably called upon to abide by it. A slight modification of one clause in the Bill would satisfy the Water Companies and secure a large benefit to the country; but if it were understood that in Committee the Bill would be modified so as to limit it to the operations of the 896 Metropolis Valuation Act of 1869, there would be no necessity for a division on the second reading.

§ MR. W. M. TORRENS,
in accepting the proposal of the hon. and learned Member, said, that it had been the intention of the framers of the Bill that its provisions should only be applicable to districts within the Metropolitan area.

§ MR. COOPE
said, that he should wish to see the Bill referred to a Hybrid Committee, by whom the parties interested might be heard by counsel.