§ Order for Consideration, as amended, read.
§ Question proposed, "That the Bill, as amended, be now considered."
§ THE CHAIRMAN OF COMMITTEES (Mr. COURTNEY) (Cornwall, Bodmin)In accordance with a Notice I have placed upon the Paper, I beg to move to leave out from the Word "That," to the end of the Question, in order to add the Words—
This House is of opinion that the allowance of a term of ninety years for the redemption of the said annuities is contrary to the spirit of Standing Order 173A of this House, but having regard to the special circumstances mentioned in the said Report, orders the Bill to be considered To-morrow.I hope that I shall not find it necessary to trouble the House at any length on this matter; but it is one of some importance, and I do not think I should be discharging the duties of the Office I have the honour to fill if I refrained from calling the attention of the House to it. It will be in the recollection of the House that some years ago Standing Order 173A was passed, a portion of which I will read. It provides—In the case of any Bill promoted by or conferring powers on a Municipal Corporation or Local Board, Improvement Commissioners, Town Commissioners, or other local authority or public body having powers of local government or rating, the Committee on the Bill shall consider the clauses of the Bill as to whether the Bill assigns a period for repayment of any loans under the Bill exceeding the term of sixty years, which term the Committee shall not allow in any case to he exceeded, or any period disproportionate to the duration of the works to be executed or other objects of the loan.It is manifest, then, that when it is asked, in the case of a Bill promoted by any Corporation or Local Board, for borrowing powers for a period for the repayment of the loans authorized by the Bill which exceeds the term of 60 years, the Committee to whom the Bill 301 is referred shall not in any ease allow that term to be exceeded. The Bill now before the House is a Bill promoted by the Corporation of Sheffield, and one of the objects of the Bill is to take over a very considerable scheme of water works. The question was raised, on the consideration of the Bill by the Committee, whether its provisions came within the scope of this Standing Order, and the Committee apparently came to the conclusion that they did not. The Bill contains a provision for purchase of the existing water works from the Company, and the consideration to be paid for the water works is not confined to the payment of a lump sum of money down, but there is power to create certain annuities—annuities which represent, in fact, the dividend to be received by different classes of shareholders of the Company—and these annuities are to be assigned to the several shareholders. The Bill also contains a provision for the compulsory redemption of such annuities, after the lapse of a certain number of years, by the creation of a sinking fund to pay off the annuities. This sinking fund will be found to rim for 90 years, and therefore the Bill is in conflict with the Standing Order which requires that no sinking fund shall run for a period beyond 60 years. I understand that it was impressed upon the Committee that there is a distinction between this case and that which the Standing Order is supposed to deal with, and the Committee, in their consideration of the Bill, ultimately conceded that contention, and decided that this application, on the part of the Sheffield Corporation to take over the Water works Company was not one which came within the Words or meaning of the Standing Order which requires that any loan must be repaid within a period of 60 years. No doubt it may be urged, with some force, that in this case the obligation is not a contract for a loan, but, in fact, an obligation of another nature, which is to remain due from the Corporation to the Water Company, and to stand over with respect of the undertaking purchased. The Committee came to the conclusion that if the Corporation had bought those works for a lump sum of money, and if they had gone into the market to raise that money, there must have been a provision for the repayment of the loan within a period of 60 years. 302 But because they did not pay for the undertaking with a lump sum of money, but allowed the shareholders of the Company to receive annuities on account of which the undertaking is to be transferred, there was not, necessarily, an obligation created which should be discharged within 60 years. If hon. Members will refer to the discussion which took place when the Standing Order was adopted, it will be seen that it was stated by those who recommended the adoption of the Standing Order, that their object was this—that there should not be laid upon any Corporation an incumbrance in regard to any undertaking which should survive a period of 60 years—that in any undertaking sanctioned by the House there should be an obligation to pay off any loan contracted within 60 years, so that at the end of 60 years the Corporation should enjoy whatever it had purchased free from any kind of obligation or incumbrance in respect of it. One most honoured Member of this House, who has only recently passed to the other House—Mr. Sclater-Booth—introduced and strongly recommended the Standing Order, and upon his recommendation the term of 60 years was fixed. The hon. and learned Gentleman the Member for Dewsbury (Sir John Simon) raised an objection; but he stood entirely alone, and other hon. Members, among them my right hon. Friend the Member for Leeds (Sir Lyon Playfair), spoke strongly in favour of the limit of 60 years. The right hon. Member for Wolverhampton (Mr. Henry H. Fowler) made use of this language. He said that in reference to the objection taken by the hon. and learned Member for Dewsbury, he (Mr. Henry H. Fowler) certainly thought that be years was a period quite long enough for imposing a burden upon any community; and he pointed out that a rate of 1 per cent would be sufficient to provide for the paying off of any ordinary loan within 60 years, and therefore that there could be no justification for imposing a heavier burden upon ratepayers who wish to borrow money for sanitary or other public improvements. No doubt, in some instances as long a term as 60 years has been allowed; but such a period has been considered far too long, and in dealing with the spirit of the Standing Order it is certainly undesirable that the ratepayers of any 303 Municipality should be burdened in I respect of any charge made for sanitary or other improvements for a lengthened period. It is admitted, in this clause, that if the undertaking had been purchased, and the money paid by a loan created for the purpose of discharging the purchase money, the transaction would have come within the letter and spirit of the Standing Order. But it is contended that because the money was not paid down in a lump sum, but is treated as an annuity, the promoters of the Bill are outside the Standing Order. Now, I submit to the House that it does not really make the slightest difference with respect to the principle of dealing with the Municipalities, and their incumbrances, whether the incumbrance is in the nature of a mortgage for unpaid purchase money, or in the nature of a mortgage adopted for the purpose of paying off a Joan. It cannot matter whether the debt is to be accompanied by a provision to pay it off in full, or whether the persons who sell are to be paid off by annuities. The obligation in respect of the two cases must be the same, and if we adopt the argument which was put before the Committee we are left in the following absurd position. I have said that the shareholders are to be paid by annuities, but in regard to one class of the shareholders they have the option of taking the money instead of annuities, and it depends upon how these shareholders exercise their option—whether they are paid off at once, or by annuities. It depends, therefore, upon the exercise of this option whether the Standing Order applies or not. Now, I have thought that this is a matter which. I could not pass over without drawing the attention of the Douse to the conclusion which the Committee has arrived at, but I do not wish to do more than draw the attention of the House to the matter. The Committee base their view of the question whether this transaction comes within the meaning of the Standing Order upon circumstances in regard to which, I am bound, with the greatest respect, to differ from them absolutely. I cannot conceive how they have been led to arrive at such a conclusion. But the Committee go on to point out that the works purchased are of a very large and permanent character, and that the Corporation ought 304 not to be compelled to carry out works so much larger than are required for the present wants of the inhabitants without being allowed at least 90 years for the repayment of the purchase money. Now, this was a question which the Committee had power to examine into, but which we cannot examine into. I desire to pay all respect to the opinion of the Committee, and I will admit that the works are possibly greater than are absolutely required now, and that the Corporation are undertaking a larger supply than is necessary for the present wants of Sheffield. Possibly that, may form a reason for allowing extended terms to the Corporation of Sheffield, and, therefore, I will not ask the House to reject the practical conclusion to which the Committee have arrived. But I think it is most desirable for the House to lay down, as clearly as it can, that the suggestion that this transaction is outside the scope and meaning of the Standing Order is one which ought not to be entertained for a moment. If it were allowed, the Standing Order could be put aside in almost every case. It would only be necessary for the purchaser to provide that the vendor shall not be paid in full, but shall have a mortgage on the undertaking, to get rid at once of the effect of the Standing Order. Then again, if the Corporation promoting new works, instead of paying the contractor in money, were to pay him in bonds, they would be able to get outside the Standing Order. I think it is most desirable to lay flown clearly that these transactions, if not literally, are in spirit, contrary to the Standing Order, and I do not see how the House is to come to any other conclusion. Having called attention to the matter and entered this protest, having regard to the special circumstances of the case, the great extent of the water Works in question, as proved before the Committee, and their excess over the present needs of Sheffield, I shall not ask the House to reject this part of the Bill. I beg to move the Resolution which stands in my name.
§
Amendment proposed,
To leave out from the Word "That," to the end of the Question, in order to add the words, "This House is of opinion that the allowance of a terra of ninety years for the redemption of the said annuities is contrary to the spirit of Standing Order 173A of this House, but, having
305
regard to the special circumstances mentioned in the said Report, orders the Bill to be considered To-morrow."—(Mr. Courtney.)
§ Question proposed, "That the Words proposed to be left out stand part of the Question."
§ COLONEL HAMILTON (Southwark, Rotherhithe)As a Member of the Committee, which was presided over by a right hon. Member of this House, I should like to say a few Words in order to explain the reasons which induced the Committee to arrive at their decision. They had before them Standing Order 173A, and the conclusion they came to was that there was nothing to prevent the repayment of the money being extended beyond the term of 60 years. They were of opinion that the Standing Order does not contemplate the raising of money by annuities, and that they had also placed before them the fact that the purchase of the scheme would involve the acquisition of works that were greatly in excess of the requirements of Sheffield, and, furthermore, their attention was called to the terms and facilities with which other towns in the neighbourhood had been able to raise money. Take the case of Manchester. In that case the Corporation have been able to raise money to be repaid in 80 years, at a cost which imposes upon the ratepayers a rate of ¾d. in the pound; in Leeds, with a similar term of 80 years, a rate of ¾d. is imposed; in Wolverhampton, 75 years, at ½d. in the pound; and at Huddersfield, 110 years, at ¼d. in the pound. Had the Committee not given way, and consented to take a lenient view of the matter, the result would have been that the ratepayers of Sheffield would have been saddled with the charge of 2½d. in the pound for the redemption of this debt within a period of 60 years. As the Bill now stands, it is proposed that the sum requisite for the purchase of the Works—namely, £489,000—should be paid off within 60 years, and treated as borrowed money to be paid off within that period. There are, however, further Works which were not originally contemplated in the scheme of the Corporation, or in the scheme of the Water Works Company, and those Works it was proposed to pay off by irredeemable annuities. In deference to the wishes of the Treasury, that proposal has now been brought down to that which is contained 306 in the scheme now before the House—namely, the creation of annuities extending over a period of 90 years, and those annuities apply to £1,500,000, upon which the rate payable by the inhabitants of Sheffield, instead of being 2½d. in the pound, will be one of 1¼d. in the pound, and will even then be greatly in excess of what any other town in Yorkshire is at present required to pay. This, however, is due to the fact that Sheffield is saddled with works which are so much in excess of their requirements. It must, however, be borne in mind that these Works are not ordinary water works, but that water is to be supplied under a scheme of gravitation of a very substantial nature without having to resort to pumping stations, so that, in all probability, the works themselves will be much more valuable 60 or 90 years hence than they are to-day. The question, therefore, arises why should the inhabitants of Sheffield be bound to pay such a rate to-day as will enable them to hand over these valuable Works entirely free to their successors two generations hence. That is the view which induced the Committee to pass over this Standing Order, and to allow the repayment to be extended over a period of 90 years.
§ THE PRESIDENT OF THE LOCAL GOVERNMENT BOARD (Mr. RITCHIE) (Tower Hamlets, St. George's)My hon. and gallant Friend has given some reasons, no doubt, which are of some force as to why Sheffield should obtain some relaxation of the Standing Order which has been alluded to with reference to the period over which the repayment of the purchase money for these water Works should be extended; but the hon. and gallant Gentleman has spoken of the scheme as though the Committee had no other option than to grant an extension of the time named in the Standing Order. Now, the point which the hon. Gentleman the Chairman of Ways and Means alluded to, and enforced with great strength, was that, if this money had been borrowed in the ordinary way, it would clearly have come within the Standing Order, and it would then have become impossible for the Committee to have departed from the provisions of the Standing Order. The Corporation of Sheffield, instead of raising money by loan to pay off the whole of the purchase 307 money at once, proceeded to raise the money by means of annuities; and the Committee seem to have been under the impression that in that case they could depart from the terms of the Standing Order and give the Corporation a further period for repayment. Now, I entirely agree with every Word the Chairman of Ways and Means has stated upon this matter. If the doctrine which has been established by the Committee in reference to this question were to be allowed to pass without record and without a protest in this House, it would, in my opinion, destroy the whole object Parliament has had in view in passing that Standing Order. It would enable any Corporation to come before a Committee of this House and justify the Committee in granting such an extension of time as would practically drive a coach and four through the Standing Order. My hon. and gallant Friend the Member for Rotherhithe (Colonel Hamilton) called attention to several instances in which a longer period than 60 years has been allowed to Public Bodies for the repayment of loans for Works of one kind or another; but my hon. and gallant Friend omitted to say that in everyone of those cases the extension was allowed before the passing of this Standing Order. Not one of the oases to which my hon. Friend alluded has been dealt with in this way since the passing of the Standing Order, and it was expressly in order to prevent such things being done in future that the Standing Order was passed. The House knows very well that on many occasions the indebtedness of Local Authorities has been brought before the House, and that it has been shown to be of the most serious character. It has undoubtedly grown up to a considerable extent owing to the long terms which have been allowed for the repayment of the money borrowed in connection with Works of this kind. Previous to the passing of the Standing Order there was scarcely any limit imposed by a Committee of the House of Commons, and it was to prevent an accumulation of debt to be placed on the shoulders of future ratepayers rather than present ratepayers—it was to prevent that process from being continued that the Standing Order was passed. I am prepared, however, to admit that there are circumstances in connection with Sheffield which would make the burden a very 308 onerous one if the limit of 60 years were adhered to; but I think the proper course for the Committee to take would have been to have reported the whole of the circumstances, and to have asked the House to enable them to depart from the Standing Order. If that course had been adopted, no harm would have been done; but I think great harm would result if the method adopted by the Committee were allowed to pass by this House without protest. I am certainly not prepared to do anything which would have the effect of throwing out the Bill or, adding unduly to the burdens of the ratepayers of Sheffield; but I think the House is indebted to the Chairman of Ways and Means for having brought this evasion of the Standing Order before it. The hon. Gentleman now asks the House, in allowing the Bill to pass, to place on record its opinion that the mode of repayment proposed by this Bill is one which is contrary to the spirit of the Standing Order, and that it is perfectly immaterial, so far as the ratepayers are concerned or the Standing Order is concerned, whether the repayment is made in the shape of annuities or by means of money lent. I think the hon. Gentleman is right in taking that course, and therefore I entirely agree with the Resolution he has submitted to the House. I am sure the House will arrive at the same conclusion.
§ MR. MUNDELLA (Sheffield, Brightside)I cannot complain of the remarks which have fallen from the right hon. Gentleman the President of the Local Government Board or from my hon. Friend the Chairman of Ways and Means. They seem to have taken a course which is only consistent with the official position they occupy—namely, to maintain and support the Standing Orders of the House. This Standing Order requires that a locality borrowing money should repay the money borrowed within a period of 60 years. I am, however, obliged to both of them for the acknowledgment they have made that there are special circumstances in this case which have practically justified the decision of the Committee. No Member of the House who has the least acquaintance with the circumstances could come to any other conclusion. The fact is, that the Corporation of Sheffield did not come to Parliament to purchase these water Works until the proprietors— 309 namely, the Water Company, had themselves come to Parliament for an extension of their powers, which would involve the levying of an increased charge of 25 per cent in perpetuity on the ratepayers of the town of Sheffield, That compelled the Corporation to take an adverse movement against the Company. There has been no attempt, I can assure both the Chairman of Committees and any right hon. Friend—there has been no design whatever to evade the Standing Orders of this House on the part of the Municipality. What has been done was this—that when the Water Company were in the other House of Parliament overtures were made to the Corporation to purchase the Works. The proposal included a scheme of annuities with a provision that the Corporation should buy out with a lump sum the preference shareholders. I have only to say, in justification of what has been done, that the Works are at the most of exceeding magnitude, and it was considered necessary that that should be so in consequence of a frightful accident which occurred 25 years ago through the bursting of a reservoir, which entailed an expenditure of nearly £250,000 upon the Water Company, with a great destruction of property and loss of life. It has since been resolved to construct a system of water Works in Sheffield upon a gigantic scale, capable of supplying nearly double the present population of the town, the cost being thrown upon the next 60 years or upon two generations. That, however, would have involved a distinct rate of 2½d.. to 3d. in the pound upon the town of Sheffield. But having regard to the rates which are already paid there, and to the depression which exists in the heavy iron trades which are carried on there, having also regard to the fact that some of the large Works are already paying from £500 to £600 a-year in rates, and will have to pay increased rates under this Bill, it was considered that it was very undesirable to impose such an increased burden upon the industry of the town, which might divert the heavy iron trades from the interior to the coast, as has already been the ease to some extent, Reference has been made to other towns which have been allowed a longer period for the repayment of loans obtained for the purpose of carrying out sanitary and other public im- 310 provements before this Standing Order was passed in 1882 or 1883. What is the fact in respect of our neighbouring towns? I believe that Sheffield is the largest town in England which has not the control of its own water Works. In the case of Huddersfield, the cost of the water Works has been more than £2,000,000, and the Corporation have been allowed 110 years for the repayment of the money, the consequence of which is that the burden imposed upon the ratepayers only amounts to ¼d. in the pound per annum. Sheffield by this Bill consents to bring itself under a contribution of 1¼d.. in the pound; whereas if the whole cost of the Works is to be defrayed within 60 years a rate of 2½d.. must be imposed, notwithstanding the fact that at the end of the 60 years the Works will be quite as good, if not better, than they are now. It must be borne in mind that these are permanent works, which will be quite as good centuries hence as the Roman aqueducts constructed under Caesar, The Corporation of Sheffield are not attempting to construct works which are not of absolute necessity. Unlike gas and other things, people must go on drinking water until the end of time; and I think it is unreasonable to throw the whole burden of the cost upon the present generation. As, however, the right hon. Gentleman opposite and the Chairman of Ways and Means only desire to observe the spirit of the Standing Order and do not propose to take any step which would really strike at the passing of the Bill and prevent it from coming into operation, and seeing that they have admitted the special circumstances which, give Sheffield a claim upon the consideration of the Committee, I trust that the House will now allow the Bill to be considered, and will consent to its being read a third time.
THE UNDER SECRETARY OF STATE FOR THE HOME DEPARTMENT (Mr. STUART-WORTLHY) (Sheffield, Hallam)As one of the Representatives of Sheffield I thank the Chairman of Committees for the course he has taken, and I think I may be permitted to say, on behalf of my constituents, that we by no means dispute the contention involved in the Motion now before the House. We accept the terms of the hon. Gentleman's Motion with great gratitude, recognizing in them a 311 desire to dispense in what is undoubtedly an exceptional case, with the terms of the Standing Order. In that sense we accept the hon. Gentleman's proposal, and I think the House may more readily accept it, when it is aware that it arises from circumstances peculiar to the individual case, and need not in any way fetter the future judgment of the House.
§ SIR HENEY JAMES (Bury, Lancashire)I only wish to say that my constituents are suffering grievously, both rich and poor, from the operation of the Standing Order. I therefore wish to express my dissent from the words of my hon. Friend, when lie says that no precedent should, be established from the action of the Committee. I think the Committee deserves great praise for the step they have taken. The operation of the Standing Order has already effected a considerable amount of evil in regard to the carrying out of sanitary works by imposing upon Municipalities unfair periods for the repayment of borrowed money. By the Standing Order you restrict the period for the repayment of money, and you make the present ratepayers pay out of their own pockets, not only for necessary works, but for works making provision for a much greater area than is now unprovided for. You not only in this case make the present ratepayers supply water works for future ratepayers, but for ratepayers who do not exist at all. The consequence is that every person after the 60 years imposed under the Standing Order will get his water free from the Corporation, or, at any rate, at a very much cheaper rate, and persons who are not ratepayers at all will have similar provision made for them. I look upon the Standing Order as of so harsh a nature that I am certain the time has come for repealing it. At present it is having the effect of checking the progress of sanitary works in every district, and it is casting an unnecessary burden upon the Municipalities. I shall not divide against the present Resolution, but I trust that when a fitting opportunity comes the matter will be reconsidered.
§ MR. BRADLAUGH (Northampton)I should not have said anything at all upon the matter but for the words which have fallen from the right hon. and learned Member for Bury (Sir Henry James). It seems to me that the disposition to increase local indebtedness is 312 one which ought to be watched most carefully, especially in the neighbourhood of Sheffield. As the right hon. Gentleman the Member for Sheffield (Mr. Mundella) knows there is a district only a few miles outside Sheffield there which is entirely bankrupt, and utterly unable to fulfil its legal obligations. Under these circumstances, I think the House ought to be exceedingly careful how it consents to relax the powers it has armed itself with under the Standing Order. It is very easy, indeed, to contract debts, but not so easy to meet them, and there ought to be the strongest opposition on the part of the House to any proposal to extend the terms of repayment, or to relax the terms which have been imposed upon those who borrow in regard to the repayment of the loans they contract in every case the persons borrowing ought to feel sensible pressure in the method of repayment.
§ Question put, and negatived.
§ Words added.
§ Main Question, as amended, put.
§ Resolved, That this House is of opinion that the allowance of a term of ninety years for the redemption of the said annuities is contrary to the spirit of Standing Order 173A of this House, but, having regard to the special circumstances mentioned in the said Report, orders the Bill to be considered To-morrow.