§ (BY ORDER).
§ Order for Consideration, as amended, read.
§ SIR GEORGE NEWNES (Swansea Town)
said the works to which this Bill referred were of a permanent character, and it was of the greatest importance that sufficient time should be given to relieve the ratepayers of some of the liability. One of the most important obligations that could be put upon those responsible for municipal government was the supply of pure water for the municipality. Having carefully considered the question the Corporation of Swansea had provided not only for the Swansea of to-day, but for the Swansea, as it would in all probability be, in the future. The Swansea Corporation had in this acted wisely; they had provided for at least five generations, and the gist of his Amendment was that one generation should not be asked to pay the whole of the expenditure. If that were done it would be a very serious matter for the people of Swansea at the present time. It would add over £5,000 a year to their rates, which would mean a 3½d. rate unless this Amendment was accepted. There was no greater stickler for the integrity of municipal finance than himself, and he would not have proposed this Amendment except for the permanent character of these works, which would last not for the one generation which was asked to pay for them, 389 but certainly for five or six, and probably a great many more. It might be said that the works had cost considerably more than the original estimate, but there was nothing unusual in the cost of public works exceeding the estimate for them, and he pointed out that in this case the extra cost had not been a waste of money because it had been caused by the fact that the corporation had been compelled to undertake the cost of supplying all the intervening area between the reservoir and Swansea—a distance of some twenty-eight miles—and that itself involved putting down another twenty-four-inch pipe line at a great cost, so that value had been obtained for the extra money spent, for the repayment of which the House was now asked to give an extension of time. To give sixty years was not exceptional. Manchester, Liverpool, and Birmingham were all granted sixty years in which to pay off the loans they contracted for a similar purpose, while in the case of London 100 years were given. Those were the simple facts, of the case. He had no desire to weary the House further, but would now only appeal to hon. Members to support the Amendment, assuring them that if this Amendment was not carried a very great injustice would be done to that great community which he had the honour to represent. He begged to move.
MR. BRYNMOR JONES (Swansea District)
said he rose to second the Amendment. This Amendment was really an appeal from the decision of a Committee of that House. The question before that Committee was a simple one. It was not opposed, except by the Swansea Tramways Company, Limited. Their opposition was duly heard, and the question settled in favour of the corporation. The Bill then passed through Committee, and it was now under the consideration of the House. The Corporation of Swansea did not ask the House to go behind the Report of the Committee except on one simple question, which was the terms upon which the Corporation of Swansea should have a right to raise a sum of £270,000 to complete the great undertaking to which his hon. friend had done such ample justice—an undertaking authorised 390 by Parliament in 1892. The Committee had given borrowing powers to the corporation to the extent of £270,000, subject to the conditions that the loan must be repaid within thirty years. The corporation asked that the time of repayment should be extended over a period of sixty years. The period originally named in the Bill was sixty years. The Local Government Board reported that that period should be reduced to thirty years, and the Committee accepted that recommendation. The Amendment was in the nature of an appeal from the decision of the Committee. There were no questions in dispute. The matter was one not of fact but of opinion. This, though it might appear to be a small question, was more important than it looked. This was a question which affected all the municipalities of the United Kingdom, and it was not right that a hard-and-fast line should be taken by the Local Government Board as to the limit of time for repayment. In determining the period the two elements that ought to be taken into account were, firstly, the financial position of the corporation, and secondly, the character of the purposes for which the money was to be borrowed. These two tests were amply satisfied by the borough of Swansea.
In regard to this Bill, he would point out that there was no question of municipal trading involved. The supply of water was one of the primary duties of every corporation. In 1892 a plan was laid before Parliament and passed with practically no opposition. In its main outline it was an accurate, well-ascertained plan. In some respects the estimates of the engineers had not been fulfilled, but in dealing with great undertakings, notwithstanding the best advice, it was impossible that no anticipation should be falsified. But the reservoir was of a permanent character and would last for many generations. It would suffice for treble the existing population and also for the discharge of the obligation under which the corporation had been put to supply the populous centres which were gradually rising between the reservoir and Swansea itself, which had grown more densely 391 populated as time went on. The only other point that he wished to put was why had this question about sixty years and thirty years been raised at this late period of the undertaking. In 1892 no objection was raised on the part of the Local Government Board to the repayment of these borrowed sums being extended over a period of sixty years. He could have understood the objections if the Corporation of Swansea had sought for new powers. It might then have been said that sixty years was too long a period, but once having allowed them to embark on a great enterprise, why at the last moment was this alteration made in the term for repayment? He did not think there was any occasion for the Local Government Board to take up a strong position on this matter. Their request was not unreasonable, and in the hope that it would be acceded to by the Government, or at any rate by the House, he begged to second the Amendment.
Amendment proposed to the Bill—
In page 13, line 18, to leave out the word 'thirty,' and insert the word 'sixty'—(Sir George Newnes)—instead thereof.
§ Question proposed, "That the word 'thirty' stand part of the Bill."
§ MR. STEVENSON (Suffolk, Eye)
, as Chairman of the Committee, felt bound to explain the reasons which actuated the Committee in the line they had taken. His hon. and learned friend had left out of sight the statement which had been circulated among Members of the House, and which related to previous loans granted to Swansea for its waterworks. When he looked at that statement he noticed that in 1892 the Corporation of Swan sea was empowered to borrow £270,000 to be repaid in sixty years. In 1898 they again approached the Local Government Board and were allowed to raise a further loan of £100,000, on the condition that it should be repaid in thirty years. It followed, therefore, that the attitude of the Local Government Board with regard to the shorter term of repayment was adopted as far back as 1898.
MR. BRYNMOR JONES
pointed out that the undertaking was originally 392 entered upon on the basis that the money required would not have to be repaid under sixty years.
§ MR. STEVENSON
said in 1902 a further loan of £71,000 was granted on a term of repayment extending over sixty years. In the present year an application was made for £250,000 to be raised, and the Committee decided that the period of repayment should be thirty years. These loans for the Swansea waterworks amounted to £691,000, as compared with the original estimate of £270,000. He did not complain that there should have been so great an excess over the original estimate, because undoubtedly one-half of the present loan was in respect of the new pipe line. They found that out of the total of £691,000 a sum of £341,000 was repayable within sixty years, whilst £350,000 had to be repaid within thirty years. Taking those amounts together, it appeared that Swansea was borrowing money for its waterworks on terms of repayment averaging forty-five years, and the question which the House had to decide was whether forty-five years was not a sufficiently long period to be allowed in a case of this kind. Previous attempts had been made, but without success, to get the period of thirty years extended in relation to the £100,000 borrowed in 1898.
Dealing with the £250,000 present loan, he found that about one-half of the amount represented excesses over previous estimates, due partly to miscalculations and partly to requirements shown to be necessary. The other half related to the new pipeline, and they bad to consider what was likely to be the length of life of that pipeline. Although the engineer's evidence gave the life as likely to last from sixty to 100 years, other Committees had had before them similar evidence which had not given anything like so long a term. Then what changes were there in the development of Swansea or the growth of its population which induced them to put forward in the present year the demand for a loan of £250,000, when, in October of last year, they only asked for £125,000. The reply which had been given to that question was that some 393 time ago there was a depression of trade and some uncertainty as to the future, but owing to the recent advance in the tinplate trade and to other circumstances Swansea was never more flourishing than it was now. The Committee did not for a moment desire to deny the utility or value of the second pipe line which might be needed in the future, and they had inserted a clause in the Bill to enable Swansea to supply water to other authorities in the district on terms to be arranged which would recoup them for the expenditure thus incurred. He agreed with the seconder of the Motion that a question of this kind went behind the special merits of the Swansea case, and he ventured to think that unless very especial circumstances were shown why the minimum period should be departed from, it was not desirable or in the general interest of municipalities that this period of repayment of loans should be extended. It was deemed advisable to have a speedy reduction of our national burdens, and surely it would be undesirable to apply to municipalities a different standard to that which was applied to national finance. He had very considerable doubts whether a case bad been established in favour of the longer period of repayment for Swansea, as he had pointed out that by taking the loans together the average term was forty-five years. At the same time he did not think that the decision of the Committee should interfere with the free expression of opinion of the House of Commons, and for his own part he was quite willing that the decision should be either reversed or confirmed by the House.
§ MR. ALLHUSEN (Hackney, Central)
recited the water history of Swansea. In 1892 they asked Parliament for powers to borrow £270,000 in order to make waterworks, a pipe line, and a reservoir. In 1898 they asked for another £100,000, and in 1902 for a further £71,000 for the purpose of completing works originally sanctioned in 1892 making a total sum of £441,000. Then in 1905 they asked Parliament for a further sum of £125,000 for the purpose of completing the works originally sanctioned, so that in the course of thirteen years, during which time the works were being proceeded 394 with, and the water consumers of Swansea had had no water from the new works, the amount of money sanctioned by Parliament had risen from £270,000 to £566,000. It was difficult for the Committee to arrive at an absolutely right judgment of the matter when the Bill was entirely unopposed, because they had to sit as judges, and at the same time find out the whole facts of the case for themselves. The Committee did their very best to arrive at a right decision. They were helped by the evidence given by a gentleman representing the Local Government Board, and he could not help feeling that in such a case it would be of very great advantage if the Local Government Board were to be represented by counsel who could cross-examine the promoters of the Bill for the benefit of the Committee, and thus relieve them from the dual position of cross-examiners and judges. The water debt of Swansea would, with the addition of this £250,000 loan, be increased to £836,000, which would be a very heavy burden on the ratepayers, for whom he could not help feeling a great deal of sympathy. This was rather a question which affected the future decisions of Committees, and it seemed to him that a case had not been made out for granting a period of sixty years for the repayment of all excess moneys required in addition to the original loan. The corporation had to admit that they had exceeded the r original estimate three times; it had been increased by over 100 per cent., and it was too much to ask the House to now sanction repayment of these additional sums over a period of sixty years. The real question at issue was whether the House intended to do anything at all to check excessive municipal borrowings and to put some drag on extravagant expenditure. In this case the Committee arrived at the very best decision on the evidence before them, and nothing had been said by hon. Gentlemen opposite to alter his opinion that the average term of forty-five years for repayment of this large debt was a very fair condition.
§ MR. HIGHAM (Yorkshire, W.R., Sowerby)
pointed out the great difficulty under which corporations and other local authorities laboured when they had to 395 meet these variable and erratic decisions of the Local Government Board. Here was an instance, he said, where for the same waterworks, and for the same class of work, in 1892 the Board granted sixty years, in 1898, only thirty years, in 1902, again sixty years, and in 1905, now thirty years for the larger sum. It was impossible for a municipality to discuss and consider its schemes, and to prepare its undertakings, with such variable decisions before it. He did appeal to the House to extend this period to sixty years. The difference between that time and thirty years meant, in the event of a loss in working the undertaking, an addition of 3½d. in the £ to the rates of the borough, and in the event of a profitable undertaking, it meant that for the next thirty years the ratepayers had to pay a much enhanced price for their water, so that their successors could have it for next to nothing. There was a great outcry throughout the country about the heavy increase in rates, and here was a case where a 3½d. addition was being deliberately forced on a municipality by the Local Government Board. As an illustration of the irregular methods of exercising pressure adopted by that Department, he mentioned an instance where it fell to his lot to be one of a deputation waiting upon a President of the Board a few years ago. It was in connection with the filtration of the sewage of a public authority, and the Board had intimated that the local authority must have land for filtration purposes. The corporation pointed out that all the land available—in fact all the land of the district was of a clay subsoil, and perfectly useless for the purpose. The Board replied, "It does not matter, we shall insist on your obtaining land," and the corporation's answer to this was that there was no legal power to compel them to buy land. The President of the Local Government Board acknowledged that this was so, but added that they would force them to buy land by stopping all their other borrowing powers till they did it, although, he said in addition, if they agreed to buy the land they would not compel them to use it. He put it to the House whether that was a fair or reasonable way for a great Department to exercise its powers, and in another direction was not this pressure upon Swansea 396 another illustration of the Board's unreasonable requirements? Year by year, water authorities found it necessary to go greater distances for their supply. The schemes became more and more costly, and naturally were being made to supply greater areas, and to look further ahead. In many cases, expenditure did not really become fruitful for ten or twenty years. Water was a prime necessity, and it was doubly important that it should be both plentiful and cheap. Would it not be wise, therefore, to give the longer period for repayment? If a corporation bought up an existing waterworks, the Department made no difference in its financial treatment, and if in the case of a works—reservoirs, etc.—already fifty years old, it was wise to give fifty or sixty years for repayment, surely it was most reasonable to ask for the longer period in the case of constructing new works. The pressure upon present ratepayers to pay off the capital cost of waterworks for the benefit of a coming generation was altogether too heavy, and this was especially apparent when they remembered that these works were never destroyed or cast aside. They were extended or added to, but they always retained their utility. He had the greatest sympathy with the demands for short periods of time for the repayment of loans in cases where the municipalities went in for purely commercial undertakings, but water supply was a matter of life and death, an absolute necessity, a case in which a corporation must spend money for posterity, and he submitted to the House that the sixty years asked for was not too long a period. He therefore supported the Amendment to alter thirty years to sixty years.
§ MR. ROSE (Cambridgeshire, Newmarket)
said the motives which made him, as a member of the Committee, unwilling to consent to an extension of the period of the loan, or to a period of sixty years for the additional money required, were those of financial prudence and a desire to restrict excessive municipal borrowing, feeling as he did that if a period of sixty years was allowed it might be an incentive to over-borrowing on the part of municipalities, whereas the shorter period would certainly conduce to greater caution. As to the suggestion 397 that gross injustice might be done to certain classes of the community by the imposition of the larger rate necessary to repay the loan in the shorter period, one of the chief arguments in favour of the Bill was that the works were rendered necessary by the great prosperity of trade in Swansea. The tinplate trade was said to be enjoying unexampled prosperity in Swansea, and that being so the class concerned could hardly object to the imposition of the additional rate.
SIR WALTER FOSTER (Derbyshire, Ilkeston)
said that while he sympathised with the desire to keep municipal expenditure within judicious bounds, he thought that if there was one province more than another in which the House should be extremely careful how such restrictions were applied, it was in that concerning the public health of the community. Borrowing for such purposes ought to be encouraged rather than checked, for economy in that direction was the worst possible economy that could be practised. In Lincoln recently there had been 700 cases of typhoid fever brought about by an inefficient water supply, and the cost of that outbreak would have twice over supplied Lincoln with a supply of pure water. Expenditure on drainage, sewage disposal, or water supply ought to be encouraged by the Local Government Board, and allowed the most liberal terms they could command. The authorities at the Local Government Board knew how difficult it was to get local authorities to incur large expenditure for public health purposes. The bigger authorities would undertake it because they were always allowed the longest terms for repayment, but the smaller authorities were usually unable to get the same length of term, and therefore were more frightened at the expenditure. For these reasons he should support the Amendment of his hon. friend.
THE SECRETARY TO THE LOCAL GOVERNMENT BOARD Mr GRANT LAWSON,) Yorkshire, N.R. Thirsk
said he did not know where the hon. Member opposite learnt his financial policy; it was certainly not at the Local Government Board. Hon. Members were altogether mistaken in supposing that the Board had adopted a dictatorial or overbearing attitude to the Committee. The Committee had the whole of the facts before them, and on the evidence submitted to them, which, of course, was the evidence of the present ratepayers, they came to their decision. The House was now asked to overrule the decision of the Committee, and without any evidence as to the special circumstances of the case to fix one of the most difficult things possible, viz., the proper period of a loan for waterworks under certain conditions. If there were special features in the case they were considered by the Committee. He might point out that for works and land orginally estimated to cost £270,000 no less than £691,000 had been required, a fact which showed very curious finance and somewhat doubtful engineering skill. The House ought to be very careful in this matter of the period of loans. The enormous increase in the amount of local debt was a very serious matter and the only way in which it could be checked was by placing at any rate a considerable proportion of the burden upon those who by their votes decided upon making the expenditure. No doubt there would be relief to the present ratepayers if the period of repayment were extended to sixty years, but what would happen in the future According to the Report of a Committee over which he himself presided, the result of extending the period of repayment for a loan of £250,000 from thirty to sixty years would mean a saving of over £3,000 a year to the present ratepayers, but the amount of interest alone would be £291,994 as against £132,600 for the shorter period, so that from the point of view of the Swansea ratepayers it would really be penny wise and pound foolish to extend the period of repayment. He hoped the House would reject the Amendment.
§ Question put.400
§ The House divided:—Ayes, 153; Noes, 111. (Division List No. 142.)401
§ Bill to be read the third time.