§ Order for Third Reading read.
§ Motion made, and Question proposed, "That the Bill be now read the third time."
§ MR. RAWLINSON
moved that the Bill be read a third time on that day three months. He said that this was a very dull subject and he could hardly expect many hon. Members to take much interest in it, more especially at that late hour of the evening. As the House was probably 710 aware, the London County Council in borrowing money was placed in a peculiar position, for they had to come to the House for permission. Any other corporation in a provincial city or borough had simply to satisfy the inspector of the Local Government Board that the loan was desirable. During the last two years he had had the privilege of bringing before the House various questions upon London County Council money Bills, and he wished to know from the promoters the reason why such a large sum was required to be borrowed in one year. The House would see how desirable it was that a satisfactory case for borrowing should be made out. He might say that he had not the slightest intention of dividing the House upon his Amendment. The first question he wished to put was whether the total indebtedness of the London County Council was increasing from year to year or was it remaining stationary. The next question was whether the total indebtedness was increasing or decreasing at any particular time. Last year they were in the happy position of finding that the County Council rate went down from 36d. to 35d. in the£. Unfortunately this year the rate has gone up again to the old high standard and that required some explanation. There was another point to which he had previously called attention and which had since been taken up by other hon. Members in connection with other private Bills, and he understood that the Government were appointing a committee to inquire into the question. The County Council took power under this Bill as they did last year to borrow money from the sinking fund for fresh expenditure. That was a financial process which he adversely criticised last year, and he still held the view that if they had had a Sinking Fund to meet capital expenditure that fund ought to be invested in some outside securities so that if the concern became financially unsound they would be able to come upon that fund for the payment of debt. In the case of the County Council power was taken to borrow from the sinking fund and that bad example had been followed in the case of various private Bills and had attracted the attention of hon. Members 711 opposite, with the result that in one or two private Bills the practice had been stopped and he understood that the Government were now inquiring into the whole matter. Another point he desired to raise was the extended period of time allowed for the repayment of certain loans granted by the London County Council to boards of guardians. The period allowed was sixty years in some cases, and he thought such a period was excessive. With regard to the proposed new County Hall, the estimate for the site was£600,000, but up to the present there had been no estimate of the cost of the palatial building which it was proposed to erect. A sum of money was being borrowed this year for that building, and he thought the House should be informed by the promoters what the estimated cost of the building was. He noticed that there was a sum of£1,250,000 for loans in connection with tramways and other public improvements, and he should like to know how much of that was spent upon the subway from the Thames Embankment to Aldwich. He would also like to know what had become of the steamboats He happened to be a small shareholder in the old steamboat company which used to run steamboats on the Thames, and this municipal enterprise with steamboats was about as good an object lesson as they could get of the result of municipal management. The original steamboat company ran a service upon the river which barely paid expenses, but instead of subsidising and assisting that company to run the boats at a profit the London County Council elected to run a service of their own. The result was that no steamboats were running at all now, because the old company had been run off the river. There appeared to be no item dealing with this matter in the measure before them, and, therefore, he would like to know how much of the capital expenditure had been recovered, how many of the steamboats had been sold, and whether they had been, sold to 712 purchasers in this country or abroad. He thought it was the duty of the House of Commons to scrutinise very closely the large sums London County of money which the Council continued to borrow year after year. He moved this Amendment in no spirit of hostility and he would not ask the House to proceed to a division.
§ SIR F. BANBURY
seconded the Motion. He wished to emphasise what his hon. and learned friend had said in regard to the sinking fund. He was pleased to know that the Government had appointed a Committee to inquire into this practice. It was quite true that in regard to borrowing the London County Council were in a different position from other municipalities, but as that body was the largest of its kind it ought to set an example to all other bodies in regard to the manner in which it conducted its finances. There could not be any question that the habit of using the sinking fund for fresh borrowings was an extremely reprehensible practice, because it prevented the public knowing the extent of the Council's indebtedness. A corporation should only use the sinking fund by buying its own stock and cancelling it. If it did not do that, it ought to invest in trustee securities. If it did what the London County Council had unfortunately done, it would use it for the purpose of fresh borrowing for schemes such as new streets, or tramways, which were not realisable. They could not sell a sewer, an improved road, or a tramway, and, therefore, under these circumstances, the sinking and, for all purposes of a sinking fund, disappeared. Another point to which he wished to call the attention of the Chancellor of the Exchequer was that it encouraged extravagance. If a municipality wanted to raise£500,000, and did not wish to go into the market, the temptation to take it from the sinking fund was very great, and the money so obtained might be spent in extravagant 713 and unremunerative enterprises. He thought the House owed a great debt of gratitude to his hon. and learned friend for bringing forward this question. If the House went to a division, he would be inclined to support him. The Chancellor of the Exchequer, as representing the Treasury, could put a veto on this, at any rate, until the Committee which he had promised had reported.
To leave out the word 'now," and at the end of the Question to add the words 'upon this day three months.'"—(Mr. Rawlinson.)
§ Question proposed, "That the word 'now' stand part of the Question.
§ MR. GUINNESS (Bury St. Edmunds)
said that the House would be relieved to know that the hon. and learned Member who moved the Amendment did not intend to press it to a division. It was certainly of advantage that the methods under which the London County Council raised its moneys should be fully ventilated. He believed that if these methods were better understood, the County Council would be able to raise money more cheaply than if the public were in the dark on these matters. Parliament intended that closer supervision should be exercised over borrowing by the London County Council than in the case of other municipalities. Those who had taken an interest in the finances of the Council must have noticed that there was a large discrepancy between the amount of money actually spent and the amount authorised to be borrowed. That was because the Council was under obligation to state the outside figure which could possibly be required for a particular purpose. They were not allowed to transfer the saving under one head to meet the deficiency under another head. It was impossible to get a close estimate of the loans required by the local authorities. This year the Council was asking for considerably less than last year. 714 Although£5,260,000 was authorised last year, only£3,236,000 was spent. This year the County Council asked £1,410,000 less for its own purposes. The total amount in this year's money Bill was£6,495,000, but that included loans to other authorities, and also£1,749,000 on account of the first six months of next year. It was necessary in that way to cover the period between the beginning of the County Council financial year, the 1st of April, and the time when next year's money Bill would receive the Royal assent. He was sorry to say that the indebtedness of the London County Council had gone up, but it was satisfactory to note that it had not gone up at such a rapid rate as in the previous year. The net debt at 31st March, 1908, was£49,938,000 as compared with£48,313,000 at the corresponding date in 1907, and£45,234,000 at the corresponding date in 1906. The rate for County Council purposes was now exactly the same as it was the year before last. When the new Council came into office they were able to reduce the education rate by 1d., but it was found necessary to increase it again to meet the growing expenditure on that service. The most important point raised by hon. Members was the question of the sinking fund. He would point out that the Treasury had to be satisfied that moneys borrowed from the sinking fund would be replaced before they were required to pay off debt, and for that reason, so far as he knew, it would be impossible to borrow money for the purpose of any loan for sixty years The general purpose for which this money was borrowed from the Consolidated Loans Fund was to advance short loans to local authorities, and the Treasury before giving sanction always insisted on such arrangements as would ensure repayment to the sinking fund with interest before the maturing of the original loan. The County Council had no choice as to the insertion of this clause, because there was a Standing Order 715 of the House of commons regulating Private Bills which said—No Bill promoted by the London County Council shall authorise any alteration in the mode of dealing with the Consolidated Loans Fund unless the Treasury specially report in favour of the alteration.Therefore, he thought they might assume that the Treasury had considered this matter, and that it was regarded as satisfactory. They were obliged to buy under this Bill unless they were able to borrow from the Sinking Fund, The hon. Member for Cambridge University had raised a point in regard to the County Hall which was to be built, and had alluded to the fact that there had been no Parliamentary Estimate of the cost. No Parliamentary Estimate was necessary, for by the Local Government Act, Section 55, local authorities were authorised to erect the necessary buildings. The County Council Site Act of 1906 was necessary to give the County Council power to acquire land compulsorily, and that Act authorised the expenditure of£600,000 on the site£384,000 had already been spent, and provision had been made for spending£175,000 this year. Hon. Members might be interested to learn that the present County Council had seen its way to decrease the estimate for building. The original estimate was to spend£1,600,000, but by means of restricting the building to a smaller site and not taking over the whole of the Holloway property, the estimated cost had been reduced by nearly£300,000. The hon. Member had also raised a point about the tramways, and had pointed out that some of the figures in the schedule were authorised under Parliamentary Estimates and others not. A good deal of the expenditure was authorised under the Tramways Act of 1870, and it was quite impossible to keep the expenditure under a special Act and under a general Act absolutely separate, because it was necessary to spend money on the assumption that 716 the tramways were a growing concern, and to have in view the general interest of the whole concern. The hon. Member had asked what the cost was of the subway from the Strand to the Embankment. Up to the 31st December last the cost had been£185,000, and the amount in the authorising Bill was£250,000. There was also a provision of£6,500 in the present Money Bill. A question had been asked about the steamboats. These were now for sale, and he thought it would be inadvisable in the public interest to make any suggestion as to what the County Council thought was their present value. The loss on the steamboat service last year was£50,000, and it was advisable that the steamboats should be sold as soon as possible. He hoped that, as the hon. Member did not propose to divide on the Bill, he was satisfied with the explanations now given.
§ MR. B. S. STRAUS (Tower Hamlets, Mile End)
said he wished to ask the hon. Member for Bury St. Edmunds if it was a fact that the present County Council had repaid no less than£60,000,000 of debt, as at the last County Council election it was put forth by the present majority that the debt was£110,000,000. That had been shown not to be the case, and he knew at the time the figures then given were absolutely untrue and only issued for election purposes.
§ MR. LEVERTON HARRIS (Tower Hamlets, Stepney)
said that what had been stated was that£110,000,000 was the total debt of London, which included the debt of the Water Board and some other boards.
§ MR. B. S. STRAUS
asked if the statement that the debt of the London County Council was£110,000,000 was ever contradicted, or whether it was made for the purpose of misleading the electors.