NECESSITOUS AREAS.

HC Deb 14 December 1926 vol 200 cc2833-76

Motion made, and Question proposed, "That this House do now adjourn."—[Commander Eyres Monsell.]

Mr. WILLIAM GRAHAM

We had put a Motion on the Order Paper for the express purpose of securing on the Adjournment a discussion of the problem of necessitous areas. That Motion was drawn in rather wide terms, in that it directed attention to the enormous growth of the liabilities of the local authorities, due to industrial distress within recent years. It went on to argue that the time had come when, in the national interest, the State should assume some part of the responsibility for these great burdens. For reasons best known to themselves the Government have made discussion of that Motion impossible. We, on our side, would have liked to submit that to the open and definite test of opinion in this House, since we are perfectly satisfied that on every ground an unanswerable case could be made for a Motion of that kind. It is of vital importance that Members should declare their faith one way or the other. We are denied that opportunity to-night, and, accordingly, I am compelled to fall back on the simple Motion for the Adjournment of the House for discussion of this question. We recognise that that confines us very largely to problems of administration, but even in problems of administration we can outline a case which I think would go a considerable distance to meet the difficulties of the local authorities at this time.

Innumerable debates on this subject have already taken place. I am not here to suggest that any Government has been free from difficulty in this matter. It would be idle to deny that a considerable sum of public money is involved. But to-night, in view of the fact that we are at the end of four or five years of industrial depression, and that events have been aggravated very much by the circumstances of 1926, it is possible to show that the case for the local authorities has become urgent, and, indeed, overwhelming. Recently figures have shown that the amount of out relief in England and Wales, which was £2,000,000 to £3,000,000 annually under normal pre-War conditions, has risen as high as £15,000,000 or £16,000,000; that local authorities like Bedwellty have liabilities of approximately 1,000,000—I am giving only round figures—with annual liabilities of £50,000; that there are heavy debts in Sheffield, Birmingham and other areas; that the North-East Coast of England and the East End of London, the West of Scotland and other parts of the country, which are exposed to industrial distress, have suffered very severely indeed. No one disputes that a large part of that burden emerged before the actual coal stoppage descended upon the country. I want to make it perfectly clear that we draw a line also, at all events, for the purposes of debate, between that part of the work of the local authorities which has been subject to controversy in this House—some form of interference by the Ministry of Health, and the rest—and the ordinary normal work of the local authorities which has not been in controversy at all. In point of fact it is local authorities which have proceeded largely in terms of agreement with the Ministry of Health which find themselves in this deplorable situation at the present time.

I think we shall gain very largely if we have that fact in our mind, and recognise that here is a great issue which has grown up because of several years of industrial distress, taken together with the events of the present year. Various appeals have been made to the Government in previous Debates, and certainly I am not going to suggest that this is capable of easy solution. In fact we, on this side, know perfectly well, from our experience of local authorities in these matters, that it is a very complicated issue and that it is very difficult to make proposals which will help the local authorities in Great Britain and will work out equitably and evenly over the whole field. But the first thought which occurs to us to-night is this: that even if we take the most optimistic view of industrial recovery in this country in the near future, several of these local authorities are going to find it almost impossible, if not indeed impossible, to meet the liabilities which now surround them. Take a comparatively small local authority which has a debt of £1,000.000 and an annual service on that debt of £50,000. It must be plain to every Member of the House that, even if conditions improve far more rapidly than the most optimistic among us believe to be possible, the normal work of that local authority must be severely penalised. The time may come when it will be compelled to say that it wants a moratorium or special consideration, being unable to meet these very great liabilities. So several of my hon. Friends and colleagues from the more distressed districts, together with the great bulk of the members for whom I speak, have come to the conclusion that it is only on the basis of some definite State contribution, or the shouldering by the State of some part of the responsibility that this situation can be met. The Chancellor of the Exchequer and I have no doubt the Minister of Health will say that in existing financial conditions they cannot entertain a proposal of that kind. Doubtless that will be the line of reply, but it is our duty in this Chamber to look at the facts of the case, and I ask hon. Members to consider what is the real situation which confronts us.

We all recognise that these very heavy burdens on the localities impose a load upon industrial recovery which is far less defensible than the load which is imposed by Imperial taxation. The load on the locality falls upon the industrial enterprise in rates, whether it can pay or not, and, moreover, the load is imposed in this country in a manner which leads to the greatest anomalies and injustices among the local authorities themselves. If the State shoulders any part of the burden, what happens is that you either add that to the public or national indebtedness of the time, and take it away from the indebtedness of the local authority, or, if you try to do it from the revenue of the day, you transfer it from local rate to national tax. The national tax approximates much more closely to the principle of the ability to pay than the local rate can pretend to do under existing conditions. If that be the state of affairs, you have a very strong case, from the standpoint of industrial recovery, for the transference of at least a portion of this burden. Hon. Members on the other side will agree that the real issue before us is not national tax or local rate, but the aggregate burden. That is what industry has to face, and what the masses of the unemployed and of others at the present day have to face, and, accordingly, any re-allocation of that burden, as between national tax and local rate, which will be truer to economic principles is a step which we are taking definitely in the interests of industrial recovery. For that reason it can be defended, both on the ground of principle and also on the ground of practice in the conditions which confront us now. I wish to make that point plain, and to enforce it in this Debate, on behalf of many whose areas are far more severely penalised than my own city can claim to be, bad as it is in the existing conditions.

I pass to the next stage of the Debate. Hitherto, the discussion has turned very largely upon a request for special assistance in some shape or form for what are called necessitous areas, and to-night it is our duty to direct attention to the change which has overtaken this controversy, and at the hands of the Government itself. Towards the end of last year a Committee was appointed for the purpose of considering in an expert manner schemes which were proposed for the special assistance of these necessitous areas. Those who have studied the report of that Committee will observe that four or five proposals were made and that the bulk of the attention was devoted to one scheme which was propounded by the Borough Treasurer of West Ham. One dare not in a Debate of this kind enter into all the highly technical proposals which were submitted to that Committee. Some of these had regard to the excess number of unemployed, or of people who required Poor Law relief. Others raised problems of rateable valuation. Several had in mind, clearly, some definite State grant, and others contemplated a continuing contribution in relief of local rates. Some, clearly, had in view what is already done for necessitous areas, under the Education Acts, but, one by one, these proposals were turned down by the Goschen Committee on the ground of the anomalies, difficulties and problems which in the judgment of the Committee they contained and which could not be surmounted.

The average person reading that report is forced to the conclusion that it is singularly barren. In other words, the committee said no scheme was practical politics, and accordingly they could not recommend anything. But why did the committee reach such a, negative result? Mainly because of the terms of reference. If the House turns to the terms of reference of the Goschen Committee, they will see that, for all practical purposes, that Committe had no power to initiate anything. They were only asked to consider and report on schemes submitted to them, and, judging from the introductory passages of their Report, they apparently took a very limited view as I regard it of their already limited terms of reference. While it is true that at the end of the Report they said they were not there to suggest that some method could not be found for overcoming the anomalies and difficulties which had been suggested—still they do not propound anything at all. The net effect of this inquiry was to give a lever to everybody who wanted to make a case against any specific scheme for the relief of necessitous areas. The House will, I think, agree that that is the wrong spirit in which to approach the situation. Here we have a vast mass of unemployed. We had them before the coal stoppage, and we certainly have more as a result of that stoppage. A great burden is imposed on the local authorities and on the early recovery of a great many of our industries, and all that the committee does is to turn down one after another the various schemes propounded on the ground that these schemes contain flaws and anomalies which cannot be removed.

All who have studied the problem of finding a formula for the relief of the necessitous areas in this country will agree that we can never get anything which will satisfy all shades of opinion. That cannot be done, because a very great deal depends upon the view one takes of a scheme of this kind. But surely we ought to go as near as we can to a. suggestion which will be practicable in character and which will bring relief broadly and generally to the districts requiring it most. That is the spirit in which the problem ought to be approached, and that certainly was not the spirit of the Committee to which I have referred. Very soon afterwards, the Government indicated in this House that no scheme for the special assistance of the necessitous areas was under consideration, hot since that time, there has been a development, and this leads me naturally and easily to the third part of what I intend to say.

The Minister of Health indicated some time ago that the Government had in mind a system of block grants or what are usually called fixed grants, although that is a very misleading term, as I think the Minister will agree. These grants were to be awarded on the basis of population, taking into account assessable value per head of the population so far as that was below the average of the country, and it is suggested that by means of a formula of that description you might, within a scheme of block grants, bring assistance to the poorer areas. At the present time, unless I am mistaken, that is the sole proposal which we have in Debate as having been put forward by the Government for the purpose of meeting the problem now under discussion. That raises very serious issues, because the House will observe that the Government have passed away from any scheme designed purely and simply to help the necessitous areas into the whole problem of the percentage grants or the Exchequer grants to the local authorities in Great Britain. That, of course, is only in keeping with what the Chancellor of the Exchequer said some time ago—that he intended to try to find some system of replacing these percentage grants by block or fixed grants, and for the purposes of this Debate we may regard this latest statement as a development of that policy.

The first thing we must point out in that connection is this—and it is an old story now—that in 1922 the Coalition Government, following a recommendation by the Geddes Committee, which many of us thought singularly ill-considered, since it had very little relation to the facts, appointed a Committee, under the chairmanship of Lord Meston, for the express purpose of analysing at length the whole system of percentage grants in Great Britain and of making recommendations. That Committee took evidence for rather more than a year from all leading local authorities, and experts of one kind and another, and from people who were in favour of the percentage system as well as from people whe were opposed to it. The history of the Committee is in many respects remarkable, but it is strictly important for the purposes of this discussion to-night. From 1922 until 1925, or until the early part of this year, nothing more was heard of the Meston Committee, and it was perfectly impossible for the members of that Committee to get the chairman to call it together, or for the succeeding Governments of the time to get him to do anything in this matter. May I make it clear, in passing, that I must not be interpreted for one moment at attacking anyone who cannot be present in this Chamber to reply for himself. That is no part of my purpose. I only want to recall to the House these facts, since they are relevant to the subject now before us.

For three or four years it was impossible to get any statement at all from the Chairman of the Committee who had undertaken to prepare a draft report but, finally, in February, 1926, a draft report was prepared. That was circulated to the Members of the Committee—I am obliged to state this, otherwise the House would not get the facts and our case would be impaired—with a covering note to the effect that the members of the Committee would be called together to discuss it at an early date. From February right down to the present time that step has never been taken and we have thus the extraordinary position that a Committee has sat for more than a year, bas taken some of the most valuable evidence ever given on this subject, has a draft report prepared by its Chairman, and yet all this material is not available to Members of this House at the very time when they are being asked to approve of a substantial alteration in the system of Exchequer grants in this country. That alteration will affect the problem of necessitous areas which is primarily our theme at the moment. No one can defend that state of affairs, but I want to go on to say that 85 per cent. of the evidence tendered to the Meston Committee was in favour of a retention of the system of percentage grants, with which of course hon. Members are quite familiar. These grants are, broadly and generally, 50 per cent. of approved expenditure for purposes of health and education; 75 per cent. for venereal disease treatment; 100 per cent. for certain port sanitary services, dealing with the danger of infection. and various percentages in respect of certain other classes of grants.

That system has been in force for a number of years in this country, and it is designed, as I think the Minister will agree, to minister to what are believed to be inevitably expanding needs in the community, and to supply, on the one side, a certain centralised regulation of the work of the local authorities, and on the other side, to encourage the local authorities, and on some occasions to press them, to undertake those services by the promise that 50 per cent. or 75 per cent. or some other percentage as the case may be of the approved expenditure will be met. Evidence was also tendered to the Meston Committee in favour of what is called the block or fixed system of grants but that evidence was a very small part of the case submitted to the Committee, and the extraordinary thing is that the draft Report—I am obliged to make this perfectly public—was inconsistent with the great bulk of the evidence tendered to the Committee. The Minister of Health will probably say to-night that he has no knowledge of the report of the Chairman of the Meston Committee.

The PARLIAMENTARY SECRETARY to the MINISTRY of HEALTH (Sir Kingsley Wood)

There never was a Report.

6.0 p.m.

Mr. GRAHAM

I refer to the draft Report of the chairman. That probably also would be the reply of the Chancellor of the Exchequer, but for us on this side the plain fact is this, that the Government are proceeding with a system of block grants which is apparently so far in keeping with what that draft Report, which they have never seen, recommended, and the House is therefore in the remarkable position of being asked to discuss a subject on which it has not this very important evidence, which should be in the possession of every Member upon an occasion of this kind. But while that is the almost ludicrous state of affairs, there are certain other considerations. The Government, apparently, propose to weight the contribution to the local authorities in terms of its extra population with reference to assessable value below the country's average. That is a kind of rough and ready description of the formula, but before any block system is introduced at all, we must remember clearly what the Chancellor of the Exchequer and the Government had in mind. They criticised, or seemed to criticise, the percentage grants on the ground that they did not give complete control over an important and growing part of. expenditure, and they also criticised them on the ground that, if they instituted some system of block or overhead grants, that would be consistent with a reduction of the national liability; in other words, it was clearly national economy which was in mind, and I understood they intended to take a certain recent year as the basic year for this purpose, and then to give some form of guarantee to the local authorities that for two or three years ahead that amount, at all events, in aggregate would be provided for them, and within the block or aggregate so fixed the local authorities would be expected to apply the percentage system within their areas.

If that be a correct description of the state of affairs, it is plain that in total the local authorities of this country are not going to get more than they have had in some recent basic year, and so we are entitled to place these two facts together, namely, first of all, the refusal of any specific provision for the necessitous areas, with all their needs at the moment, and, secondly, the prospect of some fixed or overhead grant for the future which will amount to nothing more in practice than a re-arrangement of the liability or responsibility or burden year by year within the local authorities themselves; in other words, the State has not stepped in in any capacity to help the local burdens arising from the industrial conditions of the past four or five years.

Moreover, to that state of affairs must be added this thought, that the tendency of a great deal of the Government's legislation within recent times has undoubtedly been to increase the burdens upon the local authorities. No doubt the Government would argue that while they diverted £6,000,000 or £7,000,000 from the Road Fund, all the immediate and' prospective needs were met, hut the tendency must be, in a device of that kind, to increase the burdens on the local authorities if the acute needs of a great deal of the road service were not to be neglected. The arrangements for the administration of unemployment insurance benefit were altered in such a way as to enable many of the local authorities to argue that they had got burdens which would not have fallen to them if' this Regulation had been left untouched. Nearly everything points to the fact that in the distressed areas numbers of people tend to oscillate between the Poor Law and the Employment Exchange, with a tendency to settle down upon the Poor Law, resulting in an acute form of burden on the local rates, and to this test may he added many others, the broad effect of which is to fill the local authorities with a good deal of anxiety in existing conditions.

But if the Government contemplate some system of block grants, weighting it in favour of the poorer areas on the basis which I have just described, and if that is to be the reply of the Govern-merit to-night to this fresh discussion and the many appeals on behalf of these districts, I am bound at once to say to the House that even the draft Report, I believe, contained proposals which, whether or not they are to be revealed ultimately, at all events should be discussed here before any step of the kind is taken. It certainly made it perfectly plain that there should be some kind of standard of efficiency for the country as a whole, and, in the second place, it laid down the argument, supported by a good deal of evidence, that some kind of costing system should be introduced by the local authorities, partly for the purpose of their protection, and partly for purposes of national reassurance that we were getting the best value for the money that was expended. In other words, there was a good deal of constructive suggestion, which amounted to definite conditions, before any alteration of the system of percentage grants was made in the direction of replacing them by a block or fixed sum. In addition, it was made perfectly plain that no step of that kind could be taken without a, good deal of notice to the local authorities in Great Britain, and my case to-night is that the demand for that notice is increased a hundredfold by the enormous burdens which have lately descended upon these bodies. When you have them penalised, as undoubtedly they are at present, you ought not further to prejudice the money they have got to raise by the promise of this national legislation which will weaken or impair their financial position, certainly by restricting the amount which they are to get from national funds, if the purpose of the Chancellor of the Exchequer and the Government is to be achieved. On the very lowest pleading on behalf of these districts several years should be afforded at least before a change of this kind is introduced.

As I understand the idea, the Government may proceed with this during the next. financial year, taking this year through which we are now passing or some recent year as the basic period for the new scheme. That is the state of affairs which this House, in discussing the problem of the necessitous areas, as now altered by the suggestion of the Government, has to keep clearly in view, and surely the House will agree that it would be singularly unjust to embark upon a scheme of this kind unless we are going to pay some attention to all these valuable Reports of recent years which have asked the public to study the relationship of Imperial and local taxation. The House will recall the elaborate Report of 1914, and the fact that definite Clauses were incorporated in a Bill of that year for giving effect to several of the recommendations of that Royal Commission, that the War intervened and altered the whole situation, and that right down to the present day nothing has been done.. But many of the proposals of these Royal Commissions are now urgent in character. Hon. Members will very likely say that if you are to await the application of proposals of that kind, you will never get any remedy for any area, and you will require years for further legislation. It may be true that some time is required if you are to proceed with a comprehensive scheme, but there were immediate and specific proposals of that Royal Commission in 1914 which might very well be adopted now, which, in point of fact, would bring relief to some of the more distressed of our local authorities, but which, in any case should be part and parcel of any step taken by the House of Commons before we introduce a system of block grants or do anything otherwise to impair the position of the localities.

I have tried to state the ease in these comprehensive terms for this reason, that while we argue very strongly, indeed, first of all, for the necessitous areas, we are driven by the Government's proposals to look to a very much wider field, and I beg the House not only to give us their support for some immediate relief for these areas but, further to safeguard the position for the future by refusing to assent to a scheme of block grants which is premature, which can only add to the burdens of the localities, and which can only further penalise the industrial recovery which, I trust, it is our common purpose to promote.

Mr. TREVELYAN THOMSON

The Chancellor of the Exchequer, speaking in the Debate on Wednesday. referred to the extraordinary differences in the incidence of unemployment and to the fact that if you draw a line from Bristol in the west to Hull in the east, north of that line you find double the amount of unemployment that you have south of it. That is quite true, for although the amount of unemployment averages 13.6 per cent, for the whole country, we have a very much heavier rate in the northern areas. Whereas in London and in the south-east and south-west of England the average is 7 per cent., when you get to the north-east of England it is 19.7 per cent., or nearly three times as much,, and that 19-7 is an average, so that you can find certain districts and certain trades where the incidence is ever so much heavier. For instance, if you take the north-east coast, you have in the shipbuilding trade 64 per cent. of unemployment, in marine engineering 48 per cent., in pig iron industries 63 per cent., and in iron and steel generally 53 per cent.— a most appalling total. These figures, no doubt, are swoflen on account of the recent coal stoppage, but before that, in the shipbuilding areas, the unemployment ranged from 40 per cent. to 50 per cent. If I may give an illustration of the experience of my own town, it will bring home to the House very closely what these figures actually mean, for sometimes one seems to think that here in London, in Whitehall, the necessities of these outlying districts are scarcely appreciated.

In Middlesbrough we have 38,000 insured male workers, and at the present time 15,540 are on benefit, which means that 41 per cent. of the total adult male population are on benefit. In point of fact, the number out of work is even larger, because, owing to the working of the Insurance Act, a large number are getting relief from the guardians and are being denied unemployment benefit. When you come up against figures like these, you realise how the ordinary conditions break down. The normal machinery for dealing with unemployment when it is at 5 per cent. or 6 per cent. breaks down completely in face of figures like 50 per cent. and 60 per cent. If you take the out-relief in Middlesbrough, before the war, in 1914, the average weekly amount spent in outdoor relief was £326, but to-day it is over £4,000 per week, or an increase of over 12 times. No wondeer the poor rate is up from ls. 2d. to 6s. 6d. and the total rate from BS. to 20a,, and no wonder that people ask why the industrial areas should be left to bear this burden alone. You have in many areas rates of 20s. to 30s., and then, if you turn to residential areas, such as Bournemouth, Blackpool, Southport, or Oxford, you find the total rate is only 7s. or 8s. in the It is not the fault of these industrial areas, nor is it the fault of- the employers or of the employed. They are the victims of the aftermath of the War. It is due to national and to international causes, and we say it should be made a national burden.

This claim for some equalisation of the burden is no new one. Reference has already been made to the Departmental Committee of 1914, but there was a Royal Commission on Taxation sitting in 1901, and their recommendations have not yet been carried out. They admitted there were certain services which should be looked upon as national, including Poor relief, asylums, police, main roads and education. They said that funds should be raised on the basis of ability to pay, and they considered that taxes were more in accord with this principle than rates. In March, 1914, the Departmental Committee on Local Taxation reported that a considerable increase in the amount of State subvention to local authorities is justifiable and necessary. Since then nothing has been done to carry out those recommendations. Surely, if it were necessary in 1914—and the terms of reference of that Committee were to make recommendations with a view to legislation at an early date—I think we have reason to ask that what was required in 1914 should be carried out in 1926. No new principle is involved. Already in education there is the necessitous School area grant. The same principle is recognised in the working of the Metropolitan Common Poor Fund, and the Local Authorities Financial Assistance Act. If it be right that the wealthy parishes of Westminster and St. Georges should contribute to the poverty-stricken parishes of Lime-house and Shoreditch, surely it is equally right that in the provinces the wealthy residents of Bournemouth and Blackpool should contribute to the distressed areas. In Blackpool, for instance, the poor rate last year was 4d. in the pound, while at Merthyr Tydvil it went up to 8s. 9d. These residential areas draw their support from the industrial areas, where people make money, and then retire to the more salubrious neighbourhoods, and evade their responsibilities.

Apart from the injustice of these inequalities, there is, as the previous speaker said, the very heavy burden on industry, because rates are a first charge on production. You do not wait to see whether there are profits or any income to rate; it is a first charge on production, and falls very heavily on these industries. In my own town, in 1914, the rates were equivalent to Is. per ton of steel produced, and to-day the rates are equal to a charge of 6s. or 7.s. per ton of steel produced, which means a very heavy handicap in competition with the world. The Committee already referred to, appointed by the right hon. Gentleman, although it could find no particular scheme that was watertight, seemed to be in the main in sympathy with proposals on the lines of assistance to necessitous areas, and I suggest that they should be reappointed with wider powers of reference, in order to devise some means whereby these necessitous areas could he eased of their burden. The Prime Minister, speaking on this question on the 29th June, 1925, said he was concerned as to these black spots in industry, and that. the Government were considering whether anything could be done by subsidies in specially distressed districts in aid of rates, to take that burden off those who manufacture in those districts. I submit it is time that something was done. Instead of doing anything, tin Government have increased the financial responsibilities of local authorities. Reference has already been made to the raiding of the Road Fund. Whatever may be the merits of that particular ease, the fact remains that the local authorities have so much less to spend on roads than they otherwise would have. Then the education grants have been cut down by Circular 1371 and Memorandum 44, so that if local authorities are to continue education on the same basis, they have to provide more money out of the local rates. Then the Unemployment Fund Grants Committee, working under the Circular of the 15th December last year, very seriously curtailed the grants for public works for the relief of unemployment. Then you have harsher administration of the Unemployment Insurance Act, which has driven men from the Insurance Act on to the Poor Law, and so swoflen the local rates.

I do hope the Government are not obdurate in these matters. I would appeal to them particularly with regard to the amounts payable by the Unemployment Grants Relief Fund. I do submit that it is infinitely better to provide men with work than with insurance benefit or relief. If the Parliamentary Secretary agrees with that, he has the remedy in his own hands, and will influence the Government to allow the Unemployment Grants Committee to make larger grants to local authorities. instead of making larger grants, they have been cutting them down. For the 12 months ending September last, the total expenditure sanctioned was £11,000,000, as compared with £21,000,000 in the previous 12 months. Surely, it is better to set men to work than to give them relief. Do we realise that, since the Armistice, we have paid away, in hard cash, nearly £400,000,000 in unemployment benefit, out-of-work donation and Poor Law relief? We might have had valuable works of a national character if we had only spent that money in public work. Are we prepared to go on handing out millions of money and getting nothing in return? If the Government have not the vision and foresight themselves to put in hand work they might, at any rate, allow local authorities to get. on with their schemes.

In my own town, we have spent over a million of money, and have got valuable public improvements to show for it, but with rates from 20s. to 30s. in the £, we cannot go on without greater assistance. The relief given by the Government up to the present is only one-third of the total cost, and, believing that this is a national problem, I submit that the Government would do well to grant two-thirds of the cost, and then local authorities would be able to put in hand numerous schemes. In my own town, we have many schemes we could put in hand, if only we had money with which to do it, and I do submit that, instead of paying money for no services rendered, it would be infinitely better to spend money on works of public where you would have national assets to show. It is infinitely better for the men themselves. They do not want relief; they want work, and I do hope the Government will listen to the appeal of the distressed areas. They have had to carry on long enough. They have borne the heat and burden of the day manfully, and they have a right to appeal to the Government for assistance.

Mr. DENNISON

During the short time I have been in this House, 1 have listened on many occasions to discussions of a similar kind to this one; in fact they have become more or less of a hardy annual, and have become, as far as I am concerned, almost nauseous. But they seem to have had no effect on the Government of the day. The Minister of Health represents one of the seats for the city with which I have the honour to be associated, and I understand that, during the period of his public career in that, city, he took, as a member of the corporation, a very active and useful part in the social life of that city. One of the things, 1 believe, about which he felt very keenly during the period he was on the City Council of Birmingham was this inequality of the industrial areas being called upon to hear an undue share of the burden of maintaining the unemployed. If that were the case then, it is considerably worse to-day. Let us consider some of the facts. During the last two financial years, the Birmingham Guardians have disbursed well over £3,000,000 in relief—considerably more than the other four unions which make up the West Midland area, so described for purposes of statistics. There was given by way of relief an amount equal to no less than 36s. 3d. per head of the population of Birmingham, or three times more per head of the population than industrial towns like Preston, Rochdale, Dudley and Bury. In the city where the Union Jack and patriotism count for so much, we have over 3,700 ex-servicemen and their Tamilies in receipt of Poor Law relief in April last prior to the coal stoppage. Up to April, 1925, 24 unions throughout the country borrowed something like £6,900,000, and eight of those unions borrowed between them £6,000,000, one being the Poor Law Authority of Birmingham, all this for the purpose of relieving unemployment.

Much of this heavy burden in Birmingham, as elsewhere, is undoubtedly due to the niggardly and oppressive policy pursued by the Minister of Labour, who is also the representative of a seat in Birmingham. Because of the industrial character of this city, it has to bear a rate of 16s. in the £, a great proportion of which is undoubtedly due to the growing burden of Poor Relief consequent upon unemployment. That the protest is not confined to the Labour party in this House or to the Labour members of the City Council of Birmingham is demonstrated by the report which appeared in the "Birmingham Post" of last Wednesday, of a City Council meeting—and, by the way, the majority of the City Council of Birmingham are members of the same party as right hon. and hon. Members opposite—and they carried a Resolution deploring the distress in the City of Birmingham, largely due to unemployment, and an undertaking was given to send a deputation to meet the Government in order that they might do something to relieve the position.

I wish to associate myself to a large extent with some of the things said by the hon. Member for West Middlesbrough (Mr. T. Thomson) in respect of the parlous position of the iron and steel industry of this country. If there is any industry in this country which suffers as a result of the War, and particularly as a result of the peace, it is undoubtedly the iron and steel industry. What are the facts? The latest returns show that the workers in the iron and steel industry have the largest percentage of unemployed of any industry in the country, namely, 53 per cent., and a large proportion of them have been unemployed for three or four years. It is not all due to the coal dispute, but has been more or less chronic in this particular industry. The policy pursued by the Minister of Labour in particular in restricting benefits and the conditions under which benefit could be paid to the unemployed has thrown many of them, many whom I know very well indeed, on to the Poor Law. That is not fair or equitable to them, and, besides, there is the effect upon the industry itself in the burden placed on the production of iron and steel. In places like Middlesbrough, Jarrow, Stockton-on-Tees and parts of the north-west of Scotland, it will be found that the local rates are so heavy in consequence of the burden of unem- ployment, which ought to be a national charge instead of a local charge, that in some of those districts where before the War the local rates used to add something like 6d. a ton to the cost of steel they are now responsible for an addition in the region of 7s. per ton.

I do not know that there is any object in saying a great deal more, though we could say much more if we thought there was a possibility of convincing the Government that they ought to initiate a bold scheme for taking over the whole cost of unemployment as a national charge instead of a local one. I urge that for more reasons than one, but there is one which has peculiar application to the iron and steel trade. When the peace was made, it was one of the conditions that Germany should give this country something like 2,000,000 tons of shipping as reparations. I may tell some hon. Members who perhaps do not know it, though there are many who know it better than I do, that to produce that quantity of shipping would have meant two years' full employment of every shipyard in this country. That 2,000,000 tons of shipping from Germany laid our shipyards idle and our iron and steel works idle, and if, as I assume hon. Members on the other side will say, it was a national advantage that we should take 2,000,000 tons of shipping from Germany, those who suffered in consequence of that advantage to the nation ought to have the loss made up to them by the nation. The day has arrived when the country and the nation must assume full responsibility for its helpless and destitute unemployed, rather than leaving them to be a burden on the localities, and causing individuals to suffer when there is no necessity for them to do so.

Mr. WEST RUSSELL

It is not surprising that hon. Members opposite should have sought once again an opportunity of discussing necessitous areas, nor is it surprising that the Government should have provided the opportunity, for concern about the mounting rates is widespread throughout the country. Those of us who represent industrial areas, especially areas which for a considerable time have experienced great depression, are well aware of the consternation and the dismay with which not only the ratepayers there but those responsible for local affairs regard the terrific burden which is being laid upon them. It is quite true that this is a subject that is almost threadbare. Already in this short Session two days have been given to the discussion of this question, and not only this Government, but all Governments from the time of the Coalition and before it, have been confronted with this problem of the necessitous areas. But while hon. Members opposite desire an opportunity for further discussion, so do hon. Members on this side, although the motives may be slightly different. I suppose the motives of all of us are mixed, and, that applies not only to individuals but to Government and to Opposition alike.

I would be the last to suggest that there are not hon. Members opposite who are very anxious to find a way of deliverance from this thraldom of debt into which so many of our industrial areas have been brought, but I think hon. Members will at least admit that we have some ground for suspecting that this Debate was not sought with a single eve to the solution of this problem. Only the other day we had a discussion upon a Vote of Censure upon the Government. The coal stoppage had been brought to an end. The country was indignant that so mad and so maddening an experience had been brought upon it. There were recriminations, and some of the bitterest of those recriminations emanated from Members of the other side and were directed towards their own party, and the object of that Vote of Censure was to direct some of those recriminations away from their own party towards the Government. It seems to me that part of the case tonight is to suggest that much of the difficulty with which the areas have been confronted has been due in great part to the action of the Minister of Health and the Minister of Labour. I have heard it suggested that this problem is due—

Miss LAWRENCE

The point I want to make is a short one. We have seen that, under the strain of unemployment, very many of the industrial and colliery districts have become absolutely insolvent. We are dealing with very large figures indeed. The ordinary budget of local authorities for the last normal year totalled £142,000,000. Out of that sum, £15,000,000 was for out-relief, as contrasted with £2,000.000 or £3,000,000 before the War. The Minister has told us that, during the six months ended 30th September, an additional £8,000,000 of out-relief was given. We know that the two months of October and November were very bad, and that December is not a good one, and we can hardly hope that we shall have more than two months or six weeks of normal conditions before the end of the financial year in March. In consequence, one is making a very moderate estimate, a very cautious estimate indeed, an estimate which I think is too low, if we say that in this financial year the authorities will have spent £25,000,000 under this head. That is an enormous figure.

The strain of unemployment caused by the coal dispute was a strain very much greater in degree, but not different in kind, from the strain which had been inflicted on the industrial and the colliery districts ever since the War was over and unemployment set in. That is in the nature of things. It was felt before the War. A district where there are many industrial houses is a district with the very worst class of property for rateable value, no buildings are of so poor a rateable value as the houses which house the industrial population, and there is no population which makes so great a demand upon the rates. Such a population as that needs elementary education and needs all kinds of health services, and so we have the position that the poorer a district is, the larger the demands upon its rates. That produced an extraordinary difference in rates in normal years, before the coal dispute began, a. difference extraordinarily unfair and burdensome. People are very fond of saying that this is a question of administration, that the localities with the high rates are prodigal, but that. is not true.

If one looks at the return of the Ministry of Health showing the amount raised per head of the population of a locality, which is roughly the amount spent from the rates per head, it will be seen that the districts with the high rates are often the most economical. Let me take one of the best places in England, Eastbourne. In the last completed year Eastbourne had a rate of 9s. 5d. It spent £4 11s. per head of its population. All the amenities of the world were lavished upon the citizens of Eastbourne. Middlesbrough only spent £3 13s. per head of its population, and had a rate of 18s. 8d. Sheffield only spent £3 9s. per head, and had a rate of 16s. 6d. East Ham spent a little more per head than Eastbourne, being very much burdened by its own pauperism and by its contribution to the West Ham borough. East Ham spent £4 17s. per head of its population, as against Eastbourne's £4 11s., and it had a rate last year of 23s. 5d. in the pound as against Eastbourne's 9s. 5d. Therefore, it will be seen that the sacrifices demanded are the greatest in the industrial areas which are the poorest and where the civic amenities are the least. That is always so, and it is in the nature of things. Wherever you have a large industrial population you have to face that state of things. It is in those districts where municipal life is over-burdened by the effects of general unemployment that the terrific weight of all this expense due to the coal stoppage has fallen, and, as a result, a great many of those areas are so far insolvent that they cannot pay their current expenses out of revenue.

This Debate has been initiated not to state the case, because it has been stated often enough, but for the purpose of getting, to know what the Minister of Health proposes to do. First of all, some relief is necessary for those districts which have absolutely broken down under this burden. We want to know what the Minister of Health is going to do with regard to the burden of these loans I What is he going to do with the loans borrowed with his consent? I wish to stress the point "borrowed with his consent," because in every one of these cases the right hon. Gentleman and his assistants have been satisfied that the loans applied for were absolutely necessary, and he has imposed in regard to those loans all the conditions he thought proper. Therefore, with every respect to the Minister of Health, I wish to point out that he has consented to the granting of those loans, and has satisfied himself that they were granted quite rightly.

What is he going to do about those loans? Is the right hon. Gentleman going to play the part of an ordinary creditor getting as many pounds, shillings, and pence out of those poor districts as he can without regard to the needs of the local schools and other local services? If not, I would like to ask if we are going to have some sort of Dawes plan under which, just as the resources of Germany were mortgaged to the Allies, so the resources of these unfortunate districts are to be mortgaged to the Treasury. If we are not going to have anything of that kind, I would ask: Are we going to have what I think is the only sensible thing, that is a forgiveness of these loans? All these districts have carried a burden which the State ought to have carried. They have pledged their credit and they have got their local finances into a most horrible position. I want to know if the State is going to shoulder those burdens by something in the nature of a Dawes plan, the ordinary creditor taking whatever amount in the pound he can secure. This matter is very important. At the present time the schools are in a very bad state, and they want to improve very much their civic amenities but they have not the money to spend upon them. I want to know under these circumstances what is going to be done in regard to these loans? What is going to be done to put the necessitous districts on a proper footing?

We have had a little more light on this question. We have heard that the Minister of Health has been suggesting block grants in order to benefit the necessitous areas. He has asked the municipalities to prepare a scheme, and we have had a long report on the subject dealing with the county councils concerned. I notice that about £4,000,000 is to be distributed from the grant in relief of agricultural rates, and with the best will in the world 1 cannot understand the basis upon which that is to be distributed. The health grants and the Poor Law grants are to be weighted in order to give necessitous areas more in proportion having regard to the relation between the population and the assessable value per head. To give grants in proportion to the rateable value per head is an excellent thing, and I have been in favour of it ever since the report of Lord Balfour of Burleigh's Committee was issued. At the time it was said that this kind of talk was all nonsense and that the suggestion was impossible. On the contrary, it is not an. impossible suggestion, but is a, scientific plan recommended by Royal Commission after Royal Commission.

The proper way is to distribute these grants to the various areas according to their capacity to pay, but I know the main point is, where is the money to come from? That is an extremely interesting point. Under the block grant system necessitous areas are to have a little more money at the expense of those surrounding areas which are not so necessitous. Under this scheme London will lose £311,000 a year and Birmingham £151,000 a year. Liverpool will lose £112,000 while West Ham will gain £7,000 and Sheffield will gain £8,000 or equal to a id. rate. The necessitous areas where the rates are very high will gain very little. I do not say that 20. in the £ is not a very welcome relief to West Ham, but to give relief amounting Lo about 2d. or 3d. in the £ to districts faced with such colossal rates as Middlesbrough, Sheffield, Newcastle and so forth is to give a very small measure of relief indeed.

When we asked for these additional grants we certainly did not contemplate that the local authorities as a whole should pay for them. What we wanted was more money from the Treasury. That is a very simple matter. When you have to find some £25,000,000 to make good what has been spent during these difficult times by our various Poor Law authorities you do not want a re-arrangement like the one which has been suggested, hut You want more money, and nothing but that will do any good. When you have an industrial district with rates 20s. in the and over, a burden which is killing the industries in that district, what you want from the Treasury is more money and plenty of it. We want to know exactly where we stand. If the nation will not shoulder the burden of unemployment, and if we cannot have from the Treasury something corresponding to the amount required to meet this excessive outdoor relief, unless you get something comparable to the amount required, you are really not doing anything effective to relieve the distress of necessitous areas. That is my point, and that is the reason I ask what are we going to do with regard to these loans. Is it really true that the grant-in-aid is going to amount only to 2d. in the £ in all these very poor localities. We want to know exactly where we stand, and how much the shoe will continue to pinch under the scales which have been laid down by the Minister of Health.

The MINISTER of HEALTH (Mr. Neville Chamberlain)

If there be one thing I dislike more than another in addressing this House it is that I should have to repeat myself over and over again. That does not seem to be a sentiment shared by hon. Members opposite, because it seems to me that the more often they make a speech on this subject the more they enjoy it, and once more they have initiated another debate on this subject. Already we have discussed this subject four times since last March. On this occasion I welcomed the advent of the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham), because I know he is gifted with great ingenuity, and I had some hopes that he would introduce some new element which would give me something fresh to say. I am afraid, however, that I have been rather disappointed, and although the right hon. Gentleman certainly introduced a new element, it is one which is not very helpful to the House.

The right hon. Gentleman devoted part of his speech to the discussion of a Report which has never been made by the Meston Committee, and in another part he criticised proposals which the Government have not yet formulated. Altogether there seems to be a good deal about this Debate what is somewhat shadowy and unreal.

Perhaps I may now come to some of the points to which attention has been drawn. With regard to revenue there are two aspects, namely, the temporary and the permanent aspect. With regard to the temporary aspect, the suggestion has been made by the right hon. Gentleman that we should give some form of special assistance and that argument was used by the hon. Member for West Middlesbrough (Mr T. Thomson) and the hon. Member for East Ham North (Miss Lawrence), but not one of those hon. Members has produced any really adequate suggestion as to how any special assistance should be measured or allotted except the hon. Member for East Ham North who proposes a general forgiveness of sins and a complete reimbursement, at the expense of the general taxpayer, of all the unions which have got into debt through the coal stoppage. That is a very characteristic suggestion coming from her. We know that the hon. Member for East Ham North always quarrels with me when I make conditions in order to be quite certain that the money will be spent with due regard to economy, and it appears sufficient for her charitable heart to know that a union is in distress, and in such cases she is always ready to be generous at someone else's expense.

Miss LAWRENCE

What I said was that it was very undesirable that the conditions in regard to these loans should be fixed by the mere will of the Minister of Health and what I objected to was the Minister's judgment as to the conditions.

7.0 p.m.

Mr. CHAMBERLAIN

Then it is the Minister the hon. Member objects to and not the conditions In regard to that matter I am content to leave myself to the judgment of the House. I may point out to other hon. Members who are not so indiscriminate in their generosity that there are a good number of circumstances which should be taken into account before we decide whether anything is necessary to be done in the way of special assistance, and if anything is necessary, in what proportions assistance should be given to this or that authority. I have examined just casually the position in some unions where the distress has been greatest, and I find that on the whole they are not as had as one might naturally have expected. For instance, I find that in a number of them the total indebtedness could be wiped off by an extra rate of 2d. in the £. In others it amounts to more, up to Qs. I think there are only four which are over 10s. There is one over 15s., and there is one which is over 32s.

Mr. WHEATLEY

Does the right hon. Gentleman mean above the existing rate?

Mr. CHAMBERLAIN

Oh, yes, an extra rate. It does not follow that they would necessarily wipe off the whole indebtedness in a single year. I merely show that it would be sufficient to impose an extra rate of the amount I have mentioned to get rid of their indebtedness on current account. When one finds such enormous discrepancies it is the duty of the Minister, even if that Minister were the hon. Member for East Ham North (Miss Lawrence), to see whether there is any other explanation besides misfortune or geographical position. I will take the one so far in excess of all the others, Bedwellty. Thirty-two shillings and ten-pence would be necessary as an extra rate to wipe off the indebtedness. The position of Bedwellty is now being inquired into by one of my inspectors. I am not therefore going to pass any judgment on it until I get his report, but I am bound to say that reports have been made to me alleging that considerable irregularities have been taking place there. I am told, for instance, that a large number of additional relieving officers have been appointed, some of them being former members of the local council, and that relief has been given on the orders of a special relief committee, which is an independent body, and, I think, was one of the successors to the council of action in operation at the time of the strike. I do not say those things are true. They are the sort of things that are alleged.

Mr. MAXTON

It is worth mentioning to create prejudice.

Mr. CHAMBERLAIN

Not to create prejudice but to show that there may be circumstances which should be taken into consideration in deciding whether people in other unions should be called upon to help to pay these amounts. That is not an unreasonable proposition.

Mr. MAXTON

I do not want to be unfair to the right hon. Gentleman. I never dissented from the proposition that reasonable care should be taken in the expenditure of money. I am dissenting to the right hon. Gentleman throwing out a sheer story, a yarn, to prejudice the position that is being discussed quite coofly and amicably. Nobody on this side has made any foul suggestions against you.

Mr. CHAMBERLAIN

The hon. Member is unnecessarily sensitive. If I am to carry on an argument, I must give illustrations of what I mean.

Mr. MAXTON

Try and tell the plain, simple truth. Give us fact, not fiction.

Mr. CHAMBERLAIN

My point is that before one comes to any conclusion as to the necessity or desirability of giving assistance to unions that are in difficulties it is necessary that one should very carefully examine all the circumstances. Of course there are other differences between one union and another. By some unions relief has been given on loan. In those cases the burden upon the ratepayers will be very materially decreased as the loans are paid off. In other cases, there has been no such course taken. In the case, I think, of the constituency of my hon. Friend the Member for Tynemouth (Mr. West Russell) an additional rate has already been levied, and the borrowing is constantly becoming less. It is unfair, in the case of a union which has Voluntarily imposed on itself an extra rate, that it should also have to pay its share of Government assistance being given to another union where no such steps have been taken. Therefore, I say, generally, the time has not come when it is possible to consider what course it may be necessary to take arising out of the special circumstances of the coal stoppage. Guardians are for the present being financed by Gosehen loans. We have not fixed a time for repayment, and we have said before, and I say it again if the hon. Member still asks me the question, the position will be reviewed next February. That will be the time when we will see what relief it is still necessary to give as a temporary measure, what number of men will be thrown out of work permanently by the pits having been closed, what amount of money is to be paid back again on loans, and what alteration may be made in the valuation of collieries.

Now I come to another position, because I recognise once more that, quite apart from the exceptional incidence of unemployment during the last few months, there has for a long time been a problem which is generally known as the problem of the necessitous areas. It is the problem of the places with industrial populations and low valuations and this unfortunate position, that the very fact of the high rates on industries takes away from their competitive power and consequently tends again to increase unemployment and bring about further demands on the ratepayers. I come back now to the right hon. Gentleman. He says he is entitled to debate the question of block grants inasmuch as I have indicated in a previous Debate that it was in that direction I was looking for a permanent solution of the problem. With regard to the Goschen Committee, I am not quite sure whether the right hon. Gentleman is aware how that Committee arose. It was not appointed by me, as an hon. Member suggested. It was appointed by the Prime Minister, and it arose out of the deputation which came to see the Prime Minister and impressed upon him. certain schemes, and in particular a scheme known as the West Ham scheme. It was in response to a request from that deputation that the Prime Minister consented to appoint a Committee to see whether the difficulties were difficulties which could be overcome. That was why the Committee was appointed, and that is how the terms of reference arose.

The Committee intimated that although they had tried to see whether the West Ham scheme could be amended, they bad been unable to find any way of amending it which would make it a workable scheme. I came up against the same difficulty as hon. and right hon. Gentlemen came up against when they were in office. The right hon. Gentleman says that throws upon the Government the responsibility of finding another scheme. I do not know that 1 am prepared to say that we ought to shirk that responsibility. It is for the Government to find a solution of the various problems. I believe it will be possible to find a permanent solution of the question of the necessitous areas along the lines of the block grant system. I know the hon. Member for Stoke-on-Trent (Mr. MacLaren) would find the solution in a different way. The right hon. Gentleman says we ought not to embark upon any scheme of block grants without having before us the evidence of the Meston Committee.

I am bound to say I am not altogether without experience in this matter. I have been discussing block grants with local authorities for many months. Their criticism was not based on block grants in particular, but upon their belief that the proposal in its particular form was not going to be advantageous to them. The hon. Member for East Ham North says, "The arrangement is no good to me. It is your money I want." That is not unlike the attitude of the local authorities. They want to see a proposition which will put them in a better position than they were in before. Therefore, I cannot accept the right hon. Gentleman's sug- gestion that if I had seen and considered the evidence tendered to the Meston Committee I should have taken a different view of the possibility of block grants. The hon. Member for East Ham North has examined the provisional proposals which were put out by the Minister of Health in connection with the suggested reform of the Poor Law system, and she has discovered, to her great delight, that under these proposals the situation in West Ham would be worse than it is today. Is that not so?

Miss LAWRENCE

I said that West Ham would be given a little, but not nearly enough.

Mr. CHAMBERLAIN

At any rate, the hon. Member was very pleased that she had found a flaw, and I should be sorry to grudge her any enjoyment of her consideration of the proposals as they have appeared. I would like at the same time to warn her that it would be unwise for her to have any confident expectation of disaster to our proposals on considering all those figures.

I may, perhaps, be allowed to remind the House of what I said on the 13th May last. I then reminded the House that the Rating and Valuation Act had been the first step in the possible progress towards block grants. I spoke of the proposal to transfer the functions of the boards of guardians to the local authorities, and I then said: When that has been done, we will then be equipped for undertaking a scheme which I believe will be equitable and fair, and which will have the double effect of taking into account the whole of the expenditure in the whole of the area, the whole burden of expenditure of the area qualified by the policy to be pursued, and at the same time by a system of block grants release the local authorities from the detailed control now necessary."—[OFFICIAL REPORT, 13th May,. 1926; col. 1041, Vol. 195.] It will be seen from that quotation that, in speaking of the block grant system as a possible solution of the problem of necessitous areas, I was not merely speaking of block grants in connection with health services. That is an item in the whole. Therefore, as the Government have not yet put forward any proposals for a general block grant, I merely express my personal views on the matter. I wish to make it perfectly plain that what I said on the 13th May was not confined merely to one service in respect of which Exchequer assistance is given to local authorities, but was intended to cover a. much wider area.

The situation, summed up in a few words, is this: So far as any temporary difficulties are concerned arising out of the prolonged coal stoppage, we are taking whatever steps are necessary to finance the unions for the present, until we have sufficient data before us to enable us to make a final survey of the situation. With regard to the permanent difficulty about necessitous areas, that, I believe, is capable of solution, not by special grants founded upon temporary circumstances, but by, perhaps, a better allocation of the burdens as between unemployment insurance on the one side, as suggested by the hon. Member for King's Norton (Mr. Dennison), and the. Poor Law authorities on the other. The two systems have become very much entangled together at present, and a new allocation on permanent lines of such assistance as is given by the Exchequer will, I believe, bring some relief to these overburdened areas.

Mr. HARNEY

The Minister of Health, in his opening remarks, said that this discussion had given him the opportunity of delivering a speech on a subject which had several times been discussed in this House. It may be satisfactory to him to know that I am giving him the first of a series, because I have not had the opportunity of speaking on this subject before. There can be no doubt that the present system of meeting local services out of rates is one that operates with great injustice, and, indeed, most injuriously, to industry, and I take it that the main object for a discussion such as we are now having is, not to effect any immediate reform, but to throw out suggestions and proposals which ultimately may be shaped into a reviewing and a remedying of the whole system. Of course, contributions must be obtained from the public 'for local and general services. Some of those contributions come through the channel of general taxation; others come through the channel of local taxation; and I rather think the right hon. Gentleman will agree with me that it is more just to the individual and more beneficial to trade to derive as much as possible of the contributions for public and social services through the channel of general taxation.

There are three good reasons why that is so. To start with, general taxation comes out of profits; it comes out of something that is going into the pocket; it is a slice off something that is earned. Local taxes or rates come equally whether there is profit or loss, and there very often is a loss. Where that occurs, the rates either have to come out of capital—and, of course, if that be continued, it is the high road to bankruptcy—or they have to found in a higher production, which necessarily limits the market. That is, undoubtedly, one respect in which rates are worse than taxes. Then, again, the rates fall upon the very instruments of production. If factories are enlarged, if shops are improved, if equipment is added to, up go the rates; and that, of course, must have the effect of limiting the instruments of production and lowering the output: The third reason, and I think it is the strongest, and the one that really hits necessitous areas, is that, while taxation falls over the whole body, rates press upon a vital part. They press upon centres of industrial activity; they press, so to speak, upon the heart, and, the feebler its beating, the greater the pressure, because it is where business is low, where destitution is great, that you have shopkeepers trying to pull along, that you have factories on half time, and it is in just those places and for those reasons that the burden of rates is heavier than ever.

Therefore, I should say, on general principles, that, where it is at all possible, these social and public services should be placed upon general taxation. Of course, they ought not to be all so transferred; there is a great deal to be said for keeping alive local patriotism; but there are many that should be transferred. I dare say this is very old ground for the right hon. Gentleman, but still I would like to emphasise this, that a distinction ought, undoubtedly, to be drawn in the case of the class of services which are local in character and in cost, which are normal, such as education, public health, and so on. That class of services might well be left on the rates, because, after all, it can do no great harm; it recurs with fair regularity, and it can never lead to the dangerous expedient, which we have experienced lately, of supplementary rates.

There is a vast distinction, in my submission, between money required for that class of services and money required for unemployment relief. No one can say that unemployment relief to-day is in any sense local. It may have been so in the time of Queen Elizabeth; it may have been so even in the time of the Act of 1834; but it is not so with the development of industry to-day. Industries today are so interdependent that a depression in Manchester may result in throwing men out of employment in the shipyards of South Shields. The point of outbreak of unemployment is not the seat of the ailment at all; it is a mere symptom of the disease in the whole system of national industry. Therefore, the rates might well be relieved altogether from the payment of this relief of unemployment. Of course, it may be said that unemployment relief ought really not to fall upon the rates at all—that, if unemployment is of the ordinary kind, it is met under the Insurance Act, while if it is of an exceptional kind, as in the case of this large strike, where men have not paid for their benefit, what, right have they to get relief? In theory, that is so; able-bodied men are not entitled to relief under the Poor Law. But we know how that is got over, as in the Merthyr Tydvil case, where it was said that dependants were still entitled to relief, and we know that the Act of 1918 made guardians amenable, or sympathetic, to that view.

Practically the effect is that, when you have a great strike like that, the households are entitled to relief, and whatever you deny in unemployment benefit you must give them through the guardians—it is as broad as it is long. In fact, the whole system of extended benefit under the Unemployment Insurance Act is a recognition of that principle. Where a man is unable to show that he is actuarially entitled to benefit, the Government come in and say, "We will work out a device whereby, under the pretence of carrying on this industrial insurance, we will give a grant from the Exchequer to enable these men to be paid in the form of extended benefit." I have seen this working in my own constituency last year. When the Chancellor of the Exchequer reduced the Government fraction of contribution towards unemployment benefit, I, for one, said that it would react. When, again, the Minister of Labour announced that the giving of extended benefit would be made discretionary, we also said that that would react. By reason of these two things, as those of us who live in industrial areas know, thousands of people who would have got their benefit at the door of the Employment Exchange, simply walked away from that door and got their benefit at the door of the guardians; they got at one place what was denied to them at the other. All, therefore, that has been done by this alleged economy has been to transfer on to the rates what would have otherwise come on to the taxpayer and on to the Unemployment Insurance Fund. It was a penny wise and pound foolish policy, because, although the Chancellor of the Exchequer was able to say that he had made a saving in the current year, he has reduced the revenue of the oncoming year in so far as he has handicapped industry.

What, then, are the suggested remedies? We have to recognise in this age that the households of the community must be kept, either by the work of those who are at the head of them or by the work of others. Shall the work of the others be confined to the near neighbourhood, or shall it be spread over the whole country? I have argued, so far, that it ought to be spread, certainly as regards unemployment relief, over the whole country. How is that to be done? The first way in which it was dealt with was under the Goschen scheme, but, if the right hon. Gentleman will allow me to say so, the Goschen scheme, as I have seen it working, is quite futile. You get a loan from the Ministry to distressed areas. It has to be paid back within a short time with interest, and, when it is paid back, what is saved in one half-year has to be borne in the next half-year. I am surprised to hear the right hon. Gentleman say—perhaps I misunderstood him—that these loans are not called in quickly. In my constituency there are two loans of £40,000—that is £80,000. Both fall to be paid within the current half year. I wrote to the, Minister and asked if it was not possible to defer the payment of one of them to the half year coming on. The answer was that they could not do so. So your loans are no good.

Now we have the block grant suggestion. As far as I understand it, it is all right when you apply it to the class of demands from the rates which are normal and regular in character and may be predicted, such as the demands for ordinary poor relief and public health. But what good are your block grants in the sort of difficulty we are now in? How can you apply them to a strike? Who can know the place where a strike is going to be? Who can know the duration of it? Who can know the demand per head of the strikers? We were told in the last Debate that the amount of relief granted per head during the strike of 1921 was infinitely less than the amount of relief given in the strike of 1926, and it was rather suggested that that was due to the guardians being too lavish. Really, it is not so. As far as I have been able to ascertain, the guardians along the Tyne have observed the conditions of the Circular sent them, and have not given relief to persons who are disentitled. The reason it was higher is that the 1921 strike came after a fat period, when the colfers of the unions were full and the savings banks were full of the men's savings. When the 1926 strike came those sources were exhausted.

I do not quite agree with the slogan of the hon. Member for East Ham, North (Miss Lawrence) that what we want is money, though there is a good deal of point in it. What I understood her to mean was that you do not deal with this question by financial operations, shifting a burden from one back on to another. We had proof of the futility of that last year when the Chancellor of the Exchequer thought he was very clever in reducing payments from the Unemployment Insurance Fund, which only resulted in driving persons from the door of the Employment Exchange to the door of the boards of guardians and getting from the rates what they were denied from the taxes. What is really meant by saying we want money is this. The only way to solve this problem is that money must be had, and the same amount of money must be had, irrespective of whether it comes from rates or from taxes, and the only way to solve it is to take the full amount required for the relief of unemployment directly from the taxes. And how do you do that? I should say, by very much more liberally distributing benefits under unemployment insurance. Distribute them in full up to the point when scientifically you must stop on an actuarial basis.

After that point, instead of going through the complicated device of your extended benefit, which is really a grant under the name of insurance—what insurance in the world could justify on a scientific basis the style of thing that is now being done by money being paid by the Treasury to the Insurance Fund and dofed out from it—the real way to look at it is openly and frankly. "Men, to the extent of your contributions, and those of the employers and the State, we will give you as much as we can. When abnormal periods arrive, when the machinery breaks down, we will make direct grants from the State." It may disturb the Chancellor of the Exchequer but the more money comes out of our pockets, and it is far better, since the money has to be found, that it should come from the pockets of the whole community than that it should come from the pockets of already badly stricken people in the neighbourhood in which the unemployment exists. I do not expect the right hon. Gentleman to do anything, except that I hope he will make good what he said as far as South Shields is concerned. I understood him to say the loans are not to be called in at this specified time, but that allowances are to be given.

Mr. CHAMBERLAIN

I am afraid the hon. Member misunderstood me. What I said was that no term of repayment for the most part attaches to the particular loans that are running at present, but the situation will be reviewed in February, when a final decision will have to be taken.

Mr. HARNEY

If that be so, I hope something will be done. There was one loan of £40,000. That was found to be insufficient and it was immediately followed by another loan. I understand both loans are falling due, and it is because of that that it will be necessary to have a supplementary rate. If it is possible to extend payment of the second £40,000 for six months, it will not be necessary to raise that rate.

Mr. BARKER

The right hon. Gentleman said serious allegations had been made with reference to the administra- tion of relief in the Bedwellty area, and he would not prejudice the position because he had appointed an officer to make a special investigation. Strange to say, immediately after those words, he made these, up to the present, unproved allegations against the Guardians.

Mr. CHAMBERLAIN

I made no allegations against the Guardians; I simply said allegations had been made.

Mr. BARKER

The right hon. Gentleman said the allegations were that certain miners had been appointed assistant relieving officers. I should like to know if he objects to that in an area where there are nothing but miners, and where there are about 10,000 miners unemployed. Is it not a natural thing to appoint one of these unemployed men to perform this duty instead of having him charitably relieved at the expense of the guardians? I do not understand the point in a charge of that character. I should like to know who should administer this relief if it is not those most intimately acquainted with the conditions of the district. He said allegations had been made that relief had been dispensed by some unconstitutional body known as the Council of Action. I am the Member for that area, and have been for three years on the board of guardians. Although there is a Labour majority, there is a very strong minority who are not Labour, and if there was anything of the kind the right hon. Gentleman has mentioned, they would have seen that he had notice of it long before 1926. This has been a necessitous area for five years, and its poverty has been many times mentioned in the House, but I have never known a single allegation made against the guardians until to-night. I wish the right hon. Gentleman had refrained from prejudicing the position, because he has prejudiced it, and provoked a well-merited interruption and protest from the hon. Member for Bridgeton (Mr Maxton), which I cordially endorse. This is one of the most distressed areas in the whole of the country. It is essentially a mining area, and there have been somewhere about 10,000 miners unemployed for the last five years. Many deputations have gone to the Department, and the right hon. Gentleman has had consultations with the representatives of the guardians, but as far as I know, in no single case has he made a charge of maladministration against them. He has drawn up scales, which he has embodied as a condition of his loans, and they have been faithfully administered. It would have become him much better if he had refrained from making these allegations until he had a report from the officer who is investigating.

What is the condition of this area? In round figures there is a debt of somewhere between £900,000 and £1,000,000 incurred by the guardians. There are, in addition, other debts of the local governing bodies. This astounding debt arises almost entirely through unemployment. The interest on the loans amounts to somewhere about £400 a week. The area is, and has been burdened during the whole of these years with this vast Volume of unemployment. The guardians have been doing their work as well as they possibly could without fee or reward, and they have made many appeals to the Government, through their representatives in this House, to do something to relieve the position of these distressed areas. Before the coal stoppage took place at all this board was nearly £700,000 in debt.

Notice taken that 40 Members were not present; House counted; and 40 Members being present—

Mr. BARKER

When I was interrupted, I was saying that to suppose that a debt of this magnitude was due to bad administration, was about as absurd a suggestion as could possibly be made. Unfortunately, this debt is not due to bad administration by the guardians but it is due to bad administration by the Government. Had the Government taken over their responsibilities instead of putting the burden of unemployment upon poverty-stricken areas, we should not be discussing this problem to-night. The last time this matter was before the House, I think it was on the, 16th November, the Minister of Health paid a splendid tribute to the boards of guardians for the way in which they had performed their duty during a very trying period. He made no qualifications, but paid a tribute to the efficiency of the guardians throughout the whole country. Tonight, we find him singling out one special area, which has been burdened with more unemployment than any other area, for special condemnation.

I hope the Government will realise, before long, the condition of these necessitous areas, otherwise local government will absolutely break down. We have conic to the point when it takes all the revenue of these areas to pay the interest upon the loans which they have borrowed to meet their financial difficulties, and unless the Minister of Health tackles this problem in the way he suggested that he would tackle it when he spoke on the 16th November, by making block grants to these areas, the areas will become submerged by their indebtedness and be unable to function. Bedwellty is essentially a mining area. There have been over 10,000 unemployed in that area for a long period. Opposite where I live, there is a very large colliery which normally employed 1,000 men, but it has been closed for a year and nine months. In this area the best seams of coal have been worked out. The area is not able to meet its financial obligations normally, and when it has to meet these additional obligations, the position becomes hopeless. I appeal to the Government to realise the position of these areas and of the people who are living in them. In the particular area to which I have referred the rates are now 20s. in the pound, and they have been as high as 37s. 6d. in the pound. The miners, poverty-stricken as they are, have had to meet an extra rental charge of from 3s. to 4s. a week through the terrible effects of unemployment prevailing in the area. It is high time the Government seriously came down to this problem and attempted to assist these areas in some practical form.

Mr. WILLIAM ADAMSON

The industrial conditions which have emerged in this country in recent years have placed upon local areas a burden which will seriously cripple their activities for years to come and, in addition, will undoubtedly put upon industry in those areas a burden that will make industrial recovery very difficult, unless the Government in some form or another are prepared to come to the assistance of the local authorities in the areas. The part of the problem with which I wish to deal is the financial position in the mining areas. I was glad to hear the right hon. Gentleman say that this particular problem was to receive his special attention. The condition of affairs in mining areas may be said to have been largely contributed to by the struggle that has taken place in the mining industry this year. Some of my fellow Members may remind me that we on these benches have contributed to some degree at least in bringing about the position of affairs that exists in mining areas. Evidently, from what the right hon. Gentleman said, that is being stated outside even if it is not to be stated inside this House in this Debate.

May I remind hon. Members opposite and the Minister of Health that the policy that has been followed by local authorities in the areas to which I am calling special attention, is the policy of the Government. Therefore the local authorities are strongly of the opinion that the Government ought to shoulder at least a considerable share of the burden that has been imposed upon them in carrying out the policy of the Government in respect of emergency relief. May I give one or two examples from my own constituency of the burden that has been imposed upon certain parish councils in mining areas? I have here particulars of three parish councils, but I will only quote two examples, because I do act wish to burden the House with a long speech or with a large number of figures. These two examples are typical of what is occurring in all the mining areas in Scotland and they are also typical of what is occurring in every one of the mining areas of Great Britain.

The first example is the parish of Auchterderran, which has a population of 20,000, entirely mining. The total cost of emergency relief between the 15th May and the 6th December in that parish amounted to £28,901, equal to £1 10s. per head of the population. This sum paid out in emergency relief is equal to an increase of almost 9s. in the pound on the rates. The other example is the case of the parish of Ballingry. There the population totals 10,348. They have spent in the same period in emergency relief £17,671, equivalent to an increased rate of 7s. 9d. in the pound. The burden of debt has accumulated in these two parishes. In the case of Auchterderran it amounts to 41,88s, and in the case of Ballingry £27,996. When I use the term "debt." I mean overdrafts to the bank and money advanced by the Scottish Board of Health. The experience of these two small mining parishes is typical of the experience in every one of the mining areas in Scotland, and also in Great Britain, because I find from a statement recently issued that, if we take the largely mining areas in England and Wales, the counties of Cumberland, Durham, Northumberland, Yorkshire and Wales, the increased debts in loans and overdrafts between 1925 and 1926 run from 100 per cent. to 600 per cent.

8.0 p.m.

Notwithstanding what has been said by the Minister of Health to-night, it is evidently the intention of the Government that that enormous burden is to be added to by these parish authorities being compelled to continue paying relief to able-bodied unemployed miners who have been left out of work despite the fact that the dispute has ended. If a policy of that kind is to be carried out, it is surely contrary to the expressed intention of the Prime Minister and a number of the leading members of his Cabinet in the course of the struggle, because they led both the miners and the parish councils to believe that as soon as the struggle ended unemployment insurance benefit would be provided. Up till now, whatever is to happen in the immediate future, that burden is being shouldered by our local authorities. I find that in the two cases I have quoted, in the parish of Auchterderran it will mean an additional burden of £800 a week, and in Ballingry it will mean £625 a week. Surely this is a matter that demands the immediate attention of the Government, if the expressed intention of the Prime Minister and other leading members of the Government is to be given effect to. Evidently the intention of the Ministry of Labour is entirely in the opposite direction. I have here a statement that has been issued by the chief officials of the Ministry of Labour to our local unemployment officers, dealing with the position of the payment of unemployment insurance benefit. It says: The position at each Colliery has to be determined separately. The stoppage of work due to the dispute must he held to continue until there is a full resumption of work at the pit. If that is not the ease, and the reason is that the places are in disrepair or flooded because of the prolonged stoppage, we must disallow claims until the repairs are effected. We must know exactly in each case why work was not available. Please obtain these facts from the owners, and send us as full reports as possible. A separate report for each pit is necessary. If that instruction is to be religiously followed, it means that for a long time to come the burden of providing relief for unemployed miners who are out of work, notwithstanding that the stoppage has ended, will be a very heavy burden on the shoulders of the local authorities in the mining areas. As I have already said, this policy, if it is followed out, will be against the expressed intention of the leading members of His Majesty's Government, and I hope that state of affairs is to be remedied. Unless the right hon. Gentleman the Minister of Health and the right hon. Gentleman the Secretary of State for Scotland are prepared to deal with the position in these mining areas, the future of our industry will be very dark indeed. The future of industry largely depends on that burden being lifted off the shoulders of local authorities in mining areas. The mining industry is still essential to the continued prosperity of industrial Britain, and unless that industry is placed on a satisfactory footing, it will be all the worse for the industries of the country. I hope that in the course of the Debate we will have a promise by the right hon. Gentleman the Minister for Health to assure us that this important matter will receive the attention of His Majesty's Government speedily.

Mr. RAINE

I have listened to the Debate on this subject, not only to-day but during the whole of this Session, and one fact more than another which has impressed itself upon me is that certain hon. Members are doing their constituencies an unconscious disservice by so continually calling attention to their poverty. Credit is a very sensitive thing, and if hon. Members only knew what other people were saying about the financial position of some of their constituencies to which they are so constantly referring, I think they would largely desist. I come from a constituency on the North-East coast, which has suffered at least as much as any constituency in England from unemployment. During the past four years, when shipbuilding and engineering have been so bad, we have had a host of unemployed and we have never shouted about it at all. The guardians have carried out their work just as humanely as those in any other place, and we were in the position a very few weeks ago that we had to apply to the country for a loan of £1,000,000. That loan was subscribed in a very short time. I have no hesitation in saying that, had I got up as I was often tempted to do, to speak about my constituency as others have done, that loan would not have been so successful.

I may take another illustration from a neighbouring constituency, Newcastle-on-Tyne. Last week it issued a loan and it has been fully successful. All round the North-east coast area we have all suffered, but with this difference, that some of us suffered in silence, and some have done the very opposite. I am quite aware that, during the past few months, the position in many places has been seriously accentuated through the unfortunate coal strike, in some places more than in others. Here again we have been affected to the extent of many extra thousands of men being thrown out of employment, which has thrown an increased burden on the guardians. We have made no complaint, although the amount we have had to borrow is to be repaid in two or four years, I am not quite certain which. I believe the Minister will be obliged to take special notice of the peculiar circumstances of many districts which have been specially affected during the past two months in particular, and I have no doubt that, when he gets his statistics in February, he will show that practical sympathy with those various places which he has always shown when just cause has been given for it.

I should like to refer now to the question of block grants. As a member of a municipality for nearly 25 years, I have always advocated the block grant system. I have noticed in municipal administration that there is often a great desire to do work if the Government are paying for it, and very often we allow ourselves to be side-tracked because we are told that the Government will pay 50 per cent. or 75 per cent. of the cost of certain work, and, against our better judgment, we have given way, with the result that we have had increased burdens placed upon us. When the block grant system is brought in, I believe it will be necessary to use a certain amount of discrimination between the poorer districts and those which are better off; but it will have this effect, that we will know in the different municipalities how much we are going to get and we will be able locally to control our expenditure better than we are able to do now. Many of the committees now are merely registration committees, because we get our orders from London, whereas, if we got a certain block grant, we would know what was coming, we would be better able to control expenditure, and to revise our expenditure more carefully. I believe block grants will make for more efficient administration in the locality and that, good as administration has been generally in the past, it will be even better in the future.