HC Deb 25 February 1927 vol 202 cc2125-40

Order for Second Reading read.


I beg to move, "That the Bill be now read a Second time."

For the information of hon. Members I will explain that this Bill has the support of a number of important authorities and bodies. It is supported by the London County Council, the City Corporation, various London Borough Councils, the London Chamber of Commerce, the Federation of British Industries, and the Glasgow Citizens' Union. [Interruption.] I am glad to know that its support is received so favourably by hon. Members on the opposite side of the House. The purpose of the Bill is to qualify limited companies by nominated delegates to exercise their vote in local government elections. It also seeks to qualify the nominated officer to serve on local authorities and therefore in both those respects to confer privileges which do not at the present time exist. The position at the present moment is that there is a great difference between various classes of ratepayers. The individual ratepayer has a vote for local government elections. In the case of a. partnership, the several partners likewise have a vote each, subject to certain qualifications. A limited company, although it may be a large ratepayer in its corporate capacity, has no vote and consequently no voice in local government affairs. It is not, of course, suggested that the local government franchise should be conferred upon each shareholder in a limited company. That would be an absurdity. That is not part of the proposal contained in this Bill. That is where a difference occurs as regards the necessity for the proposals of this Bill so far as local government is concerned, and where the difference lies between the ratepayer and the payer of ordinary Imperial taxation. An anomaly exists at the present time from the point of view to which I have referred.

There are two principles which I think I may invoke in support of the proposals of the Bill, namely, the principle of equality in representation, that is to say, equality in franchise—a principle which is fairly familiar both in this House and in discussions outside at the present time—and also the constitutional principle that there should be no taxation without representation. I am aware that this is not a question so much of taxation as of payment of rates, and I am familiar with the distinction between rates and taxes; but, nevertheless, the principle applies just as forcibly in local government as it does in national government. In local government we have a smaller rateable area, and, consequently, a greater interest in the small area on the part of each ratepayer. The shareholder in a limited company, who has no voice in the determination of local affairs, and, consequently, in the manner in which his contribution to the rates may be spent, has, in his capacity as a citizen of the State, a voice and usually a vote—in fact, invariably a vote if he is on the Parliamentary register—so far as the determination of national policy and the levying of national taxes are concerned.

We have, moreover, in support of this proposal, certain historical precedents to which I propose to refer. Prior to the year 1894, limited companies were in a position to exercise the vote, certainly in regard to guardians' elections, and, in certain cases, in regard to elections to the vestries. For example, under 59 Geo. III, and under the Poor Law Amendment Act, 1867, they had certain rights in regard to exercising the franchise. That position was altered under the Local Government Act, 1894. Since that time, a number of proposals have been submitted to the House to remedy the existing condition of affairs. A Bill was presented in 1904 to confer the municipal franchise on companies. In October, 1904, the Council of Municipal Corporations passed a resolution in favour of it, and in 1905 a Bill was again introduced into this House. Neither of those Bills was passed. I am not sure whether either of them had a Second Reading, but at any rate neither of them got far. In 1908 a Bill was introduced into the House of Lords by Lord Avebury, and passed by that House, but it did not secure a Second Reading in this House. The subject, therefore, has on several occasions been before this House, and has generally received a favourable acceptance, although the exigencies of Parliamentary circumstance have not enabled the proposals to be carried into law.

Those attempts at legislation have been followed up. I was fortunate enough to have the opportunity last year of introducing the Bill which I am asking the House to receive to-day, but certain national circumstances involved the necessity on the part of His Majesty's Government for taking all private Members' time, and that Bill could not be introduced. That was unfortunate, but I trust the House will take the opportunity to-day to remedy that misfortune. I have alluded to the difficulties at the present moment, and to the anomalies which exist, as I have pointed out, between an individual, a partnership which may have several votes, and the absolutely unenfranchised condition of limited companies and mercantile corporations. The proposal has the advantage of what I might describe as highly respectable parentage and collateral ancestry. It has been suggested on more than one occasion, and it has even got so far as passing through one House of Parliament, but it has not as yet received the favourable consideration of this House.

The procedure of the Bill is quite simple. The operative part of the first Clause reads: Where any joint stock or other company has during the whole of the qualifying period occupied as owner or tenant any premises of the value of not less than £25 in a local government electoral area, and is rated in respect of the sonic, an officer of such company shall lie entitled to he registered as a local government elector for such local government area, and he shall be qualified to be elected a member of the local government authority. Those are the essential words, and they will entitle a limited company both to exercise the vote itself, by its nominated officer, and also qualify that nominated officer, if he so desires, to offer himself for election to the body operating in the local government area. There we have the compliance with the principle, to which I have alluded, of representation combined with taxation. We also afford an opportunity to people skilled in the administration of private affairs and big mercantile undertakings of taking part in the local government of the area with which they are closely concerned, an advantage to local government which I think this House should highly appreciate.

There are criticisms against this proposal. There are those who think it will go too far and those who think it does not go nearly far enough. The essential moderation of the proposal is one of its features which should commend it in all quarters of the House. It is not suggested that, because a company pays rates, every shareholder should equally share in the franchise of the local government area. Ours is a very moderate suggestion. There are those who think it would put too much power or influence in the hands of a large concern, but that is not sought at We only aim at putting a large ratepayer, who mar happen to be a limited company, in the same position as an individual ratepayer—a very modest proposal. So far as precedents are concerned, I should like to point to the procedure which now obtains in the case of the Port of London Authority. The Act that constituted the Port of London Authority in 1908 permits of the nomination and voting by limited companies. The Bill follows similar lines to those in the operative Sections of that Act, a procedure which previously had received the approval of Parliament in the Belfast Harbour Act, 1883.

A further criticism has been suggested, that advantage might be taken of the Bill to set up limited companies of a fraudulent or non-bonâ fide character with the sole end of what one might describe as manufacturing votes. Thera is no suggestion of that sort, nor is there any substantial inducement. A limited company must be a bonâ fide limited company such as operates under the Joint Stock Acts or applies to the public for subscription or a bonâ fide private limited company which differs only from the others by the fact that it does not appeal for public subscription. In either case there is nothing of the nature of manufacturing votes attempted or intended, and each limited company for which we seek to provide the franchise has to be a ratepayer in the area with an annual rateable qualification of not less than £25. I think that apprehension may be dismissed, There is no danger of anything of the sort, and no danger that the effect of our proposal would be to provide a gerrymandering of that kind.

I recommend the Bill to the House on the grounds that we desire to remove an anomaly that we desire to put the large ratepayers on an equal footing with the individual or the partnership, and not to deprive them of the franchise just because they are a limited company. To grant the franchise would comply with two accepted principles. The advantage of equalising the franchise, as far as that can reasonably be done, is desirable, because it would be in compliance with the principle of no taxation without representation, because we have precedents for it, and because the grant of the franchise in these circumstances would encourage the nominated representatives of great mercantile and commercial bodies, industrial or otherwise, to take an interest in local affairs, which would be for the public advantage and in the national interest. For these reasons, and having endeavoured to deal with some of the objections that may be raised, I ask the House to give favourable consideration to these proposals.


I beg to second the Motion. This is a Bill which seems to cue to be so moderate and so reasonable that it must appeal to all those who appreciate reason and moderation. Its general principles and objects have been ably dealt with by my hon. and gallant Friend, and I hope to avoid, as far as possible, repeating anything that he has so well said. I would like to base the claim that this Bill is not only due but overdue, upon some figures which I will quote. These figures, as the House will see, reveal to us that a great change has taken place in this country in recent years in the system and methods by which businesses, large and small, are conducted. This Bill is an attempt to apply up-to-date legislation to the changes which have taken place over a period of years. It may surprise some hon. Members to know that this change in the methods and system of carrying on business is as great as it really is. In 1905, not much more than 20 years ago, which is a short time in the life of a country, the number of limited liability companies in this country was under 40,000. By 1915 their number had grown to 66,000, and in the last 10 years, that is between 1915 and 1925, the number had grown to the large total of 95,000. That is an extraordinary increase in 20 years. It is art increase of more than double, from 40,000 to 95,000; and an increase of 30,000 in a short period of 10 years. But statistics do not always tell the whole story, and in this case the statistics upon which we can lay our hands certainly do not reveal the full extent of the change in our business system to which I have referred, because not only has the number of companies so largely increased but the great majority of these companies have very largely increased the number of branch premises which they have in different parts of the country. A few years ago it was somewhat unusual for a company to have more than one or two branches. Ten branches, or 20 branches, was considered something very large, but now we have many companies with hundreds of branches spread over the country, and I know of one which has 2,000 branch premises.

If we take the large increase in the number of companies and bear in mind that a large proportion of these companies have so vastly increased the number of their branch premises we can easily see that the number of rate-paying premises which have been disfranchised by the present law must be very large. What happens is this. Premises are opened and if at the end of the name there is the word "Limited" that ipso facto means that no person who pays rates for those premises is entitled to any vote in connection with local government. I do not think anyone can deny that an enormous number of ratepayers in various local areas have been and are being day by day disfranchised by the operation of the law as it exists at present. Let me take two cities with which I am well acquainted as examples. I take Liverpool first; or rather, in order to save the time of the House I will take the two cities together. Take Liverpool and Manchester. The rateable value of the premises owned or occupied by companies in each of these two great cities is roughly one-third of the total rateable value of the city, and as rates are paid on the assessable value it follows that each year these various companies must contribute approximately one-third of the total amount of the rates that are levied. It seems incredible yet it is the actual case that these company ratepayers, although they contribute roughly one-third of the rates, have no voice whatever in the local management of the areas in which they are situated, although the question as to whether these areas are well governed or badly governed is a matter of the most vital importance.

I do not propose to elaborate that argument at any length, because I think that a mere statement of the fact must carry conviction to any unprejudiced person that it is wrong—I was going to say worse than wrong, that it was absurd and silly —that so many of the larger ratepayers in an area should have no voice whatever in connection with the local Government of that area. The Bill I have ventured to term a very moderate Bill. I think I could support it with even greater enthusiasm if it went further. I wonder whether the House realises how extremely modest the Bill is? I save mentioned that these company ratepayers contribute about one-third of the rates of the area in which they have premises. Logically it might be said that, that being so, they were certainly entitled to one-third of the representation. But this Bill makes no such claim as that. It does not ask for representation in respect of each property of a company in any area. Although a company may pay rates on twenty branches in a certain area, it is only suggested that the company should be entitled to one vote.

I think there has been some misapprehension about the Bill. From casual conversations I have had with hon. Members they seem to think that this will be some great swamping Measure creating a large number of voters in municipal affairs. That is not so. No matter how many branches a company has in a certain area, all that is asked for is that the company in that area should be entitled to one representative. I do not think there is any Member in any part of the House who can think that that is an extravagant or unreasonable proposal. I hope that I have served some purpose in making clear to the House what this Bill really does mean. Logically, perhaps, we would be entitled to ask for the whole loaf. We may be entitled even to ask for half a loaf, but what we are asking for is not the whole loaf and not the half loaf but merely a few crumbs from the loaf. What would be the effect of this Bill? It would merely be to give a vote to a concern which is possibly the largest ratepayer in its area, which is probably employing a very large proportion of the workers in that area, and which has, perhaps, 50 branches in that area. All we ask is that such an important concern, paying such large sums in rates, so vitally interested in the good management of the district, should have one vote in that area; in other words that it should have no more than the smallest ratepayer in the district. I do not see how moderation could be carried any further. There is an old saying to the effect that those who pay the band are entitled to call the tune. In this case we do not ask to call many of the tunes. All we say is "we pay one-third of the salaries of the band. Do let us have a little voice sometimes as to what tune is to be played."

I do not wish to detain the House but this is an important subject of which I have made some considerable study, and I would like to say a word in particular in regard to private companies. There were on 31st December last 86,000 private companies. In what respect does the private company as a rule differ from the ordinary firm? As a rule it happens that the ordinary firm of several partners may find it, for family or some other good reasons, convenient or advisable to divide its capital into shares. The partners do not go to the public and invite subscriptions; it is purely a private arrangement between the partners or the members of the family concerned and it has its advantages to those concerned. But the change made in the name of, say, Messrs. Brown, Smith & Co., by merely adding the word "Limited" has no prejudicial effect upon the family or upon the company. It is merely a matter private accounts, yet under our existing law, if partners come for good reasons to that very sensible arrangement and form a concern with shares, a private limited concern, the moment they do so and add to the name over the shop or factory or office the little word "Limited," that concern is disfranchised for local government purposes. That seems to be an anomaly. There is a private firm, let us say, for example, paying £400 a year in rates, cad with four partners, and each of those four partners is at present, as long as the firm have over their door "Brown, Smith, & Company," entitled to a local government vote, but should that business be carried on in exactly the same fashion, by exactly the same men, in exactly the same premises, and paying exactly the same rates, but with the letters "Ltd." added after their name, every one of those four partners is disfranchised. Although the rates continue to be paid, every one of those four partners is disfranchised, and that particular concern, because it is a private company, has no voice whatever in the local government of the area in which it exists.

Lieut.-Commander KENWORTHY

If they live on the premises they have the franchise.


That may be so, but I should think it is rarely that they live on the premises, and in any case it is a matter of detail, which does not affect the general principle to which I have referred. The hour is late, and I do not want to go into all these little details.

Lieut.-Commander KENWORTHY

Go on.


If the hon. and gallant Member wishes me to enter into all those points, I am afraid I shall deprive him of any opportunity of making the speech which is obviously burning on his lips, but, if I have the hon. and gallant Member's permission to continue a little longer, I want to suggest most strongly and earnestly that conditions that might have involved no great hardship 10 or 20 years ago do to-day involve a very serious hardship. As I am not so Conservative that I always want that things should remain as they are and have been for the last 20 years, as I am progressive, and not reactionary—

Lieut.-Commander KENWORTHY

Come over here!


The hon. and gallant Member suggests that, because I am progressive, I should go over there, but I should regard that as a reactionary step. I very much appreciate the compliment that the hon. and gallant Member has paid me in desiring me to come and strengthen the weakness of his case, but I am getting perhaps too old for that, and—[HON. MEMBERS "No!"] If hon. Members will allow me to finish the sentence, I was going to say that I am getting perhaps too old and too experienced to desire to live in the past, to desire to continue to-day conditions which might have been applicable 20 years ago. That, I should call reactionary. I want to progress and to change our legislation when it can be beneficially changed. This Bill will remove to some extent, but not as far as I would wish, a glaring anomaly and a great injustice. Above all, I would stress the point that this is an extraordinarily moderate demand, because there is the case of the four partners who have become a limited liability company. We do not ask you to give votes to all four, but a vote to one of them.

Therefore, there can be no danger, such as I imagine is apprehended by some hon. Members, that this Bill, if it passes —and I hope it will pass—will create a large number of capitalist electors who will swamp the proletariat. I dare say that will be the cry, but it will be utterly absurd. The number created will not be large, and when we consider to whom these limited companies largely belong, we shall finch that in a large number of cases the capital concerned has been provided by the members of the proletariat. Therefore, I am not putting this from the point of view of the capitalist, or from the party point of view or from the point of view of the employer, but solely on the ground that this would be a wise Act, which would redound to the satisfaction and protection of every class of the community, not excluding the proletariat.


I beg to move, to leave out the word "now," and at the end of the Question to add the words, "upon this day six months."

On the Bill which passed its Second Reading a few moments ago, we had a very good-humoured discussion throughout, and there was no real difference of party between us. It was a difference of individuals in regard to a certain Measure which was proposed, but in regard to this Bill we are faced with a totally different issue, and although the Mover and the Seconder have tried to put it forward as one of those Measures about which we are all agreed, that it really does not do very much, that it only enfranchises one or two of the more unfortunate joint stock companies, and will not interfere with the proletariat or any persons of that kind, I want to describe this as one of the biggest examples of an attempt at class legislation that has been introduced into this House. [HON MEMBERS: "Oh!"] I, of course, quite expected that note of amusement from the benches opposite. As far as the Conservative party is concerned, its business, as the late Lord George Hamilton said, is to look after its friends, and this afternoon the hon. and gallant Member for East Fulham (Colonel Vaughan-Morgan) has put forward something on behalf of his friends of the limited liability companies. Local government bodies in this country are really the most important factors we have in our life. I suggest that in many ways they are far more important even than this House. After ail, we can only decree what the law shall be, but the administration of a large portion of the law is in the hands of our municipal authorities, and I think it will be agreed that they perform their duties well.

What has been the basis of the franchise for a considerable time? Previous to 1832 it was in every sense of the word a property qualification, but as education has progressed and the economic development of the country has grown it has been found more and more necessary to take into consultation the masses of the people. We no longer base intelligence on property; quite the contrary. We now say that intelligence comes as the result of citizenship, and we have given citizens' privileges to adult males and to a very large number of women, and if the present Government had only kept its pledges there would be a Measure before us now extending the franchise to women at the age of 21. Though that has been the tendency, the hon. Baronet the Member for Kirkdale (Sir S. Pennefather) is assuring us that he is a progressive. If he will permit me to say so without offence, his progressiveness seems to be like that of the crab, and here he wants to go back to the simple enfranchisement of property.


I entirely deny that.


I can only refer the hon. Baronet to the Bill. It confers upon limited liability companies the right to nominate under their seal one person on the company as a local government elector in a particular locality. What is the basis on which a joint stock company is formed. It is formed entirely on the basis of property, and I cannot congratulate the hon. Baronet on his logic if he denies what. I say, that this is in every sense of the word a Bill for the enfranchisement of property.


May I point out that at present voting power is based upon the value of the rents paid, so it is based upon property, but that there is disfranchisement when the property is held by a company. Therefore, while the hon. Member finds fault with my logic, I am entitled to find fault with his statement.


My statements are perfectly accurate. I will turn to Clause 1 of the Bill. First of all, it carefully excludes county councils, municipal corporations, or county or metropolitan boroughs from exercising the light to appoint a local government elector. If I understood the argument fro the Bill aright, it is that these joint stock companies have certain ratepayers' rights in their localities which they are not able to exercise; but there are also a large number of municipal corporations which have the same ratepayers' rights. The London County Council, for example, is a very considerable ratepayer in every metropolitan borough, but it is deprived of the right to appoint a voter, although a joint stock company which happened to have ft shop or factory in each one of the metropolitan boroughs would be allowed to vote. Further, all other local government authorities have ratepayers' interests outside. I am the chairman of a board of guardians which has a school in Essex, and we are the largest ratepayers in that parish. Under this proposal we should not be allowed to nominate a person to be a voter in that Division. If the argument of hon. Members opposite is right that those persons representing private companies who have a particular ratepayers' interest in a locality should have a vote, it also follows that a municipal corporation should have a vote as well. Who is to be the person to exercise this vote. According to this Measure it is to be: An officer in such company or corporation authorised under its seal. This seems to be introducing an extraordinary form of procedure into our system of enfranchisement. A company consists of shareholders who subscribe to the various funds of the company, and they are taken from all parts of the country and hold different and varying views in regard to politics. A company is not a body which can come forward and say that it represents the views of the whole of the shareholders. All that is being done here is to concentrate in the hands of certain individuals the right to vote in a locality with which individually they have no concern. This proposal is going to apply to a good many of our industrial districts, and more particularly in London to the East End districts. I know, from personal experience, that in connection with one great limited liability company in the East End of London at the present time, the officers or members of the board of directors have found no difficulty in getting a vote. The Metropolitan Municipal Alliance deals with these matters and a great factor in the control of that body is the firm of Messrs. Bryant and May, and Messrs. It. and H. Green and Silley Weir. For a long time not only did the accountant of Messrs. Bryant and May have a vote in the Poplar Division, but he was a member of the Poplar Borough Council, and he was doing the very thing which the hon. Member who proposed this Bill suggested could not be done at the present time. This was accomplished simply and solely because Messrs. Bryant and May let off a certain proportion of their premises to an accountant, and he became a duly qualified elector of the Metropolitan Borough of Poplar. With regard to the firm of IL and H. Green, I know that Captain Green had a vote. I could give the names of many other firms in this connection, because this thing is done all over the place. If the persons who are really interested in the locality think it worth their while, they will take care that they get the vote.

The hon. and gallant Member who introduced this Bill put forward the analogy of the Port of London Authority, but I think that analogy is incorrect. That, authority after all is a body concerned only with a purely commercial enterprise. As a matter of fact, it is running a big commercial enterprise. The dock and wharf services of London cannot be run successfully entirely under private enterprise, and so, of course, a public body has been called into being. The wharfingers and others have the right to elect the largest proportion of the members of the Port of London Authority, hut they are there concerned entirely with their business as a port and harbour authority. They are not concerned with Local Government questions.


The analogy is true to the extent that they fix the tolls.


They are entirely concerned with administering a port and harbour authority. What is the interest of these particular companies in the public health service or in the housing question which local government bodies are called upon to administer?


Very large.


I know a good many companies who are anxious that there should be a fine system of transport in their area, and they do not mind how much is paid out of the rates for that purpose, but they have a strong objection when it is a question of paying public money that is going to benefit the poorer sections of the community. [HON. MEMBERS: "No!"] They have a very strong objection to paying money out of the rates on behalf of child welfare and maternity welfare. [Hon. MEMBERS: "No!"] They have a very strong objection to anything which is going to benefit persons who are down and out and who are the poorest members of the community. [HON. MEMBERS: "No!"] We know that there are other tentative proposals in the air with regard to Poor Law reform, underlying which there is exactly the same principle. Poorer persons do not matter. We are to concern ourselves with these great powerful com- panies which exist at the present time. They are the big ratepayers, and they are the people who have to be consulted on all these things. The unfortunate individual who has to live under conditions which very often have been largely produced by the mismanagement of many of these companies are to be still further handicapped by having the dice loaded against them in regard to votes for a municipal corporation.

I said at the beginning that this was one of the greatest pieces of class legislation that has ever been introduced. It is really an attempt to say that money's worth is to be the deciding factor in regard to the organisation of the work of citizenship of this country. [HON. MEMBERS: "No!'] Hon. Members differ, but they cannot get away from the Bill and from the effect of the Bill. What will be the result directly? Supposing this Bill passes into law and we have only one person in each company entitled to be enrolled as a local government voter, what is going to follow? In a little while we shall have them saying, "This company, which has only £1,000 capital, has one vote and that company, which has £5,000,000 capital also has only one vote. Is that fair? I can give an illustration. Bryant and May are rated in the Parish of Poplar at £6,500 and there is a small limited liability company which is rated only at £50. According to the hon. and gallant Member, there would be simply one vote given to each of these limited liability companies. But later on we shall have them coming and saying that they require votes in proportion to the rateable value, and, once you have passed the principle of this Bill I can see no logical reason for refusing such a demand.

It being four of the Clock, the Debate stood adjourned.

Debate to be resumed upon Monday next.

The remaining Orders were read, and postponed.

Whereupon Mr. SPEAKER adjourned the House, without Question put, pursuant to Standing Order No. 3.

Adjourned at One Minute after Four o'Clock, until Monday next (28th February).