LOCAL GOVERNMENT BILL.

HC Deb 28 November 1928 vol 223 cc441-76

Order read for resuming Adjourned Debate on Amendment to Question [26th November], That the Bill be now read a Second time,

Which Amendment was, to leave out from the word "That" to the end of the Question, and to add instead thereof the words: this House declines to assent to the Second Reading of a Bill which, whilst amending the Law relating to poor relief, perpetuates the evils of the Poor Law system and extends the vicious practice of unrepresentative persons being nominated to membership of elected bodies, makes no provision for the prevention of destitution, fails to make unemployment a. national responsibility, and will not appreciably relieve the financial position of necessitous areas; will arrest the normal and steady development of local health services by the establishment of fixed block grants from the Exchequer and the imposition of a charge for treatment in hospitals, especially maternity hospitals, a proposal calculated to increase the already high mortality amongst mothers; inaugurates a system of rating relief that will be unfair in its incidence; and, by failing adequately to reimburse local authorities for loss of revenue, will add to the burdens of shopkeepers, householders, and other ratepayers."—[Mr. A. Greenwood.]

Question again proposed, "That the words proposed to be left out stand part of the Question."

Mr. SIDNEY WEBB

Before embarking upon a general discussion of the Bill, I should like to make a protest against the magnitude of the Measure, not because of the number of Clauses but because the Bill, I contend, is six or seven separate Bills bound together in one. I have looked carefully into these six or seven separate Bills, and each one of them might he brought in by itself in a complete form without impinging upon any of the others. It is quite possible to draft the title in such a way as to cover any number of Bills, by the careful use of words. I suggest that in this case it is going very near what I venture to call an unconstitutional breach of the procedure of this House. My complaint is not merely that the result is a very long Bill—it is said to be the longest Bill ever introduced—but, instead of having six opportunities of discussing the principles of six different Bills, the House has only one opportunity. Instead of having the opportunity on Report of considering all the Clauses affecting the separate principles of six different Bills, we have only one opportunity; and on the Third Reading we have only one opportunity, instead of six. We do not need to imagine a future Ministry going much further if we suggest that it is possible to put the entire Government business of the Session into one Bill, at any rate apart from formal business, and the Budget. I suggest that it would be an outrage against the procedure of this House to put the entire Government business of the Session into one Bill. It would greatly limit the opportunity of discussion upon the separate principles concerned, even if it allowed unlimited time in Committee for the details. What is perhaps more important is that it would very much restrict the opportunity which this House has of offering suggestions as to how the Measure should be improved. 'On all these points, I say that this is an unfortunate departure in the constitutional procedure of this House.

Having made that protest, I pass on to the Bill. It nevertheless remains, protest or not, a very big and complicated Measure, and, consequently, we are all compelled to select only two or three points on which to take up the time of the House. But even if we limit ourselves to two or three points of principle, I am afraid it involves, in my case at any rate, taking up more time of the House than, I have been accustomed to take. The first point I want to make is that the, main object of the Bill is what we may call, for short, de-rating. The Minister of Health, in his extremely lucid and masterly speech in introducing the Measure, suggested that the de-rating proposals were really there in order to enable the various reforms in local government to which he attaches importance to be carried out. Does he really suggest that? As a matter of history, the right hon. Gentleman will admit that he is not correct. De-rating is not put there in order to get the local government Clauses through. It is on record, and we know that at the last General Election the Primo Minister said that the primary obligation of the Government was—not to effect local government re- form—the primary obligation of the Government was to grapple with unemployment and the serious position of industry.

Let us admit that they have been grappling with it ever since and so unsatisfactory has been the manner in which they have been grappling with it—not unsatisfactory to my friends on this side—[HON. MEMBERS: "Oh, they like unemployment do they?"] That is hardly an interruption which can have proceeded from intelligent hon. Members opposite. So unsatisfactory has been the grappling of the Government with this primary obligation to a large part of the majority of Members on the Government side that there were clamours—[HON. MEMBERS: "Speak for yourself!"]. That is another interruption which leads me to think that the standard of intelligence of hon. Members opposite must have gone down. So unsatisfactory was it that there was what we may call, for short, a mutiny, and another idea was brought forward in a way which was extremely inconvenient. That idea was that the primary obligation of the Government was to proceed along the lines of the safeguarding of industries, not the Local Government Bill, and, therefore, in August last the Prime Minister wrote to the Parliamentary Secretary to the Treasury saying emphatically that the main policy of the Government for the permanent relief of productive industry was the great scheme of de-rating. That was a nasty one for the leaders and followers of the mutiny, and one can imagine that there was internal trouble and that the representatives of the mutineers in the Cabinet had to be tackled, not by the Prime Minister himself, but by a more artful gentleman.

They were successfully tackled, andnow, I suppose, these mutineers will have to toe the line and say that the main policy of the Government for the permanent relief of productive industry is not Protection—of course, they never mention it—is not even the Safeguarding of Industry; it is this great scheme of de-rating. I hope that will send the great army of the Conservative party to the General Election in good heart. I hope they will all sing in the same key, if not on the same note. Whatever value there is in Safeguarding, it is a subordinate thing; it does not matter much; the main policy of the Government for the relief of productive industry is the great scheme of de-rating. That is perhaps not worth spending much time about. What does it matter how the great scheme of de-rating arose or what purpose it was intended to serve? The question we want to ask is: Does it offer any remedy for the serious condition of industry? Does it do anything for unemployment? Certainly it puts £24,000,000 a year into the pockets of the employing class. That is a very real thing; balm in Gilead, but I cannot believe that if that was all that was meant and 'all it did that the Prime Minister would have thought it a remedy for the serious condition of industry.

I want to argue, and I claim the indulgence of the House for an argument which is necessarily difficult, that the de-rating scheme itself, apart from the rebate on railway rates, is not a remedy for the serious condition of industry or for unemployment. If I were to put it paradoxically and in an extreme way, I would say that there is no warrant for saying that this gift of £24,000,000 a year to the employing class will cause one single additional man to be found employment. I put it in that way in order to arrest attention and possibly to induce hon. Members opposite to listen with a little interest to what I have to say and to see whether there is anything in that argument. It is, in effect, a gift to the employers, a gift to their profit and loss account—notice that—in all productive industry. It is not so large a gift as they think. The Chancellor of the Exchequer, in giving away £24,000,000 a year, must have winked one eye, because he realises that he will get back £5,000,000 or £6,000,000 a year in IncomeTax 'and Supertax. The right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) pointed out that in the case of a farmer a de-rated farm will quite certainly fetch in the market, when it is sold, the capitalised value of the amount of the de-rating. Nobody will deny that; certainly no landlord or his agent will deny it, and consequently there will be something more in Death Duties for the Chancellor of the Exchequer.

4.0 p.m.

But that is not the main point. The curious point about this gift is that it is so irregular. It is not in proportion to production or the number of persons employed. It is not in proportion to costs. It is an amount considerably less than 2 per cent. on the aggregate costs of production. The main point about it is that it is extraordinarily irregular. It is given to all employers in productive industries irrespective of the commodity they produce or whether their industry, like that of brewing or making artificial silk, is exceedingly prosperous, or whether, like the production of iron and steel, it is in nearly all cases unprofitable; and whether the premises are situated in a specially distressed or necessitous area, where the rates are high, or in another part of the country where the rates are low. The subsidy will be payable in equal sums for premises of the same rateable value within the same rating area whatever the amount of commodities produced, whatever their aggregate value, whatever the efficiency of the establishment, and whatever the number of persons now or hereafter employed. They w ill have the same sum given in these divers cases. On the other hand the amount of the subsidy will vary, for establishments of the same efficiency, in one and the same industry, employing equal numbers of workers, occupying premises assessed at equal sums, and producing the same value of product and identical profits, according as they happen to be situated in different rating areas in one of which the amount of rate in the £ is actually several times as great as in the other.

The consequence is that there is no basis for any estimate of the effect of the gift on the volume of business in each commodity, or on the amount of its aggregate production or on the total number of people employed. I think hon. Members will see that what interests the manufacturer, assuming it is a competitive business, is how he compares with his competitors, and he is very much interested in anything which makes a difference between his competitors and himself. He is not so very much interested in any change which affects all his competitors equally with himself. That leaves his competitive capacity undiminished, but this gift is going to bring rain from the Chancellor of the Exchequer's Heaven to fall alike on the just and the unjust, but to fall differently upon different just people and differently upon different unjust people, and even more on the unjust than on the just, and, more important still, to fall on them whatever their marginal costs of production may be. Of course, it is very nice for employers to receive this gift, but that will be entered in their profit and loss account, and not until they come to the profit and loss account. Consequently, it will make no difference at all to their business.

Assume for a moment that it is a sheer gift. You have the fact that the Government's main remedy for unemployment, for the precarious position of business, is this gift, in the hope that by this gift something will happen—that the employers will be enabled and induced to employ more people. That is what it comes to. The Government hope that, by making a free gift to employers without conditions in this irregular way—and that is the point of my remarks—these manufacturers will employ more people. In view of the fact that the boom of 1919 and the slump in 1920 to 1928 have come about very largely through the uncoordinated eagerness of the whole crowd of employers, first to increase production frantically in that short period of boom in trade, and then restrict it as drastically as they could in the slump that followed, it is extraordinary that we are going to give to some uncoordinated and unorganised crowd of employers this huge gift, without conditions, in this irregular way. There is something ironical in entrusting to them £24,000,000 of public money to have for their private use, free from any conditions, in the hope that, in the chance-medley of competitive indusry, somehow there will come about a better adjustment of production to demand, or of purchasing power to output, which is the cause of unemployment.

If that be at all a fair description, that the Government are or giving, free from conditions, this huge subsidy which the employers can, if they like, put in their own pockets without doing anything with it, and the Government are doing it in the hope, I grant them, that somehow or other, out of this chance-medley of uncoordinated employers fighting for their own ends, it will result in any single person being added to the ranks of the employed, then I can only say, if that is a fair description, that the credulity of His Majesty's Government surpasses even their statesmanship. Will this gift diminish the cost of production? Consider a man in business about to tender for an important job in slack times, knowing he is tendering against his competitors. Of course he puts down the wages, the cost of the raw materials, and all incidental expenses, and something, I suppose, for contingencies, but in slack times, when he is seeking to get a contract in the face of keen competition that man does not put down the whole of the overhead charges which he has anyhow to pay, whether his factory is full or half empty. Of course he has got to get his overhead charges back eventually from somewhere, but he will he glad enough in slack times if he can keep his works open, and his business going, and get the new contract in face of keen competition, on terms which will just give him back his outlay. He does not, as a matter of fact under these circumstances, Put down anything like the overhead charges which are already being loaded on the business he has already secured. I am assuming, of course, he will put down everything that would be increased by the new job. He will get this gift from the Government, £700 or £7,000 a year, whatever it may be, whether he gets this job or not, and consequently it would not pay him, it would not be wise, his accountants would not advise him to put down as overhead charges the rates he had already paid out of the proceeds of the business he already has, and, consequently, he would not be able to tender for this new job at any cheaper rate because the premises have been de-rated. [Laughter].

Before hon. Members laugh let them consider another case. Consider the man who is in almost the biggest industry in this country even to-day, and that is agriculture. Consider the farmer. The farmer to-day, in a great many cases, is considering how much land he is going to sow with wheat and how much land he is going to let down to grass, and the important thing in the consideration is that on this decision virtually depends the number of men he is going to employ. The fact is that in the next year there are going to be many agricultural labourers turned off, because the proportion of wheat acreage is falling and fewer men will be required. The Government come forward and say, "We are going to de-rate you. You have already been let off three-quarters of your rates and we are going to let off the final quarter." That, I estimate will amount to, on the average about £15 or £20 per farmer. You give him £15 or £20 whether he sows wheat or puts his land down to grass. If the farmer considers that he is not making the wheat crop pay at present prices, he will put his land down to grass. Will he be affected by the consideration that the Government are putting £15 more in his pocket He is getting that anyhow. Farmer A puts down land to wheat, and gets £15. Farmer B thinks that grass will pay him better, and lets his land. down to grass. He, also, will get £15. Clearly it will make no difference to his decision.

I can give other cases. You say you want industry to increase, and you do not mind so much increase of profits. You want the volume of industry increased, and, incidentally, more people will be employed. Perhaps! Will this gift lower wholesale prices to the distributors who sell to the consumers? Because, mind you, unless it does lower prices, I do not see how you can get any increase in business. The only way of increasing demand is by lowering prices. Is this going to lower prices? Take a humble business after the big business of agriculture, but an indispensable business—that of coffin making. Coffin makers are going to be de-rated just as other employers of labour. Will it lower the price of coffins? Even if it does, will it, increase the demand for coffins? I really cannot see how it is going to diminish unemployment among the coffin makers. The coffin maker is a type of man who is in a business for which the demand is extremely inelastic. But there are other cases of a like kind. The demand for bread is extremely inelastic in this country. If you lower the price of bread, you do not get an increase in the consumption of bread. You may get an increase in the consumption of meat but not of bread. You are going to de-rate the big bakeries and the flour mills. Will that lead to increased consumption of bread, and if not will it diminish unemployment among the bakers, or unemployment in the flour mills?

I suggest, therefore, that there is very great doubt whether this de-rating will increase the volume of business at all, and whether it will, therefore, diminish the volume of unemployment at all. That is putting it very high, and I am asking hon. Members to consider it. This remedy for unemployment is not a matter of electioneering. This remedy for unemployment will not come into operation until after the General Election. You will not be able to see the effects of it until long after the Election, and, whether I am right or wrong, it will not increase the value of it at the election; so that you need not be uneasy, but you might, for your own satisfaction, think it over. The right hon. Gentleman the Minister for Health says that the great object of de-rating is to carry the Local Government Bill. I make a present of this to my hon. Friends the mutineers who do not like the right hon. Gentleman's panacea, and are in favour of their own panacea. I ask them whether they are quite certain that this de-rating is going to do what it is said it will do? Will they ask him whether he is quite sure that de-rating is going to put a single extra person in employment?

There are lots of other cases that could he mentioned, of course. I notice that the Government factories are to be de-rated, the Army Clothing Factory for instance. Will that lead to an increase in employment The Post Office factories, too, are to be de-rated. Meanwhile the Post Office, or the Government, is proposing to dispose of part of the Post Office business. I am afraid that the Army factories will not take on one single man more; they will take on only the men that are required for the business, and the de-rating will be a gift. Then take the brewery industry and the distilleries. I am not going to raise the objection that in their case this gift is going to rich and profitable enterprises. There is another objection. Will the gift induce them to lower the price of beer? We all know that it will not. Will it induce them to lower the price of whisky? We all know that it will not. Will it therefore increase the demand for whisky? Of course it will not. In that case it will not reduce unemployment by a single person.

I might ask about the great cotton-thread industry or the tobacco industry or the soap industry. They will get very large sums in de-rating—very large in the eyes of poor annuitants like myself. But those sums will be quite insufficient to enable them to reduce the price, even if they wish to reduce the price, of a reel of cotton or a packet of cigarettes or a cake of soap, even by an infinitesimal fraction, and they will not reduce the price. Does anyone suggest that they will? Of course not. Will it cause any increase in demand I do not think so. Will de-rating make people smoke more cigarettes for love of the Government? Inevitably it will not put one single person more into employment in those industries. I want to quote a very wise sentence which was written 20 years ago by the ablest student of unemployment we have had, to whom we owe a very great deal. Sir William Beveridge, writing on "Unemployment a Problem of Industry," in 1909. used these words: The problem of unemployment—this is a point which cannot be too strongly emphasised—is insoluble by any mere expenditure of public money. It represents not a want to be satisfied but a disease to be eradicated. It needs not money so much as thought and organisation. That applies to all remedies of the nature of doles. It applies to doles to the unemployed. It applies equally to the much less justifiable doles to the employers. That is the condemnation of the great scheme of the Government for dealing with unemployment. Whatever happens in this House, whatever happens amongst the electors, I am sure it will not escape condemnation by serious students of the subject.

I want to say a few words about the reduction of railway rates for exports. It is equivalent to an export bounty to a particular industry; it is a subsidy out of the taxes to a particular industry. Conceivably that might cause a reduction in the price to the foreigner to that extent, and it therefore might cause an increase of demand from the foreigner. But remember that we have been reducing the price of coal to the foreigner in that hope for a couple of years, and we still find that the demand for coal is very nearly as inelastic as the demand for coffins. There has not been, owing to a much larger reduction of price than the amount of this re- bate, any increase in the export trade, at any rate nothing like the increase that was anticipated.

You could achieve the end in view by making the bounty big enough, but is it worth while to pay money out of our pockets so as to enable the foreign manufacturer to buy our coal more cheaply than the English manufacturer can buy that coal? I do not know whether that is economic statesmanship. It certainly is not very commercial statesmanship, and I do not believe that any hon. Member opposite will get up and support a proposal to do something which will enable foreign manufacturers to get British coal at a cheaper rate than that at which the English manufacturer can get it. The Government are not giving any rebate on railway rates for coal supplied to British manufacturers, except in the case of iron and steel. The rebate is to go only to coal which is to supply the needs of the foreign manufacturer in the hope that the scheme will make coal cheaper to the foreign manufacturer than to the British manufacturer. What statesmanship is this?

I pass from that to say a few words about the block grant. In the very able speech of the right hon. Gentleman the Minister of Health, he told us that the percentage grant had great disadvantages and he spoke of the superiority of the block grant to the percentage grant. During his speech I felt very much inclined to ask him whether he was going to withdraw the Bill, which did not correspond with his speech, and to bring in another Bill. Of course, the Bill does not abolish the percentage grants. The percentage grants at present amount to something between £35,000,000 and £40,000,000 a year, but the percentage grants which the right hon. Gentleman wants to abolish amount to something under £4,000,000. Consequently he leaves nine-tenths of the percentage grants still existing. Look at the matter in another way. Of course, the right hon. Gentleman may say that the wicked people at the Education Office and the Home Office would not allow him to abolish the percentage grants on education and on police entirely, and that consequently he could not help himself. Nevertheless he made his speech largely on the advantage of substituting the one grant for the other.

As a matter of fact, he has not made that substitution. He adds £16,000,000 block grant to the de-rating and he abolishes only £4,000,000 of the percentage grants. Therefore he does not substitute £16,000,000 of block grants for the percentage grants. He changes the conditions of £12,000,000 of block grants into new block grants, and then incidentally and, I must say, wantonly, abolishes £4,000,000 of percentage grants. And these are just the grants which are of the highest utility. Let us look at the way in which the abolition of the £4,000,000 of percentage grants will be seriously adverse to the further development of the optional services. There are places which say they do not want the optional services, that they do not want to trouble about maternity and child welfare or tuberculosis, because their districts are healthy. I have heard that stated. They are not injured by the optional grant which is given to other places. The new block grant is said to be based on relative needs. The needs that are measured are only the obligatory services. Maternity and child welfare are not reckoned as a need. Under this scheme the same grant will go to the district that does practically nothing for maternity and child welfare as to the district that does its duty. The right hon. Gentleman said that he intended to keep these backward places up to the mark. He stated that when the Bill became law there would be a position in which there would be one single health authority in each area, whose duty and function it would be to survey the whole of the institutional needs of that area. That is the sort of sentiment which gains the adhesion of the hon. and gallant Member for St. Albans (Lieut.-Colonel Fremantle), who is so keen on public health.

But the Bill does not say that. It says quite the contrary. Clause 51, on which the Minister relies, limits this survey to the area of infectious disease and leaves out maternity and child welfare altogether. I suppose that tuberculosis is included, though I shall have something to say about that when we come to the Clause.

The words "public health" in Clause 4 do not include tuberculosis; the right hon. Gentleman has there put tuberculosis separately, He must not do that—put it in one place and not in another, because he may be held by his omission in Clause 4 to have meant by "public health" something that is independent of maternity and child welfare. I am sure that his lawyers will tell him so. Under the Bill the needs are to be measured by the obligatory services and not by the optional. Yet it is just the optional services which the percentage grants were instituted to encourage. The Chief Medical Officer of the Ministry of Health, Sir George Newman, says in the Report which was issued a few weeks ago after the Bill was in draft: There can be no doubt that the percentage Exchequer grants-in-aid of health have been of the highest possible value and incentive during the last 15 years in getting special medical services in operation and in guiding their direction.

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

Read the whole of the quotation.

Mr. WEBB

I will, but it may take five minutes. I can well understand that the Chief Medical Officer, after he had read the Clause of the draft Bill, said to him- self "Hullo, I am being hit"

Sir K. WOOD

Never mind about the quotation, if you cannot find it.

Mr. WEBB

Oh, yes, I will find it, but I ask the House to observe that it is not who am taking up the time, but the Parliamentary Secretary who requested that it should be read in full.

The MINISTER for HEALTH (Mr. Chamberlain)

Perhaps the right hon. Gentleman will continue his speech and my right hon. Friend will complete the quotation for him.

Mr. WEBB

I am sure the right hon. Gentleman will not suggest that what I have quoted is not Sir George Newman's opinion because Sir George Newman's opinion is known and has been expressed over and over again. I am sure he does not mean to suggest that I have misstated Sir George Newman's strong opinion which is perfectly well known to the hon. and gallant Member for St. Albans and to any other hon. Members who take an interest in health services. There is no adequate provision in the Bill to prevent positive backwardation in these optional services. I believe the Minister to be as keen on the development of these health services as any of us but his Bill does not correspond with this desire and the only provision to prevent backwardation in these services is the provision enabling him or the county council to survey these services.

As a matter of fact there is no provision for the Minister's interference in that way except in regard to public health and he does not mention maternity and child welfare or the other optional services in that connection. He has taken no express power to interfere in. regard to maternity and child welfare services. As I have pointed out and as the right hon. Gentleman's draftsman must have told him in one place public health is mentioned and then maternity and child welfare and tuberculosis are mentioned separately and in this other place he will be taken to mean public health only without maternity and child welfare and perhaps also tuberculosis. Moreover the phraseology is such that this does not apply to maternity and child welfare; moreover as a matter of fact the question in regard to these services is a question of their progressive increase and not actually of their going back. There is only express power to interfere as far as I can see in regard to infectious diseases hospitals and I do not see any protection in this default clause against backwardation. These new services are not yet common over the Kingdom. Let me give one instanee, that of the infant centres. I gather that there are only 1,695 infant centres in the whole of the Kingdom. That may sound a lot to a mere man but these centres are places where poor mothers bring their newly born infants for examination and weighing and so forth and where they have to attend regularly. What is to be the radius in that case? Does that mean a radius of a. mile? Can you ask a mother with an infant to travel more than a mile? How many of these infant centres would you need to cover the 88,000 square miles of England and Wales? It may be "Some counties do not want them." But babies die in those counties; and the infantile death-rate is a disgrace in many cases. The Minister knows it and his chief medical officer knows it. The right hon. Gentleman would be the last man to wish to see the progress of maternity and child welfare services stopped in those counties. But it will be stopped because, just as the gift to the manufacturer in this Bill is coupled with no conditions that he is to spend it on employing more people, so the block grant to the local authorities is coupled with no condition that they are to spend some of it on maternity arid child welfare.

Mr. CHAMBERLAIN

Does the right hon. Gentleman contend that the maternity and child welfare service is not one of the functions of local authorities?

Mr. WEBB

It is obvious that I cannot contend that. What the right hon. Gentleman is referring to is his power under the default Clause. I think it is Clause 86. This is a supremely important point. The Clause reads as follows: The Minister may reduce the grant payable in respect of any year under this Part of this Act to any council by such amount as he thinks just if lie is satisfied that the council have failed to achieve or maintain a reasonable standard of efficiency in the discharge of their functions relating to public health"—

Dr. VERNON DAVIES

Carry on.

Mr. WEBB

I am quoting it in the interests of the Minister. This is a diminution of his power: regard being had to the standards maintained in other areas whose financial resources and other relevant circumstances are substantially similar, and that the health of the inhabitants of the area of the council or some of them has been or is likely to be thereby endangered. The Noble Lady the Member for the Sutton Division of Plymouth (Viscountess Astor) is keen about maternity and child welfare. Imagine her coming forward under this Clause to plead that such and such a council ought to be declared in default because it had not attained a reasonable standard of efficiency in the discharge of its functions relating to public health. There is no mention of the other service at all.

Mr. CHAMBERLAIN

Are we to take it that it is not public health?

Mr. WEBB

I am only a hedge lawyer but I am a lawyer and I have several times pointed out to the right hon. Gentleman that if you express one term in a series and do not express others you may be taken to have deliberately omitted the others. In Clause 4 you have "public health" in one place and in the next line "maternity and child welfare." You can make it quite clear by including in Clause 86 the words "including maternity and child welfare," but even supposing you do so the complainant has to show not only that the service is not reasonably efficient but also that the health of the inhabitants of an area or some of them has been or is likely to be endangered. Of course it could be said that such and such an infant's health had been, endangered; but will it not be held to mean that such a complaint is referring only to infectious diseases? [HON. MEMBERS: "No!"] The right hon. Gentleman can make it right if he will do two things, include his other optional services after these words "public health," and instead of the words "reasonable standard of efficiency," use the words "reasonable standard of adequacy and efficiency." [HON. MEMBERS: "Agreed!"] There is no doubt that in some of these largely backward counties there are some maternity and child welfare schemes which are reasonably efficient, but the trouble is that they are not adequate, and the Bill does not expressly enable the Minister to interfere if the service where it exists is reasonably efficient, but is very far from being adequate. The point is that these are growing services and the question of their inadequacy is important because they are growing. In five years' time, as has been pointed out, maternity and child welfare ought to have reached twice its present degree of adequacy, even though it may not have become any more efficient when it exists, but the right hon. Gentleman has not taken steps to secure that.

I must come now to what is after all my biggest interest and that is the Poor Law. The right hon. Gentleman's Bill with regard to the Poor Law is like the historic curate's egg. It is very good in that he should at last do what his father recommended 40 years ago and abolish the separate ad hoc destitution authority. Neither the right hon. Gentleman nor any of us would wish to cast any reflection on the public spirited men and women who serve as guardians but the evil of the system is, first that they are limited to the relief of destitution. They cannot step in before destitution has begun, in order to prevent it, and they cannot go on for a single minute after destitution has ceased, in order to prevent a relapse. They are limited to the moment of destitution. In the second place they are circumscribed in all sorts of ways in what they do, and the system is quite incongruous in relation to the treatment of the sick. The right hon. Gentleman does not sweep the Poor Law away. He has abolished the boards of guardians but not the Poor Law. He has transferred the work of the boards of guardians with their powers and liabilities to the county councils and the county borough councils. That is a step and I thank the right hon. Gentleman for that step. It is said that the time-lag in England is 19 years, and the 19 years is up this year. But the Bill does not stop the overlap between the services of the county and borough councils and those of the boards of guardians. Clause 4 is merely optional. It enables the council to do certain things as a part of public health instead of the Poor Law. So far so good, but it only "enables" them to do it, which means that some of them will do it and some will not. The result of that will be not merely upsetting to the right hon. Gentleman's statistics but it will mean that the rights of citizens will differ in different localities. Let us take the three adjoining county councils of Northumberland, Durham and the North Riding. All three include great mining, shipbuilding and iron and steel areas. In Durham I venture to prophesy that the miner or mechanic will be dealt with outside the Poor Law as far as the Bill allows. At any rate as far as Clause 4 allows it I have not the least doubt that Durham County Council will take all these services out of the Poor Law. The adjacent counties will not do so. Unfortunately they will not be able to take the sick man out, or only in some cases, will they be able to take the sick man out of the. Poor Law.

These men whose cases are taken out of the Poor Law in Durham will not be disqualified for sitting on the council. They will not be reduced to the pauper status. I wonder do hon. Members realise that there is such a thing as the pauper status? It is often suggested that all this has been swept away but such is not the case. There is still the pauper status—in a much more injurious and serious form, much more real and much more inimical to the objects of the right hon. Gentleman's Bill than hon. Members imagine. Let me mention one instance. There is the disqualification for office which the right hon. Gentleman is actually extending. Then has the right hon. Gentleman realised that the pauper in a Poor Law institution has no remedy for even the grossest, wickedest, most malicious negligence by the Poor Law authority or its officials? If a man goes into a voluntary hospital and gets treatment for nothing as a matter of charity, nevertheless in a, case of grave neglect he has a right of action against the management of the hospital and against the negligent official. That is so with regard to the City hospitals under the Public Health Act. That has been held in case after case, but the pauper because he is a pauper is not allowed to sue either the Poor Law authority or the officials of that authority even for the grossest negligence.

The right hon. Gentleman says he hopes to see all these institutions made available by classification for different classes of the sick. I am sure he means that he hopes to see institutions to which the present pauper sick will be able to go and to which other people who are sick will be able to go. That has been his great point. He wanted to provide adequate hospital accommodation for everybody in the county. Does he realise that the pauper patient in one of these institutions will have no remedy for the grossest negligence, whereas the patient in the next bed who is not a pauper will have a remedy? That situation is impracticable. I suggest that if the right hon. Gentleman is going to retain the Poor Law, he must in some way put those two patients on an equality. Just because they are poor and ill and defenoeless, all the more the law should not deny that ultimate remedy for gross negligence which it does not deny to the poorest patient in a voluntary hospital or in a public health institution. I will ask the right hon. Gentleman to be good enough to note that point.

Now, with regard to the recovery of costs, the right hon. Gentleman says that at present the Poor Law authority is able to recover the cost of its relief from the person relieved or from anybody responsible—

Mr. CHAMBERLAIN

I did not say they were able; I said it was their duty.

Mr. WEBB

The right hon. Gentleman need not so quickly interrupt. It is not a duty imposed upon them by any action of this House. It is an Order by the right hon. Gentleman's predecessor which makes it a duty.

Mr. CHAMBERLAIN

The right hon. Gentleman was misquoting what I said, and that is why I interrupted him.

Mr. WEBB

I beg the right hon. Gentleman's pardon for misquoting him, if I did. At any rate it is not a duty which has been imposed by this House. For the first time the right hon. Gentleman is going to ask this House to impose it as a duty on the authorities to make a charge on everybody—for the first time—and he cannot justify that merely by saying that the boards of guardians have been told to do it by one of his predecessors. But notice the difference. The board of guardians is only able to recover the cost of the relief, and it cannot recover anything more than the Cost of the relief, which is the cost of the food, clothing, and so on. Such cost definitely excludes the cost of buildings and repairs thereto, furniture, salary and other remuneration of officers, superannuation allowances, etc. That is what the board of guardians is told to recover by the right hon. Gentleman, but that is not what the right hon. Gentleman is going to ask this House to tell the public health hospitals to recover. He says that they are to be told to recover the average per patient per day of the cost of the entire institution. The expenses as set out in Clause 13 are to be as follows: The expenses incurred by the council or authority in providing for the maintenance of a person in an institution shall, in respect of each day of maintenance in the institution, be deemed to be a sum representing the average daily cost per patient of the maintenance of the institution and the staff thereof and the maintenance and treatment of the patients therein. Notice what that means. Supposing you run a hospital for a particular kind of case and supposing it is half full, as it very generally will be, or even if there were only one patient throughout the year, the whole cost of that hospital, if one patient is there, can be charged on that one patient. That sounds ridiculous.

Sir K. WOOD

"The average daily cost."

Mr. WEBB

But that is the average. The right hon. Gentleman knows too well—he is quibbling, as a matter of fact—the point that I am making. Suppose you have a hospital which has provided for a considerable number of patients, with the necessary staff, and suppose that during the year there is, God be thanked, very little sickness and the hospital is nearly empty. The average cost per patient per day will be enormous-Why, the right hon. Gentleman himself has just authorised the Metropolitan Asylums Board to equip a most expensive ward for the reception of women suffering from a particular kind of cancer and to provide it with radium, at an enormous cost, for eight women only. The average cost for each of those eight women per day will come to a very large sum. Of course, the right hon. Gentleman will not be able to recover it, but the bill must be sent in. The right hon. Gentleman wants these hospitals to be resorted to by poor people willingly. He wants them to come in—cases of cancer—at the earliest possible moment, but he asks the House to insist that the woman shall be told that she will receive a bill for some immense sum, or what will sound to her, an immense sum. She may be told, "We will not be exacting," and to the very poor the charge may be reduced or even remitted, but will such a bill induce people to come into these hospitals early, as the right hon. Gentleman wishes? The right hon. Gentleman does not propose to alter the bill which will be sent in to the person under the Poor Law, but in these public health hospitals he does. There are very good hospitals which will be affected. There is one at Edmonton, which has just got power to spend £6,000 on radium for a very small ward. If you are going to charge that to a patient on the average cost per day—

Mr. CHAMBERLAIN

The right hon. Gentleman must not misrepresent the effect of the Clause. He is under a mis- apprehension. The cost of treatment must be separated there from the cost of maintenance. He is talking about treatment, and not maintenance. The patient will not be charged with the cost of treatment.

Mr. WEBB

What does the Clause say? It says: The whole of the expenses incurred by the council or authority in the maintenance of that person. and the expenses are to include The average daily cost per patient of the maintenance of the institution and the staff thereof and the maintenance and treatment of the patients therein. It says "and treatment." The right hon. Gentleman said in his speech that you must have one rule, for all institutions, but in the Poor Law institution he is only going to charge a woman with maintenance, excluding the cost of buildings and repairs, salaries and other remuneration of the staff; he is only going to charge the Poor Law patient 20s. per week, or something like that—nothing to do with the average cost of the institution, or the treatment, or the salaries of the doctors, but only the maintenance; and that is what the Poor Law authorities do charge now when they can do it. You must have one rule for all, says the right hon. Gentleman in his speech, but, as a matter of fact, Clause 13 proposes a different rule., a rule which proposes to make a charge, obligatory in every case, which shall include the average cost of the institution, of the staff, and of the treatment, including the radium. The average cost must be charged to the poor woman whom you want to induce to come in for treatment. That is not one rule for all. The Bill does not correspond with the right hon. Gentleman's speech, and I hope he will insert an Amendment that will secure one rule for all.

It has been suggested that this perfectly extortionate charge may be made, but that it will not be pressed, but inquire of any medical officer how that will operate! What about the fear of the charge? The right hon. Gentleman wants the people to come into these institutions before they are destitute; he wants the poor man suffering from rheumatism to come in before tie is broken down and unable to go to work; he wants the cancer case to come in at the very earliest moment, when there is no incapacity, and yet he is apparently going to require the institution to present to every patient a bill of this immense size. I can only imagine that he has been paying regard to the susceptibilities of the voluntary hospitals, and that they are afraid that these public health institutions will be so good that people will not want to go to the voluntary hospitals. I am quite sure that this House must not deter poor people from going into hospital by the threat of such a bill as that, which is not justified, and which is contrary to the right hon. Gentleman's speech when he said that there must be one rule for all. Poor Law guardians do not in practice send in any bill at all. Whether it is their duty to do so or not, I do not know, but they do not do it habitually; and the right hon. Gentleman knows it, and his auditors know it. They only recover when they have reason to believe that they can equitably recover, and they do not send in a bill in every case. The right hon. Gentleman wants this House, for the first time in its existence, to say that you shall send in a bill in every case to the destitute man or the poor mother, this immense bill, which I venture to think—well, I will not say what I think.

Let me point out another thing. This immense charge—I call it immense, and it is immense, relative to the circumstances of the people in question—is to be made in every case except that of infectious disease. One of these infectious diseases which is treated in public health hospitals is what is known as venereal disease, and it has been expressly ordered that the treatment of this disease shall be granted, as of right, to everybody, whatever his affluence—to the richest man, if necessary—wherever he is, quite irrespective of settlement, absolutely free; and not only outdoor attendance, but whatever institutional treatment is prescribed, without any charge at all. Now in the maternity centres, where the women come in for their confinement, the Chief Medical Officer of the right hon. Gentleman says, in his Report: Besides the treatment provided at the regular centres, special arrangements exist at 1a maternity and child welfare centres by which women and children discovered to be suffering from gonorrhoea or syphilis can be treated there, thus saving them the trouble of attending at a V.D. treatment centre. In this way many infected patients receive the necessary treatment which they might otherwise neglect, and the transmission of syphilis, or the danger of ophthalmia neonatorum is prevented. 5.0 p.m.

Women come in, with the approval of the right hon. Gentleman's Department, afflicted with venereal disease, and you must not charge them anything. They have to be treated absolutely free. One would not have supposed that you would pick out just these women not to have the bill presented to them. The other women who come in are to have this very large bill sent to them. It is not very enterprising for a Department to make that suggestion. You are going o make a charge in every case of a woman going into a maternity centre and yet to see that the treatment of venereal disease shall be gratuitous. Are you going to send in this bill in the one case and not in the other? The right hon. Gentleman would do better to agree with his adversary while he may and accept the proposed Amendment of the hon. Member for Sutton. Let the maternity and child welfare grants go on; they will only go to the districts that want them and they will continue to afford a valuable incentive to other districts to make this provision.

I have pointed out that the Poor Law is to be handed over intact, and that you will have a difference in right between one citizen in one county and another citizen in another county. Under the Poor Law, citizens all over England are supposed to have the same legal rights of relief. Now you are going to dodge about from county to county. County A will have taken over some of the Poor Law services, and County B will not have done so. The resident in County A will not be a pauper and the resident in County B will be a pauper. There is, however, a much more serious case, for Clause 4 enables the new authorities, if they like, to take over some part of the Poor Law service, some part only, and a small part, and it prevents them taking over all the rest of the Poor Law services. These are to continue to be Poor Law. I ask the right hon. Gentleman's particular attention to one Section of the Poor Law which is in as bad and chaotic a condition as it was in 1834. It is the relief of the able-bodied. There are as many able-bodied men being given outdoor relief from Poor Law authorities to-day as there were in 1834—not proportionate to the population, but literally as many. The right hon. Gentleman referred in a happy way to the suggestion of his illustrious father that the Poor Law ought to be handed over to the counties and county boroughs, but he might have reminded the House that his illustrious father, in making that suggestion, said emphatically that the unemployed workmen ought not to be degraded by the Poor Law at all. He said: The law exists for securing the assistance of the community at large in aid of their destitute members; and where the necessity has arisen from no fault of their own, the persons concerned, there ought to be no idea of degradation connected with such assistance. Those compelled to apply have probably paid rates and taxes in past time. The payment is, in fact, an insurance against misfortune. The illustrious father of the Minister of Health was not able to get his own way then but he came into the Government, and he managed to do something. He sent out a circular, in which he said: It is not desirable that the working classes should be familiarised with Poor Law relief. The spirit of independence that leads so many of the working classes to make great personal sacrifices rather than incur the stigma of pauperism is one that deserves great sympathy and respect, and it is the duty and the interest of the community to maintain it by all means at its disposal. If the author of these words could be here now, how surprised he would be to find that his equally illustrious son is proposing that the only class among those whom the guardians at present relieve which is not to be taken out of the Poor Law is the unemployed; that is the 100,000 men and their families whom the guardians are now relieving out of the Poor Rate, are to remain, because the Poor Law is to be handed over to the counties, and they are not to be taken out of it. They are to remain under the Poor Law, and the county or county borough council will have to go on doing what the guardians have been doing. That is not what Mr. Joseph Chamberlain suggested. His influence went further, and the Unemployed Workmen Act was passed in 1905 to enable the borough and city councils to make some other provision than out-door relief for the unemployed. This Bill proposes to repeal the Unemployed Workmen Act. These men are not only to be kept under the Poor Law but the door is locked, bolted, and barred against them by the repeal of this Act. The councils which are to take over the duties of the guardians are to be held within the limits of the powers that the guardians now have, and the powers which were given to them by the Unemployed Workmen Act are by this very Bill to be taken away from them. Mr. Balfour and the Conservative Government in 1905 thought that they were really doing something for the unemployed and for some yearn they did something for them under the provisions of that Act, but now, when unemployment is with us again, those powers are to be denied to the city and town councils which have to take over the job which the guardians have failed to perform, with no further powers than the guardians had.

I said that the Bill did not correspond with the words of the right hon. Gentleman, and I do not think that it corresponds with his intentions, but as it has been drafted I suppose that a mechanical majority will force it through this House. We ought to look at these points with a humane mind, free from the trammels of the officials of the Ministry of Health, who very naturally and inevitably are steeped in 90 years of the traditions of the Poor Law. We want to make a fresh start. I am sure the local councils want to make a fresh start; they do not want to take over this job without greater powers to help them, still less, to have their powers reduced. I am not entitled to predict, but if the House will allow me I will give my opinion of this problem for what it is worth. I do not believe that the question of the unemployed can be properly and successfully dealt with either by the new authority or by the board of guardians. I want the new authority to try it, because that is always an advance, but I did not expect that they would be deprived of some of the machinery that they already possess. I do not believe that it can be done. They will not be able lawfully to do anything but relieve destitution and will be able to do it only at the moment of destitution. They will not be able to step in and help a man sinking into destitution, and they will not be able to do it after destitution has ceased. They will not be able to train a man or to migrate him to another place; they will be forbidden to spend any money in helping the man to go to another district—and quite properly because other places would be up in arms if that were done.

That means that you want a national authority. The Government have established a Ministry of Labour, and this Ministry is every day maintaining a million men. The Poor Law guardians are maintaining only 100,000 men, while the Ministry of Labour are handing out relief to a. million men and their wives and children under the unemployment insurance scheme, and yet we are boggling over letting the central Authority deal with 100,000 more men. The minds of those who have worked for 90 years under the Poor Law cannot see anything outside the ring of the Poor Law. They have only 100,000 men, but outside that ring there are 1,000,000 men at present being relieved by the Ministry of Labour, and it is only a technical difference whether they are paupers or not. Local authorities cannot deal with the problem because industry is not local, and has no regard to local boundaries; and the local council can no more cope with the unemployed of an industry without going over the boundary than the board of guardians can. It cannot get information from other districts, and, moreover, any training that is applied must be specialised, and you must recruit such specialised institutions from a wide area. It must be national, eventually will be, because of the unfair incidence of the burden. It is admitted by this Bill that it is not fair that the rates in one district should be raised appreciably above the rates in another because of the accidental patchiness of unemployment, but that patchiness will recur again and again. A much more important consideration is that the local authority cannot possibly apply preventive measures. We have erected a framework of prevention for preventing people becoming sick, and that is why our sickness rate is not overwhelming. But we have not yet erected a framework for the prevention of unemployment. We shall not know how to do it until we have a specialised Department which is thinking about it. It was not until we had a national Department thinking it out that we had a system of public education. So with public health; we did not get public health on any large scale until we had a national Department which was thinking about the whole thing.

This Bill fails to carry out the intentions of the right hon. Gentleman and the intentions of the Government, fails I am quite sure, to carry out the desires of the House in these matters; and I ask the right hon. Gentleman to see if there is not some substance in some of my points and to put in Amendments to carry out his own desires. But on the main point of whether able-bodied men are to remain under the Poor Law and without the aid of the Unemployed Workmen Act, whether the new authorities are to go to this new work crippled through having no more than the powers of the boards of guardians, it seems to me—we have had some Biblical quotations already—rather like the case of the potentate who hardened his heart and would not let the people go. It seems to me that the Poor Law authorities behind the right hon. Gentleman are not willing to let these able-bodied people go, and I ask him whether he had not better let them go like the sick, whom I am sure that he wishes to take completely out of the Poor Law, to be dealt with by the county and county borough councils in whatever way they find necessary, in preparation for the taking over by the Ministry of Labour of the whole of the able-bodied unemployed.

Captain O'CONNOR

A feature of this Debate so far as it has gone has been that it seems to have aroused considerable enthusiasm on the part of the respective supporters of those hon. Members who have happened to take part in the Debate, and that is no less consoling to the person eliciting some response than it is to the person who is in the position of having his remarks pondered upon. I hope the House will pardon me if, in a Second Reading Debate, I do not attempt to pursue in any elaborate detail the minor points to which the right hon. Gentleman the Member for Seaham (Mr. Webb) directed his attention. [HON. MEMBERS: "Minor!"] I am not suggesting for one moment that in the course of his speech, which lasted about an hour and a half, he did not cover some of the major points, too [Interruptian]. One of the advantages which I must confess the Socialist party offers to its members is that they can be practically certain that if they can subdue their own members they can secure a quiet hearing for any of their speakers.

To go back to one or two of the more or less major considerations enunciated by the right hon. Gentleman, I think those who can cast their minds back so far as the earlier portion of his speech will recall some of the most astonishing and unsupported statements which have ever been heard from the Opposition Front Bench. I have never been able to see how it is possible in any reasonable assembly to suggest that no benefit is given to industry by a reduction of rates amounting to, approximately, £25,000,000. That seems to me a proposition so untenable and so ridiculous, more especially when it comes from the party which is consistently complaining of the burden imposed upon industry by the toll levied by capital, that I cannot see how it can be put forward as a reasonable argument. Why should it be a burden that capital should take a toll for its services, and not a burden that the local authorities should require a toll for their services? It seems to me that the problem of when a burden is not a burden is one to which hon. Members opposite have never directed their minds.

The hon. Member for Mile End (Mr. Scurr), speaking two nights ago, went even farther than the right hon. Gentleman the Member for Seaham, because he said the burden of rates was a positive benefit. Like Tatcho for bald heads, possibly it may stimulate the further productivity of industry. But I will confine myself to the simple statement that I cannot appreciate how any authority can say that if you relieve industry of £25,000,000 you are not facilitating the task of production. I have instanced the case of the rentier, and I will instance another case which has been constantly under the notice of hon. Gentlemen opposite. That is the case of the German nation, which by inflation liberated itself from a large part of its debenture charges. Has it ever been suggested that the German nation, by relieving its industries of those overhead charges, has not put those industries in a much better position to compete than are the industries of other countries? The proposition which has been put forward from the benches opposite is really not argu- able, and the right hon. Gentleman's view of how he conceives a business concern puts forward its tenders is one of the most remarkable I have ever heard. At any rate, it will go down to history as a very good example of the danger of trusting Socialist statesmen with the management of businesses. If an ex-member of the Socialist Government conceives that he is going to tender without taking into consideration any of his overhead charges, then I think the natural reluctance which has already been shown by business men in this country to confide their destinies to Socialist guidance will be increased and heightened. Comparable to this, I think, was the description of the way in which a board of guardians will total up the bill which it will render to some poor person who has received benefit in one of its institutions. He cannot seriously have considered that in arriving at that charge the fact that only one person was in the hospital would be used to attract all the overhead charges for all the beds in the hospital. He cannot seriously consider that it would attract, for instance, all the overhead expenses in respect of £7,000 worth of radium, and if he does not think so it is monstrously unfair to say so.

Mr. WEBB

That is the Clause, Clause 13.

Captain O'CONNOR

My qualifications as a lawyer are perhaps almost as sketchy as those of the right hon. Gentleman, but I would venture to say with positiveness that no such interpretation of that Clause would be endorsed by any Court in the country, and even if that were the present effect of the Clause, surely it is not a matter to be introduced in a Second Reading Debate. We have come to a, strange pass in Second Reading discussions if on a Bill of this magnitude we are going to dispute about the wording of individual lines and individual Clauses, and so occupy time which ought to be devoted to very much more general arguments. Therefore, I want at once to return to more general considerations, and I intend to do so whether I am applauded from one side or the other.

To my mind this Bill, in its main features, is simple, is terse. It consists really of four main principles, and I have not heard any successful attacks upon any one of them, either in this House or out of it. The first principle is that industry should be relieved of rates. I will come in a moment to say which portion of industry the Bill relieves of rates, but I do not think the proposition I have stated is seriously contested. The second is that local government areas should be widened; and I do not think that can be contested. These areas, which were fixed at a period and in relation to circumstances which have long since passed away, have now become obsolete. They were fixed in many cases on considerations relating to their proximity to a market town, and the distance which people could travel, and it is quite obvious that some of these considerations must have become illogical in the light of present-day circumstances. The other two features are the transfer of certain services to the widened areas and the measurement of the drafts which local authorities may make on the central Government. These comprise in essence the four features of the Bill; all the rest is detail.

You may attack the detail, and no doubt much of it will have to be modified, and will be modified, as the Bill goes through Committee, but from our point of view on these benches we have seen no real and formidable attack upon the essential soundness of each of those four propositions. I do not think there has been any attack upon the question of the widening of the areas. As regards the transfer of the services, there can be nothing very wrong in that in principle, because the right hon. Gentleman himself, as, indeed, does his whole party, proposes to transfer the services to areas which are still wider, namely, to the State itself. Therefore, it is not open to the Opposition to use the argument that by transferring certain services to the administration of bodies in wider areas we are losing contact with local needs. That argument may be open to the Liberal party, whose position is different from that of the Socialists. It is open to the Liberal party to say, "You are losing the benefit of close contact with the people by transferring these functions to wider areas," but that is not open to the Socialist party, who are prepared to entrust the most intimate social functions to the tender mercies of the State. That is a proposition which is not palatable on this side of the House, because we feel it would involve an immense increase in bureaucracy, and abolish largely the local interest which is so important a part of the administration of the Poor Law.

Now I turn to the question which occupies the greater part of the Bill, the question of Government contributions. At the present moment nobody supports the present method. The right hon. Gentleman the late Financial Secretary to the Treasury (Mr. W. Graham) pointed out over and over again last night that the system of assigned revenues cannot be defended. Therefore, that part of the system has no supporters at the present time. The almost incalculable indents which local authorities might make in the future indicates the need of some regulating machinery of the kind which is introduced by this Bill, and that must, I think, be borne in mind in view of any possible decentralisation of social work into the areas. I think the answer to the advocates of the percentage grant system is that with increasing social activities in the areas, the potential demands of the local authorities upon the central Exchequer, necessitating Budget variations, are becoming more incalculable year by year.

There is everything to be said for some scientific method of allocating grants. Whatever may be said of it in practice, in theory the percentage system must be unsound. It cannot be a sound principle that an area should be able to attract to itself grants varying according to the amount which it can spend. It cannot be fair that an area which cannot supply the essential minimum for the purpose of attracting a grant at all should for that reason and for no other be deprived of the means of setting on foot essential social services. On principle and in theory, the system must break down, and if we can only find some more adequate formula upon which to allocate grants I do not see on what logical ground the new method is not to be preferred.

It may be said that such a logical method has not been discovered in the formula. That may or may not be true, but at any rate it is the best formula put into the field up to date. I was intensely amused to hear the hon. Gentleman the Member for Nelson and Colne (Mr. A. Greenwood) say on the first day, almost as a caricature of the reactionary Tory who does not exist in reality, that he did not believe in these patent formulas. That is the kind of argument which must have greeted Caxton when he introduced printing. That is the kind of argument with which, no doubt, Darwin and Newton were greeted, and it is somewhat curious to observe what Nietsche would call the transvaluation of values—the Conservative opposition sitting on the benches opposite. Undoubtedly, there will have to be some modifications made in the details of this scheme.

There is one small matter which I want particularly to suggest to the Minister of Health in connection with the formula. I do not think our case is served by pretending that the formula is scientific, but the basis of the formula is undoubtedly more scientific than the present method of allocation of funds. Once you introduce a capricious multiple you make your formula not scientific but empirical, and it strengthens our case to admit that right away. If it is empirical, you cannot give scientific reasons why a multiple of 10 in any particular class of persons has the precise effect which it has. You might as well ask a cook who makes a Christmas pudding precisely how she knows what quantity of raisins or currants she puts into that indigestible article. When you once admit that it is empirical, you are placing a very great reliance on the Minister, and you are asking for very great confidence in the experts at your disposal. You are asking the people to say that they are right in the figures and multiples they have provided according to which the needs of the various areas have to be determined. There ought to be in the Bill itself some provision for a revision of the working of the formula, and for a reconsideration of the formula by the Minister at the end of the first quinquennial period. I do not believe in giving blank cheques to Ministries, however important and well managed they may be. I think in the course of the Committee stage it will be well worth considering whether the weighty arguments advanced for the maintenance and support of the child welfare centres and the maternity centres should not be given due consideration. The percentage grant system was devised originally to nurture those services until they could be put on their own legs. When such services have become well established, they will not need that nurturing, and they can be dealt with under the block grant system. I want the Minister of Health to consider whether he has sufficient power under Clause 86 of this Measure to deal with the authorities which are not living up to their responsibility in the matter of carrying out those duties. It seems to me to be a somewhat anomalous method that if an authority is not supplying the service which it ought to be supplying, you are proposing to take away all the funds that it has, because then it will be less able to perform the services which it is its duty to perform. I think some additional power ought to be given to the Minister of Health like that which he possesses under the Boards of Guardians (Default) Act, under which he has power to take over the management of certain services in flagrant cases.

I want to turn to some of the arguments which were presented against this Bill yesterday by the hon. Lady the Member for East Ham North (Miss Lawrence), in a speech so remarkable and so excellent that many of us on this side cannot recall a contribution to these Debates from the opposite side of the House which was its equal. While I feel some diffidence in attacking the hon. Lady in her absence, I must deal with several points upon which she allowed her natural reluctance to accept this Bill to mislead her. First of all, she expressed some doubt as to the amount of the Exchequer contribution in future years. What I would like to have asked her had she been present was whether that really matters. It is clear in the Bill that it cannot be below £40,000,000. Clause 69 makes it quite clear that the ratio of grants to rate and grant borne expenditure is constant and you do not get a complete or accurate conception of the burdens upon local authorities unless you bear in mind that that ratio is constant, and under the provisions of Clause 69 can never be reduced. The fact is that if the fraction to-day is one over four, the fraction 25 years hence will still be one over four. The comparison which the hon. Member for East Ham North made showing the losses which local authorities have suffered under the Agricultural Rates Act is not a fair comparison, and the hon. Member ought to recollect that the reason they incurred those losses was because there was no such ratio employed in either of those cases. Therefore, to that extent her argument is indeed a boomerang on her own head.

There was another matter with which she dealt with much less than her usual fairness. She spoke of the loss to the different areas within the county areas. Hon. Members will recollect that the hon. Member said that these areas came down with a bump at the end of 15 years. May I point out that it is not one bump but 15 bumps, and the hon. Member ought to have made it clear that only 50 per cent. of the money is taken from the authorities who gain to reduce the losses of others. The position of those other authorities is going to be that there will be 15 bumps upwards and therefore their position is constantly improving. I think the hon. Member for East Ham North might have made it clear that the corresponding authorities were improving their position at different periods during the 15 years. There is one other matter which the hon. Lady the Member for East Ham North did not make quite clear to the House. She gave contrasted instances of certain authorities which were losing (using Blackpool as an example with a reduction of 2d., Bournemouth with 2d., and Eastbourne 2d.), and as illustrations of places where there would be an increase in the rates she gave Blackburn with an increase of 5d., and Bootle with an increase of 7d. The hon. Member did not point out that those figures were not the figures of the Ministry of Health, but were figures which she must have accumulated from the memorandum prepared by the auditor to the Association of Municipal Corporations. She failed to point out that those figures were prepared before the recent memorandum in which the guarantee has been substantially altered, and they were prepared by the actuary whose formula was rejected by the very Association for which it was prepared. Therefore, it must not be taken that the figures which she gave are accepted by the Ministry of Health; in fact, they are at very great variance with the figures contained in the White Paper concerning which there has been no serious challenge.

I would like to refer to the type of argument which we have to meet in the country and for which hon. Gentlemen opposite and their party have been particularly responsible. There is an uncanny fascination on the part of the Liberal party for a brewery, and if a brewery can be brought into an argument, it concentrates all the accumulated Radical prejudice that can be poured out upon the miserable Tory candidate. It is a fact that a brewery has always had a most uncanny fascination for hon. Members opposite. The attack which has been launched by the Liberal party against this Bill circles round the position of the unfortunate brewery. It is argued that because a brewery will have certain advantages accruing to it on account of the operation of this Bill, therefore the whole scheme under which industry is divided into productive and unproductive sections must be scrapped, and you must have a system which does not permit the brewery to benefit. Hon. Members opposite have never put forward any alternative. The dividing line between productive and unproductive industry is a perfectly clear and definite delimitation, and it is difficult to think of any other delimitation according to which you derate.

The gentlemen of the Liberal party do not really appreciate the motive of the de-rating proposals of this Bill. Taking their own account of their alternative, it is quite clear that they do not appreciate the proposals of this Bill. The real motives of this Measure are founded on two principles. One is that the present system of rating hampers the competitive power of British manufacturers abroad, and the second is that the system of rating is very unequal between industries in one area and another. Those two propositions cannot be contradicted, and there is no way by which you can get rid of that unfair burden over all the areas except by treating productive industry as a whole. There is no method by which you can distinguish between one factory in an impoverished area and another factory in a prosperous area. I cannot see upon what principle the Liberal party suggest that we should apply the rating relief to the failures in industry. Up to the present I have not heard of any definite or well-considered alternative which has been suggested by hon. Members opposite. I have given the gist of the arguments which are put forward in my constituency by Liberal gentlemen who come there to try to unseat me, I trust with, up to date, no great prospect of success.

I want to ask some pertinent questions of the Liberal party as to how they are to frame their scheme so that it will benefit distressed, and only distressed, industries. Are they, first of all, going to set up a clearing house of failures other than their own Whips' Office? For what period is an industry to make a loss before it gets its rate relief? Is it to be two, three or four years, or only one year? And, when it has been determined that it is sufficiently unprosperous to have rate relief, how soon will it become rateable again if it makes a profit; or is there going to be a kind of switchback, by which it gets its rates in one year, loses them in the next, and so on? If you are going to have a system of rating in one year and de-rating in the next, how on earth is any industry going to budget for its own needs? More important still, how is any local authority going to budget for its own needs? Each local authority will have to determine whether the industries in its area are going to be prosperous or not before it knows how much it is going to lose in rating in succeeding years. Again, on what period is the loss to be calculated? Is it to be calculated for a period of one, two, or three years, or are we just going to take a balance sheet at the end of the year and say that the industry has lost money during that year, and, therefore, ought to have relief from rates in the next year? An industry cannot know until the end of its financial year whether it has made a profit or a loss, and the real advantage to industry which accrues under the Government scheme, but would not accrue under a scheme which only gave relief to distressed industries, is that it will receive its benefit in the form of lower rates at the time when it needs it, and not at the end of the financial year when its needs are over. Then there is, of course, the anomaly that the same industry may be prosperous in one area and unprosperous in another. We have had, for instance, the example of the steel industry—