HC Deb 29 November 1928 vol 223 cc635-751

Considered in Committee, under Standing Order No. 71A.

[Mr. JAMES HOPE in the Chair.]

Motion made, and Question proposed, That, for the purposes of any Act of the present Session to amend the Law relating to the administration of poor relief, registration of births, deaths, and marriages, highways, town planning, and local government; to grant complete or partial relief from rates in the case of the hereditaments to which the Rating and Valuation (Apportionment) Act, 1928, applies; to discontinue certain grants from the Exchequer, and provide other grants in lieu thereof; and for purposes consequential on the matters aforesaid, it is expedient—

  1. (1) To authorise the payment out of moneys provided by Parliament of such grants and other expenses. (including salaries) as are by or by virtue of the said Act made so payable; so, however, that the amount of the General Exchequer Contribution by reference to which the amount of any of the said grants is under the said Act to be calculated shall not in respect of any year exceed the sum of the following amounts:—
    1. (a) an amount equal to the total losses on account of rates of all counties and county boroughs in England and Wales calculated in accordance with the said Act;
    2. (b) an amount equal to the total losses on account of discontinued grants of all counties and county boroughs in England and Wales calculated in accordance with the said Act;
    3. (c) as respects any year in the first period for which the General Exchequer Contribution is fixed the sum of five million pounds, and as respects ally year in any subsequent period such sum (not being less than is provided in the said Act) as Parliament may determine;
  2. (2) To authorise the payment out of the Consolidated Fund or the growing produce thereof of such sums as are by the said Act made chargeable thereon for the purposes of—
    1. (a) paying to the Road Fund in respect of each of the years beginning on the first day of April, nineteen hundred and twenty-eight and nineteen hundred and twenty-nine, the sum of five hundred and thirty-six thousand nine hundred and fifty-four pounds and eight shillings;
    2. (b) making advances to the cattle pleuro-pneumonia account of Great Britain;
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    4. (c) making payments towards the rates on certain tithe rent-charges and payments in lieu of tithe;
  3. (3) To remit the interest on, and in certain cases part of the principle of, so much of any loan made before the twelfth day of November, nineteen hundred and twenty-eight, by the Minister of Health to a Poor Law authority under Section three of the Local Authorities (Financial Provisions) Act, 1921, as amended by any subsequent enactment, as shall not have been required by the Minister of Health to be repaid before the first day of April, nineteen hundred and thirty."—(King's Recommendation signified.)—[Sir Kingsley Wood.]


It may be for the convenience of the Committee if I say a word about the order of our discussion. This is an enabling Resolution to allow us to discuss those parts of the Bill which are printed in italics. Without this Resolution those parts could not be discussed. The provisions occur mostly in Clause 6, but there are other scattered provisions in italics in other parts of the Bill. Speaking generally, I may say that it will not be in order to have a general discussion on the Bill, but it will be in order to have a discussion on those parts of the Bill which are bound up with or dependent on the Government contributions that this Resolution authorises. It will not be in order to have a discussion on the purely administrative parts of the Bill.


You have stated, Mr. Hope, that this is an enabling Resolution. I would like to direct your attention to line 23 as it appears on the Paper. It appears to me to be different from the ordinary form adopted for these Money Resolutions. The common form is that it is expedient to grant money "not exceeding" a certain amount. In line 23 there is a reference to "such sum, not being less." The first question I put to you is: Is there any precedent for a Money Resolution which substitutes for the words "not exceeding," the words "not being less"? The second question is: Has this Committee any mandatory power over the House, or can we merely enable the House to do certain things by this Resolution?

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To the second question I can give an answer at once, and it is, "Certainly not; it has no mandatory power." As to the first question, whether there is any precedent, I cannot at the moment say. I imagine that there must be, but in any case there is nothing to prevent His Majesty signifying his assent to a definite limit or an unlimited recommendation to this House. That recommendation, of course, may be limited by the action of this Committee or the action of the House on Report, but it cannot be extended. I see no constitutional difficulty in the particular limiting words not being put in in this case.


Am I right in supposing your Ruling is that, whatever we may do now, we are not forcing the House of Commons to guarantee any sum in future, and that we are merely enabling them in future?


In the case of all these Resolutions, they have to be confirmed by the House afterwards, and embodied in a Bill at some time.


Is it your intention, Mr. Hope, to have a general discussion on the Resolution itself before the Amendments, or to call the Amendments separately, if in order—(1) in line 11, to leave out the word "contribution," and to insert instead thereof the words "Contributions in respect of (a) losses of rates and (b) losses of grants; and (2) to leave out lines 17 to 19, inclusive?


Of the two Amendments on the Paper, one is in order and one is not. I should propose to allow a general discussion for some reasonable period, without fixing the exact time, before calling on any hon. Member who has his name against an Amendment.

Lieut.-Commander KENWORTHY

Which Amendment is in order?


The second.


I take it that the first Amendment on the Order Paper in my name is out of order on the ground that it increases the charge. May I be allowed to hand in an alternative Amendment which does not increase the charge?


What is the hon. Gentleman's alternative Amendment?


It has been handed in at the Table.


I am afraid the objection remains.


The terms of the alternative Amendment are as follow: In line 11, after the word "contribution," to insert the words "in respect of (a) losses of rates and (b) losses of grants." That leaves the definition "general Exchequer contribution," as defined in Clause 69 of the Bill.


We are not concerned here with the Bill. The Bill does not govern the Resolution; the Resolution governs the Bill.


If that be so, it is imperative that the House should be able to make a distinction between the losses of rates and losses of grants, and not add to the charge, so that local authorities may, if the House decide, be able to secure the exact sum lost by the de-rating inside the area. The effect of these words would not he to increase the charge, but to divide the two parts. The actual pool, which is called the general Exchequer contribution, will be left intact in the alternative form of Amendment, although not, I agree, in the form of the Amendment on the Paper. The intention of the Amendment is merely to allow the House to divide that pool into two parts, not to add a penny to it, so that the House may determine, if it so desire, to let the local authorities have returned to them in each specific case what they lose by the accumulation of the pool.


I do not think that is the effect. This is not a specially easy Resolution to construe, but I think the Amendment would undoubtedly be an extending one, because it would take away something of the present limitation. At present the Resolution runs that certain money should be authorised so, however, that the amount of the general Exchequer contribution … shall not in respect of any year exceed the sum of the following amounts. The hon. Member, by his Amendment, would, after the word "contribution," insert the words "in respect of (a) losses of rates and (b) losses of grants." That would, I think, reduce the limitation. The effect of that would be that the limitation would only apply to those two heads, and would not limit the contributions that might be made by the £5,000,000 grant, or some other con- tributions of Parliament. Therefore, I think it is an extending Amendment, and does not come within the King's Recommendation.


Some of us, especially myself, have sat here for 18 hours, and been unable to catch the Speaker's eye, and I feel that on account of the large number of Members who wanted to speak—


I am afraid the hon. Gentleman cannot enter into that now.


On your Ruling, I want to ask a question. If I am called upon in the discussion to-day, shall I be permitted to ask the Miniser of Health what effect this Money Resolution is going to have on the 28,000 unemployed in Monmouthshire. I failed yesterday to get in, and will you allow me to raise the question to-day?


It would be in order to ask what effect the Financial Resolution might have on any particular county, but I must ask if the hon. Member is endeavouring to stake out a prior claim.


In view of the statement you, Mr. Hope, have just made, I propose to take the six different items which involve a charge upon the Exchequer as far as this Resolution is concerned. The first is the main grant to the local authorities, which will be known as the general Exchequer contribution, and the extent to which those grants are not in substitution of existing grants, they represent an additional charge. Secondly, there are certain additional and supplementary grants. Thirdly, there are grants to rating authorities for the half-year ending 31st March, 1930, in reimbursement of the loss of rates which will be suffered by them owing to de-rating as from 1st October, 1929. Fourthly, there is assistance to county and county borough councils in respect of loans raised for current expenses by Poor Law authorities whose liabilities are about to he transferred to these councils. Fifthly, there are certain administrative expenses incurred in bringing the Bill into operation and, lastly, there are certain payments out of the Consolidated Fund.

Consequent on the abolition of the Local Taxation Account, the Bill provides changes in the method of meeting certain charges already borne by the Exchequer in respect of higher education and other matters of that sort, but these changes will not, of themselves, increase the liability of the Exchequer. The principal charge is in respect of what is called the General Exchequer Contribution. It is the pool out of which the main annual grants, the amounts of which will be recalculated every five years, are to be made to the local authorities, and these grants will, taking the country as a whole, replace the loss of revenue which local authorities will suffer through de-rating and the withdrawal of certain existing grants. Therefore, two of the three items which will go to make up the sum to be voted foe the General Exchequer Contribution will be, first, a sum equal to the calculated total losses on account of rates, and, secondly, a sum equal to the calculated losses on account of the discontinued grants, and, thirdly, there will be—and with this Members will be familiar by this time—an additional grant in each year of the first quinquennium, which will be a sum of £5,000,000 yearly—£25,000,000 for the quinquennium.

In determining losses on account of rates—I should say this, because I believe there have been one or two questions raised about it in the last two or three days—and on account of grants, the calculations will be based on the figures of what is called the standard year, that is, the current year, 1928–29. It may be asked, why is this year selected? The answer is that the year selected is the latest year in which the expenditure will be accounted for and audited in time to enable the new grants to be fixed and paid in due time after the scheme is in operation.



I am endeavouring to compress my remarks as much as I can, while endeavouring to cover as many points as possible, and I think it will help the Committee if I may be allowed to proceed, and any questions can be put at the end. It is very difficult to deal with this subject unless I can continue in this way. Secondly, I may say that this particular year may be regarded for this calculation as being on the whole a normal year. Poor Law expenditure, it is true, remains in some areas at a high level, but the year has not been marked, like some recent years, by any industrial disturbance. The fact that for some areas a high figure of Poor Law expenditure is taken is, under the methods adopted for the calculation of rate losses, advantageous to the local authorities generally. Again, the health grants will be larger in 1928–29 than in any previous year, and the indications are that the Estate Duties, and, consequently, the discontinued Estate Duty grant out of the Local Taxation Account will this year reach a very high figure. Therefore the selection of 1928–9 as a basic year is on the whole favourable to the local authorities.

The exact method of calculation of rate loss is laid down in Part I of the Fourth Schedule to the Bill, and I should say that this loss is to be calculated as if the Poor Law and the highway services had been transferred to county and county borough councils at the beginning of the year, and as if the valuation list of 1st October, 1929, had been in force. The amount of loss of rates for each area is calculated in the manner explained in the White Paper, and will be certified by the district auditor. It is, of course, impossible at this stage to give a precise estimate of what the total loss calculated on the basis of the standard year subsequent to de-rating will be. The expenditure of the year will not be ascertainable until after 31st March next, and the re-valuation and re-classification under the Rating and Valuation Acts, 1925 and 1928, is still, of course, proceeding, but an approximate estimate is £24,000,000.

The rules for ascertaining the total loss in grants are contained in the Fourth Schedule to the Bill, and the financial year 1928–9 is again for this purpose selected as the datum line. I do not think I need go further into the different kinds of grants that are to be discontinued. The details of the estimated amounts are given in paragraphs 5 to 12 of the Financial Memorandum, and they amount to about £16,000,000. As also explained in the Memorandum, certain other local taxation moneys which are at present applied to the cost of police, of higher education, of stamping out cattle epidemics, and of rates on tithe rent charges, will he replaced from other Exchequer sources. In each case the loss of grants will be certified for each spending authority by the Minister of Health, or, in the case of Road Fund grants, by the Minister of Transport in accordance with the arrangement shewn in the White Paper.

The total losses on account of rates and grants are for the time being estimated at £24,000,000 plus the £16,000,000 to which I have referred, which makes a sum of £40,000,000—a figure which, I emphasise, will of course be subject to correction when the final figures for the year are known.

To this will be added an additional sum. which in each year of the first quinquennium will amount to £5,000,000. This sum is quite apart from the additional and supplementary Exchequer grants forming the second of the items which I enumerated a few moments ago. Let me at once say that the £5,000,000 is not a calculated figure. It is the sum which, taking a broad survey of the country as a whole, and taking into account the reasonable development of local government services and the desirability of affording some special measure for help to necessitous areas, is deemed to be a satisfactory and sufficient sum. The amounts now estimated at £24.000,000 and £16,000,000 remain for all time. These two figures, whatever the sum may ultimately be, remain for all time. The £5,000,000 of new money will be replaced after the first quinquennium by a sum to be determined by Parliament and expressed in accordance with the ratio which my right hon. Friend explained at considerable length in the Second Reading Debate and which I do not propose to go over again. I need hardly say that if any hon. Member who has not sufficient knowledge of that matter at present puts any points, my right hon. Friend will deal with them, but I am anxious not to occupy too much time in explaining matters which have already been dealt with by the Minister of Health. The minimum amount of the annual General Exchequer Contribution in the quinquennial periods after the first, will, in accordance with the ratio to which I have just referred, depend largely upon the rise or fall in the rate-borne expenditure and the estimate contained in paragraph 50 of the Financial Memorandum assumes—I emphasise that word "assumes"—a quinquennial increase of £2,000,000. One more observation with regard to this General Exchequer Contribution. Hon. Members in the Debate have used the expression "final Exchequer contribution." There is no such thing as the final General Exchequer Contribution. The General Exchequer Contribution will be fixed afresh at each quinquennial period.

I would like to say a few words about the manner of the allocation of the General Exchequer Contribution between counties and county boroughs. That of course is described in paragraphs 20–22 of the Financial Memorandum. Briefly, it is proposed that it should be allocated eventually between those areas according to a formula which takes the population of each area as its basic factor and increases that figure with reference to four further factors which have already been discussed in the Debate. These again, are described in the Financial Memorandum and the amount which will be allocated in that way, on the basis of what we call the weighted population and which will go to each county is known in the technical terms of the Bill as the county apportionment. Out of each county apportionment—out of each sum which the county receives in this way—will be set aside the grants which will be payable to the county districts. The balance after that amount has been paid, will be paid to the county as its general Exchequer grant.

As is set out in the Financial Memorandum, the amounts so paid to the county councils will be, where necessary—I think it is almost a complete justification for the formula which has been adopted that it will only be necessary in a very small minority of the counties—supplemented by an Additional Exchequer grant, and for the first quinquennium the grant paid to a county will be made up to a minimum of 1s. per head of the population, over and above the amount of the loss of rates and grants on the calculation of the standard year. In subsequent quinquennia, if the county apportionment is less than the loss of rates and grants—still, I may say, calculated on the figures of the standard year—an additional grant may be given to make up the deficiency subject to two conditions—first to the needs of the county as determined by the weighted population not having become smaller, and, secondly, to there being no reduction in the General Exchequer Contribution for the country as a whole owing to a general reduction of the total rateborne expenditure.

The grants to be paid to county boroughs will be assessed on the same lines but with some necessary modifications, and they again are explained in paragraphs 35 to 38 of the Financial Memorandum. The principal differences are these as compared with the county council grants. First, there are no areas in county boroughs with councils of their own, and, therefore, no sums are required to be set aside from the county borough apportionment, which is, accordingly, paid in full to the county borough. Secondly, while in the case of counties, the guarantee of the minimum grant in the quinquennia after the first is based on the loss of rates and grants of the standard year, if that were done in the case of county boroughs, it would obviously not be sufficient. Therefore, special allowance has been made for the circumstance that the transfer of the Poor Law services to the counties and county boroughs will in most cases throw some increased burden on county boroughs owing to the incidence of pauperism being higher in the county borough portion of a union than it is in the county part, and the guarantee in tile case of the county borough will therefore be a minimum grant to make good the loss calculated on the basis of the standard year, after allowance is made for the increased burden in respect of Poor Law. The additional shilling for the first quinquennium is, of course, common both to counties and county boroughs.

In London some further modifications are necessary. Whilst in some respects the Metropolitan boroughs resemble in this connection the county boroughs, they do not, and will not under the scheme administer either the education or the Poor Law services. Therefore the grants to those boroughs are distributed in the same way as to the county boroughs but with two modifications. In the first place, the unemployment factor in the formula will be omitted as far as the Metropolitan boroughs are concerned because they will not be concerned with the administration of the Poor Law. Secondly, the money factor applied to that part of the grant which is based on weighted population, will be reduced to one-third. The remainder of the London county apportionment, after deduction of the Metropolitan borough grants, will be paid to the London County Council as its General Exchequer Grant.

What about the cost? The additional grants estimated to be payable to counties, including London and county boroughs—that is to say the sums required in guaranteeing the additional shilling in the first quinquennium and no loss afterwards—are set out in detail in paragraph 50 of the Memorandum. These are figures over and above the £45,000,000 distributed from the general Exchequer contribution. The figure for the first quinquennium when the additional shilling is guaranteed is £605,000 annually. Then in the second quinquennium it drops to £525,000, increasing to £820,000 in the third and to £1,120,000 in the fourth. I should say that these figures are based on the assumption that the general Exchequer contribution is increased by £2,000,000 on each quinquennium, and that the distribution of weighted population remains as in the standard year.

I must make a. brief reference to the distribution to the county districts from what we call the County Apportionment, as I know a large number of Members are interested in this part of the scheme. The sums which will be payable to each county district are made up of what we might call three items. The first is an amount based on the flat rate sum per head of the population arrived at as explained in the White Paper. This has already been the subject of some discussion. The flat rate for rural districts will be one-fifth of the flat rate of urban districts. Secondly, there is a sum to be given towards making good any loss of special and parish rates sustained by rural district councils. Thirdly, there is a sum allocated to each county district, carrying on its own maternity and child welfare service. As regards the flat rate sum per head of the population this is arrived at by dividing half of the aggregate county apportionments of counties other than London by the aggregate estimated population non-weighted of those counties. The total sums allocated to the county districts in this way are then adjusted with the aid of what is called a supplementary Exchequer grant. The object of this supplementary Exchequer grant is in order that no separately rated area in any county will suffer an increase of rate by reason of the scheme when it first comes into operation, and in order to avoid any dislocation of local finance over a comparatively long period. After the first year this supplementary grant will decrease by one-fifteenth in each of the succeeding 14 years, and the full adjusting process will be found in the paragraphs in the White Paper. With the necessary modifications, the adjustment of losses and gains in separately rated areas is applied to county boroughs and to London. In the case of London, the adjustment will be made in connection with the levying by the London County Council of the rate for general county purposes, and the supplementary grant will, therefore, be paid in the case of London to the London County Council. The estimated cost to the Exchequer of this supplementary grant will be £1,725,000 in the first year of the scheme, and it will decrease annually by one-fifteenth, that is, £115,000, until it finishes altogether in the year 1945–6.

Now, out of the County Apportionment there will also be set aside, as I said just now, a sum for each rural district representing 75 per cent. of the loss during the first quinquennium, 50 per cent. in the second, and 25 per cent. in the third where a rural district suffers loss on account of what are called special and parish rates. Also, for the first quinquennium, it is provided that the district shall receive from the county council the remaining 25 per cent., so that, for that quinquennium, the whole of the loss of these special and parish rates will be made good to the districts. After the first quinquennium, the contribution to be made by the county council is left to the determination of the council according to the circumstances of the several districts from time to time. Obviously, that is a matter which will have to be considered in the light of the circumstances of that particular period.

There is only this further sum with which I need detain the Committee in that connection, and that is the further sum which is to be deducted out of the county apportionment for each non-county borough, urban district, or rural district which is carrying on maternity and child welfare work. In approximately 250 areas this service is administered by the district councils, and it is very desirable, I think, that this arrangement should continue. Therefore, provision is made for a scheme to be framed by the Ministry of Health, in consultation with the county councils, for determining the appropriate amount by which the sum set aside from the county apportionment for these authorities shall be increased. In dealing with that question of maternity and child welfare by these means, these particular authorities who are doing this class of work will be secured so far as their financial arrangements are concerned, and a scheme will be formulated by my right hon. Friend in consultation with the county councils.


And with the district councils?


Yes. There is a further charge which I referred to at the beginning, which will be incurred under the Bill for the grants to be given to rating authorities under Clause 92 in respect. of loss of rates which will be suffered by them in the half-year beginning 1st October, 1929, in which the de-rating proposals come into operation. That is a transition period before the scheme comes into full effect.

I want to refer to two other matters, one of which is of some importance, namely, the financial arrangements which are contemplated in these proposals in connection with what is called the Goschen loans. The mitigation of the liability for loans raised by Poor Law authorities which will be transferred to counties and county boroughs is provided for in Clause 94 and is referred to in paragraph 52 of the Financial Memorandum. It is estimated that on the 1st April, 1930, the outstanding debts of this nature will amount to £6,140,000, and the terms of the settlement proposed in the Bill in regard to these loans provide for the mitigation of the burden which would otherwise be thrown upon the counties and county boroughs. It is proposed to make three concessions in this connection—first, the remission of interest or, in the case of outside loans, that is, loans from banks, a grant towards interest; secondly, a lengthening of the period of repayment; and, thirdly, a reduction of the capital sum when its repayment would entail a rate charge over a certain figure.

It is estimated that the present value of the relief proposed to be accorded to the several county and county borough councils under this Clause amounts to about £2,200,000, which may be said to represent a special measure of Exchequer assistance to the depressed areas over and above the advantage to be secured to those areas under the financial arrangements set out in Part VI of the Bill. The main relief in respect of interest and the spreading of the period for repayment represents, it is estimated, a loss to the Exchequer of £178,000 a year; as regards the special grants to areas which borrowed otherwise than from the Ministry, they are estimated at a cost of £6,000 for 15 years; and as regards the excusal of the payment of principal in certain cases, the loss to the Exchequer by writing down the principal of the loans will, it is estimated, amount to £29,000 a, year for 15 years.

Then there is another item, which we may call the administrative expenses in relation to this scheme. The additional liability to be incurred under the Bill in respect of administrative expenses is estimated at a sum of £50,000.

In addition to these grants for administration to be met out of voted moneys, the Bill also imposes certain charges on the Consolidated Fund, and the principal one is referred to in paragraph 19 of the Financial Memorandum. There is a fixed sum of £536,954 out of Motor Licence Duties. Under existing arrangements these are paid out of the Consolidated Fund to the Local Taxation Account, being diverted from the Road Fund. Under the Bill this sum will, with effect as from the 1st April, 1928, no longer be diverted from the Road Fund. The Local Taxation Account will, however, continue to receive this amount from the Consolidated Fund, so that an additional charge of this amount in each of the two years 1928–29 and 1929–30 will be imposed on that Fund. After 1929–30 the Local Taxation Account will, be course, be closed, and this grant will be absorbed in the new consolidated grants under the Bill.

Then there is a reference in the Financial Resolution to the Cattle Pleuro-pneumonia account of Great Britain. The explanation of that particular item is this: Charges may from time to time be imposed on the Consolidated Fund in respect of advances on that account, such advances to be repaid out of voted moneys within the year, and the reason briefly for this provision is that a sudden and widespread outbreak of cattle disease might require a greater expenditure than this particular Account is able to meet.

Further, there will be certain payments out of the Consolidated Fund in respect of rates on certain tithe rent charge, but no additional liability on the Exchequer is involved under this particular item.

Now I come to my final word as regards the total cost, to sum up what I have already been stating. The total estimated cost of the scheme of grant payments in the first year is shown in paragraph 49 of the Memorandum at £47,330,000, and after deducting £16,000,000 representing the estimated total of discontinued grants, the net increase is therefore £31,330,000. The net sum which it is estimated will be required to be voted for these grants by Parliament in the first year of the scheme will be £47,330,000, less about £5,400,000 charged against the Road Fund and appropriated in aid of the Vote, as explained in the Memorandum. Of the £5,400,000 from the Road Fund, £2,800,000 represents expenditure on road grants which are to be discontinued. Such are, broadly, the financial arrangements of the scheme, and I hope, after my explanation, that the Committee will agree with me that in the main these financial provisions are quite simple. At any rate, I think this can be said, that they are much simpler than the present system, which must be traced through numerous Acts of Parliament, and bears no relation to-day to actual conditions. Such additions and complications as arise in the Government scheme are, of course, duo to their desire to ease the transition from the present haphazard and inequitable system to an orderly and just one, and it is because this Measure and these new financial arrangements will undoubtedly make for a better, fairer, and more equitable system of local government that I now commend this Resolution to the House


I wish that I could honestly congratulate the right hon. Gentleman upon having substantiated his claim that the statement which he has just read to the House had removed all the obscurities of the financial provisions of this Bill, but I am afraid that there are still many Members, of whom I confess I am one, in the condition admitted by the hon. Member for Sutton (Viscountess Astor) when she said that she knew little or nothing of the provisions of this Measure. I suppose that it is in accordance with precedent for one of the Ministers who are mainly in charge of a Bill to move the Financial Resolution, although it stands in the name of a representative of the Treasury, but one of the remarkable features of the last three days' Debate has been the silence of the representatives of the Treasury in a matter in which the Treasury is very deeply concerned. I do not know if we are to hear the Chancellor of the Exchequer or the Financial Secretary this afternoon, nor do I know whether the silence of the Chancellor so far is explained by his unwillingness to speak, or by the unwillingness of the Minister of Health to allow him to speak. I am quite convinced that by now the Minister of Health realises the difficulty in which the Chancellor of the Exchequer has placed him by the Chancellor's desire to introduce a spectacular announcement in a Budget which otherwise would have been of a very humdrum character. If I may use a somewhat vulgar expression, the Chancellor of the Exchequer sold the Minister of Health a pup, and ever since, the right hon. Gentleman has found it to be a most inconvenient embarrassment.

My right hon. Friend the Member for Central Edinburgh (Mr. W. Graham), in the important contribution which he made to the Debate upon the Second Reading of the Bill, responded to an appeal which had been made by the Minister of Health, that at this stage of our discussions we should confine ourselves to considering broad principles rather than details of the Bill, which can more properly be discussed in Committee when we come to the particular Clauses. I, too, will accept that advice, and will try to deal with the matters involved in this Financial Resolution in their bearing upon what is claimed to be the real purpose of this Measure. May I at the outset make one further confession. I am not, except from one point of view, very much concerned whether the effect of the financial changes will be to raise rates in some areas and to lower them in other areas, because, in any readjustment of local government and rating areas, it will be quite impossible, especially when you are dealing with such a complicated and anomalous system as exists at the present time, to devise any system by which every injustice and every anomaly can be completely removed. When, however, we come to discuss the formula in detail, the ground of our criticism will be that the method which is being adopted will add to certain injustices, and will not do justice as between locality and locality.

What has been declared to be the main purpose of this Bill in its financial aspect? It is to readjust the financial relations between the Exchequer and the local authorities. I want to consider those provisions from that point of view alone. Are the proposals going to deal with what for a great many years has been admitted to be a serious grievance on the part of the local authorities? In the Budget that was introduced a few months before the outbreak of the War, the then Chancellor of the Exchequer took the rather unusual course in a Budget speech of devoting practically the whole of his observations to this question of the relationship of the local authorities and the National Exchequer and he said—and there was general agreement with him—that the grievances of the local authorities were so serious that the matter would brook no further delay. The War, of course, made the treatment of that urgent question impossible for some years to come, but during the last eight years that grievance has become aggravated. The claims of the local authorities for more generous contributions by the National Exchequer nave been considerably increased. How far do these financial proposals promise to lessen the grievances, and to remove the financial burdens upon the local authorities? That is the point to which I want to confine my observations.

There is another matter upon which I think there will be, in the abstract at any rate, very much agreement among all parties, namely, that many of the functions and the compulsory duties of the local authorities are largely of a national character. Obligations have been imposed upon the local authorities by Acts of Parliament, and there are central Government Departments which supervise the administration of the local authorities, and have the power to take action against them in case of default to carry out their legal obligations. What does that imply? It implies, it is an admission, that these services are not merely of local interest, of local importance and of local necessity, but that the nation as a whole has an interest in the efficient administration of these services. That applies to most of the major services of the local authorities, for which they have to raise large sums in their revenue.

5.0 p.m.

Nobody can maintain that education is a purely local service, and of purely local interest. The children in our elementary schools in any particular village or town are not being educated for the village or the town. They have been educated for the nation, and, owing to the modern facilities for the migration of population, a very large proportion of them will spend half their lives not in the district which bore a very considerable part of the cost of their education. The same thing applies to many of our public health services, and it applies with equal emphasis to two other services the Poor Law and the roads.

The Poor Law constitutes a far greater grievance for the local authorities than even the case of education, because I believe the cost of education is borne to the extent of nearly one-half, or round about one-half, by the local authorities and one-half by the National Exchequer. But I find from the returns with regard to the expenditure under the Poor Law in the year 1926–27, which were published by the right hon. Gentleman a week or two ago, that about £50,000,000 was spent that year on Poor Law administration and relief. What is the contribution of the State to that? I believe it is less than £3,000,000. Therefore, practically the whole cost of the Poor Law was borne by the local authorities Then look at the powers which the Ministry of Health have and which they employ in regard to the administration of the Poor Law. They issue orders, they make regulations, they fix the scales of relief, they send down their inspectors, and yet they make a contribution of only about 6 per cent, to the total expenditure upon Poor Law administration and relief. That, surely, constitutes an overwhelming case for transferring, not the whole, but at any rate a large part, of the expense of Poor Law administration and relief from the shoulders of the local ratepayers to the National Exchequer.

I would like to show to what extent the financial proposals of this Bill touch that situation. The aggravation of the grievance of the local authorities in recent years is mainly due to the increase in Poor Law charges. I have very often said that f think one of the most difficult problems, if not the most difficult, of statesmanship is to try to fix what should be the precise relations between a local authority and the State. It is an extremely difficult problem, not only on its financial side but upon its administrative side too, because we want as far as possible to keep local interest, to keep democratic forms of government, and that, of course, is difficult where you have a large measure of central control and central authority. It is an extremely difficult problem, and I do not think it will ever be solved, except approximately. If we bear in mind what I said just now about the importance of trying to combine the two things in the best proportions we can devise which are likely to attain the purpose we have in view, we may arrive at an approximate, if not a complete, solution of that difficult problem. And I admit this further, that if we are going to maintain a measure of local control and local administration over these public services, it may be necessary that we should exact some contribution at any rate from the locality in order that it may have a financial interest in the efficiency of the administration.

Having made those general observations, let me pass to deal with their application as they arise out of the proposals of this Bill, remembering that the whole idea of this long agitation for a readjustment of the financial relations of the local authorities and the State has arisen out of the feeling, the just feeling, that local authorities are bearing too large a share of the cost of services which are of a national or semi-national character. Let us test these proposals by that consideration. To what extent do they lessen this grievance on the part of the local authorities? It is quite true that under the Resolution which has just been moved there is a proposal to provide a sum, estimated at £24,000,000, from the National Exchequer for the de-rating proposals. Yes, but that is nothing at all to do with what has been declared to be the purpose of the Bill. It is not at all a question of lessening the financial burdens on the local authorities—not in the least. Of course, it is going to relieve individuals, but it is not going to lessen by a single penny the amount of money which the local authorities have to raise for the purpose of carrying out their local services.

Therefore, so far as the problem itself is concerned, that is, the lightening of the financial burdens of the local authorities, we may leave that sum of £24,000,000 out of consideration altogether. Nobody will be prepared, I think, to dispute that statement. Now with regard to the £16,000,000. That is not new money; it is money which hitherto has been paid to the local authorities, only it is to be paid in a different form. We are agreed upon that. That accounts for £40,000,000 out of the £45,000,000—£24,000,000 for de-rating and £16,000,000 for the discontinued grants—and leaves us with;£5,000,000 of new money. It is quite true that there are other contributions, amounting, it is estimated, to about £2,000,000, or just over. This financial explanation makes it quite plain, but it was admitted by the right hon. Gentle-man just now, that they are going to be paid in order to make up losses which may be incurred by the change of financial relations and are not going to lighten the burdens upon the local authorities. Therefore, we have got at the beginning £5,000,000 of new money, and only £5,000,000 of new money. The £2,500,000 to which I referred just now is provided—I do not think anyone will quarrel with my statement if I put it like this—to tide over the transition period extending over 15 years. But the supplementary grant is temporary in its character. The £5,000,000 is permanent. Therefore, apart from that £5,000,000 there is to be no additional Exchequer grant during the first five years. There is a provision that at the end of each quinquennial period there shall be a revision of the financial position between the local authorities and the Exchequer, and it is estimated that an additional £2,000,000 a year for a further period of five years may be required if certain conditions have come to exist.

That means that at the end of 20 years the total Exchequer grant is estimated to be just over £52,000,000. Of that sum £40,000,000—the £16,000,000 and the £24,000,000—is not new money; and therefore the most that is estimated to be the addition to the Exchequer grant to the local authorities 20 years hence is £12,120,000. But that £2,000,000 to which I referred—and I think this is a very important point—that £2,000,000 depends upon an increase in local expenditure, and it is calculated something like this. If when they begin to make the estimates for the next quinquennial period there has been an increase of £8,000,000 in rate borne expenditure, then the State is going to contribute £2,000,000 to that. That, I think, is the position. This £2,000,000 is 25 per cent. But at the present time, under the percentage system as applied to certain grants, the State is paying much more than that. I believe that the percentages of local expenditure are divided at the present time in something like these proportions—33 per cent. paid by the Exchequer and 67 per cent. by the local authorities.

The MINISTER of HEALTH (Mr. Chamberlain)

47 per cent.


I said 30 per cent. and the figure depends to some extent on what you call Exchequer contributions. But we will not quarrel about that, because if 40 per cent. is contributed by the Exchequer it makes my point all the stronger. Whatever may be the precise figure, if the State has to pay only 25 per cent. of future increases in rate borne expenditure it will be paying very much less than it does at the present time. That is my first point. Do these financial provisions lessen or in any degree remove the admitted grievances of the local authorities? They do not.

My second point is that that £16,000,000 which the State now contributes mainly in percentage grants if the present arrangement continues would automatically increase year by year, and I think it is quite certain, judged by the experience of the last 10 years, that it would increase at the rate of more than £2,000,000 a year. Therefore, to that extent the local authorities are going to lose and the National Exchequer is going to gain. It is estimated that in 20 years the increase will be only £7,120,000. In the last 14 years, the rate-borne expenditure has increased from £80,000,000 to nearly £170,000,000, or more than double. Therefore, at this rate there is no relief. On the contrary, the arrangement is going to lessen the anticipated contribution of the Exchequer to the extent of the increased expenditure of the local authorities. This means that the proposal is going to add to the burden of their rates. Therefore, the relief which has been foreshadowed is quite illusory, because it is going to put into the pool £24,000,000, which, as I pointed out earlier in my remarks, has really nothing at all to do with the expenditure of the local authorities.

I want to ask a further question. The Minister of Health has spoken about estimates amounting to £24,000,000, and he has put down that sum as the estimate of the losses which the local authorities will incur owing to the de-rating of productive enterprises. But why £24,000,000? The Chancellor of the Exchequer stated in his Budget speech that the estimate was £26,000,000, that is £21,000,000 for industrial properties, and just under £5,000,000 for agricultural properties. Supposing it is found that the cost of de-rating is very much higher or in any measure higher than the estimate of £24,000,000? Seeing that the total Exchequer grant is limited, does that mean that, whatever the loss on de rating may be, it will be paid in full; or does it mean that £24,000,000 only will be allocated for that purpose? If it does, then, seeing that the total is fixed, there will be so much less by way of grants to local authorities for the other services which they have to carry out.


Where is it fixed?


It is fixed.


Not in the Financial Resolution.


No, hut it was fixed in the speech made by the Minister of Health, and the amount will have to be determined by Parliament. I am dealing now with what the Government intend and what they propose to do. Of course, I know it is perfectly within the province of any future Government to repeal this Measure altogether, but I am dealing with the proposals which are now being put forward. There is another important question which must arise during the quinquennial period. The local authorities are not likely to postpone all their expenditure until the standard year. Any increase in their expenditure, if they are progressive, will he annual, and therefore they will get no contribution, not even 25 per cent. from the State during those four years. This will be accumulative in its effect after the quinquennial period.

I have never heard any argument or seen any statement which to my mind at any rate has been a conclusive answer to the argument that the de-rating of industrial properties is going to increase the amount of rates borne by other classes of ratepayers. I suppose that we shall get new industrial districts in the country, and new factories will arise which will he rated only at 25 per cent., and they will involve enormous expenditure on the part of the local authorities. I am alluding to such things as new streets, water supplies, schools, and numerous other social undertakings. That means that until the next quinquennial period the whole burden of that expenditure will fall upon the local authorities. It also means that a far greater burden will fall upon the properties which are fully rated. I am now stating the position as it appears to me, and my own opinion on this point is rather confirmed by what the Minister of Health said just now.

The compensation for the loss of de-rating is not going to be allocated to each rating area according to the exact amount of its loss. That proposal is going to work in a most unjust way if it is going to be allocated upon a county basis. There are certain parts of the area affected by de-rating which will lose while other parts will lose practically nothing at all. There are a good many districts within a county rating area which are almost purely residential, and they are fairly wealthy. I understand the right hon. Gentleman meets that by the distribution he has made which takes cognisance of the amount lost, but that is in the initial period, and at the end of 15 years that arrangement disappears altogether, and the losses on de-rating pass into the general pool.

I come now to the simple formula by which these grants have been distributed. I understand that the aim of the formula is to give assistance according to the needs of the locality. What are those needs? First of all, comes population, and the formula takes that as a basis. I admit that population ought to be made an important factor in such a formula as that, but that is not the only factor by any means, because you can have a population which is very dense and very poor, and the poorer the population the greater is the need for municipal expenditure. Therefore, quite rightly, other factors have to be introduced, and one of them I confess I do not understand. Whatever induced those who prepared this formula to make the lumber of people under five years of age a factor in estimating the needs of a locality Heaven may know, but certainly I do not know.

Now we come to rateable value, and I agree that that should enter as a factor in estimating the assistance which may be needed. I agree that it is very important. Rateable value varies very much in different districts. I have not gone into this matter myself for a good many years. Before I came into this House I was a member of a municipal corporation, and I was much interested in this question of rateable value. I was surprised to find such wide variations in the rateable value of municipal areas where it appeared as though the industrial and general conditions were evenly concentrated. There may be a low assessment, because it has been the practice of many authorities to rate low, and they have had an inducement in the past to do that more especially in non-county boroughs. where they had to make a contribution to the county rate, but it may be due to the fact that the property is of a poor type. For instance, we find that seaside watering-places invariably have a high rateable value per head of the population, because the houses are of a much higher average type than those in purely private residential districts. Therefore, I do not object to that factor. As regards unemployment, however, I cannot understand why so little importance is attached to it as a factor in assessing the need of a locality, and I did not at all understand what the right hon. Gentleman said this afternoon about the proportion of financial asistance to be provided by the State which is going to what we call the necessitous areas or the heavily rated areas.

The last of the White Papers which have been issued in explanation of this scheme is one of the most interesting documents that has ever come into my hands. [Interruption.] I will tell the House why. It is because it has a preface—a very short preface—which gives eight reasons why not one of the figures in the following 60 pages is of the least value at all, and why nobody should attach the slightest importance to them. But, even taking these figures, let me turn to an industrial area like Aberdare. There the poundage of rates for 1926–27, according to this table, upon which no reliance must lie placed, was 24s. 2d., while the "Estimated poundage of rates for 1926–27 under the scheme before payment of Supplementary Exchequer Grant" is 22s. 2d. That, be it noted, is not on the basis of the standard year, but on the basis of the year 1926–27. I have not been down to Aberdare just lately, but I should assume, as one who knows the general conditions of the mining area of South Wales, that Aberdare is a place which is very much hit by the prevailing distress in the mining areas. What is Aberdare going to do? The poundage of rates for 1926–27 was 24s. 2d., and under these estimates it is to be 22s. 2d. What is the gain? Does that fulfil the declared object of this Measure, that it is going to relieve the burden upon local authorities? That only shows how little this factor of unemployment which is introduced into the formula is going to operate in relieving the extra burdens that are laid upon the shoulders of the distressed areas.

I will give some figures, which have been worked out by the Association of Municipal Treasurers, as to how, under this formula, the money will be distributed according to the various factors. For each £100 that will be distributed from the pool, £37.4 will be on the basis of the actual population. That will be modified by the number of children, and it is amazing to find that £28.4 out of £100 will go on account of the number of children under five years of age, or nearly as much as is allocated on the basis of actual population. As regards low rate-able value, one would have thought that that would be a very important factor, but only £16.6 is to be allocated to it, while in respect of unemployment the lowest amount of all, namely, only £2.8 out of each £100, is to be allocated. Then there are the roads, and this is another thing that I do not understand. I cannot for the life of me understand why importance should be attached to the length of roads in any area as bearing upon the needs of the area. I am fortified in that scepticism by a statement made by the right hon. Gentleman when he was defending the small percentage that is to be granted from the pool to the rural district councils, which, as he said, had practically no expenses except for roads and one or two other things. However, the point is that the actual population, low rate-able value, and particularly unemployment, do not gain the proportions under this formula to which I think their claims entitle them.

By all these tests, these financial proposals do not fulfil the claim made for them, namely, that there is to be a lightening of the burden of local authorities and an increased contribution by the State. As a matter of fact, and this will be my concluding point. I am going to prove that the Treasury is going to pay less, and that this Measure is going to result in a considerable financial gain to the Treasury. I have already given one reason for that, namely, that, under the 25 per cent. contribution, they are going to nay much less than they have been paying under the percentage grants scheme, which is now to be abolished. I do not know—no one knows yet, I suppose—what will be the effect of the new assessments, but I do not expect that there will be much reduction in the assessable value of the country as a whole. My first reason for believing that is that assessments already have been low in what we call the depressed areas, and then we know that new industrial districts are arising, and will come into the new valuation. I think the effect will be to increase the national valuation con- siderably. At any rate, what is going to be the result? With regard to de-rating, the Treasury is going to gain, in the first place, because at present the sum paid in rates is deducted as a working expense before assessable profits are arrived at. I will give an illustration. Suppose that an enterprise in a productive industry is paying £1,000 a year in rates now. It can deduct that £1,000 as a working expense. Henceforth it will pay only £250, and, therefore, there will be an additional £750 returned for Income Tax purposes. That will represent an increase of £150 in Income Tax. They will gain £750 from the rates, and they will pay to the Chancellor of the Exchequer £150. I calculate that, on the country as a whole, owing to that, this de-rating is going to increase the return under Schedule A by about £3,000,000 a year, which will go a long way towards compensating for the £5,000,000 of new money.

That, however, is not all. My right hon. Friend the Member for Seaham (Mr. Webb), in his speech yesterday, which won, I think, universal admiration, said, and I think he was quite right, that the advantage from de-rating is not going to be passed on in the form of cheaper commodities, but is going to be an addition to profits, or, at any rate, it is going, where there are no profits, to reduce the losses. Where there are profits, it is going to increase the assessment. Relief is going to be given to the amount of £24,000,000 or £26,000,000 by de-rating, and that is all going to increase the aggregate profits assessable under Schedule D. Putting the amount at £25,000,000, the Income Tax upon it will be £5,000,000. Of course, the figures I am giving are like these estimates—they are subject to revision when the actual facts are ascertained; but my argument is that there will be an increased return under Schedule A and an increased return under Schedule D, and the aggregate of these two, whatever the precise amount may be, is certain to be more than the £5,000,000 of new money which the Government are contributing.

I think the right hon. Gentleman claimed that he had established his case. I make a similar claim, and, I believe, with a good deal more justification. I began by saying that I was going to apply to these proposals this test: Will they relieve the municipalities of some of their present expenditure for national and semi-national services? They will not. As a matter of fact, although to do so would be going outside the limits laid down by the Chair, it would be the easiest thing in the world to show that these changes are going to increase the rates of the local authorities. The Bill has been described as a Higher Rates Bill. That title has been resented by the two right hon. Gentlemen opposite, but I am quite sure that experience will prove that it is a true description of the Measure. If this Bill is intended to be a benefit to the local authorities, then I submit that it is nothing but a fraud and an imposture.


The right hon. Gentleman the Member for Colne Valley (Mr. Snowden), for the first time in his life, I believe, finds himself approving of something that has appeared in the "Daily Mail," and, for the first time in my experience of the right hon. Gentleman, I find that his opinion and that expressed by the "Daily Mail" are identical.


Personally, I never see the "Daily Mail."


I wondered how far they would go together. The right hon. Gentleman made several points in regard to the finance of the Bill, and, with the permission of the House, I will try to deal with them to the best of my ability. Before doing so, however, I should like to refer to the suggestion of the right hon. Gentleman that the first task of his party, on being returned to power, would be to repeal the whole of this Bill. I would only say, very respectfully, that a very long list is being added up of Measures which are going to be repealed, and I appeal to Parliamentary experience, certainly to my own, as showing that the repeal of Measures is not work that is undertaken by a party when they come back to office; they find things to do that are far more important than that.

The first and chief point the right hon. Gentleman made was that local authorities were not relieved by this Bill. He said the £24,000,000 was money which would replace the loss of rates. The £16,000,000 was not new money and the only new money was the £5,000,000. Of course that is both true and untrue. It is true that the £24,000,000 goes to make up what is lost in rate-able value. The right hon. Gentleman erred rather seriously in looking at this question solely from the point of view of rates. The object of the Bill is to reduce unemployment and to increase the wealth of all classes in the country, and if I can show that the effect of the Bill will be to increase largely the wealth of those localities, and of those who dwell in them, even where the application of the formula seems to throw a loss on the rates, I think I shall have done a great deal to meet the gravamen of the right hon. Gentleman's charge.

May I take the position of a locality after the Bill is passed? The first thing that will happen is that there will come into that locality a large sum which did not come into it before—a large sum of new money across the border. Take a county borough, because that is a compact unit. Into that county borough will come a very large sum of money which before was raised in the ambit of that borough, and it will be spent in the borough, and, instead of taking in their own washing, as they were doing before, extracting the money from their own people and spending it on them, new money will come in to be spent. I do not want to press that too far, but it will have a very great effect on the prosperity of that borough if the sum they can spend on social services, on Poor Law, maternity and health services, will not be found entirely inside their area, and so, quite apart from de-rating, a large relief will be given and a large amount of extra money that they spend on these services will come in from outside.

Of course, the matter does not rest there. My next point is that de-rating will increase the prosperity of industry, thereby increasing employment and increasing the wealth of the borough. Surely we ought to look not merely at what the local authorities will receive in rates, but at the whole effect of the Bill on the wealth of local authorities. If we are right in thinking that employment will be largely increased, the wealth of all these local authorities will increase also, and that will be distributed in the way wealth is distributed, in increased wages, and that will spread to the shopkeeper and all those trades that depend on the wealth of the community. Therefore, the whole community will increase in wealth through the increased employment. I would suggest to hon. Members opposite that they should look not merely at the rates, but at those who pay the rates. Rates are paid by persons and not by things, and if all the people who pay rates are generally wealthier, the burden of the rates is very much smaller.

The right hon. Gentleman must look at the burden on those who have to bear the rates, and if they have largely increased means to bear those burdens, though the amount of money that comes into the coffers of the local authority is not increased, the thing that they have in charge, the prosperity of their area, is very largely increased, and the burden on the ratepayer is not increased even though in certain cases the man or woman may pay more rates. But the matter does not stop there. The last few years have seen the migration of industry from the highly-rated districts of the North to the lower-rated districts of the South. I certainly hope that the heavy industries will return to their natural home. I will never admit the contrary. Does the right hon. Gentleman think these very highly-rated and distressed areas will draw a fair share of new industries that are started just because their rates are reduced? After all, the only reason industries have left those areas is because of the high rates, and when you take away those high rates you take away the reason why they have migrated.

His next point was that the £16,000,000 a year would be too small a sum to take into calculation, for the Treasury grants had increased automatically by £2,000,000 a year over the last eight years and the amount ought to be increased. I think there is a miscalculation there. When the right hon. Gentleman says those grants have increased, does not he include the grants for education and police and others which are still on a percentage basis? I do not think that for the purpose of getting that £2,000,000 increase he has abstracted the grants that are included in the block grant.


What I said was that since 1914 the rate-borne expenditure has risen from £80,000,000 to £160,000,000 or £170,000,000. That is over £6,000,000 a year. I was dealing at that point with the increase in the rates, and my point was that if this continues to increase at the rate of 6 per cent. per year, the £2,000,000 over five years is inadequate.


The right hon. Gentleman referred to the increase of the percentage grant working out on the average at £2,000,000 a year. In those percentage grants are included the grants for police and education, which are still on a percentage basis and are not in the block grant. My point is that you cannot, therefore, say the block grant ought to increase by this £2,000,000 a year every year. That would be to leave out of calculation the very large amounts of money which, when the Bill is passed, as in the past, will be paid on a percentage grant.


Is not the hon. and gallant Gentleman overlooking that the guarantee is a guarantee which includes those grants? The right hon. Gentleman's proposal is quite accurate. The new guarantee is not the ratio between these new grants that are given but surely between the rate-borne expenditure and the national grants, comparing the total expenditure, both the percentage and non-percentage grants, and it is a quarter of that.


I will deal with one point at a time. I prefer to take the points in my own order. The new money, the £5,000,000 and the £2,000,000, that comes at the beginning of every quinquennium are a very fair way of meeting the expenditure that will be thrown on the local authority. Alter all as, the right hon. Gentleman said, the block grant system is a system—it is not a figure—and in my opinion it is far the best way of treating the relations of national and local finances and, supposing Parliament should want to increase the block grant, it can increase it.

6.0 p.m.

His third point was that de-rating will increase the rates, because the grant is allocated on a county basis and the county basis will not apply equally to all the localities inside the county. I quite agree that that is so. Some districts will suffer, but there are a great many things to be taken into consideration. I have had got out for me the grant in pence per head of the population of 14 of the chief industrial towns, including Manchester, Leeds, Halifax, Huddersfield and so on, and on the other side of the account the figures for seven towns of pleasure or learning, starting with Blackpool and ending with Oxford. The average grant in pence for the industrial towns is 268 pence per head, and in the case of the other class only 88 pence per head. So there is a very big gain in a quarter in which I am certain the right hon. Gentleman would wish it to be. It goes to those who will need it most. But take the case of the boroughs that lose. I have some in my constituency. The chief borough in my constituency that loses is Harrogate. Still, in that case, I think, it is fair to say that there are two things which should be considered. The first is, that the largest part of the loss is in respect of the Poor Law contribution; and I think that we are right in thinking that if prosperity increases the charge in respect of the Poor Law will decrease. The second thing is that all these towns, Blackpool especially, depend on general prosperity, on the money that is in the country. The more money that there is in the country and the better it is distributed the more will go to Blackpool—[An HON. MEMBER "Why not Harrogate"?]—I hope that some of it will go to Harrogate. I really believe that some of it will go there. I believe that the whole prosperity of the West Riding will be very largely increased and that the admirable facilities for health and pleasure that Harrogate affords will become even more popular than they are now, and that the excellent waters which have restored so many of our citizens will be drunk in even greater measure. I want to impress upon the Committee that in the case of the necessitous boroughs, those that are hardly hit and those that want assistance, the increase that will go to them is far more than that which will go to these more or less prosperous areas which already have a very low rate. Therefore, though some areas will lose, those that need help most will gain. Here especially may I refer to Aberdare. Aberdare gains, I notice, 2s. in the £ finally. It starts with a gain of 1s. 8d. in the £ and ends the 15 years with an amount of 2s. in the £. I do not think that that is a very unfavourable example of the action of this Bill.


Will the hon. and gallant Gentleman say what rate they will have to pay when the deduction is taken off?


Certainly, I will. It is all here. The present rate in Aberdare is 24s. 2d. The final rate will be 22s. 2d., and the starting rate will be 22s. 6d. So there is a very substantial decrease. [An HON. MEMBER: "The rates are too high"!] Hon. Members may say they are too high. I do not deny that. That is not the fault of this Government. Anyhow, I believe that any locality that obtains a rebate of 2s. in the pound per head of the population ought to consider itself very lucky.

The fourth paint which the right hon. Gentleman made was with regard to the formula. May I plunge into that same rather stormy sea? First, of all, he said that it was quite wrong to take children under five into our calculation. He surprised me. I thought that we were all agreed that children under five were a heavy charge upon a local authority, because of the health and maternity services which they impose on the local authority. The eugenists of to-day have told us that the least well-off members of the population are producing bigger families than those who are more well-to-do. I believe that that is admitted. Then why not take the number of children under five? They entail a considerable charge upon the local authority. The right hon. Gentleman complained about rate-able value being taken. I agree, to a certain extent, with what he said. There are still large variations in the assesments, but the right hon. Gentleman must not overlook the work done by the Act of 1925. I believe that it has had, and will have, a very large effect upon the removal of these differences. Assuming that we could get equal valuations all over the country, I am sure he would agree that the rate-able value was a proper factor to which to give due weight.

Last of all comes the question of unemployment. I think that we can treat unemployment in two ways. I believe that the Government could have done one of two things. They could have said: "Unemployment is so abnormal and so exceptional that we will not include it in our normal course of events, but we will make a special grant to unemployment," or they could have said: "We will include it to the extent that it ought to be included." Though these two things seem very different, I believe that in the end they will work out very much the same. The percentage, the right hon. Gentleman said, was only 2.8 per cent. for unemployment. He knows very well that in this sort of case a percentage is no guide whatever. The feature of unemployment is that in large parts of our country the population is very well employed. Unemployment is localised or confined to a few industries and a few places. Although the percentage is only 2.8, the actual advantage gained by the district where unemployment is very bad will be very much more than that, for such district will get the advantage of the unemployment in its area.

Lastly, the right hon. Gentleman, with some anger, said that the Treasury will gain £5,000,000. I hope it will. After all, the Treasury's gain is our gain. He rather spoke as if this were a contest between the Treasury and the local authority. I believe that we shall all gain. I believe that the Income Tax return under Schedule D will increase. I have very good reason for thinking that it will. But surely that is no reason for attacking this Bill, because it is an additional advantage. I do beg of the right hon. Gentleman to look at the effect of the Bill and not regard it solely in terms of rates and poundage. The Bill has a much wider value than that. It will increase the wealth of those communities that are at present depressed. By increasing wealth it may increase the rate-able value of a particular locality, but it certainly will lighten the burden of the rates on those who have to pay them, and thereby perform a very great national service.

I have only one more thing to say, and that is with regard to percentage grants compared with block grants. It seems to me that those members who defend percentage grants are defending either an injustice or a false principle of government. The injustice is this. It helps those localities which cannot help themselves, and it does not bring in that help until the locality itself has paid its money. It is a subsidy for the rich localities. It helps the rich at the expense of the poor. So much for the injustice. The false principle of govern- ment is this. It is defended, if is defensible at all, on the assumption that the local authority can call the tune. They can put up their expenditure and compel us here to give them 50 per cent., either by coercing us, persuading us or by some other method. I think that that is entirely wrong. This House ought to allow nobody to interfere between itself and its complete control over the public taxes. We ought to say the exact amount that we devote to all these services and submit to no sort of pressure whatever. I think that to defend the percentage grant on the ground that the progressive localities can force the pace is a wrong principle. We have to say what we shall give. It is not the localities' money; it is the taxpayers' money. It is our business to protect the taxpayers' money and to make such grants as we think proper, and not allow anybody else to say what grants we ought to make. I have tried to deal with all the points that were made by the right hon. Gentleman. I support the Bill, and especially the financial provisions of the Bill.


I am very glad that the Parliamentary Secretary has at last found an enthusiastic supporter of the Government's proposals. No doubt many persons will suffer from sick headache in the effort to master the complexity of these financial proposals. As I listened to the Parliamentary Secretary this afternoon I noticed that, unlike his usual custom, he was very closely attached to his notes, with which, apparently, he was very 10th to part. It would be out of order to suggest that the right hon. Gentleman read his speech, but he certainly kept very closely to his notes. I could not help remembering an incident on the London County Council some years ago. I was reminded of a discussion there in which it was suggested that the rate demand note should state clearly how the various figures were arrived at. I should like to see how the rate paper is made out when these proposals become law, at any rate, as far as London is concerned. It may be necessary to attach a copy of the right hon. Gentleman's speech. It would, no doubt, be a very good advertisement for him, and, I have no doubt, prove very illuminating to every ratepayer. As the formula will change during the next 15 years revised versions will have to be printed. It seems to be equally satisfactory that the right hon. Gentleman is himself a London Member. A singular feature about these discussions is that London seems to have sunk into the background. London, with its population of 4,500,000, does not seem very much concerned. I do not think that there has been a single London Member except the right hon. Gentleman—from his side of the House, at any rate; and there have been two hon. Members from above the Gangway—who has taken any part in these discussions.

I happen to have been a member of a special committee set up to consider the whole of these proposals as they affect London. I would have liked the right hon. Gentleman the Parliamentary Secretary to have been present in the early days of those committee meetings. They would have been a revelation to him. The chairman of the committee is a conspicuous Member of this House, the hon. Member for West Fulham (Sir Cyril Cobb). I am sorry that the hon. and gallant Member is not here this afternoon. I should have liked him to listen to the speech of the right hon. Gentleman. It would have been a surprise to him to hear the discussion. The proposals as they were originally outlined came as something like a bombshell to the loyal supporters of the right hon. Gentleman, the members of the Conservative party who dominate the County Council of London. They issued reports, supported by elaborate details, which have not been disproved, showing that London under the formula will lose something over £1,000,000 a year: a very serious thing for the capital city. On the assumption that the formula some day will come into existence, it has not been disproved that that sum will be lost to London.

I understand that the right hon. Gentleman's political friends in London have been placated by a guarantee. Guarantees have been floating about all over the country. I am afraid that the Minister of Health and the Parliamentary Secretary have not had much summer holiday. Most of the summer they were receiving deputations from the North, the South, the East and the West from municipal corporations, urban district councils and rural district councils, who were full of criticisms. Those depu- tations went back with guarantees in their pockets. I would like to know what real substantiality there is in those guarantees. I very much doubt whether the sum which we are asked to pass in this Financial Resolution will he adequate if all those guarantees are implemented. The statement given with respect to London suggested that London would be a loser for the whole period of 15 years. I interrupted the right hon. Gentleman to find out how the gradation proposed in his scheme will apply to London, and whether year by year the amount is to be decreased. He certainly disarmed the opposition of his friends by the promise that, at any rate, London during the whole period would not be worse off.

It is interesting to note that even with the guarantee London is likely to suffer. The causes of the cost of London government are well known. The cost is high, not because of the exceptional extravagance of the municipal authorities in London but because of the very high cost of the various services. The post of London services works out at something like 40 per cent. higher than elsewhere. Therefore, the ratepayers of London have a special call for help from the central government. Under the formula, London will come out extraordinarily badly, largely doe to the high assessable value, which reflects on the local rates, because when it is necessary to build a school or make a considerable improvement or to widen a road or to do anything necessary to carry on the work of a local government, they have to pay through the nose to the landlords. While the high assessable value in London hits the ratepayers, when it comes to a formula like the one proposed it does not ease the position of the ratepayer in the carrying on of the administration of the district.

I have been faced with the suggestion that, at any rate, my particular borough has nothing to complain of in regard to these proposals. I am told that Bethnal Green and Poplar will have at last some assistance from decreased rates. With great respect, I think the right hon. Gentleman will agree with me that that has nothing whatever to do with this formula. It is entirely due to the proposals for a reform of the system of administering the Poor Law. We are glad that the Poor Law is to be reformed, because London for the last ten years has been unanimous, without distinction of party, in requiring such a reform. It would have been much better to have carried out this reform in London by a short Bill applying to London only, and then we should have had unification of the Poor Law administration. If we could have had unification of the Poor Law without any of this formula, without any of this complex financial scheme of de-rating, we should have been far better off than we shall be under this scheme. Therefore, the London ratepayers, the 4½ millions of population, with all their social problems, overcrowding and unemployment are likely to have a serious set back. I shall be interested to hear the right hon. Gentleman on this subject, not in his capacity as Parliamentary Secretary to the Ministry of Health but in his capacity as a London Member, making some of these things clear. We are entitled to know why as a London Member he supports a Bill which will mean a serious set back for London.

Even the poor districts that are to get some advantage from the proposal to make the Poor Law a common charge and a common responsibility are to be robbed of some of the advantages by the full scheme. Districts like Poplar and Bethnal Green will actually get less under the formula than they would get under the simple 'unification of the Poor Law. It is quite clear, if the figures are studied, that some of the advantage which they derive under the Poor Law proposals are taken away under the formula. In this way, advantages which would have accrued to these districts if we had simply had a reform of London Government, will be taken away. Not content with that, for some reason which is not yet plain, the fund which equalises municipal services, the Equalisation Fund, is to be removed. At present, the discrepancies in rateable value between, say, Westminster and Bethnal Green are equalised to some extent by the Equalisation Fund, in addition to the equalisation effected by the Common Poor Fund. Now, for some reason, this Equalisation Fund is removed. What is the reason for that?

The needs requirements of the poorer boroughs of London are just as great as the needs requirements of the West End boroughs, but their respective assessable values are enormously different. The assessable value of Westminster works out at over £9,000,000, while the assessable value of Bethnal Green only amounts to £500,000, with the result that a penny rate in Bethnal Green only brings in £2,300, while a penny rate in Westminster brings in £36,000. Nevertheless, the Government comes along and, without giving any reason or explanation, penalises the poor districts by eliminating the Equalisation Fund, which has been in existence for the last 30 years and which it is generally agreed is sound and just, and has made it possible for the poorer districts to give the same sanitary service and the same standards of street cleaning, street lighting, and medical inspection as are enjoyed by the richer boroughs, without too large a rate. Some explanation ought to be given for this action.

In addition, the poorer districts of London are going to be handicapped by the fact that the bulk of de-rating is in their areas. The great industries are not situated in the West End, in the wealthier boroughs or in the City of London, but in Poplar, Bermondsey, Bethnal Green, Southwark and other working-class areas. They will therefore be put into the position of having a smaller area from which to collect their rates than at present. They will be very much handicapped when they want to extend their services and to collect the necessary money to pay the cost of those services, because their rateable value will have decreased by the elimination of the industrial hereditaments. It is a very curious thing, perhaps the Minister will be able to give some explanation, that the only people who have been claiming the advantages of the de-rating scheme are the big industries. The Ministers and many of their friends are very sensitive if anyone mentions brewers.




It is almost like a red rag to a hull, almost an insult to remind them of the existence of brewers. I do not know why.


Nor do we.


I am glad that the hon. Member for Royton (Dr. Davies) does not object to my reminding him of the existence of brewers, who will get great advantage under the de-rating proposals. In Bethnal Green, in the south part of the borough, the two big industries are breweries, and they have, I am informed, immediately handed in their request for the advantages of the de-rating scheme. On the other hand, I am informed that the smaller industries, manufacturers who have only yearly tenancies or short terms of leases for their factories have not up to the present made a request for de-rating. It is possible that they are afraid that their rents may go up. Another possible explanation may be that they are afraid of the Income Tax collector. That is not simply the case in Bethnal Green. I see that in Wandsworth, in spite of notices being sent out, a comparatively small number of persons have up to the present realised the great advantages which the Minister holds out under this scheme. The Wandsworth Borough Council report that there are approximately 2,000 hereditaments in the borough which come under the category of productive industry, and about 80 per cent. of the traders have so far omitted to apply for relief. That is a very remarkable fact which requires explanation. It shows that the machinery of this scheme is not working out quite in the way that the right hon. Gentleman and his friends anticipated. These people seem to be under some suspicion that the advantage of claiming a remission of three-fourths of their rates will not entirely accrue to their benefit.

I would like to ask the Parliamentary Secretary a question about the Borough of Woolwich, which he represents so ably in this House. I understand that Woolwich Arsenal is to be de-rated. That will mean a loss of £67,000 or £68,000 a year to the borough. What are the Government going to do about that? Are they going to make up that amount? Are they going to claim from their own Treasury that this money shall be restored to Woolwich, or is Woolwich to be deprived of this very considerable sum? Even if the sum is to be made good, it will be very serious for the Borough of Woolwich, because as her services expand, if they should require more money they will find their assessable value very much decreased, and the product of a penny rate will be very much lower. That applies not only to productive industry in the manufacture of guns, but to other Government property, like the clothing factory in Westminster. Perhaps the right hon. Gentleman will explain it. The whole trouble, as I said on a former occasion, is that the Government are doing the right thing in the wrong way. I voted against it on the previous occasion and I shall vote against it now. This is really not a Bill to reform the Poor Law; it merely transfers it from one authority to another. The Government would have shown some imagination if it had listened to its friends on the London County Council who, when they asked for a reform of London government, at the same time insisted that the able-bodied poor should be taken out of the hands of local authorities and handed over to the State.

If they had done that, they would have been spared the complexities of this Measure and the need for bolstering up these bad financial proposals by makeshifts and guarantees which they have been forced to put forward at the last possible moment under pressure. We have the machinery of the Employment Exchanges to which the administration of the able-bodied poor should have been given. This would have done more to assist necessitous areas than all the ingenuity in this Measure can possibly do. You cannot discover a formula. Every formula breaks down when it is put to the test, and London with its great needs and requirements is going to pay a very heavy penalty for its loyalty to the Conservative Government. If the percentage grant had been continued it would have gained as much as any other part of the country. The Parliamentary Secretary was very indignant when it was suggested that the interests of the maternity and child welfare services would suffer by the abolition of the percentage system. Suppose the same principle was applied to the housing subsidy and the Government came forward and offered a block grant for the construction of houses. Does the Minister suggest that as many houses would be built under a. block grant as under the present system? The answer is obvious; and the same thing applies to the health services. The guarantee of a block grant is a stimulus to inefficiency. The money will be forthcoming whether the service is developed or neglected. The proposals of the Government are thoroughly unsound, the finances will not hold water, and they must inevitably end in a breakdown. I hope the Committee will vote against the Resolution.


The hon. Member who has just spoken has referred to certain prosperous industries in his constituency and has suggested how the Financial Resolution will benefit them. The particular point he made can be most effectively answered by referring him to the speech of the right hon. Member for Colne Valley (Mr. Snowden) who, towards the end of his remarks, made some allusions to a particular productive industry which was rated at £1,000 and which he said, as a result of these de-rating proposals, would receive a reduction of its rates of £750; it would then be rated at £250 and its profits increased by £750. The right hon. Gentleman failed to point out that that industry, if it was not making a profit, would not have to pay an Income Tax under Schedule D, it would only have to pay on net income if it were earning a profit as an industry, and he showed quite clearly that the effect of this Bill is to make the relief greater to industries which are not earning a profit than to industries which are making a profit. The right hon. Gentleman the Member for Colne Valley answered fully one of the points made by an hon. Member of his own party when he gave us that example.

The main proposal of the Financial Resolution is to authorise the payment of certain moneys in order to make up losses on rates and grants for the de-rating of selected hereditaments. In considering this main proposition, may I refer to the speech of the right hon. Member for Seaham (Mr. Webb), who quoted with approval a statement made by Sir Wm. Beveridge, that the problem of unemployment is insoluble by any mere expenditure of public money. The effect of this Financial Resolution is to give public money in certain selected directions, and we cannot get away from the fact that the underlying conception of the Bill is the relief of unemployment and putting right the economic position of the country. If, as has been made clear, we have to give public money in certain selected directions, the directions being well known to the House, that is, the main staple trades and export trades, the point I want the House to consider for a few moments is, how is it that there is this urgent necessity to give relief in these special directions. Why are we called upon at this time to say that definite public assistance must be given to these staple producing and export trades. Is it because these trades are taking part in a general depression which affects the whole country, and merely because of their size they require this relief?


I am afraid the hon. Member is delivering a speech which he did not have an opportunity of delivering on the Second Reading of the Bill. If he was in the Committee at the beginning of the proceedings he would remember that the Chairman of Committees said that the discussion must be confined to finance.


The point to which I am addressing myself is that the financial relief is to be given in certain specified directions, and I want to know why this public money is being given to these specified trades. I am inquiring why these staple industries require this assistance. Is it because of some internal disabilities? Are they badly managed? Are they inefficiently manned? Are the wages that are paid in some respects higher than the rates of remuneration throughout the country? The answer is, No, they are not. They are not badly managed, though one must appreciate the fact that the staple trades would be in a better position if some measure of reorganisation and concentration of production took place. But on the whole they are not trades which we can say are in a bad position owing to bad management. Nor are they trades which are unskilfully manned; nor are they overpaid. When I come to the question as to whether they are taking part in a general reduction in prosperity which has taken place over the whole community, the answer is that this country is on the whole not less prosperous than it was in 1920, but more prosperous. Every index of prosperity which one can get, taking the numerous considerations which must be taken into account when we try to assess national prosperity, shows that this country is more prosperous than it was in 1920. Mr. G. D. Rokeling has got out for the first time in the economic history of this country an index of national prosperity—


I still cannot see how the hon. Member reconciles this with the terms of the Financial Resolution. He is really dealing with questions of policy which have been ruled out of order.


The Resolution says: To authorise the payment out of moneys provided by Parliament of such grants and other expenses. in certain directions, and I am addressing myself to the point as to whether or not these grants should go in these specified directions. However, I will endeavour to keep myself in order and I propose to be as brief as I can. It is essential the Committee should realise that all the economic authorities in the country, including Mr. Rokeling, say that as a nation we are in fact more prosperous now than we were in 1920, yet if you go to these depressed trades and say that on the whole they are better off than compared with the year 1920, when they enjoyed a boom period, and the amount of unemployment was less than it had ever been in any time during recent years, they would find it very difficult to believe. The point I want to make is that since 1920 this country has been, going through very great economic changes, whose repercussions it is difficult to assess even now. One factor which stands out more clearly than anything else is that the monetary policy—


Really, the hon. Member cannot bring that within the Rules of Order on the Financial Resolution. He must address himself to the question as to whether this amount should be paid; and he cannot discuss the general financial policy of the country.


I bow to your Ruling. I was only trying to show that the effect of the monetary policy of the Government has been to make it necessary for these amounts to go in the particular directions I have indicated. I will leave it at that. May I give an example, bearing directly on this Financial Resolution, showing why it is right and proper that particular areas should be given this assistance in accordance with the formula and why it should be directed particularly to the main staple and exporting trades. It has been stated that during recent years every pound of cotton yard produced in Lancashire was produced and disposed of with a gift of 1d. per pound to the foreigner. That statement is not a statement of the whole truth, but there is a certain amount of truth in it. In fact, although a loss of a penny a pound on the whole of the cotton production in Lancashire has taken place, it has not been at a loss gained by the foreigner but at a loss gained by our own countrymen. The effect of the economic change between 1920 and 1926 has been to increase the charges for social services and to increase the financial overhead costs, so that while in 1920 a certain amount of yarn had to be put on one side to pay for these services, now, in order to pay for the same social services, we have to put on one side twice the amount of yarn. In other words the lack of prosperity in the exporting trades has resulted in prosperity to those who do not trade. What the exporting industries have lost, the non-producing industries have gained. Therefore, it is a proper thing that these grants should go to the producing trades.

The point that I particularly emphasise is that as a result of the policy that has been pursued, these exporting trades have been depressed, and it is now only right that the nation should come to the assistance of exporting trades. It is not inefficiency but the result of national policy which has made our main producing and exporting trades lose so much money and be responsible for so much unemployment. I think all parties will agree that in concentrating the reduction of rates on the producing areas the Government are pursuing a wise policy. It would not do merely to relieve the able-bodied unemployed over the whole area, or to give some help to industry by taking sixpence in the pound off the Income Tax. You must concentrate your relief in the way in which it is proposed in the Bill. Not less than £20,000,000 out of the £26,000,000 is to be given to the relief of producing industry. The formula takes need into account. I be- lieve that the formula is firmly based on the necessities of the situation.

In my own constituency the Bill will do more to help the cotton trade than any other proposal of which I have heard in recent years. The hon. Member for Nelson and Colne (Mr. A. Greenwood) said that he would oppose the Bill at all its stages. He represents a constituency which is connected with the Lancashire cotton trade, and I make so bold as to say that he will find it very difficult for his supporters in that constituency to help him when he says that he is going to object to these de-rating proposals. Personally I shall be very happy, at the next election, to fight on the ground of this Bill. I believe that the Bill is going to do more to revivify the cotton trade than any other Measure that we have had before us in the lifetime of this Parliament. It is a revival of the depressed industries that is the country's most urgent problem. The proposals upon which this Bill is based will in fact prove to be a measure of justice to British industry.


My intervention in the Debate is for a very limited and specific purpose. I want to call attention to the effect of the financial provisions upon education. It has been assumed in the country and has been repeatedly stated, that education is completely outside the scope of the financial provisions. Those statements are entirely without foundation. I admit that it has been particularly difficult to see the exact effect and incidence of the various provisions in the Bill upon education, but I am sure that the "New Statesman" in its issue of last week was quite right in stating that those people who thought that the financial provisions of the Bill did not affect education, and that they would not affect it seriously in the near future, were living in a fool's paradise. The first provision that evidently affects education, both by example and in quantity, is the principle, embodied in this Financial Resolution and in the Bill, of a fixed block grant. Every reason given by the Government for the abolition of the percentage system and the substitution for it of a system of fixed block grants—not merely block grants, but fixed block grants—can apply, if they so desire, equally to education as to other social services to which they apply now.

A very interesting sidelight is thrown on the mind of the Government in relation to the financial provisions of the Bill in the issue called "Notes on the Government's Proposals for Local Government Reform." I understand that that was first issued to the Conservative party. It really embodies a financial pronouncement on the part of the Government. This is what I find on page 10, in a reference to the pros and cons of the percentage system: The health services on which percentage grants are paid are no longer in an experimental stage. That applies equally to education, for education is no longer in an experimental stage. I want to know whether it is the clear intention of the Government to increase the minor steps they have taken in this Bill, by imposing a block grant in a fuller sense upon the whole of our educational system. Here is a continuation of the quotation: The ratepayers can be trusted to insist on the maintenance of a high standard of efficiency in the service which they can never feel themselves exempt from the risk of requiring. On the other hand these services are not of the kind which it is necessary to press even upon unwilling recipients. The Government have come to the conclusion that there is no need for pressure on even unwilling recipients on behalf of services which are financed now by the percentage grant system. If the reasons stated apply to the health services, which are beyond the experimental stage, we have ground for fearing that the same reasons will actuate the Government so far as education is concerned. It is mere humbug to say that the percentage system has been a mere spending device. The percentage system has worked economically and efficiently in education. I am pleading here against the fixed block grant system being applied to education. It is very interesting to note that Sir Amherst Selby-Bigge, in his book on the Department of the Board of Education, has a chapter on finance, and that the proposals embodied in the financial arrangements of this Bill are almost all foreshadowed in that chapter. He says this: Really the block grant system or the percentage system is in favour at a particular moment according to whether your policy is progressive expansion of social services or whether you want reactionary curtailment in the social services. 7.0 p.m.

Let me pass from the general aspect to a. more particular application. Am I right in saying that the education rate, based as it will be on a restricted rateable area in future, is bound to jump up? Is it not a fact that the Government are going to take out the rateable value from education authorities, and that as a result the education rate will have to be levied on a restricted field? Will not that fact in itself drive up the poundage rates which are levied for education? I have seen it stated that one particular area will lose 50 per cent. of its rateable value, that a penny rate now produces £2,400 but that under the new system it will bring in only £1,200, and that as a consequence, in order to get the same amount of money for the service of education, the rate will have to be 2s. instead of 1s. in the pound. I ask the Parliamentary Secretary whether he can make it clear that that is not to be the effect. Can he tell us that the restricted rate field will not have a detrimental effect on education in the sense that it will call for higher rates to provide the same amount of money? Further, I think that the provision for the lag is going to have a serious effect. I do not think the Government ought to press this through all its stages until we have some financial paper giving us the effects and reactions upon the education service. Only the Government have full details and, in fairness to the House and to educationists, who are now becoming very interested in this matter and very much afraid of the reactions of these provisions, it would be very useful and convenient if we could get some comprehensive document showing the effects on the education service.

Turning to the question of the lag, as I understand it, if there is an increase of £8,000,000 in the first quinquennium, that is to say, if, at the end of that period, there has been an expansion from £180,000,000 to £188,000,000 in rate borne expenditure, the Government then give an added quarter for the next quinquennium; that is to say, they give a quarter of £8,000,000, or £2,000,000. My first comment is that you are going to carry into the second quinquennium a rate burden of £6,000,000. Obviously, there will be an adjustment, and what was costing the authorities £8,000,000 will cost them in the future £6,000,000 and will cost the Government £2,000,000. The authorities then start the second quinquennium with £6,000,000 added to them, so that they carry a burden in the second quinquennium of £30,000,000.

The figures given are assumed, and it is equally fair, for the sake of argument, that we should assume that the total expansion of £8,000,000 has been reached by regular steps. Assuming that it is taking place equally every year, the expansion then is at the rate of £1,600,000. What happens then? In the first year of the second quinquennium you carry over the £6,000,000 from the first and you add £1,600,000. As you go on increasing in this way, you find that it is quite possible, under the lag provided by the financial arrangements of the Government, for the expenditure to go up and up carrying forward the back expenditure and incurring new expenditure in the future to such a degree that you get figures like £30,000,000 and £23,000,000. Then the Government may come forward and say that they will give £2,000,000 more, making their total contribution £4,000,000.

Obviously, the first thing to note is that, under the system of the lag, every new expansion in the social services will have to be undertaken at the expense of the rates. Every new social service beginning or old service expanding, including education, in the future under the financial provisions of this Bill will have to be undertaken at the expense of the ratepayers of the country, at the expense of rate areas which have been restricted, and at the expense of ratepayers in houses and in shops. The second thing to note is that, if there is to be any expansion at all worthy of our social services, this scheme is really meant to prevent that expansion. That fear is creeping into the minds of educationists very strongly. The right hon. Gentleman may shake his head, but educationists up and down the country are beginning to be alive to the serious danger that may be implied in the financial provisions of this Bill, and it is for him to clear away their apprehensions.

I want to ask him about some details. It is quite evident that, if the value of a penny rate is affected, the grant is also affected. That is what we used to know as the old Fisher formula. Generally speaking, the education grants are paid upon a percentage basis. The items are 60 per cent. of teachers' salaries, 50 per cent. of social services, and so on. You add those percentages together, and from the total you subtract the value of a 7d. rate, and the result is the grant from the Government. Obviously, if the value of a 7d. rate goes up or down, it affects the amount of grant given by the Government. Have the Government considered the effect of the de-rating scheme upon the amount of the penny rate, and, consequently, on the amount of grant received by the education service? Have they considered also the increased assessments that are taking place? I would like to know, too, the incidence of the value of a penny rate as it would be affected under the proposals of this Bill by the Fisher grant and the Fisher formula.

Another point is this: I find there is a provision about Welsh intermediate education referred to in the explanatory memorandum. The memorandum states that, under the Welsh Intermediate Education Act, 1899, a Treasury grant is payable in aid of schools subject to schemes under that Act, limited for each county and county borough to the amount produced by a halfpenny rate in the £. As the provisions in this Bill may affect the grant-limit, continues the memorandum, Clause 65 provides for its stabilisation at the amount which was payable in the standard year. This is an education grant, it adds, and the Clause accordingly also provides that its administration shall be transferred from the Treasury to the Board of Education. Notwithstanding that the grant which is now paid on secondary intermediate education in Wales is going in the future to be a fixed stabilised amount. Whatever the value of the rate in the future, the grant paid will have no relation to the value of that rate. In the past, the grant paid for intermediate education in Wales has had a direct relationship to the value of a halfpenny rate. By this proposal, it is suggested that for that there is to be substituted a fixed amount in the future.

The fact that the Government have put an item of this kind in a fixed stabilised grant is sufficient ground for our being suspicious of their intentions over the whole field of educational grants. Here we have the beginning of a fixed grant in education. I would like to ask the Government to let us know definitely and clearly what their intentions are in this direction. The "New Statesman" suggested—and I believe it is true—that the Government were afraid to tackle education at this moment. They know well that the hiding they got in 1925, when they had to withdraw their circulars, would be repeated. It is quite clearly revealed in that most illuminating chapter on the finances of the Board by Sir Amherst Selby-Bigge that the Minister of Health and the Board of Education have been struggling to substitute a block grant for the percentage grant which now obtains. I would like a clear, definite, and specific announcement that the grants are not to be tampered with.

There is another ground for anxiety. The Burnham scale which affects teachers will come to an end in 1930–31, and the new three-year programme period will begin about the same time. Is it the intention of the Government to stifle in advance the application of the second round, as it were, of the new programme period by having a block grant substituted for a percentage grant? I happen to have a document analysing the whole of the proposals written by a financial expert, who says: Urban district councils which are elementary education authorities may, however, lose a considerable grant under the Act of 1923 in connection with their education expenses, and it is suggested that the Association should consider the making of representations on this point. Can we have some enlightenment from the right hon. Gentleman on this point? This financial expert says that the urban district councils which are elementary education authorities will lose a considerable grant under the Act of 1923. Educationists want to be enlightened as to the exact financial effects, and the transfer of the Agricultural Rates Act to the block grants system. Another point I want to know is this. In the Grant Regulations it says: Additional grant in highly-rated areas: In those areas in which the grant calculated as above would, when added to the grant under the Agricultural Rates Act, 1896, fall short of the net expenditure by a sum exceeding the equivalent of a rate of the prescribed amount, an additional grant equal to the prescribed proportion of the amount of such, excess shall be payable. That is an extra grant for necessitous areas. The Agricultural Rates Act grant under the provisions of this Bill will be merged in the block grant system. I want to know what arrangements have been made, with regard to the highly-rated areas, as far as the Agricultural Rates Act grant is concerned. The latest Memorandum issued by the Government shows that they have taken no notice of it—that they have not taken into account the effect of this transference of the Agricultural Rates Act grant over to the block grant system. What arrangements, I ask, have been made, if any—and I say "if any" with emphasis—as far as educational finance is concerned in connection with this transference.

I am sorry I have had to deal with a number of technical points, but when all these details are added up, and taken into consideration together with the general principles and history of the Government in the matter of grants, there are grounds for great fears in reference to the educational services of the country. If it is intended that the rates shall go up, or if that is the effect, then I am afraid it will be a long step forward in preventing the coming into operation of the programmes for which the right hon. Gentleman has been clamouring. I can assure him that educationists throughout the country will require answers to questions such as I have put forward, and, if those answers are not satisfactory, the proposals which the Government are now forcing through will meet with the whole-hearted and determined opposition of those educationists.

The PRESIDENT of the BOARD of EDUCATION (Lord Eustace Percy)

Perhaps I may now deal with the specific points brought forward upon this Resolution in connection with education, and I think I can do so in a very few words. The first question is that of the necessitous areas grant. It is, of course, true, that the reduction in rateable valuation, quite apart from the minor effects of any transference of the Agricultural Rates Act grants and the reduction in the yield of a penny rate in necessitous areas, will affect the Board's necessitous areas grant. An alteration will have to be made in the present Regulations, so as to fix a prescribed amount different from the present one, which will leave the necessitous areas in no worse position than they are in at present in relation to that grant. That we propose to do by an alteration of the Board's Regulations.

Then, as regards Welsh intermediate education, it is not true that the effect of this Clause of the Bill is to fix an amount for the grants of the Welsh local authorities to the Central Welsh Board. At the present moment there is a maximum limit of the yield of a halfpenny rate for any grant made by Welsh local authorities to the Central Welsh Board. That maximum is not attained at the present moment, and probably the hon. Member for Wellingborough (Mr. Cove) knows that, owing to a new arrangement to which we came, there is, at least, a considerable margin between what the local authorities are now paying and the present maximum. What we propose to do is to fix the maximum at the present yield of a halfpenny rate, but not fix the amount of the actual contribution at the amount which the local authorities are now contributing. We are fixing a maximum in that matter as in other matters where in local government a fixed rate is prescribed as a limit for expenditure. We are stabilising the maximum, not the actual amount, at the present yield of 1d. or ½d. rate, as the case may be. I do not see what else we can do. In any case, there is no danger of the Central Welsh Board suffering from this in any foreseeable future.

The hon. Member for Wellingborough made a point which I find it difficult to understand. He asked what was going to be the effect of the Fisher formula in conjunction with this Bill on the local authority whose rateable valuation will be reduced. If their rateable valuation is reduced, then the yield of a 7d. rate will be reduced and there will be less deduction from their expenditure before the Board's grant is paid. Therefore, their Board's grant will go up, and, in so far as this Bill affects the Fisher formula in that respect at all, it is in favour and substantially in favour, of the local authorities.


I said there were other factors, and my question was: Had the Minister any definite figures as to the financial effect? That is what I am after. This is a very difficult and complicated matter, and I should like to know whether the Minister has any figures which he could give us in the form of a Paper?


As far as the effect of the Rating and Valuation Act, 1925, is concerned, that really is wholly irrelevant to this discussion. As far as the effect of the Bill is concerned, the hon. Member asks how much the grant will be increased by the reduction in the yield of a 7d. rate. I cannot, off-hand, give an estimate. It depends on a number of rather uncertain factors, but that every local authority which is receiving anything more than 50 per cent. at the present moment will gain substantially is obvious.

Then there is the question of lag. I think the hon. Member for Wellingborough has forgotten that the increase in the proportion of the Exchequer contribution to the expenditure of local authorities is an increase in proportion, not to the expenditure which falls upon the rates, but to the whole expenditure, falling on rates and the new grant. Therefore, in educational expenditure the local authority will not only get the Board's percentage grant on any extra money which they spend. They will also in the succeeding quinquennium get the credit for the whole of that extra expenditure borne by the rates. Therefore, there is nothing in that point.

There is also the general point as to the reduction in the rateable valuation possibly limiting the power of local education authorities further to expand their services. Both counties and county boroughs are getting considerable extra grants beyond what they receive at present. It will take all of them a considerable time before, by any expenditure on education, they absorb the very substantial benefits which they are receiving from the Bill, though it is perfectly true it is not applied in the same way to what are known as Part III authorities—borough and urban district councils—because they do not get, in all cases, a guarantee over and above their present grants.

The hon. Member mentioned the Burnham scales in relation to that matter. Let him remember that all these Part III authorities are guaranteed against any loss over the first year of the quinquennium, which takes them up to March, 1931. It is true that in the case of some of these local authorities the rateable valuation will be reduced and their grants under the Bill will be reduced gradually over a period of 15 years. It is too early yet for the Board of Education to be able to judge what will be the precise position of these smaller local education authorities. At any rate, they are guaranteed up to 1931. We must examine the position well before that date and see whether any alteration in the education Regulations are necessary in order to ensure that these authorities will be able to continue the proper expansion of their educational services.

Finally, a word which I very much want to say. It is all very well for the hon. Member for Wellingborough to talk about what I think is an imaginary perturbation among local education authorities as to the effect of the Bill. But if he talks about the effect of the Bill on the accomplishment of the programmes which I have asked the local authorities to draw up and the programmes which I shall ask them to draw up at the end of the present period, then I would remind him and the Committee of the real oppressive preoccupation of those who have to consider education administration from a national point of view at the present time. At present, we are making all over the country steadier and more hopeful progress in the reorganisation of our education and the building up of a better system of education than we ever have made before. I think all over the country the progress being made is more than any of us hoped for some years ago—four, five or six years ago. I shall not name any period which might be controversial.

But there is one qualification. There is one respect in which we are not making progress. In certain areas, like Glamorgan—the areas of the Part III authorities in Glamorgan, Northumberland and Durham—the local authorities are unable, even with the necessitous areas grant of the Board, even with any modifiction which you could introduce into the Board's regulations—these authorities are literally unable even to keep their existing educational provision up-to-date let alone make any substantial progress. The hon. Member for Merthyr Tydvil (Mr. Wallhead) knows it as well as I do. That is the oppressing preoccupation of educational administration at the present time. I have had the experience of going to the Rhondda Valley, for instance, and of seeing a school literally falling about the ears of the children, having provided my grant to the rebuilding of that school—a grant which, in consideration of the position in the necessitous areas, came, I need hardly say, to a great deal more than 50 or even 60 per cent., and finding the local authority utterly unable to put up their share of the money. That is the real danger to educational progress at the present time. When I look at the figures of extra grant which all these areas will receive, I unhesitatingly say, from the point of view purely of education administration, that this Bill is going to give the opportunity to those authorities to make at least some progress with their programme, which they never could have in any other possible way.


May I ask the Noble Lord whether his reference to Merthyr Tydvil means that Merthyr, as a Part III authority, will be abolished and taken over by or merged into the County of Glamorgan? Is that the intention of the Board?


Merthyr Tydvil is not a Part III authority, but a county borough.


I regret that I cannot follow up the very interesting point that has been raised in connection with education, but I want to deal briefly and specifically with one other matter, relating to the question of the voluntary homes provided for the unmarried mother and child. In the whole of these discussions during four days this point has not been brought to the attention of the House. It is very small in relation to the great questions that we have been discussing, but it is a matter of very deep anxiety to those who are in charge of these homes. There are, roughly, about 100 to 105 of these voluntary homes which would be affected by Clause 68 of the Bill. Since 1918 we have been steadily developing a much better method of dealing with these cases, which are very terrible, sad, tragic, and very often disagreeable. They have been dealt with directly between the voluntary associations and the Minister of Health. They have not gone via the local authorities in any way, and it is a peculiar feature in connection with this work that it would be seriously hindered, if not destroyed, by any attempt to bring these homes under the ordinary regulations.

May I give one case in point, the case of one of the maternity homes in London? In November, 1928, there were 33 inmates in the home. From London there were 14 girls, but there were 19 girls from the provinces, drawn from Sheffield, Ipswich, Norwich, Middlesbrough, Peterborough, and smaller towns. From Wales, from Surrey, Middlesex, Berkshire, and other counties—it may he one ease from each of these areas. Not merely would the idea of attempting to collect any per capita grant from the local authorities in that connection be stupidly cumbersome, from the standpoint of administration, but we suggest that there would be the strong objection that the reasons why these girls are brought to the homes far away from the area in which the case occurred is because they want to get away from any contact with the people who knew them and who might be either distressed by the condition of affairs or follow up the girl, to her great disadvantage.

There is another instance, in a county borough, where the number of admissions is 36 and the cases from the borough itself are only two, 34 being drafted in from other districts. They have built up a system of interchanges between the homes in order that they might classify different cases, so that each case might get the most appropriate kind of treatment, and all who are in touch with this work know perfectly well that there have been, ever since the days of Josephine Butler, peculiar difficulties surrounding the work. These homes are based on the idea of assisting the unfortunate mothers—it may sometimes be a young girl of 16—who have been turned out of their own homes, girls who are pursued by married men, and it is felt that they need the particular protection which detachment from the locality is able to afford. The Ministry of Health inspector is experienced and is in touch with all this work. He is very much better able to deal with difficulties in connection with these particular homes than is any local inspector, who might have only had experience of one home in his locality. Above all, it is better that the standard of efficiency in these homes should be kept as high as possible, and this can better be done under the present arrangement of inspection by the Ministry of Health than by decentralising this work under the local authorities, no matter how sympathetic they may be.

There is, further, the point that where a home is in a seaside locality, as it very often is, for obvious reasons of health, probably the whole of the inmates may have resided outside the area and the local authorities would not want to be responsible for any share of the cost. At present boards of guardians may make grants for cases outside their areas, but under the Bill that will no longer be possible. Therefore, for that, and many other reasons, I would urge that this little group should remain undisturbed in the work that has been developing since 1918, and that we should be allowed to continue with the work under the present arrangements. When we remember that the mortality rate of legitimate infants is 68 per 1,000 and that it is 150 per 1,000 for illegitimate infants, when we remember also that these girls, if they are threatened with local disgrace, very often are inclined to turn to desperate measures to get away—they commit suicide, they do anything rather than face the disgrace that they bring upon their own people—for these and many other reasons, we very definitely ask the Ministry of Health to remove this small group entirely from the ambit of the proposed changes.


Various points of criticism have been brought before the Committee as to the possible effects of the de-rating scheme, but I would like to impress upon hon. Members that the figures that we are discussing are hypothetical figures, based upon a hypothetical foundation, and that it is possible, when the figures for the standard year are brought out, that they may be very much better or worse than those shown in the White Paper. It is perhaps necessary that we should remember that, otherwise we might be tempted, in our speeches in the country, to make definite statements based on the White Paper which may prove later on not to be justified, and so may create a false impression as to the truth or otherwise of the person making them. Various associations have felt it necessary to criticise, in some form or other, some of the financial provisions of the Bill, but I find that a very important class of local authorities, the urban district councils, have not yet had their case presented to the Committee for consideration, though their case is of great importance. These local authorities are rather worried, and they would like the Minister to consider very seriously, and with all the sympathy in his power, the case which I hope to put before him.

At present the rating resources of the local authority are elastic, inasmuch as they can be expanded when more money is needed or contracted when less money is needed. The present system has up to the present proved ideal from their point of view. They recognise that variations must of necessity take place throughout the country, but each urban district authority, naturally, is very anxious that it should not be their particular authority which may have to suffer. Under the Bill they will retain a portion of their rating revenue, and that portion will remain elastic as far as it is capable of expansion. It may, however, be of such a nature as to be incapable of further expansion, and in that case the authority must look to the population grant for the balance of its revenue. Now even the population grant is variable and may increase, remain stationary, or diminish, so that what happens is that, whereas at present local authorities have a single elastic system of revenue, they will under the Bill have two systems, one elastic and capable of expansion, and the other perhaps non-elastic and capable of no expansion at all.

That means that in the course of time some of these local authorities are bound to lose money. The loss, we know, for the first year will be reimbursed, but at the end of the 15 years you will have the very definite position that certain local authorities will be worse off than they are now. It is granted that others may be very much better off, but that fact is not much satisfaction to the particular authority which may be out of pocket. It is clear that, unless such districts get some help, they will be faced with the alternative either of putting an additional burden on the remaining ratepayers, which they may not be able to bear, or of abandoning a necessary or perhaps a vital service, because they have not the money to carry it out, and it may be a service which they might have been able to carry out and would have carried out if it had not been for the effect of the Bill. I suggest that this is perhaps an unfortunate position in which to allow any urban district authority to remain.

The object of the Bill is not to cripple a district or to restrict its resources, but to maintain them, and, further, to see that they may have increasing resources to meet increasing needs. In districts where the population may remain stable the need of the population for public work may extend. For instance, a conversion scheme may be necessary, or further water accommodation, and you will find that this authority may not, under the Bill, have the money to do this work, to the consequent detriment of the public health of the district. I hope the Minister or the Parliamentary Secretary will, in his reply, be able to give some hope or some consolation to these urban district councils and perhaps will offer some suggestion which may relieve them of some of their anxiety. That they are anxious, cannot be denied, but I have every assurance that the Minister will do all in his power to meet the legitimate aspirations of these authorities.

I would like also to refer to the speech of the hon. Member for Wallsend (Miss Bondfield), who reminded me of another service which is likely to suffer under this Bill. I mean the British Social Hygiene Council, who now get a grant from the State. Under the Bill they will get no grant from the State. They will be dependent upon grants from the county authorities, but experience in the past is not very hopeful in this respect, for the county councils and local authorities have not seemed very anxious to spend money in this direction. This is a vital question, and if there is any possibility of acceding to the request of the hon. Lady, I hope the British Social Hygiene Council may be similarly treated, as it will be, of great benefit to the health services.

We have heard a great deal of criticism with regard to the block grant versus the percentage grant. I am in favour of the block grant for health services. The percentage grant has been in existence for a certain number of years; the people have had the opportunity of using it and reaping its benefits. What has been the result? A large number of authorities have not even troubled to start welfare services at all, although knowing that they would get their percentage grants. It has been a stimulus to a great many other authorities to start these services, but the experiment has now lasted long enough. We have got to the stage when the people know the value of these services, and all the authorities which were anxious or willing to avail themselves of these services have done so. Therefore, what remains but simply to give them a block grant, because by giving the block grant—


How can it be a stimulus if you give them a block grant?


These block grants are now to be in the hands of the county councils, and a large number of the welfare centres now are worked through the county authorities. They will have a larger sum of money than they had before, and will be able to say, "You must have a welfare centre here, and you must have a centre there." The result will be that there will be a larger number of welfare centres throughout the country, and a good general average of efficiency instead of, as at present, super welfare centres in some places and no centres at all in other places. It is much better for the health of the people that we should have a good general average of health rather than peaks and depressions. I am therefore a strong supporter of the block grant for the health services, and the Minister is to be congratulated on deciding to have them; I hope that he will, remain fixed in his opinion.

This money has to be distributed according to a formula, an empirical formula which is the result of a good deal of work. It is an exceedingly clever formula, and has the advantage that, in spite of criticism from all parties in the House, and from all parts of the country, no one has been able to produce a better one. That is a great tribute to its cleverness. I would like to draw attention to the fact that the unemployment factor simply refers to men, and unemployed women are not included. In the Lancashire cotton trade there is a large proportion of women. That trade is in a seriously depressed position, and I am afraid that the Lancashire cotton district will not get the full benefit from the scheme which they ought to get, because the unemployed women are not included as a factor. I would like to ask the Minister whether it would be possible to introduce another factor for unemployed women.


I thought the hon. Gentleman said that there was not a better formula.


I am prepared to accept what the Minister will say. If he says that it is impossible to alter it, I will accept his word. I have also sufficient faith to believe that he is open-minded and open to receive constructive criticisms, thereby differing from some other people. So far as I could understand his argument, the ex-Chancellor of the Exchequer said that the de-rating scheme would do no good at all because the money would not be passed on, and that it was to be delivered into the hands of the manufacturers and capitalists. I will give an actual experience, because I am not an authority on financial matters. A certain mill in my constituency went to the trouble of working out the relief which they expected to gain from the de-rating scheme, and they found it worked out to be the equivalent of one eighth penny per lb. of yarn. A director of that mill said to me, "I wish that we had had this de-rating Bill through by now." I said "Why?" He said, "I have been working out what the relief will be, and I find it will mean one-eighth penny per lb. and I lost, by one-eighth penny per lb., an order for yarn which would have kept 500 people employed for one month." Is the benefit of that going to the hands of the capitalist?


I doubt the calculation very much.


There is no reason why this particuar gentleman should tell me an untruth.


I have seen several lots of figures worked out.


I am convinced that the Bill is going to benefit the industry of this country. Those who criticise it seem to argue as if there will be no change in the condition of this country in the next 15 years. If there is not any change, the country is done, but what will happen? We shall find, I think, that by means of this Bill the wheels of commerce will begin to turn, and we shall have increased employment, increased wages, increased spending power, and increased exports. We shall find within two or three years that, because of the contructive policy of the Minister of Health and of the Conservative Government, we have brought the country out of the bog of unemployment, once more on to the road to prosperity.


I am pleased that the hon. Gentleman the Member for Royton (Dr. Davies) referred to the urban district councils and their position under this Bill. I do not agree with him when he said that this Measure, and that amount of money which industries are to be given as a result of the proposals of this Bill, will set the wheels of industry going. I would like to take him to the mining industry as an example. The price of coal has been reduced during the last three or four years by an amount equivalent to something like 4s. to 5s. a ton on all coal exported.


And you have increased your export markets.


We have not, because the export of coal for the first 10 months of this year is 1,500,000 tons less than in the first 10 months of last year, when the export was lower than it has been for any year, with the exception of 1926, in the last four or five years.


Has the coal industry regained any of the markets which they lost as a result of the prolonged coal stoppage?


I am not going to say that more markets have not been gained in South America, in Brazil, or in some parts of Europe, but, notwithstanding the price being reduced so much as compared with three years ago, the export of coal during the first 10 months of this year is lower by 1,500,000 tons as compared with the first 10 months of last year. Under the de-rating proposals the relief will amount from 3d. to 4d. per ton. The total amount of relief in South Wales from railway freight relief and rate relief will not amount to more than 10d. We are losing twice 10d. a ton on the average on every ton of coal produced. The whole basis of the Money Resolution is wrong. We are handing to productive industry £24,000,000 a year. If a certain amount of this money were set aside and given to the industries which are suffering as the result of depression, on condition that it should be used for the purpose of benefiting those industries, and not given as a subsidy in perpetuity, but given to them for five or 10 years, I am convinced that it would do much more good than the proposals of the Bill. If the mining industry do with the 10d. a ton which they will get under this Bill, what they have done with every concession which the Government has given them, they will be worse off in 12 months time than they are at present. I did not rise to deal with that aspect of the matter; I simply followed the hon. Gentleman. I do not understand his reasoning on the question of block grants to urban district councils. If there is any section of local government which will suffer as the result of block grants as against percentage grants, it is the urban districts.


For health services?


For health services and any other service, because all that they will receive as a result of all loss of rateable value for health services is a fixed sum of 150d. The right hon. Gentleman said that there were a large number of urban districts which were working maternity and child welfare services, and that there was the possibility of the Minister agreeing with county councils for the urban district councils to continue that work. Probably some financial arrangement will be arrived at which I trust will mean an addition to the block grant of 150d. I would like to put one or two matters to the right hon. Gentleman, as I come from a district which will be seriously affected by this Bill. It is admitted that if there is one urban district council in the country which will suffer as a result of the Bill, it is the Council of Mountain Ash; and what applies to Mountain Ash applies to almost every local governing authority in the coal areas of this country.

8.0 p.m.

The right hon. Gentleman the ex-Chancellor of the Exchequer referred to the position of Aberdare. The White Paper, Cmd. 3227, does not give anything like accurate information with regard to any of the urban districts councils in Glamorganshire. The figures in the White Paper are based upon the rateable values for the year ended 31st December, 1926. It was during 1926 that we had the seven months' stoppage in the coal mining industry. The assessable values of collieries are based upon outputs, and the figures in this White Paper are based upon the period in which that long drawn out seven months' stoppage occurred. The position will not be nearly as favourable to the locality when we come to put this scheme into operation as it would appear to be from the White Paper figures. No matter what period you take, take 1926, 1927, 1928 or 1929, unfortunately we are not going to have a normal period for the application of this Bill. I should prefer, so far as the mining industry is concerned, that we should take a period when there was something like normality. In Aberdare the rateable value of collieries and industrial hereditaments which will benefit under this Bill is something like £27,000. The normal rateable value of those undertakings in a normal year is something like £60,000. The result is that Aberdare is going to suffer, and suffer considerably.

I will quote the case of Mountain Ash on the same point. The normal rateable value of the urban district of Mountain Ash is derived as to about 50 per cent. from collieries and railways and 50 per cent. from cottage and other properties. This Bill is going to reduce the rateable value of Mountain Ash by something like 371 per cent., but Mountain Ash, notwithstanding that loss of rateable value, will simply be given the block grant of 150 pence to cover all the losses sustained. Without the supplementary grant the rates in Mountain Ash would be 1s. 5d. in the £ higher than they would have been if things had been left alone, and it is only the supplementary grant which will maintain matters as they are in Mountain Ash for the first year. After that the supplementary grant will be reduced by 1–15th every year for the remaining 15 years, and with rateable values as they are Mountain Ash will be 1s. 5d. in the £ worse off than if things had been allowed to remain. This Bill is not a Measure to assist necessitous areas. In Mountain Ash, unfortunately, we have rates of 28s. in the £.

The right hon. Gentleman referred to the effect of the Rating and Valuation Act. The application of the Rating and Valuation Act in those districts where there has been no re-valuation of cottage and other properties for some time is going to give the Minister an advantage again. No district in the whole country is going to lose so much as Mountain Ash through the loss of the rateable value on its industrial hereditaments, through the increased rateable value of its cottage and other properties, and through the reducing of the compounding allowances both for general district rate and poor rate purposes. Mountain Ash is in such a deplorable condition that I would almost ask the right hon. Gentleman to give special consideration to it and to similar districts. I make that appeal to him, not only in regard to Mountain Ash, but in regard to all the coal mining areas in the country, because there are no districts so necessitous as the coal mining areas. In the Aberdare Parliamentary Division we have, unfortunately, 15 collieries which are idle. They will not be brought into the rateable value for the year 1928–29, upon which the basis of this Bill is going to be worked out. Fortunately, not one of those collieries is to be abandoned, we are told; when trade does recover, all will be brought back into production. Let us assume for the sake of argument that in 1930 these 15 collieries are brought back into production. The urban districts of Aberdare and Mountain Ash are going to lose, because they will then only benefit to the extent of 25 per cent. of the rateable value of those collieries, whereas under the old scheme they would have had the benefit of the full 100 per cent. of their rateable value. I think a special case on the lines I have indicated can be made out, not only for the industrial areas of Glamorganshire, but for every coal mining area in this country.

Then there is another point, concerning the position of urban district councils which are administering elementary education and which are known as Part III authorities. In Glamorganshire there are half a dozen urban district councils opera- ting elementary education, and their position is most precarious. With their loss of rateable value and loss of grant they would benefit to the extent of 150 pence even if they were not operating elementary education, but, unfortunately, they are, and their elementary education rate will have to be charged upon the reduced rateable value. They are bound to suffer considerably through getting only this fixed grant of 150 pence. I ask the Minister to consider not only the special circumstances of the urban districts, and even the county boroughs in the coal mining areas, but also to give consideration to the urban districts where the councils are Part III authorities for administering elementary education.


I am very much interested in the provision of water and sewage schemes in our country villages, and I welcome particularly the two Clauses in the Bill which assist the carrying out what is an urgent necessity. But I am a little disturbed about one thing, and I would like to ask the right hon. Gentleman in charge of the Bill whether the Financial Resolution and the financial provisions in the Bill do really make the Bill workable or give us really any actual assistance. The provision of a water supply is one of the most urgent needs in a large number of villages. In some populous parts of the South of England medical officers of health are greatly disturbed over the existing condition of affairs. Under the existing law the whole cost of a water supply has to fall upon the particular parish desiring it. Experience has shown that you cannot get more than 2s. 6d. in the £ on the rateable value of his house or cottage out of any individual for the purposes of a water supply, and the result in numerous cases where there is an extensive village, or where the country is hilly and there are difficulties in laying on the water, is that there has to be a rate-in-aid to pay for the cost of bringing the water and the amortising charges to pay off the loan, and that makes the scheme absolutely prohibitive. A scheme often runs up the rate-in-aid to 4s., 5s. or 6s. in the £, in addition to what the persons consuming water have to pay. Then, as soon as a water supply is obtained, a sewage scheme becomes necessary, and when you put on top of the rate-in-aid of 5s. or 6s. a similar rate-in-aid for a sewage scheme, the whole thing is still more prohibitive.

The de-rating proposals as they stand will make the position still more difficult in so far as the cost to a particular parish is concerned, because the assessable value is so very much diminished. Although the provisions in the Bill are not quite clear on the point and may require some alteration, I understand that a district council may come in to the assistance of an individual parish and spread the rate-in-aid over the whole district, and there is a further provision that the county council may, out of its benevolence, come to the assistance of the district council and provide some further funds. What I wish to ask the Minister is, What provision is there in this Financial Resolution or in the Bill for meeting any of those extra rates which would be created by the provision of any water supply or sewage undertaking where but for the de-rating provisions the actual burden on the ratepayers would be very much less? If the Minister could tell me that, it would go a long way towards satisfying me as to the value of these provisions, which I can assure him are most urgently necessary, in which view I am certain I should be confirmed by the medical officers of health of any populous villages.


The expenditure of money which we are discussing to-night falls, broadly, under two heads, the general assistance given to local authorities in their ordinary work in lieu of the discontinued grants, and the additional money which it is claimed is found for that purpose, and, under the second head, is the £24,000,000 which is the indemnity to local authorities for the de-rating of industry. The first of these heads has been fully dealt with by the late Chancellor of the Exchequer in his speech earlier to-day. I will direct my observations to the second of those two heads. We have heard only one voice in this Debate from the Benches opposite directed to this second objective in regard to the expenditure of this money and yet in the earlier discussions it was this objective which was altogether paramount in the minds of Government spokesmen. Primarily it was claimed that this Measure and the expenditure of money which we are now discussing would so relieve industry as materially to assist the employment of labour in this country and grandiose claims were made in that respect.

As the discussion proceeds we hear less and less about the mitigation of unemployment and more and more about the great measure of local government reform in local government administration for which the Minister of Health is responsible. One very significant fact is the total absence of the Chancellor of the Exchequer from these Debates and this has already been the subject of comment by the right hon. Gentleman the Member for Colne Valley (Mr. Snowden). In addition it must be remembered that the Chancellor of the Exchequer has thrown down the most resounding challenges to the Labour party on the subject of this de-rating scheme, but to-night when the finance of the Measure is under discussion, when the side of these proposals which the right hon. Gentleman initiated is being discussed in this House, he hands over to the Minister of Health the entire burden of defending those proposals. Speaking in the country on 13th November last, the Chancellor of the Exchequer went so far as to say: The Labour party had hardly yet found out what it was all about and in fact were only just beginning to learn that there was such a thing as a rating problem in connection with industry. And yet after three days of challenge and attack from this side of the House the Chancellor of the Exchequer, when he has the chance of exposing our ignorance in the course of the Debate, does not avail himself of that chance. What an effrontery it is for the Chancellor of the Exchequer to claim that the party on these benches have never heard of the rating problem and that he, the right hon. Gentleman, a few months ago had for the first time brought this great matter forward for the consideration of the House. I heard speeches on the rating problem delivered from these benches more than five years ago. They were made by the Leader of the Opposition, and there were also very cogent speeches on the same subject from that party of one Member to which I had the felicity to belong directing attention to this problem which was not discovered by the present Government until a few months ago when they found themselves coming nearer to a General Election without having made one suggestion of any kind for the solution of the unemployment problem. After the chancellor of the Exchequer had launched this great scheme upon the country, he retreated altogether from the fray, and now we find the Minister of Health defending these proposals in a purely local government Bill. In dealing with the financial aspect of this Measure, I propose to address my observations to the proposed methods of expending this money which is intended to relieve industry and improve employment. What is the argument which has been adduced from the benches opposite? It is, as I understand it, that by relieving industry of the overhead charge of rates you enable industry to reduce the cost of production.


I do not know whether the hon. Baronet was present when I gave my Ruling, to the effect that a general discussion on the Bill as a whole is not in Order on this Resolution. What is in Order is the effect of the Government contribution in the case of different localities, but a general discussion on the principles of the Bill is not in Order.


I was present when you, Mr. Chairman, gave that Ruling, and I listened to it with great attention. I have no intention of discussing the general proposals of the Bill, and I was trying to confine my remarks to the question whether or not the expenditure of this money by the Government would achieve the object which they set out to achieve. I was led to believe by your Ruling that that would be strictly within its ambit, and I should only be following the example of hon. Members opposite in many arguments they have used to show that the expenditure of this money would very greatly benefit industry and produce more employment in trades where unemployment now prevails. The argument which has been used on the benches opposite is that if you relieve industry of the overhead charge of the rates you will enable industry to produce goods more cheaply than before and that manufacturers will then be able naturally to enlarge their trade and employ more workmen. It on those grounds that hon. Members have claimed that this Measure will relieve industry and promote employment.

May I point out that exactly to the extent to which the costs of production of industry are reduced by this subsidy—for it amounts to a subsidy—to exactly that extent the market for which industry caters will be reduced by the burden which is placed upon the taxpayer. You are taking £24,000,000 from the taxpayer with one hand and reducing his power to buy to that extent, and you reduce the costs of production to exactly the same extent. That is purely a book-keeping transaction which does not place one single man in employment in this country. Take as an illustration the £18,000,000 of this taxation which is raised by a tax upon petrol. You place that great charge of £18,000,000 on the distributive side of industry in order to reduce by a corresponding amount the charge on the productive side of industry. How can it be argued that any net gain to employment is achieved by a purely book-keeping transaction of that kind?

It might be advisable to tax the rich who patronise luxury industries in order to subsidise those staple trades which are producing commodities which are purchased by the working classes, and in that case you would be conferring the benefit of cheaper commodities on those who are buying the goods produced by those particular trades. That might be a desirable transaction, and it might be placed in the same category as some of those measures of taxation recommended from these benches in order to deal with social reform. But the fallacy of the Government proposal is that not one extra man will be employed by its adoption, because you are merely transferring purchasing power from one class to another, and, although you may improve your staple industries at the expense of your luxury trades, you do not add to the aggregate of production or the aggregate of employment. As far as the home market goes, I believe it is a simple and ineluctable proposition that the whole of this subsidy to industry is merely an enlargement of the market in one direction accompanied by a curtailment in another direction, which leaves you exactly where you were when you began. It is, however, quite true, as has been argued from the benches opposite, that, as regards the export trades, we are facing another problem. In the case of the export trade you are taxing the British taxpayer in order to subsidise the supply of goods to foreigners, and you are not by that process curtailing your foreign market, which remains the same as it was before; but by this subsidy to rates you are enabling British industry to produce more cheaply for that market, and to that extent your object may be achieved.

I believe that in this instance the remedies proposed are altogether ineffective. For instance, the Minister of Transport, speaking last night, claimed that the maximum benefit to coal from the reduction of railway rates amounted to 7½d. a ton, and I think it is agreed that the actual reduction in the overhead charges on coal itself, consequent upon colliery de-rating, does not amount to more than 3d.; so that at the very most you are saving some 10d. a, ton to the coal trade, upon which trade, according to the estimate of the Secretary of the Mining Association, Mr. Lee, you placed a burden of at least 1s. a ton by the return to the gold standard a year or two ago. But even if it be true that the assistance given to the export trade is material, I would point out to the party opposite this extraordinary conclusion to which their policy is now leading. It has always been the policy of the Conservative party to tax the goods which the foreigner supplies to us. It is now the policy of the Conservative party to subsidise the goods which we supply to the foreigner. I wonder what the hon. and gallant Member for Bournemouth (Sir H. Croft) thinks of this new-found philanthropy of the Conservative party for the foreign consumer, this elaborate subsidy to our exports in order to supply the foreigner with a cheaper product.

I would never dogmatically and in all circumstances object—[Interruption.] We are discussing a serious subject, however peculiar it may seem to hon. Gentlemen opposite. I was about to observe that I have not any objection in principle to a subsidy upon exports, in circumstances where that may be urgently desirable, but. I would suggest that, in a situation such as that with which we are now confronted, where we are exporting enough goods, not only to buy all the foodstuffs and raw materials that we require, but also to import £300,000,00 worth of manufactured articles each year and to maintain a favourable trade balance of some £90,000,000 a, year for foreign investments—I suggest that, in a situation such as that, a subsidy to exports and to exports alone, which this Measure amounts to, is not justified, and that really our problem is not to maintain and yet further to swell our totally artificial export trade of pre-War days, but rather to organise measures for the reconstruction and development of our home market, which are altogether lacking from the proposal that is now before us. As I endeavoured earlier to argue, as far as the home market is concerned you are curtailing that market to exactly the same extent that you are enlarging it, and in no way are you carrying out anything other than a purely book-keeping transaction. Even in respect of the export trade, I would ask, is this Measure effective for the purpose which it is designed to achieve? It is being proposed that we should spend money in order to relieve the export trade of some of its burden, but I would submit to the Government that the export trades in the main staple industries, such as coal, steel, cotton and the rest, have, before the introduction of this Measure, been in many instances almost completely de-rated, or, at any rate, have been written down to a purely nominal sum.

I base my argument, not on my own experience, because I have none in this regard, but upon the argument of a member of the party opposite, who is considered to be so good an authority that he was invited to address their Industrial Committee on this problem. This famous expert, Mr. Michael Faraday, who, apparently, appears continually in cases of this kind, gave the following opinion. He said: Under the present rating laws, which seem to be misunderstood, the rent that a tenant would give for premises suitable for the purpose of carrying on any particular trade, although not exclusively assessed according to actual profits, is based fundamentally upon the ability to make profits by the occupation of such premises. He then went on to point out that many mills, in the rating cases of which he has been employed, have been written right down to a nominal figure, on the ground that they were now unable to make profits, and he proceeded as follows: The formula is identical 'n the iron and steel trades, the engineering trade, and the coal trade, which are, briefly, the basic industries which are now and have been for so long under such a heavy cloud. and he then gave a long list, which I have here, of names of firms on the Clyde whose rating has been written down in some cases to a nominal figure before the introduction of this Measure, simply on the ground that they were no longer making profit. To what point do we come? We come, surely, to this, that the only trades which can really be assisted in the competitive struggle by this Measure have already been assisted to the maximum extent that is possible, under the ordinary rating law of this country, and they will not be assisted to any appreciably greater extent by the Measure which we are now discussing.

What, then, are the industries which will be assisted by the expenditure which we are discussing to-night? They are prosperous trades, they are sheltered trades, in which not an extra man will be employed, but in which profits will be swollen. The right hon. Gentleman the Member for Burton (Colonel Gretton) was here earlier in the evening, and I hope very much that he will address us before this Debate is concluded. The trade which he so ably represents is to receive £500,000 of this money. That, with the best will in the world, I understand, cannot be handed on to the consumer of beer, because 1d. per pint off beer costs the brewers, I understand, something like £30,000,000, an astonishingly large figure. That sum cannot possibly be handed on, and it can only have one destination, namely, that of extra profits to the brewers. In this respect, therefore, we have arrived at the extraordinary conclusion that the ordinary taxpayer of the country is to be taxed, and the whole distributive trade of the country is to be taxed by an imposition upon petrol, in order that the already vast profits of the brewing trade may be yet further enhanced. All through the prosperous trades we find that the assistance is going to them, and to them alone.

There is another extraordinary fact which has been pointed out by Mr. Michael Faraday, who in general is a supporter of the Government. He has pointed out that, even since the Act of 1925, under which machinery was de-rated, in very many cases the mates of prosperous firms have risen, and he instances one Birmingham firm which is probably familiar to the right non. Gen- tleman, as it is to myself. The reason why the rates of these firms have gone up is that their buildings and their land have increased in value. You have, therefore, these two factors, that, on the one hand, the main staple trades which you seek to assist are already de-rated because they are not making profits, while, on the other hand, prosperous industries, even since the Act of 1925, have witnessed a great appreciation in their rates; and those industries, already prosperous, whose rates are high, will have practically the whole of the enormous benefit under the Bill. In the majority of cases it will not lead to an increase in employment, because they are already competing successfully and have no reason to lower their costs of production. It will lead purely to an increase in the profits they are already enjoying, and the net result of the Measure is a transfer of purchasing power from the general taxpayer to the favoured shareholders of these few concerns.

Earlier in the discussion the right hon. Gentleman the Member for Colne Valley proved to the satisfaction of everyone that local authorities, in their finance and in their administration, were not being greatly assisted by the Measure, and in fact his statement that the Treasury would actually benefit from the finance of these proposals has gone completely without challenge so far from the other side of the House. I have now tried to show that the other claim of the Government, that by the de-rating of industry employment would be increased, is equally fallacious. So we are left with the remnants of a scheme which was originally designed to revolutionise local government finance and to go a long way towards curing unemployment but which merely provides the right hon. Gentleman's idea of a certain reform of local government machinery. Covering these proposals is all the intricacy and the mystery, such as it is, of the formula and the unnecessary elaboration, as I believe, which conveys these financial proposals. I do not for a moment object to algebra if it is an instrument of greater lucidity, but algebra can also be an instrument of greater confusion and the Government in this respect have proved themselves very shrewd psychologists. They have, in fact, nothing to offer to the country at all, nothing which, if ex- plained in plain language, could induce the plain man to believe that anyone of the problems of the day could be solved, but they were shrewd enough to realise that simple minds often give a certain respect to things they cannot understand. That accounts for many of the phenomena of our history, including the respect of the Conservative party for Mr. Disraeli and, no doubt, for the posthumous respect they will one day accord to the present Chancellor of the Exchequer. But all that by way of parenthesis.

The Government's shrewdness rests on this, that they realise that, having nothing to offer, they must conceal the inadequacy of their proposals behind a great cloud of mumbo jumbo and mystery. Just pierce through that cloud to analyse the actual proposals, to analyse the finance and the expenditure that we are discussing to-night, and you find just book-keeping transactions, as far as anything is done at all, and absolutely no material assistance of any kind given either to industry or to the local authorities. I should be wandering beyond the scope of order if I indicated what I believe to be the real remedies for this situation. The real remedies are far more fundamental, far wider and more comprehensive than those contained in the Government's proposal, and I am afraid also that in some questions, such as credit and banking reform they will lead us into complexities which will make the comparatively simple problems we are discussing to-night seem like a kindergarten study. Far be it from me to attempt to develop such themes this evening. I would only suggest that this Measure is utterly inadequate to deal with the problem with which it sets out to deal. I oppose it on the ground that it is yet another essay in unreality, that it is yet another smoke screen behind which the Government conceals the fact that it is doing nothing at all, and that it further postpones the day when some Government with courage and capacity will really grapple in a fundamental Measure with the problems which this Measure disregards.


I think the House should be assured that the vast majority of the London Members are most certainly in favour of the Bill. So far the House has only heard representatives of London who have opposed it, and we have had to-day the more or less usual speech from the hon. Member for South-West Bethnal Green (Mr. Harris). He is a member of the London County Council, and the House should, I think, be informed that the London County Council has passed a resolution supporting the Bill. It is true there were certain financial matters under consideration between them and the Minister, but a very large majority of the Council are entirely satisfied with the proposed arrangements which will be made by the Ministry of Health as regards London. I can say that perhaps with some reservation as to the various allowances between the London boroughs. I represent a borough which, as far as I can see at the moment, will be in some way damnified, that is to say, it stands to lose an extra shilling at the end of 15 years unless there is a considerable reduction in the cost of London government, but I understand from a report of the county council—they are still in communication with the Minister—that arrangements will be made which will guarantee the whole of London, and I hope the whole of the boroughs, against any loss for the whole of the 15 years. I am grateful to the Ministry for the additional grant of a shilling a head of the population and the additional grant of guarantee against loss. I can only hope we shall have a, full guarantee for every individual borough against any loss right throuh the 15 years and afterwards.

The hon. Member for South West Bethnal Green criticised the proposed repeal of the Equalisation of Rates Act. But when you have the whole of the poor under common administration by the London County Council it is natural and proper that not only should the common poor rate be abolished ut the Equalisation of Rates Act too. It is referred to in the appendix to the Bill, and it ceases to have effect as from the date of the operation of the new scheme on 1st April, 1930. Having been in local government for 30 years, I am grateful to the Ministry for giving these powers to the borough councils to deal with vaccination and the registration of births, deaths and marriages, I can only hope further powers will be devolved upon them by arrangement between the Ministry and the county council, as they are dealing with many other public health services. I am also not surprised that the Unemployed Workmen Act, under which the Central Unemployed Body has acted for now nearly 25 years, is to be abolished. Like the hon. Member for Bow and Bromley (Mr. Lansbury), I was an original member of that Board, and I think we did a certain amount of good work. At any rate, we were the forerunners of the system of Employment Exchanges which has been, I think, of very great benefit both to employers and to the employed.

The hon. Memer for Smethwick (Sir O. Mosley) referred to the brewing trade in particular as deriving large benefits from this scheme. Hon. Members know that I am not uninterested in that trade, and I have had got out for me details of the "enormous" benefits that will accrue. T can assure the Committee that those benefits are very limited indeed. I find in a particular business in which I am interested that if there is a rebate of 75 per. cent. of the rates I shall get a rebate of £3,489. As against that I shall have to pay—and, as a matter of fact, I think, it will be found that practically every large industrial establishment will have to pay—a very considerable sum in respect of the increased duty of 4d. per gallon on petrol. In my case it will amount to £1,434, leaving a paltry balance of £2,000 on which there will be an enhanced charge under Schedule D which of course the Chancellor of the Exchequer will want. Therefore I shall be credited with a very inconsiderable sum. As mentioned by the hon. Member for Smethwick, and, I think, also by the right hon. Member for Colne Valley (Mr. Snowden), there is a great possibility that when the next valuation comes, it will be the duty of the rating authority under the Acts of Parliament to reassess these industrial properties at the rent that a tenant from year to year would give, and a property freed from 75 per cent. of its rates will, of course, pay a great deal more. I hope that the Committee will see that these "large" benefits which have been spoken of by hon. Members behind me, and also by hon. Members of the Labour party as going to industrial properties are absolutely illusory.

I am proposing to put down an Amendment which will make it clear that there shall be no powers given to the rating authorities to increase the assessments in consequence of the provisions of the De-rating Bill, and I hope that the Minister will see his way to accept it. There is another point which was mentioned by the hon. Member for Smethwick to which I would also like to refer. He said that this large sum of £400,000 which brewery properties were going to get—I have explained that it is much less than that in reality—would not be applied in reducing the price of beer. That is quite true. The amount is so comparatively small that it could not be applied to this purpose. I am sure that the Committee would understand that any benefit such a trade as the brewing trade would get in this respect would naturally go to the benefit of the consumer; it would go to the benefit of the consumer in the improvement of the article produced.

I support this Bill heart and soul. I think that it is going to be of real benefit to a great many of the hard-hit industries of the country by increasing their opportunities for trade abroad, and by promoting a much larger measure of employment. If it does that, as I believe it will, it will benefit the whole of the country. It will be of benefit to the distributing trade, while every tradesman and every labourer in town and country will also benefit from its proposals, I am very glad to give the Bill my most hearty support.


I am quite sure that all hon. Members on this side of the Committee have listened with very great pleasure to the intervention of the hon. Member for North Kensington (Mr. Gates) in this Debate. We are extremely grateful to him for the compliment that he has so graciously paid to our arguments. If I may be allowed to say so, I hope that when an Amendment comes to be moved by hon. Members on this side to exclude breweries from the benefits of this Bill—seeing that in his view those benefits are so small and negligible—he will come wholeheartedly with us into the Division Lobby in its favour. In passing, may I add this reflection? It is abundantly evident that the light is at last beginning to dawn upon some hon. Members below the Gangway on the opposite side of the Committee as to what is going to accrue to the brewers from these benefits. Recently, I was speaking with a business friend of mine in my own constituency—a successful man in a small way—and he told me that the Petrol Duty will involve him in an expenditure of about 10s. a week as a contribution to the finances of this Bill from which others are going to draw.

I am not going to speak, however, on that particular matter to-night, but upon an entirely different one. It does seem curious that until to-night very little has been made in the course of these discussions of the case of the smaller local authorities in regard to the formula upon the basis of which the Bill is to operate. It is, indeed, somewhat significant that even the official spokesmen on the Government side throughout these Debates since Monday have very largely overlooked the very special difficulties which confront these local authorities in regard to the incidence of this particular formula. Most of these urban authorities of which I propose to speak are, of course, necessitous areas, and the right hon. Gentleman who introduced this Debate this afternoon made it abundantly clear that it was the purpose of the Government, through the medium of this formula, to provide some relief for necessitous areas. I submit, and I think the right hon. Gentleman will agree with me, that the large number of urban areas—all of them in South Wales are necessitous areas—are necessitous because trade has declined so abnormally that they are unable to meet their immediate needs from the rate which they are able to collect.

I want to put one or two propositions to the right hon. Gentleman which, I think, will justify my claim that one or two other elements should have entered into this formula. One is this. I think that the formula overlooks the claim of many of these areas for special weighting in respect of pauperism. There is weighting in respect of unemployment in those areas but there is no weighting in respect of pauperism as such. Anyone who knows areas like Merthyr and my own—Pontypridd and nearly all the areas in South Wales would come under this category—must realise that there is a heavy burden devolving upon these various authorities by reason of the fact that large numbers of people have been forced upon the Poor Law, not because they normally and ordinarily would have fallen upon the Poor Law but because they have exhausted their unem- ployment benefit and, there being no other means of subsistence, they have had to turn to the Poor Law for something to help them along. There is no weighting in respect of these people, large numbers of whom have gone to the Poor Law because they have exhausted their unemployment benefit. Having exhausted their unemployment benefit, they would not be counted in the returns of unemployment in any given area. That applies to hundreds if not thousands of people in South Wales. In my own constituency there are pith which have been closed for two, three and four years. It, therefore, is abundantly clear that large numbers of people will long ago have exhausted their benefit and will have become a burden upon the Poor Law. They will not appear in the books of the employment exchanges but will appear in the books of the Poor Law. That is one weighting which is very important, and should be kept in mind.

I want to fortify that argument by reference to a return issued by the Ministry of Health in regard to pauperism in various parts of the country. It is said that under the application of this formula various districts which are normally well-to-do, will be, curiously enough, able to get benefit which other areas more deserving do not get. Take Eastbourne. In this return, the number of unemployed people who applied for Poor Law relief in Eastbourne was about 12 per 10,000; in Hastings, one per 10,000; Brighton six per 10,000, Bournemouth one per 10,000. The burden of the Poor Law in those areas is negligible; it does not exist to any extent worth considering. Turn to the North of England. Gateshead had 181 per 10,000 and Sunderland 138 per 10,000. Therefore, my point is plain that the weighting of this formula ought to have had concern with the simple point of pauperism as distinct from the question of unemployment.

9.0 p.m.

Let me turn to another point in regard to the formula. There are certain people who are living in these burdened areas who do not appear upon the books of the Poor Law authorities or in the returns of the Employment Exchanges. There uninsured persons in those areas, large numbers of them, and they ought to have some consideration in the weighting of this formula. There is also a small point which we ought to bear in mind when we consider the figures in regard to the weighting concerning unemployment. Perhaps it is a Committee point, but it is one for consideration. Take the area of Merthyr and my own area. The areas served by Employment Exchanges are not always co-terminous with the area of the county or county borough. In my own area, two of the pits of which I have spoken have been closed for two years and nearly every man who is unemployed there registers not in the county but in Merthyr Tydvil and, therefore, weights the population in Merthyr with respect to unemployment and relieves it in respect of unemployment in the county area. Then again, in this proposal, as I understand it, unemployment is taken in relation to men only and not to men and women. That does not concern my area very much but in an area like Lancashire probably it is a most important consideration, and I submit that the right hon. Gentleman ought to reconsider the matter from that point of view.

I would ask the attention of the Committee and of the right hon. Gentleman to another important question which has a tremendous bearing upon the implication of this scheme for some of these areas. It has been repeatedly pointed out to-night that there is some danger in the standard year which has been chosen. How do we stand in relation to this matter in South Wales? The hon. and gallant Member for Rhondda Valley (Lieut.-Colonel Watts-Morgan) will know that what I am saying is true, from his long experience. In South Wales, collieries made their contributions to the local rates on the basis of output. Everyone knows that the standard year which the Government have chosen, the year 1928–29, is the very worst year from our point of view, because our output in 1928–29 is lower than it has been for many a year. Scores of collieries have been closed and the consequence is that from the point of view of our local authorities an extremely unfair year has been chosen.

The right hon. Gentleman will argue that will make very little difference, because three-quarters of the rates are to be taken off. True, but I am not so much concerned about the three-quarters; it is the quarter which is left that I am concerned about. The 25 per cent. that is left is the only reliable expanding figure that the local authority can rely upon. There will be a block grant in respect of various services given to the county council, but the only thing that will actually expand for these areas in the next five years, whether there is or is not a revival of industry, will he the 25 per cent. The rest will be a fixed thing, a hard-and-fast figure. I should like the right hon. Gentleman to follow this point, because it is most important. He has in the Ministry at this moment a petition from five or six urban councils in my constituency and in that of my neighbour the hon. Member for Bedwellty (Mr. C. Edwards). The financial experts appointed by these six authorities tell them that under this proposal they are going to lose between them £180,000 by the process of de-rating. Three-quarters of that is going to come back to the county, but even in that case they are face to face with an appalling situation created for them by previous Governments.

What is their position? The Government decides that public works shall not participate in this benefit. They were in course of constructing public works when the War came along. They wanted to go on, but the Government said they must not. They stopped, and when they recommenced building again they found that instead of costing £500,000 the works would actually cost them £1,500,000, and this after they had borrowed the money not at the pre-War rate but at 7½ per cent. They entered on this huge commitment on the assurance and anticipation that the revenue from rates in the area would expand year by year. Now they are in this situation, that, faced with this terrible burden, they are left with only one-quarter of their rates which they can rely upon as an expanding revenue. They have committed themselves to this tremendous financial burden with the horrifying prospect of the possibility under this Bill of being unable to meet the new situation. Let me put another point. The right hon. Gentleman by this proposal has upset another calculation which is most important to them. Under their scheme they were hoping to convert their loan from a 7½ per cent. basis to a cheaper rate. They could not do this until 10 years had elapsed. The 10 years will presently elapse? Will that conversion be easier now. The right hon. Gentleman must know that no conversion can be easy if a locality has only one-quarter of his rates to rely upon as an expanding factor during the next four or five years, and I think the right hon. Gentleman by this Bill is, quite unwittingly, doing a very grave injustice to these areas, which have had these heavy financial commitments imposed upon them not by any blunder of their own but by Government interference in the early days of the War.

There is another consideration which I must put before the Committee. They have completed these public works, and now they know that under this Bill the rateable value of these public buildings is going to swell the sum which will go to the county council's coffers. The greater the rateable value of these public works, the greater will be the contribution of the Government to the county council; and not to them. The people in these areas, having an almost intolerable burden to bear, now find themselves actually compelled to contribute to the swelling of the pool of finance for the county council in regard to which they are not pro rata participants. It is true also that while these urban areas are swelling the pool of grant to the county council they are also making a grant to the rural councils, because the rural councils are to be guaranteed against unnecessary and undue loss. I submit therefore, that these urban areas are going to suffer a most terrible financial burden and I want to ask the right hon. Gentleman this question. I admit and rejoice in the fact that a proposal has been made that he should reimburse the counties where they take over certain Goshen Loans. So far as it goes, I have no objection, but I submit that his formula, or his Financial Resolution, should have provided for the equally deserving financial claim in the case of areas such as I have described. I am speaking, perhaps, in a parochial sense, but if you estimate the respective contributions to rates of the organisations which are going to get benefit as compared with public works it will be realised that I am not so parochial after all. Mines and various other concerns are going to get benefit represented by about 12.31 per cent.; gas, electricity works and sewerage works, 11.82 per cent.; and houses and shops 65 per cent., so that the people who are going to make a contribution through their petrol consumption, the people who are going to bear the main burden, will constitute more than 65 per cent, of the ratepayers of the country, and relief in the direction I have indicated would be very welcome indeed.

One other word and I have done. We have heard a good deal in this Debate about the benefits that are going to come to various areas. Will the right hon. Gentleman turn to the figures he has given for Glamorganshire. I will take three areas, one in West Glamorganshire, one nearer Central Glamorganshire and one in East Glamorganshire. In his speech the right hon. Gentleman referred to Pontardawe. What is to be their position under the estimate of the Minister himself? If this scheme had been in operation in 1926–27, it would not have made one penny difference to the rates in that area. In 1926–27 the rates were 15s. in the £, and the estimated poundage of rates under the scheme, after the Supplementary Grants have been given, is still 15s. Take Mountain Ash. Its rates in 1926–27 were 28s. in the £, and would have remained 28s. in the £ if the scheme had been in operation with the Supplementary Grant.

Take my own area. This indicates how the scheme will work out. I have told the Committee before that I had the misfortune, from one point of view, to represent the most highly rated area in the country. In the last half year the rates were 18s. 1d. in the £. That is 36s. 2d. for the year. What does the return tell us? In that district, Gellygaer, in 1926, the rates were 26s. 1d. If the supplementary grant had been applied, plus the scheme, the rates would have been reduced to 25s. 8d. The total benefit under the scheme in 1926–27 would be only 5d., but since then collieries have closed and the rates have gone up from 26s. 1d. to 38s. 2d. What has the Minister to say to this? He says "Oh, I shall come along in the first year and I shall see that you have such a grant that you will not lose in the first year." But what is that to us? Unless he can guarantee that after the first year there will be a substantial revival of industry to give us an adequate revenue, he will have to help us the second, and the third, and the fourth year. Indeed, as things are now, he will have to help us even to the 15th year, for it is abundantly true that Parliament is in vary grave danger of making a miscalculation if it thinks that merely by relieving the rates to the tune of three-quarters for the producing industries there will be a revival of the coal trade of South Wales.

What are the facts? According to a joint memorandum presented by Members of this House to the Prime Minister prepared by coalowners and miners' leaders in April of this year, we were told that the average burden per ton imposed upon coal in South Wales was 3d., and that the average burden per ton imposed on coal by royalties in South Wales was nearly 9d. per ton. Even though you did remove the 3d. per ton, it could scarcely help to make these necessitous areas anything other than necessitous in the end. So the point I make is this: Let me grant, if the Minister likes, that some benefit may come from this scheme. I think that some benefit may come to some of these areas; I am not prepared to deny it. But if this is all the Government can do for these necessitous areas, I repeat that they will remain necessitous still; their burdens will still be onerous; their perplexities will still be difficult to solve. I beg the right hon. Gentleman specially to realise that he ought to consider whether the overburdened urban areas should not be specially met by some special grant in respect of the exceptional difficulties in which they are involved during the present industrial crisis.


Before we pass on to the Amendment on the Paper, it would, perhaps, be convenient if I were to intervene and make some reply to the various speeches which have been made on the Financial Resolution. I do not want again to go over the ground that has been traversed in the course of the Debate upon the Second Reading of the Bill. Indeed, if I were to attempt to do so, the Chairman would at once pull me up. I do not want, in particular, to discuss on this occasion the very large number of what I may call Committee points which have been raised by hon. Members this afternoon. I take hon. Members' observations as being a sort of notice to me that these are points which they will desire to raise later. Many of them are points which certainly raise matters proper for discussion, and I dare say that as the Measure goes through Committee we shall find that there are a number of details which it is possible to amend. But in regard to the general point which has just been put to me by the last speaker, I say frankly that the situation in South Wales is in my opinion one which can never be dealt with completely and satisfactorily by any scheme of rating reform.

I am glad that the hon. Member is so fair as to think that some benefit may accrue to these areas by reason of this reform, but I think he has quite justly pointed out that, even taking into consideration such benefits as may accrue, undoubtedly many districts there must still be left in a very difficult and anxious situation. The fact is that the position there is altogether abnormal and unique, a permanent or to some extent permanent shifting of industry. You have the case where the industry of the district is the sole industry, or nearly the sole industry, and it is difficult to see how any scheme of rating reform can deal with a matter which really depends upon a recognition of the unhappy facts of the situation. We must rather try to find fresh opportunities for those who may never be able to obtain employment in their industry in that district again. Of course, some part of the difficulties which the hon. Member has mentioned does arise from the fact that we are now equalising certain charges over very much larger areas than before. I might, perhaps, point to one place which happens to be next on the list to the one that the hon. Member mentioned. I mean Glyncorrwg, which at present has a rate of 31s. 10d., but which, if the scheme came into operation at once, would have its rate reduced to 24s. 9d. That, of course, means that it is one of the areas in this district which gains under the scheme by the equalisation of the charges over the whole area of the county. As the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) said earlier, you cannot have any redistribution of burdens within a county without necessarily finding some areas gaining and others losing. The policy with regard to the particular position in South Wales and Durham is a policy of transference, and that must be considered as super-added to any benefits that accrue under this particular scheme of local government reform.

I wish to acknowledge that many of the speeches which have been delivered on this Financial Resolution have been real contributions to the Debate. This afternoon we had from the right hon. Gentleman the Member for Colne Valley a very weighty and serious speech, which raised large issues, and, if I may say so, treated the subject in an entirely statesmanlike way. I can say that he spoke for 35 minutes this afternoon without my finding myself in serious disagreement with anything that he said. Although afterwards he went on to some criticisms, I hope to be able to show him a little later on that those criticisms were largely based upon the lack of a full understanding of the various intricacies of these financial proposals which govern the scheme.

One of the propositions that has been put forward by' various hon. Members in connection with this Resolution is that it would have been a very much better plan than that offered by the Government if instead of trying to make a redistribution of Exchequer grants in the way we have, we had taken the relief of the able-bodied unemployed right out of the local purview altogether. I wonder if those who advocate a proposal of that kind have considered what the actual figures are? The right hon. Gentleman spoke of the cost of poor relief as being £50,000,000 a year. He does not suggest that the whole cost of poor relief should be made a national charge, and what he really was directing his observations to was the outdoor relief of the able-bodied unemployed. If that be so, may I point out to the House that in 1926–27, when, of course, that particular charge rose to a high peak, the total expenditure in the country was £15,100,000, which if it had been expressed in the form of an average rate in the £ throughout the country, would have amounted to 1s. 2¼d. in the £, but in the following year, 1927–28, the total expenditure on this particular matter was only £6,900,000, which is only equivalent to a rate of 6½d. in the £. Taking such estimates as are available to me for the current year, it would appear that the charge is likely to be in the neighbourhood of £5,500,000, or only the equivalent of a rate of 5d. in the £.

How does that compare with the proposals of the Government? The right hon. Gentleman said there was only £5,000,000 of new money for which we were entitled to take any credit. He brushed aside the £2,500,000 extra because, as he said, that was merely used to compensate for losses, but for whatever it is used it cannot be denied that that £2,500,000 is going into the pockets of the ratepayers. Therefore, in considering the position of the genera: ratepayer under the scheme, one must take into account as the sum of new money, not £5,000,000 but £7,50,000. I am speaking of England and Wales alone. That would amount to a rate, if it were evenly distributed over the country, of 7d. in the £. So that we have to compare the figures I have given for the three years, namely, 1s. 2¼4d.,6½d. and 5d. with a rate of 7d., which is the equivalent figure represented by £7,500,000. Therefore, even taking that alone, the Government proposals do offer a larger benefit to the general ratepayer than you would get if you took out the relief of able-bodied unemployed and made it a national charge.

Of course, that does not by any means exhaust the proposals which the Government are making or the benefits which will accrue to ratepayers. I take the de-rating proposals, and although there may be various estimates—we have had one a little while ago for one particular industry—of the effect which is going to be produced by those reliefs, still, taking the agricultural relief alone, that, I estimate, is equivalent to a relief amounting to 3s. 5d. in the £ on the rateable value of agricultural land. Then, of course, there is the industrial and freight-trans port relief, and that amounts, on the whole, to a relief of les. 5d. in the £. What really, then, we are doing is to concentrate the assistance that we are giving to ratepayers very largely in certain particular directions, and it is from that concentration that we expect and believe that we shall give a stimulus to industry which may result in increased employment and, therefore, in lower charges to ratepayers.

That was the general argument. We had yesterday a very interesting speech from the right hon. Gentleman the Member for Seaham (Mr. Webb) who again, I must say, devoted a good deal of time to Committee points, but the part of his speech which chiefly interested me was at the conclusion when he spoke of setting up a central authority to deal with the relief of the able-bodied unemployed. I was hoping that he was going to develop a little bit further what he meant by that proposal. I was quite certain that hon. Members who cheered him so vigorously from behind had not the slightest idea what he meant, but I do not do him the injustice to suppose that he put forward that idea without having a very definite scheme in his own mind. I was extremely sorry he did not develop it, be-cause neither he nor any body else who had spoken in this Debate on the other occasions has attempted in any way to explain how those difficulties which I enumerated in my speech on the Second Reading of the Bill are to be overcome.

It is quite true that, as a matter of fact, the Minister of Labour is to some extent taking this problem under his care and that the establishment of training centres for unemployed men and boys is to some extent making it into a national charge, but I do not know whether there is any idea on the part of the right hon. Gentleman that in that direction could be found a solution of the problem, because if there were, I should want to ask him this question: Suppose you are going to put unemployed able-bodied people into training centres what are you going to do with them when you have trained them? You could go on extending it and undoubtedly you could up to a certain point find employment for them when they had been trained. Everybody agrees—


I am afraid this goes beyond the terms of the Financial Resolution.


I do not want in any way to trespass on the ruling of the Chair and I will not proceed further into that point, but it may be that in the course of our discussions in the Committee stage we may have more opportunities to hear at a little greater length what exactly is the proposal of hon. Mem- bers of the party opposite for making unemployment a national charge.

I said a little while ago that there had been some misunderstandings of the scheme on the part of the right hon. Gentleman and if he has not altogether understood it, I certainly am not surprised that others have also failed to grasp the full significance of many of the proposals that we are making. I would like this evening to devote myself to trying, if possible, to make clear to the Committee what are some of the fallacies into which hon. Members opposite have fallen in their criticisms of the Bill. I will begin with the right hon. Gentleman the Member for Colne Valley—the most formidable critic we have. He stated this afternoon that the Exchequer was going to gain under this scheme. He said there were a number of services to which the Exchequer already contributes upon a percentage basis. Roughly speaking, he said quite rightly, that percentage was a percentage of 50, but he said that under the new scheme the Exchequer was only going to contribute 25 per cent., with additions later on. He said that therefore, under the new scheme, the proportion which the Exchequer would contribute would be much less than it is at present.

Surely that involves an extraordinary misapprehension of the figures. I do not think the right hon. Gentleman could have apprehended the purpose of the illustration which is given in the Memorandum. The 25 per cent. of which he spoke is not the proportion of the Exchequer grant to the total rate-borne expenditure at all. I am sure he will confirm this. If he looks at the illustration he will see that the 25 per cent. is the proportion between the £45,000,000 which is estimated to form the first general Exchequer contribution, and the rate-borne expenditure plus the sum of £45,000,000. That is not at all the same thing as the proportion of total Exchequer grant, to total rate-borne expenditure. To get that, you must look at paragraph 4 of the memorandum which was issued last June—Command Paper 3134. There it will be seen that the present figures of total Exchequer grants and total rate-borne expenditure are respectively £87,000,000 and £159,500,000. That means that the proportion is 35 per cent. Exchequer grant to 65 per cent. local rate expenditure. It is pointed out in that paragraph that if under the present scheme had the de-rating proposals come into operation the grant would then become £111,000,000 and the rates would become £135,500,000. In other words, instead of their proportion being 35 per cent, to 65 per cent., the proportion would be 45 per cent. to 55 per cent. Therefore, the right hon. Gentleman will see that in that particular matter he is under a misapprehension, and that in fact the proportion of Exchequer contributions to rate-borne expenditure is increased under the scheme and not diminished, and that the Exchequer cannot in any way be said to gain there.

I come to the next criticism which the right hon. Gentleman made. He spoke of the increased local expenditure which, he said, was shown in the illustration to be found in paragraph 50 of the financial memorandum. We have to preserve a certain ratio, and in preserving that ratio what we do, in fact, is to provide that in each quinquennium we increase, not only the block grant in proportion to the total of rate and grant borne expenditure, but, as I explained in my Second Reading speech, the fact is that if the expenditure for education and police services—which are still going to attract their 50 per cent. grants—if that expenditure increases, it also increases the Exchequer block grant. I do not think that point was present to the mind of the right hon. Gentleman.

Before I take him on to the next error, I want for a moment to turn to another and lighter piece of artillery. The hon. Member for East Ham North (Miss Lawrence) made a speech on the finance of the Bill during the Second Reading Debate. As a House of Commons man of some standing now, I always heartily welcome a good speech from any quarter of the House, and I quit appreciate a clever and effective piece of mockery such as that which the hon. Lady gave us, even though it be at my own expense. But I thought I observed that some hon. Members on the other side went further, and not only admired the brilliancy of the presentation of the case but also accepted the hon. Member as a serious financial critic. I could not go quite so far as that. As I listened to the hon. Member I was able to note, what, no doubt, was not present to the minds of some hon. Members opposite—that there was hardly any statement which she made, from which she drew conclusions, which was not, in fact, erroneous. She dealt with the question of the ratio and gave a picture of the extraordinary confusion and complication of the calculations on the ratio which very much amused us all; but in looking at the report of her speech I see she described the working of the ratio in three sentences, and in those three sentences I find no fewer than nine mistakes.


She gave you something on which to make your speech to-night.


Precisely, and I am going to make some of my speech upon it. She said, to begin with: In 1935 the amount of the general Exchequer contribution will depend upon the total rate-borne expenditure of 1933–4. The hon. Member, I know, is not stupid. She said she was not idle; and I fail altogether to understand how she could make such a mistake as that, because it is so very clearly pointed out in the Bill that the item to which the Exchequer contribution is related, is not rate-borne expenditure but rate and grant-borne expenditure. That is the first mistake, and it was repeated several times in the course of the speech.


The General Exchequer grant for the first quinquennium being known the only factor necessary to determine the Exchequer grant in the second quinquennium is the rate-borne expenditure in the fourth year of the first quinquennium.


We may pass on from that point. I will not press it. But it is inaccurate to say that it depends on the rate-borne expenditure because, actually, it depends upon what is stated in paragraph (c) Clause 69, namely rate and grant-borne expenditure. Then she went on to say: In 1940 the total Exchequer contribution will depend upon the rate-borne expenditure of 1938 which we do hot know and on the first quinquennium which is difficult to foresee. The Exchequer contribution in 1940 will depend upon the rate-borne expenditure of 1938 and 1933, and that for 1945 will similarly depend upon the rate-borne ex- penditure of 1944, 1939 and 1934, and the final general Exchequer contribution will depend upon the total rate-borne expenditure of 1948, 1944, 1938 and 1933. That, no doubt, sounded very ridiculous, but it was not true. I shall endeavour once more to try to explain how this ratio works. The ratio on which we have to calculate the Exchequer contribution in a succeeding quinquennium is the proportion which the general Exchequer contribution for the first quinquennium bore to the total amount of rate and grant-borne expenditure in the first year of that quinquennium. Let us suppose that the proportions are one to four. All you have to bear in mind in seeking what is the general Exchequer contribution for succeeding quinquennia is that the general Exchequer contribution bore to the total rate and grant-borne expenditure in the first year of the first quinquennium the proportion of one to four. If you find, therefore, what is the rate of grantborne expenditure in the fourth year of any quinquennium and take a quarter of that, that will give you the general Exchequer contribution.


In order to determine the general Exchequer grant for any number of succeeding years, the only material you need is to know the rate-borne expenditure in the selected year. When you say that an equation depends on a factor, you mean that you know that factor when you are solving the equation. That is all you need, and to get the general Exchequer contribution you need to know the rate-borne expenditure of the selected year, and when you know that you know everything.


I am sure the hon. Member believed that she knew everything, but she related the contributions wrongly. Once you have settled the ratio for the first quinquennium, that really gives you all you want, and you can find from that ratio exactly what the general Exchequer contribution is for the succeeding quinquennia. I still have one or two other points to mention in the speech of the hon. Lady. She goes on to say: The long table of figures on page XIX proceeds on the assumption that the total rate-borne expenditure will increase by £2,000,000 every quinquennium."—[OFFICIAL REPORT, 27th November, 1928; col. 289, Vol. 223.] But surely the hon. Lady did not mean that, because it says clearly in the beginning of the paragraph that it is the general Exchequer contribution which is assumed to increase by £2,000,000 every quinquennium, and, of course, that means, assuming that the ratio is one to four, that the rate and grant-borne expenditure increases by four times that amount. It is, therefore, £8,000,000 and not £2,000,000 for the quinquennium which she ought to have put in there. I am very desirous of making this thing clear to all hon. Members, because I fully accept that the misstatements which the hon. Lady made were made in absolute good faith, but I think she had not clearly understood the Bill. Again she and, I believe, the right hon. Gentleman opposite, made the mistake of thinking that in preserving this ratio we are actually fixing the amount of the general Exchequer contribution.




I beg the right hon. Gentleman's pardon then, but it is clear that that is not so, that this is a minimum. It is not a fixed amount, and what we are guaranteeing is that the general Exchequer contribution shall never be less than is produced by maintaining its ratio: and, of course, it will be quite possible for any succeeding Parliament to increase the general Exchequer contribution by anything they like, therefore increasing still further the proportion between the national contribution and the local contribution for local services. All that we are claiming here is that we are giving a, one-sided guarantee to local authorities. It is a case of "Heads you gain, and tails you do not lose." When it is suggested that the amount which is assumed as the increase in local expenditure in this illustration is not enough, that it is not as great as the amount by which local expenditure has increased in past years, that really is not relevant to the point, because any increase in local expenditure will carry with it necessarily an increase in the Exchequer contribution; and further than that, if Parliament thinks there is sufficient revenue at its disposal, it can increase still further, up to any amount it likes, the Exchequer contribution.

I will not go into all the points on which I think the hon. Lady's speech shows some misunderstanding, but I should like to mention one other point, which was certainly perfectly clear to the right hon. Gentleman opposite. There is no final general Exchequer contribution. The hon. Lady spoke twice of letting things down with a bump in the year 1950, and that appeared to be on the assumption that the additional grant would stop in that year. If that was her impression, that is not, of course, correct. The illustration on page xix of the Financial Memorandum only takes us down to the year 1950, but that does not mean that the additional grant from the Exchequer stops then. It goes on, and it will be operative for an unlimited' period of time, provided that there are still losses to be made up by that additional grant. Therefore, any idea that there is going to be a bump at the end of the year 1950 is erroneous, and there will be no bump whatsoever. What we have in fact done is, by means of supplementary grants, to modify the effect, not of the formula—that is another misunderstanding; the supplementary grants have nothing to do with the formula—but to correct the immediate effects of the equalisation of the charges for Poor Law and highways. There is no derogation from the principle in saying that the changes which the equalisation will bring about, within a particular area shall be spread over a period of 15 years instead of taking place all at once.

Now let me come to the next point. The right hon. Gentleman foresaw that in the course of a quinquennium you might have new factories springing up in an area, and he said that the result of those new factories would probably be to bring new duties and new liabilities on the local authority. Granted; but not immediately. You do not, as soon as you have got a new factory, immediately open a new school or a new park or enter into all the expenses which may ultimately be entailed by the addition of the factory; and, of course, the first addition which we expect to come from the establishment of these factories is new population, which is going to be taken account of in the calculation of the general Exchequer contribution in the next quinquennium. If an area such as we are speaking of has increased its population and, therefore, its need, that will be taken care of by the formula, which will consequently direct a larger grant to that particular area. [Interruption.] The right hon. Gentleman opposite says: "Ah! but the charges come first, and the increased contribution comes afterwards"; but has he taken account of the fact that the new money comes also? We are beginning the first quinquennium with new money, which is intended to provide for some expansion of the services of the particular locality. If, in the course of that quinquennium, still further new liabilities arise, that again will be adjusted in the next quinquennium.

I would ask him to bear this in mind too, that it does not always happen that a new population comes into the same area as the new factories. You may very easily have a case, as you do have now, where the factories are in one area and the population is in another area; and in that case, of course, the area, under the present circumstances, that has the factory has the rateable value, and the area that has the new population has all the charges, whereas under the new system, the reformed system, it will be just the reverse. It is true there will be some advantage to the area that has the new factories, because they will still pay a quarter of the local rates, but the area that has the new population and has not got the rateable value will have all the advantages which the formula will give it in directing a larger grant to the larger population. Therefore, in that respect the proposal of the Government for distributing Exchequer grants, not in proportion to expenditure, but in proportion to need, is a real improvement and advance on the situation as we have it to-day.

Let me come to the right hon. Gentleman's analysis of the formula. I do not think that he has fully apprehended all the reasons which led to the adoption of the formula in its present shape. He said, for instance, that he could not understand what the number of children under five had to do with the needs of the population, beyond, I suppose, the comparatively small needs that might be expected from the extra education, and so forth. Do not let us underrate that, because, as I have no doubt many hon. Members have perceived, if you de-rate a considerable amount of property in a particular rating area, the charge for education which would formerly have necessitated a given rate, must now necessitate a larger rate upon the smaller part of the rateable value which is left. That alone means that the needs of that area will be increased, and they will have to increase the rates for the same service. Therefore, the number of children is one of the factors that must be taken into account, but that is not really the principal purpose of putting in the factor of children under five. I thought I had explained it, but I will explain it again. We are taking this factor largely as a factor of the relative wealth or poverty in a district. The right hon. Gentleman must take the two factors together—rateable value per head and the number of children—and, put together, these are really the combined factors which give us the extra weighting in the poor districts as compared with the more wealthy. I do not think that the right hon. Gentleman will question that, broadly speaking, the larger the number of children, the less wealthy the area is bound to be. I think that he will find that that will meet the difficulty which he saw in our attaching so much importance to this factor.

10.0 p.m.

Then he took the figure of unemployment, and he had some figures, which had been prepared by some actuary, showing how a sum of £100 would be distributed over the country in accordance with the formula. He found that it gave only £2.8 for the figure of unemployment, but he has not appreciated the way in which the unemployment factor works. The £2.8 represents the total proportion of the money which is given for the unemployment factor over the whole country, but, of course, the way the formula works is to direct that money for unemployment to certain particular districts. So that that bright young man's brain wave, which somewhat amused the hon. Member for East Ham North, was really a very good idea, because what it did was to take the population as weighted already by the children and the rateable value, and multiplied that by the figure found for unemployment, so that where you have a comparatively poor district, there the unemployment factor works with a multiplying effect. If the right hon. Gentleman will take for instance the county of Glamorgan, to which he drew attention, and examine the figures in the White Paper which refer to it, he will find that the unemployment factor there is not 2.8 but 112 per cent. He will find that the multiplication factor has in that county brought up the weighting for unemployment to a very much higher £gure. Comparatively few areas will benefit by the unemployment factor, but where it does apply, it applies with great force, and it will be found that the actual weighting of the population due to the unemployment factor varies from quite small figures up to as much as 200 per cent. The question was raised by another hon. Member whether women ought to have been brought into the unemployment factor. I should be glad if that could be debated in Committee. We do not put into our formula for the sake of one particular area something which is going to be unfair to a great many other areas, and where women go to work and their husbands are also at work you must not double the figure of unemployment if they are both out of work, because, after all, it is only one household. If, however, hon. Members say that there are cases where the woman is in fact head of the household, and is in a district where women are ordinarily employed, and that there is great un-employment, and if hon. Members say that that is a matter which ought to be taken into consideration, my reply is that it is a very fair subject for discussion. The right hon. Gentleman made another point in connection with the last factor, that of the sparsity of the population. He could not understand why the number of miles of road should be taken into account in the distribution of this money Surely it must be the case that where you have, a population thinly distributed over a large area, you must have a much greater length of roads to serve that population in proportion to the population, than where the population is crowded together. Apart from that, where the population is thinly distributed over a large area, the same service must necessarily cost more than if it is in a compact area, where a given mile of road or a given service will serve a larger number of people. We might have taken the numbers of population per acre, but there are different kinds of agricultural or county districts. There are the moor-lands, for instance, where the services must be light as compared with agricul- tural districts, with a far greater length of roads. It is for that reason that we have taken, not the number of miles of roads, but the number of people per mile of road as one of the factors.

It is, of course, quite true that in many respects this formula is an empirical one. It is considered a fault that it should have been tried in various forms, and that it should have been applied to various districts to see how it would work out. I should have thought that that was the only common-sense way, for you must begin to see whether y our formula will do what you want it to do before you decide whether it is the correct formula or not.

And that, certainly, is the way in which the formula has been constructed; it has taken a number of different shapes before it arrived at the one before the Committee. But I think the point to which the Committee will have to direct their attention is not so much whether the formula can be justified on theoretical grounds as whether, on examination of its results, it is going to put money in the right places. In many cases hon. Members have found fault with it in that respect. We will argue those cases out in Committee and see whether their criticisms are justified; but I do think that we get matters in a wrong perspective if we always examine what the results of the formula are going to be as compared with what is the present situation. Our view is that we shall arrive ultimately at a situation where the Exchequer contributions are going to be distributed according to needs, and therefore it is the needs, and not what is happening now, to which we must address ourselves if we are to see whether the formula is successful or not. If the result of the formula were to leave everything as it is, then it would be a failure, because what the formula has to do is to correct inequalities and injustices as they are existing to-day. Looked at from that point of view, many cases which to-day may seem paradoxical or unsatisfactory may take on a different aspect.

I notice that my right hon. Friend the Member for Wells (Sir R. Sanders) compared the counties of Somerset and Hampshire. He said that they were two counties which in many, if not in all, respects were very similar to one another, but that under the scheme one would gain a very much larger sum per head than the other. That may be so, but what we have to consider, I suggest, is not whether one would gain more than the other, because that would be merely to take the new system and compare it with the old, but to consider whether if they are alike in their needs they will ultimately share, alike in the grants which they will get. When I compare the counties of Hampshire and Somerset in that respect I find that the total grant to Somerset will be 330 pence per head and the grant to the County of Hampshire 314 pence per head, so that out of this scheme they are, in fact, going to get very much the same amount of money, and, if anything, there is a slight advantage on the side of Somerset. I hope hon. Members will look from that point of view at other cases where they find what they think is a discrepancy in the results of the formula. If the needs are alike, then the formula should give similar amounts of money to the two places; but that should be entirely independent of anything which is happening now. I apply the same test to some of the places which were mentioned by the hon. Member for Caerphilly (Mr. Morgan Jones). He spoke about Bournemouth, Eastbourne, Gateshead, Sunderland and Merthyr, and seemed to think that the rich and prosperous places were going to get much more than their share as compared with those which are needy and poor. As a matter of fact, I find that whereas Eastbourne will have 97 pence and Bournemouth 112 pence per head of the population, Sunderland will get 319 pence, Gateshead 354, and Merthyr 355.


Is it not a fact, also, that Sunderland and Gateshead will lose heavily by de-rating, whereas Bournemouth and these others will not? Whatever factor you apply to a town like Bournemouth, which will suffer no de-rating, because it is non-industrial, it is bound to gain.


I think the hon. Member is right in that assumption up to a point, and it is quite true that, as between two different places, one may lose much more by de-rating than another, but, of course, the fact that it loses by de-rating means that the rateable value per head goes down, and one of the factors in the formula is that that must attract more money to that particular town.


Can the right hon. Gentleman tell us what the figures are in the ease of the West Riding?


I do not think I can lay my hand upon it at this moment, but I will be very pleased to supply the hon. Member with the figures when I can collect them, if he wishes for them. I do not think there is very much more I want to say, but I wish to address myself to one other point which the right hon. Gentleman made. He spoke of the Chancellor of the Exchequer as getting a very good bargain out of this scheme. He said that for the moment the Chancellor was going to spend £5,000,000 of new money and was going to get back a considerable amount of it under Schedule D.


And Schedule A.


And Schedule A. I think the Chancellor himself in his Budget speech pointed out that that would be one result, that since the charge for rates is a deductable item under Schedule D if there were less paid there would be less deducted, and that where a business was making a profit it would have to pay larger income tax upon its profits in the future than in the past. I think, if I remember aright, the right hon. Gentleman said the Chancellor would gain about £1,500,000 in 1931, and some £2,500,000 in 1932, under that scheme. I wish I could think that this beneficent scheme, which is going to benefit so many people, were going to benefit the Exchequer also, but I am rather afraid that when the right hon. Gentleman spoke of the £5,000,000 of new money he had forgotten the Financial Memorandum preceding the Bill where, on page xviii, we have a summary of Exchequer grants and a summary of the final result. The net additional cost to the Exchequer of the whole scheme is not £5,000,000 but £31,330,000. If you deduct your £1,500,000 or your £2,500,000 from that, I am afraid it will still leave the Exchequer very much to the bad.

The right hon. Gentleman said the loss of rates is estimated in a standard year at £24,000,000. I think he found some inconsistency between that figure and the figure quoted by the Chancellor of the Exchequer in his Budget speech, but the Budget speech figure included, of course, Scotland, and that accounts for the difference. He asked me "Supposing this Estimate turns out to be incorrect, supposing the loss of rates should be more than £24,000,000, seeing that the total Exchequer grant is fixed, how is the difference to be made up?" I do not know where he found his statement that the total Exchequer grant is to be fixed. There is no limiting factor in the Financial Resolution. Of course, the real fact is that this figure of £24,000,000 is only an estimate, the best estimate we can make at the present time, but whatever the loss of rates proves to be in the standard year that must be taken into account in fixing the general Exchequer contribution.

I hope that as a result of these discussions we are gradually beginning to clarify our minds to some extent with regard to these proposals. I fully recognise that there are many complications and many intricacies, and I think it is not surprising and certainly not discreditable that everybody is unable to follow all these difficult points and get them clearly settled in their minds. That is the advantage of discussions of this sort, where questions are put and statements made on certain assumptions and where those assumptions may be shown to be founded on misunderstanding. By degrees we shall arrive at a full appreciation of the scheme. For my part, I am convinced that when we get to that happy situation and when everybody in this House fully understands the scheme, even those who criticised it so hotly at the beginning will find that their criticisms are without much foundation.


I beg to move, to leave out lines 17 to 19, inclusive.

During these Debates we have listened with a considerable amount of admiration to the speeches made by the Minister of Health. Those speeches remind me of the time when I first became acquainted with the "Arabian Nights" and the story of the merchant who thought he had gold in his drawer but it turned out to be withered leaves. The reason I am moving this Amendment is for the purpose of raising a direct issue in regard to those particular health services as to whether the Exchequer contribution to them should be by way of percentages or by way of block grants. We feel very suspicious about the whole of the proposals of the Government, and when this question comes forward we are told that really and truly the basis of the whole thing is the Government's desire to help productive industry, to relieve unemployment; and yet when we find a system of block grants coming into this Bill our minds go back to the declaration of the Chancellor of the Exchequer on the 16th March, 1926, when the Economy (Miscellaneous Provisions) Bill was before the House. Upon that occasion, the Chancellor of the Exchequer said: It is the considered policy of His Majesty's Government to convert the system of percentage grants into a system of block grants, that is to say, pay definite sums instead of percentages to the local authorities; to give those authorities increased discretionary powers, to make them responsible for any extravagance or any unduly bold enterprise to which they may commit themselves, and to give them 100 per cent. of any economies which they may be able to eiTect."—[OFFICIAL REPORT, 16th March, 1926; cols. 286–7, Vol. 193.] The Minister of Health has told us that this system is going to give a great deal more money to those authorities, and that they will be able to spend a great deal more. He also says that they are not going to be interfered with by the central Government. We are also told that the local authorities will be made responsible for their expenditure, and that the Government will give them 100 per cent. in regard to any economies which they may be able to effect. I venture to suggest that the whole of that phrase means that there is a desire on the part of His Majesty's Government as far as possible to stop the progress which has been made in the country in regard to many of these health services.

During the course of this Debate and of the Debate which took place on the Bill, not a single suggestion has been put forward by the Minister or the Parliamentary Secretary as to why the present system of percentage grants should be superseded by a system of block grants. The fact remains that the first proposal to interfere with this system of grants to our local authorities who are administering these health services was made by the Geddes Committee when it reported in 1922—a Committee composed of three gentlemen who knew nothing at all about local government or about these services, but who were only concerned with seeing how to cut expenditure down without any relation to what the expenditure was for; and it has been the policy of the Government to try to implement that ever since.

It has been said before, but it ought to be said again, that the Government sought, through the appointment of the Meston Committee, to be able to get a Report in favour of this block grant system, but they were faced with the fact that every local authority that gave evidence before that Committee, and every Government Department that gave evidence before that Committee, stood by the percentage system as against the block grant system; and the consequence has been that, despite every pressure from Members of this House, Lord Meston's Committee has, very conveniently, never been called together, and no Report has ever been presented by it at all. A further point in regard to the proposals which are at present before us is that they even go further than the system which was proposed before.

The system previously proposed was a block grant for each service, instead of a percentage grant, but to-day this block grant mixes everything up. It mixes public health services, roads, and all the other services together. What is that going to mean with regard to many of our large counties, and particularly what we may term rural counties? I venture to suggest that., when those counties get what belongs to them out of this block grant, after certain distributions have been made as between the other districts in the county, what will happen, as most of those councils are manned, will be that they will use the largest part of this Government grant in looking after the roads rather than looking after maternity, child welfare, and other services of that kind. The whole system is an encouragement to every local authority to withhold expenditure on these services.

I am not merely giving a view of my own; I am not merely giving a view of hon. Members on this side of the Committee. I have here a letter from what is, after all, a body that ought to have some consideration in a question of this kind, the Association of Infant Welfare and Maternity Centres. They have passed a resolution which I think this Committee ought to have. This body is a federation of over 1,200 local infant welfare centres, and their resolution was that: This Association views with grave apprehension the proposals for reform in local government with respect to the substitution of block grants to local authorities for percentage grants in respect of the Maternity and Child Welfare service. This service is a young and growing service that has not yet developed so as to secure to the children of the country as a whole the benefits made possible by the Maternity and Child Welfare Act. This Association believes that in their present form the provisions would not make adequate allowance for much-needed extension within the next five years, and that they would be ineffective in promoting increased action on the part of unprogressive local authorities, besides seriously prejudicing the position of the voluntary organisations which have been built up with Government approval and support, and eliminating the stable element of central control ensured by the present percentage grants from the Exchequer. I think that that resolution, from a body of people experienced in this work, is one which demands serious consideration from every Member of the House of Commons. In regard to the grants for maternity and child welfare particularly, no case has been made out either by the Minister or by his assistant. We have had a certain number of figures thrown at us, but none of them are figures on which we can rely. The Minister's own figures are as hypothetical as any others that can be produced. We have had comparisons made as between the amounts that will be given to Bournemouth and Gateshead and places like that, but if that is any reflection at all, it is not a reflection on the percentage system, but rather on the policy that has been pursued by the Ministry of Health. They have been cutting down expenditure where it was needed and they have had a very blind eye on those districts which seemed to be more favourable to the political policy of the present Government. I agree with the point of view put forward by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) when he introduced the Finance Bill in 1914. He said: We propose to use this contribution as a means of pressing local authorities to deal with more spirit and boldness, with all these problems which I have enumerated and which affect the well-being of the community under their care—housing, including the clearing of slums and the provision of better accommodation; the provision of a sufficient number of hospitals and the grappling with greater energy with tuberculosis. We could not do so unless the grants-in-aid were real and substantial. We contend that those grants-in-aid can only be made real and substantial when they are based on a percentage grant. If any alteration ought to be made—and there are some authorities which ought to have more than others—it ought not to be by abolishing the percentage but by changing the rate of percentage between various authorities, giving a larger percentage to the poorer authorities and a smaller to the more wealthy. Because we believe this system of block grants, and particularly the mixing up of all services, is going to have a deleterious effect upon our health services we stand by the grant system.


I beg to second the Amendment.


We shall, no doubt, have several opportunities of discussing this issue of the percentage system versus the block grant system, and a very important issue it is, but this is not a very convenient hour to debate the matter. Several speeches have been made in the last three days dealing with it. On page 3 of the White Paper there is a list of the grants. I do not think anyone, certainly the right hon. Gentleman the Member for Seaham (Mr. Webb) and many Members of the Liberal party would not desire to see the assigned revenues continued. This Amendment would mean that nothing could he done in that connection. When we come to the proposals in the Bill a better opportunity will be provided to raise the question. Further, anyone who desires anything to be done from the point of view of the necessitous areas must recognise that this would mean the withdrawal from what we might call the pool of a large sum of money, some £16,000,000, which is carried under our formula to benefit, amongst other things, the necessitous areas of the country.

There are very considerable and grave questions raised in that connection tonight. I only wanted to indicate them briefly out of respect for the arguments which the hon. Gentleman has put forward, so that he shall not think that we are not concerned about the statement which he has made. I want briefly to say in reply to him that, at any rate, this is not a very convenient way to raise this question. I think that it is likely to carry implications which he himself will not desire. Therefore, I advise him and all hon. Members in this Committee who are concerned with regard to this matter, that it would be better to take the discussion on another occasion. The point of view of the Government is that we must ask the Committee to reject this Amendment, and it is for these various reasons that I have intervened at this point.


If this Amendment were carried, it would have the effect of preventing us from paying back the local authorities at all, would it not?

Sir. K. WOOD

That might be one of the results, but I have not considered that point of view. It is obvious that something would have to take its place.


I do not want to go over the ground which my hon. Friend the Member for Mile End (Mr. Scurr) covered in arguing the merits of the present system of grants-in-aid as compared with block grants. I would like to give an example of how the proposed change would work in a particular instance. The Minister of Health has been good enough to get out the effect of the proposed scheme in the West Riding. My constituency is part of the West Riding of Yorkshire, and I find in the list of West Riding authorities which he names that there are some 13 which are more or less within my own constituency of Penistone. I would like to submit to him the effect of the working of this scheme in my own constituency. I want to ask for a better system for local government, and I would like the right hon. Gentleman to help me so that I may refer to the question when I go to my constituency. I find in regard to these 13 authorities that under the proposed system of block grants eight of them will be in a definitely inferior position when the formula is applied, and five of them will gain.

Take, for instance, the urban district of Cumberworth. Under the scheme after the formula has been applied, the rate will be 12s. as against 11s. at the present time, whereas the neighbouring town of Denby will have a rate of 14s. as against 14s. 4d. at the present time. What is to be said for the inhabitants of those two places living side by side when one is to make a loss of 1s. and the other a gain of 4d. The town of Penistone was rated in 1926–27 at 10s. 3d. in the £. When the Minister applies the formula the rate for the town will be 12s. 10d., an addition of 2s. 7d. Or take the town of Shepley, which at present is rated at 10s. in the £. Under the proposed scheme, and under the application of the formula, the rate will be 12s. 4d. in the £. Looking over the whole of these urban and rural districts in my constituency, I find that while five authorities will gain 2s. 7d. in the £under the proposed scheme of the Minister on the application of the formula, eight other authorities will lose no less than 9s.11d in the £.

After 15 years, when the whole of the supplementary grant has been worked out, the right hon. Gentleman is going to leave a legacy for my constituency amounting to an increase of 7s. 4d in the pound on the rates to be met by the local authorities. A statement of this kind is much more worth while than a good deal of abstract argument as to the merits of the scheme. How does the right hon. Gentleman imagine that anyone can go into a constituency like Penistone and argue the case that the present Bill will lead to a better system of local government?

I have submitted a case which shows that this Bill will mean a very heavy increase in the rates throughout the whole of my constituency. I do not know how he works out the figures in relation to particular urban authorities in my constituency or in relation to the constituency as a whole. How can he justify adding 2s. in the pound to the rates of the urban district council of Penistone under any reasonable plan? The only thing that I can think of is that he must know from personal experience that we have a bitterly cold station in Penistone and in appreciation of that fact he is saddling the district with a burden of increased rates to the extent of 2s. in the pound. In regard to a place like Shelley, where there will be a reduction of 7d. in the rates, the only explanation I can think of is that perhaps there is some poetic licence involved and that because he thinks Shelley or his descendants may have been buried there, he will show his appreciation. I submit that my constituency in the West Riding is a pointed example of the vicious calculations involved in the new system proposed, and a striking evidence of the need for the Amendment.


The Minister did not give us any indication whether he would view sympathetically the pleas that were put forward by the hon. Member for the Sutton Division of Plymouth (Viscountess Astor) or by the hon. Member for Wallsend (Miss Bondfield) with regard to the maternity and child welfare services. The maternity and child welfare grant only amounts to £1,053,000 out of the grand total, so that the financial reason why he should not consider the concession, does not apply. If he could give us some indication what his attitude would be on the more convenient occasion which he mentioned, we might feel inclined to await his convenience, but he gave us no undertaking. I do not know whether the hon. Member for the Sutton Division has received any promise; at any rate she is not in her place. The fostering of this particular service is far more important than the money involved. I do ask the Minister that he should take into consideration the point of view put forward by the hon. Member for Walls-end. From my experience I know that a great many voluntary institutions will be very severely handicapped if the grant takes the block form, as is proposed in the Bill.

These institutions are mostly of a religious and charitable character. They cover a wide area and I cannot see how the grant is going to be apportioned to enable them to carry on. As far as I can see many of them will have to put an end to their benficient work. Before we acquiesce in the right hon. Gentleman's request I think we should have something more definite.

Question put: "That the words proposed to be left out stand part of the Question."

The Committee divided: Ayes, 285; Noes, 122.

Division No. 17.] AYES. [3.47 p.m.
Acland-Troyte, Lieut.-Colonel Ellis, R. G. Macnaghten, Hon. Sir Malcolm
Albery, Irving James Erskine, Lord (Somerset, Wiston-s-M.) Makins, Brigadier-General E.
Allen, Sir J. Sandeman Erskine, James Malcolm Monteith Manningham-Buller, Sir Mervyn
Amery, Rt. Hun. Leopold C. M S. Evans, Captain A. (Cardiff, South) Margesson, Captain D.
Apsley, Lord Everard, W. Lindsay Marriott, Sir J. A. R.
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Fairfax, Captain J. G. Mason, Colonel Glyn K.
Astbury, Lieut.-Commander F. W. Fade, Sir Bertram G. Merriman, Sir F. Boyd
Atholl, Duchess of Fielden, E. B. Meyer, Sir Frank
Baldwin, Rt. Hon. Stanley Foster, Sir Harry S. Mitchell, W. Foot (Saffron Walden)
Barclay-Harvey, C. M. Gadle, Lieut.-Col. Anthony Mitchell, Sir W. Lane (Streatham)
Beamish, Rear-Admiral T. P. H. Ganzonl, Sir John Monsell, Eyres, Com. Rt. Hon. B. M.
Benn, Sir A. S. (Plymouth, Drake) Gault Lieut-Col Andrew Hamilton Morrison, H. (Wilts, Salisbury)
Bennett, A. J. Gilmour, Lt.-Col. Rt. Hon, Sir John Nelson, Sir Frank
Bentinck, Lord Henry Cavendish Glyn, Major R. G. C. Newton, Sir D. G. C. (Cambridge)
Berry, Sir George Guff, Sir Park Nicholson, Col. Rt. Hn. W. G.(Ptrsf'ld.)
Bethel, A. Gower, Sir Robert Nield, Rt. Hon. Sir Herbert
Betterton, Henry B. Grace, John Oman, Sir Charles William C.
Birchall, Major J. Dearman Grattan-Doyle, Sir N. Ormsby-Gore, Rt. Hon. William.
Boothby, R. J. G. Gretton, Colonel Rt. Hon. John Pennefather, Sir John
Bourne. Captain Robert Croft Gunston, Captain D. W. Perkins, Colonel E. K.
Bowater, Col. Sir T. Vansittart Hacking, Douglas H. Perring, Sir William George
Bowyer, Capt. G. E. W. Hall. Lieut-Col. Sir F. (Dulwlch) Peto, G. (Somerset, Frome)
Braithwaite Major A. N. Hall, Admiral Sir R. (Eastbourne) Power, Sir John Cecil
Brass, Captain W. Hammersley, S. S. Radford, E. A.
Briscoe, Richard George Hannon, Patrick Joseph Henry Ramsden, E.
Brittain, Sir Harry Harland, A. Rawson, Sir Cooper
Brocklebank, C. E. R. Harvey, G. (Lambeth, Kennington) Rentoul, G. S.
Brooke, Brigadier-General C. R. I. Headlam, Lieut.-Colonel C. M. Rhys, Hon. C. A. U.
Brown, Brig.-Gen. H.C.(Berks, Newb'y) Henderson, Capt. R.R. (Oxf'd, Henley) Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Bullock, Captain M. Heneage, Lieut.-Colonel Arthur P. Robinson, Sir T. (Lane, Stretford)
Burgoyne, Lieut.-Colonel Sir Alan Herbert, S. (York, N.R., Scar. & Wh'by) Rodd, Rt. Hon. Sir James Rennell
Burman, J. B. Hilton, Cecil Ropner, Major L.
Butler, Sir Geoffrey Hoare, Lt.-Col. Rt. Hon. Sir S. J. G. Ruggles-Brise, Lieut.-Colonel E. A.
Carver, Major w. H. Holbrook, Sir Arthur Richard Salmon, Major I.
Cautley, Sir Henry S. Hope, Capt. A. O. J. (Warw'k, Nun.) Samuel, A. M. (Surrey, Farnham)
Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.) Hopkins, J. W. W. Sandeman, N. Stewart
Cazalet, Captain Victor A. Howard-Bury, Colonel C. K. Sanders, Sir Robert A.
Chadwick, Sir Robert Burton Hudson, R. S. (Cumberland, Whiteh'n) Sanderson, Sir Frank
Chamberlain, Rt. Hon. N. (Ladywood) Hunter-Weston, Lt Gen. Sir Aylmer Sandon, Lord
Charteris, Brigadier-General J. Hurd, Percy A. Sassoon, Sir Philip Albert Gustavo D.
Christie, J. A. Hiffe, Sir Edward M. Savery, S. S.
Churchill. Rt. Hon. Winston Spencer James, Lieut.-Colonel Hon. Cuthbert Sheffield, Sir Berkeley
Churchman, Sir Arthur C. Jones, Sir G. W.H. (Stoke New'gton) Smith, Louis W. (Sheffield, Hallam)
Clayton, G. C. Joynson-Hicks, Rt. Hon. Sir William Southby, Commander A. R. J.
Cobb, Sir Cyril Kennedy. A. R. (Preston) Spender-Clay, Colonel H.
Cohen, Major J. Brunei King, Commodore Henry Douglas Stanley, Lord (Fylde)
Couper, J. B. Kinloch-Cooke. Sir Clement Storry-Deans, R.
Craig, Sir Ernest (Chester, Crewe) Knox, Sir Alfred Stott, Lieut.-Colonel W. H.
Croft, Brigadier-General Sir H. Lamb, J. Q. Streatfeild, Captain S. R.
Crookshank, Col. C. de W. (Berwick) Lister, Cunliffe, Rt. Hon. Sir Philip Stuart, Crichton-, Lord C.
Crookshank, Cpt. H.(Lindsey, Gainsbro) Lloyd, Cyril E. (Dudley) Stuart, Hon. J. (Moray and Nairn)
Culverwell, C. T. (Bristol, West) Locker-Lampson, Rt. Hon. Godfrey Styles, Captain H. Walter
Cunliffe, Sir Herbert Locker-Lampson, Com. O. (Handsw'th) Sueter, Rear-Admiral Murray Fraser
Curzon, Captain Viscount Loder, J. de V. sugden, Sir Wilfrid
Dalkeith, Earl of Long, Major Eric Thompson, Luke (Sunderland)
Davies, Maj. Geo. F. (Somerset, Yeovil) Lougher, Lewis Thomson, F. C. (Aberdeen, South)
Davies, Sir Thomas (Cirencester) Lowe, Sir Francis William Thomson, Rt. Hon. Sir W. Mitchell-
Davies, Dr. Vernon Luce, Major-Gen. Sir Richard Harman Titchfield, Major the Marquess of
Davison, Sir W. H. (Kensington, S.) Lumley, L. R. Tryon, Rt. Hon. George Clement
Dean, Arthur Wellesley Mac Andrew, Major Charles Glen Vaughan-Morgan, Col. K. P.
Drewe, C. Macdonald, Capt. P. D. (I. of W.) Waddington, R.
Edmondson, Major A. J. MacIntyre, Ian Wallace, Captain D. E.
Edwards, J. Hugh (Accrington) Macmillan, Captain H. Ward, Lt.-Col. A L (Kingston-on-Hull)
Warner, Brigadier-General W. W. Williams, Herbert G. (Residing) Woodcock, Colonel H. C.
Warrender, Sir Victor Wilson, Sir Murrough (Yorks, Richm'd) Worthington-Evans, Rt. Hon. Sir L.
Watson, Rt. Hon. W. (Carlisle) Wilson, R. R. (Stafford, Lichfield) Wragg, Herbert
Wells, S. R. Windsor Clive, Lieut.-Colonel George Wright, Brig.-General W. D.
White, Lieut. Col. Sir G. Dalrymple- Winterton, Rt. Hon. Earl
Williams, A. M. (Cornwall, Northern) Womersley, W. J. TELLERS FOR THE AYES.
Williams, Com. C. (Devon, Torquay) Wood, Rt. Hon. Sir Kingsley Major Sir George Hennessy and
Major Sir William Cope.
Adamson, W. M. (Staff., Cannock) Hirst, G. H. Robinson, W. C. (Yorks, W. Ft., Elland)
Alexander, A. V. (Sheffield, Hillsbro') Hirst, W. (Bradford, South) Sakiatvala, Shapurji
Ammon, Charles George Hore-Beilsha, Leslie Salter, Dr. Alfred
Baker, Walter Hudson, J. H. (Huddersfied) Scrymgeour, E.
Barker, G. (Monmouth, Abertillery) Jenkins, W. (Glamorgan, Neath) Scurr, John
Barr, J. John, William (Rhondda, West) Shaw, Rt. Hon. Thomas (Preston)
Batey, Joseph Jones, J. J. (West Ham, Silvertown) Shepherd, Arthur Lewis
Beckett, John (Gateshead) Jones, Morgan (Caerphilly) Shiels, Dr. Drummond
Bellamy, A. Kelly, W. T. Shinwell, E.
Benn, Wedgwood Kennedy, T. Sinclair, Major Sir A. (Caithness)
Bromfield, William Kenworthy, Lt.-Com. Hon. Joseph M. Smith, Rennie (Penistone)
Brown, Ernest (Leith) Kirkwood, D. Snell, Harry
Buchanan, G. Lansbury, George Snowden, Rt. Hon. Philip
Buxton, Rt. Hon. Noel Lawrence, Susan Stamford, T. W.
Cape, Thomas Lawson, John James Stephen, Campbell
Cluse, W. S. Lee, F. Stewart, J. (St. Rollox)
Clynes, Rt. Hon. John R. Lindley, F. W. Sullivan, Joseph
Connolly, M. Livingstone, A. M. Sutton, J. E.
Cove, W. G. Longbottom, A. W. Taylor, R. A.
Dalton, Hugh Lowth, T. Thomas, Rt. Hon, James H. (Derby)
Davies, Evan (Ebbw Vale) Lunn, William Thomas, Sir Robert John (Anglesey)
Davies, Rhys John (Westhoughton) MacDonald, Rt. Hon. J. R. (Aberavon) Thorne, G. R. (Wolverhampton, E.)
Day, Harry Mackinder, W. Thurtle, Ernest
Dennison, R. Maclean, Nell (Glasgow, Govan) Tinker, John Joseph
Duncan, C. MacNeill-Weir, L. Wallhead, Richard C.
Dunnico, H. Macpherson, Rt. Hon. James I. Walsh, Rt. Hon. Stephen
Evans, Capt. Ernest (Welsh Uni'ver.) March, S. Watson, W. M. (Dunfermilne)
Fenby, T. D. Mitchell, E. Rosslyn (Paisley) Watts-Morgan, Lt.-Col. D. (Rhondda)
Garro-Jones, Captain G. M. Montague, Frederick Webb, Rt. Hon. Sidney
Gibbins, Joseph Morris, R. H. Wedgwood, Rt. Hon. Josiah)
Gillett, George M. Morrison, R. C. (Tottenham, N.) Wellock, Wilfred
Gosling, Harry Mosley, Sir Oswald Welsh, J. C.
Greenall, T. Murnin, H. Westwood, J.
Greenwood, A. (Nelson and Colne) Naylor, T. E. Williams, David (Swansea, East).
Grenfell, D. R. (Glamorgan) Oliver, George Harold Williams, Dr. J. H. (Llanelly)
Griffiths, T. (Monmouth, Pontypool) Owen, Major G. Williams, T. (York, Don Valley)
Grundy, T. W. Palin, John Henry Wilson, C. H. (Sheffield, Attercliffe)
Hall, F. (York, W. R. Normanton) Paling, W. Wilson. R. I. (Jarrow)
Hall, G. H. (Merthyr Tydvil) Pethick-Lawrence, F. W. Wright, W.
Hamilton, Sir R. (Orkney & Shetland) Ponsonby, Arthur Young, Robert (Lancaster, Newton).
Hardie, George D. Potts, John S.
Harris, Percy A. Purcell, A. A. TELLERS FOR THE NOES.
Hayday, Arthur Richardson, R. (Houghton-le-Spring) Mr. Charles Edwards and Mr.
Henderson, Rt. Hon. A. (Burniey) Riley, Ben Whiteley.
Henderson, T. (Glasgow) Ritson, J.
Division No. 18.] AYES. [10.42 p.m.
Acland-Troyte, Lieut.-Colonel Dixey, A. C. Luce, Major-Gen, Sir Richard Harman
Ainsworth, Lieut.-Col. Charles Drewe, C. Lumley, L. R.
Alexander, E. E. (Leyton) Edmondson, Major A. J. Lynn, Sir R. J.
Alexander, Sip Wm. (Glasgow, Cent'l) Edwards, J. Hugh (Accrington) MacAndrew, Major Charles Glen
Allen, Sir J. Sandeman Ellis, R. G. Macdonald, Capt. P. D. (I. of W.)
Amery, Rt. Hon. Leopold C. M. S. Erskine, Lord (Somerset, Weston-s.-M.) Macdonald, H. (Glasgow, Cathcart)
Applin, Colonel R. V. K. Everard, W. Lindsay McDonnell, Colonel Hon. Angus
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Fairfax, Captain J. G. MacIntyre, Ian
Astbury, Lieut.-Commander F. W. Falle, Sir Bertram G. Macmillan, Captain H.
Atholl, Duchess of Falls, Sir Charles F. Macnaghten, Hon. Sir Malcolm
Atkinson, C. Fanshawe, Captain G. D. Macquisten, F. A.
Balfour, George (Hampstead) Fenby, T. D. Maitland, A. (Kent, Faversham)
Balniel, Lord Fermoy, Lord Maitland, Sir Arthur D. Steel
Banks, Sir Reginald Mitchell Fielden, E. B. Makins, Brigadier-General E.
Barclay-Harvey, C. M. Ford, Sir P. J. Manningham-Buller, Sir Mervyn
Barnett, Major Sir Richard Forrest, W. Margesson, Captain D.
Beamish, Rear-Admiral T. P. H. Foster, Sir Hurry S. Marriott, Sir J. A. R.
Bellairs, Commander Carlyon Fraser, Captain Ian Meller, R. J.
Bennett, A. J. Fremantle, Lieut.-Colonel Francis E Merriman, Sir F. Boyd
Berry, Sir George Gadie, Lieut.-Col. Anthony Meyer, Sir Frank
Betterton, Henry B. Ganzonl, Sir John Milne, J. S. Wardlaw-
Bevan, S. J. Gates, Percy Mitchell, S. (Lanark, Lanark)
Birchall, Major J. Dearman Gault, Lieut.-Col. Andrew Hamilton Mitchell, Sir W. Lane (Streatham)
Bird, Sir R. B. (Wolverhampton, w.) Gilmour, Lt.-Col. Rt. Hon. Sir John Monsell, Eyres, Com. Rt. Hon. B. M.
Boothby, R. J. G. Glyn, Major R. G. C. Moore-Brabazon, Lieut.-Col. J. T. C.
Bourne, Captain Robert Croft Goff Sir Park Moreing, Captain A. H.
Bowater, Col. Sir T. Vansittart Gower, Sir Robert Morrison H. (Wilts, Salisbury)
Bowyer, Captain G. E. W Grace, John Nelson, Sir Frank
Boyd-Carpenter, Major Sir A. B. Grant, Sir J. A. Newman, Sir R. H. S. D. L. (Exeter)
Brass, Captain W. Grattan Doyle, Sir N. Newton, Sir D. G. C. (Cambridge)
Brassey, Sir Leonard Greaves-Lord, Sir Walter Nicholson, O. (Westminster)
Briscoe, Richard George Griffith, F. Kingsley Nicholson, Col. Rt. Hn. W. G.(Ptrsf'ld.)
Brittain, Sir Harry Gunston, Captain D. W. Nuttall, Ellis
Brocklebank, C. E. R. Hacking, Douglas H. O'Connor, T. J. (Bedford, Luton)
Brooke, Brigadier-General C. R. I Hall, Lieut.-Col. Sir F. (Dulwich) Oman, Sir Charles William C.
Brown, Ernest (Leith) Hall, Admiral Sir R. (Eastbourne) Ormsby-Gore, Rt. Hon. William
Bullock, Captain M. Hall, Capt. W. D'A. (Brecon & Rad.) Owen, Major G.
Burman, J. B. Hamilton, Sir R. (Orkney & Shetland) Pennefather, Sir John
Burney, Lieut.-Com. Charles D. Hammersley, S. S. Percy, Lord Eustace (Hastings)
Butler, Sir Geoffrey Hanbury, C. Perkins, Colonel E. K.
Carver, Major W. H. Hannon, Patrick Joseph Henry Perring, Sir William George
Cassels, J. D. Harland, A. Peto, G. (Somerset, Frome)
Cautley, Sir Henry S. Harvey, G. (Lambeth, Kennington) Phillipson, Mabel
Cayzer, Sir C. (Chester, City) Harvey, Major S. E. (Devon, Totnes) Plicher, G.
Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.) Headlam, Lieut.-Colonel C. M. Power, Sir John Cecil
Cazalet, Captain Victor A. Henderson, Capt. R.R.(Oxf'd, Henley) Pownall, Sir Assheton
Cecil, Rt. Hon. Sir Evelyn (Alton) Henderson, Lieut.-Col. Sir Vivian Ramsden, E.
Cecil, Rt. Hon. Lord H. (Ox. Univ.) Heneage, Lieut.-Colonel Arthur P. Raid, D. D. (County Down)
Chadwick, Sir Robert Burton Hennessy, Major Sir G. R. J. Rentoul, G. S.
Chamberlain, Rt. Hon. N. (Ladywood) Herbert, S. (York, N. R, Scar. & Wh'by) Rhys, Hon. C. A. U.
Charteris, Brigadier-General J. Hills Major John Waller Rice, Sir Frederick
Christie, J. A. Hilton, Cecil Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Churchman, sir Arthur C. Hoare, Lt.-Col. Rt. Hon. Sir S. J. G. Roberts, E. H. G. (Flint)
Clarry, Reginald George Hohler, Sir Gerald Fitzroy Roberts. Sir Samuel (Hereford)
Clayton, G. C. Holbrook, Sir Arthur Richard Rodd, Rt. Hon. Sir James Rennell
Cobb, Sir Cyril Holt, Captain H. P. Ropner, Major L.
Cochrane, Commander Hon. A. D. Hope, Capt. A. O. J. (Warw k, Nun.) Rye, F. G.
Cockerill, Brig.-General Sir George Hopkins, J. W. W. Salmon, Major I.
Cohen, Major J. Brunei Howard-Bury, Colonel C. K. Samuel, A. M. (Surrey, Farnham)
Colfox, Major Wm. Phillips Hudson, Capt. A. U. M. (Hackney, N.) Samuel, Samuel (W'dsworth, Putney)
Colman, N. C. D. Hudson, R. S. (Cumberl'nd, Whiteh'n) Sandeman, N. Stewart
Conway. Sir W. Martin Hume, Sir G. H. Sanderson, Sir Frank
Cope, Major Sir William Hunter-Weston, Lt.-Gen. Sir Aylmer Sandon, Lord
Couper, J. B. Hurst, Gerald B. Sassoon, Sir Philip Albert Gustave D.
Courtauld, Major J. S. Iliffe, Sir Edward M. Savery, S. S.
Courthope, Colonel Sir G. L. Jackson, Sir H. (Wandsworth. Cen'l) Shaw, Lt.-Col. A.D. Mcl. (Renfrew, W.)
Cowan, Sir Wm. Henry (Islington, N.) James Lieut.-Colonel Hon. Cuthbert Sheffield, Sir Berkeley
Craig, Sir Ernest (Chester, Crewe) Jones, Sir G. W. H. (Stoke New'gton) Shepperson, E. W.
Crawfurd, H. E. Kennedy, A. R. (Preston) Sinclair, Cot. T.(Queen's Univ., Belfast)
Croft, Brigadier-General Sir H. Kindersley, Major Guv M. Smith, Louis W. (Sheffield, Hallam)
Crooke, J. Smedley (Deritend) King, Commodore Henry Douglas Smith. R. W. (Aberd'n & Kinc'dine, C.)
Crookshank, Col. C. de W. (Berwick) Kinloch-Cooke, Sir Clement Smith-Carington, Neville W.
Culverwell, C. T. (Bristol, West) Knox. Sir Alfred Smithers, Waldron
Cunliffe, Sir Herbert Lamb, J. Q. Somerville, A. A. (Windsor)
Curzon, Captain Viscount Leigh, Sir John (Clapham) Southby, Commander A. R. J.
Dalkeith, Earl of Lister, Cunliffe, Rt. Hon. Sir Philip Spender-Clay, Colonel H.
Davidson, Rt. Hon. J. (Hertford) Little, Dr. E. Graham Stanley, Lieut.-Colonel Rt. Hon. G. F.
Davies, Maj. Geo. F. (Somerset, Yeovil) Lloyd, Cyril E. (Dudley) Stanley, Lord (Fylde)
Davies, Dr. Vernon Locker-Lampson, Rt. Hon. Godfrey Stanley, Hon. O. F. G. (Westm'eland)
Davison, Sir W H. (Kensington, SO Loder, J. de V. Storry-Deans, R.
Dawson, Sir Philip Long, Major Eric Stott, Lieut.-Colonel W. H.
Dean, Arthur Wellesley Lougher, Lewis Streatfeild, Captain 8. R.
Stuart, Crichton, Lord C. Waddington, R. Wilson, Sir Murrough (Yorks, Richm'd)
Stuart, Hon. J. (Moray and Nairn) Wallace, Captain D. E. Wilson, R. R. (Stafford, Lichfield)
Styles, Captain H. Walter Ward, Lt.-Col. A.L.(Kingston-on-Hull) Windsor-Cilve, Lieut.-Colonel George
Sueter, Rear-Admiral Murray Fraser Warner, Brigadier-General W. w. Winterton, Rt. Hon. Earl
Sugden, Sir Wilfrid Warrender, Sir Victor Wolmer, Viscount
Tasker, R. Inlgo. Waterhouse, Captain Charles Womersley, W. J.
Templeton, W. P. Watson, Rt. Hon. W. (Carlisle) Wood, Rt. Hon. Sir Kingsley
Thom, Lt.-Col. J. G. (Dumbarton) Watts, Sir Thomas Woodcock, Colonel H. C.
Thompson, Luke (Sunderland) Wayland, Sir William A. Worthington-Evans, Rt. Hon. Sir L.
Thomson, F. C. (Aberdeen, South) Wells, S. R. Wragg, Herbert
Thomson, Rt. Hon. Sir W. Mitchell White, Lieut.-Col. Sir G. Dalrymple Wright, Brig.-General W. D.
Tomlinson, R. p. Williams, A. M. (Cornwall, Northern)
Tryon, Rt. Hon. George Clement Williams, Com. C. (Devon, Torquay) TELLERS FOR THE AYES.
Vaughan-Morgan, Col. K. P. Williams, Herbert G. (Reading) Mr. Penny and Major The Marquess
of Titchfield.
Adamson, Rt. Hon. W. (File, West) Hayday, Arthur Sakiatvaia, Shapurji
Adamson, W. M. (Staff., Cannock) Henderson, Rt. Hon. A. (Burnley) Salter, Dr. Alfred
Alexander, A. V. (Sheffield, Hillsbro') Henderson, T. (Glasgow) Scurr, John
Ammon, Charles George Hirst, G. H. Shaw, Rt. Hon. Thomas (Preston)
Baker, Walter Hirst, W. (Bradford, South) Shepherd, Arthur Lewis
Barker, G. (Monmouth, Abertillery) Hudson, J. H. (Huddersfield) Shiels, Dr. Drummond
Barnes, A. Jenkins, W. (Glamorgan, Neath) Shinwell, E.
Barr, J. John, William (Rhondda, West) Short. Alfred (Wednesbury)
Batey, Joseph Jones, Morgan (Caerphilly) Slesser, Sir Henry H.
Beckett, John (Gateshead) Jones. T. I. Mardy (Pontypridd) Smith, Ben (Bermondsey, Rotherhithe)
Bellamy, A. Kelly. W. T. Smith, Rennie (Penistone)
Benn, Wedgwood Kennedy, T. Snell, Harry
Bondfield, Margaret Kenworthy, Lt.-Com. Hon. Joseph M. Snowden, Rt. Hon. Philip
Broad, F. A. Kirkwood, D. Stamford, T. W.
Bromfield, William Lansbury, George Stephen, Campbell
Buchanan, G. Lawrence, Susan Stewart, J. (St. Rollox)
Buxton, Rt. Hon. Noel Lawson, John James Sullivan, J.
Cape, Thomas Lee, F. Sutton, J. E.
Cluse, W. S. Lowth, T. Thurtle, Ernest
Connolly, M. Lunn, William Tinker, John Joseph
Cove, W. G. MacDonald, Rt. Hon. J. R. (Ab'ravon) Townend, A. E.
Dalton, Hugh Mackinder, W Trevelyan, Rt. Hon. Sir Charles
Davies, Evan (Ebbw Vale) Maclean, Neil (Glasgow, Govan) Viant, S. P.
Davies, Rhys John (Westhoughton) March, S. Wallhead, Richard C.
Day, Harry Mitchell, E. Rosslyn (Paisley) Walsh, Rt. Hon. Stephen
Dennison, R. Montague, Frederick Watson, W. M. (Dunfermline)
Duncan, C. Morrison, R. C. (Tottenham, N.) Watts-Morgan, Lt.-Col. D. (Rhondda)
Dunnico, H. Mosley, Sir Oswald Webb, Rt. Hon. Sidney
Gardner, J. P. Murnin, H. Wellock, Wilfred
Gibbins, Joseph Naylor, T. E. Welsh, J. C.
Gillett, George M. Oliver, George Harold Westwood, J.
Gosling, Harry Palin, John Henry Wheatley, Rt. Hon. J.
Graham, D. M. (Lanark, Hamilton) Paling, W. Wilkinson. Ellen C.
Graham, Rt. Hon. Wm. (Edin., Cent.) Parkinson, John Allen (Wigan) Williams, David (Swansea, E.)
Greenall, T. Pethick-Lawrence, F. W. Williams, Or. J. H. (Llanelly)
Greenwood, A. (Nelson and Colne) Ponsonby, Arthur Williams. T. (York, Don Valley)
Grenfell, D. R. (Glamorgan) Potts, John S. Wilson, R. J. (Jarrow)
Griffiths, T. (Monmouth, pontypool) Richardson, R. (Houghton-le-Spring) Windsor, Walter
Grundy, T. W. Riley, Ben Young, Robert (Lancaster, Newton)
Hall, G. H. (Merthyr Tydvil) Ritson, J.
Hardie, George D. Robinson, W. C. (Yorks, W. R., Elland) TELLERS FOR THE NOES.
Mr. C. Edwards and Mr. Whiteley.

Main Question put

The Committee divided: Ayes, 280; Noes, 132.

Division No. 19.] AYES. [10.52 p.m.
Acland-Troyte, Lieut.-Colonel Beamish, Rear-Admiral T. P. H. Brocklebank, C. E. R.
Ainsworth, Lieut.-Col. Charles Bellairs, Commander Carlyon Brooke, Brigadier-General C. R. I.
Alexander, E. E. (Leyton) Bennett, A, J. Bullock, Captain M.
Alexander, Sir Wm. (Glasgow, Cent'l) Bentinck, Lord Henry Cavendish. Burman, J. B.
Allen, Sir J. Sandeman Berry, Sir George Burney, Lieut.-Com. Charles D.
Amery, Rt. Hon. Leopold C. M. S. Betterton, Henry B. Butler, Sir Geoffrey
Applin, Colonel R. V. K. Bevan, S. J. Carver, Major W. H.
Apsley, Lord Birchall, Major J. Dearman Cassels, J. D.
Ashley, Lt.-Col. Rt. Hon. Wilfrid W. Bird, Sir R. B. (Wolverhampton, W.) Cautley, Sir Henry S.
Astbury, Lieut.-Commander F, w. Boothby, R. J. G. Cayzer, Sir C. (Chester, City)
Atholl, Duchess of Bourne, Captain Robert Croft Cayzer, Maj. Sir Herbt. R. (Prtsmth. S.)
Atkinson, C, Bowyer, Captain G. E. W. Cecil, Rt. Hon. Sir Evelyn (Aston)
Balfour, George (Hampstead) Boyd-Carpenter, Major Sir A. B. Cecil, Rt. Hon. Lord H. (Ox. Univ.)
Balniel, Lord Brass, Captain W. Chadwick, Sir Robert Burton
Banks, Sir Reginald Mitchell Brassey, Sir Leonard Chamberlain, Rt. Hon. N. (Ladywood)
Barclay-Harvey, C. M. Briscoe, Richard George Charteris, Brigadier-General J.
Barnett, Major Sir Richard Brittain, Sir Harry Christie, J. A.
Churchman, sir Arthur C. Hoare, Lt.-Col. Rt. Hon. Sir S. J. G Rhys, Hon. C. A. U.
Clarry, Reginald George Hohier, Sir Gerald Fitzroy Rice, Sir Frederick
Clayton, G. C. Holbrock, Sir Arthur Richard Richardson, Sir P. W. (Sur'y, Ch'ts'y)
Cobb, Sir Cyril Holt, Captain H. P. Roberts, E. H. G. (Flint)
Cochrane, Commander Hon. A. D. Hope, Capt. A. O. J. (Warw'k, Nun.) Roberts, Sir Samuel (Hereford)
Cockerill, Brig.-General sir George Hopkins, J. W, W. Rodd, Rt. Hon. Sir James Rennell
Cohen, Major J. Brunei Howard-Bury, Colonel C. K. Ropner, Major L.
Colfox, Major Wm. Phillips Hudson, Capt. A. U. M.(Hackney, N.) Rye, F. G.
Colman, N. C. D. Hudson, R s. (Cumberl'nd, Whiteh'n) Salmon, Major I.
Conway, Sir W. Martin Hume, Sir G. H. Samuel, A. M. (Surrey, Farnham)
Couper, J. B. Hunter-Weston, Lt.-Gen. Sir Aylmer Samuel, Samuel (W'dsworth, Putney)
Courtauld, Major J. S. Hurst, Gerald B. Sandeman, N. Stewart
Courthope, Colonel Sir G. L. Illfie, Sir Edward M. Sanders, Sir Robert A.
Cowan, Sir Wm. Henry (Islington, N.) Inskip, Sir Thomas Walker H. Sanderson, Sir Frank
Craig, Sir Ernest (Chester, Crewe) Jackson, Sir H. (Wandsworth, Cen'l) Sandon, Lord
Croft, Brigadier-General Sir H. James, Lieut.-Colonel Hon. Cuthbert Sassoon, Sir Philip Albert Gustave D.
Crooke, J. Smedley (Derltend) Jones, Sir G. W. H. (Stoke New'gton) Savery, S. S.
Crookshank, Col. C. de W. (Berwick) Kennedy, A. R. (Preston). Shaw. Lt.-Col. A.D. Mel (Renfrew, W.)
Crookshank, Cpt. H.(Lindsey, Gainsbro) Kindersley, Major Guy M. Sheffield, Sir Berkeley
Culverwell, C. T. (Bristol, West) King, Commodore Henry Douglas Shepperson, E. W.
Cunliffe, Sir Herbert Kinloch-Cooke, Sir Clement Sinclair, Col. T. (Queen's Univ., Belfst
Curzon, Captain Viscount Knox, Sir Alfred Smith, Louis W. (Sheffield, Hallam)
Dalkeith, Earl of Lamb, J. Q Smith, R. W. (Aberd'n & Kinc'dine, C.)
Davidson, Rt. Hon. J. (Hertford) Lister, Cunliffe, Rt. Hon. Sir Philip Smith-Carington, Neville W.
Davies, Maj. Geo. F. (Somerset, Yeovil) Little, Dr. E. Graham Smithers, Waldron
Davies, Dr. Vernon Lloyd, Cyril E. (Dudley) Somerville, A. A. (Windsor)
Davison, Sir W. H. (Kensington, S.) Locker-Lampson, Rt. Hon. Godfrey Southby, Commander A. R. J.
Dawson, Sir Philip Loder, J. de V. Spender-Clay, Colonel H.
Dean, Arthur Wellesley Long, Major Eric Stanley, Lieut.-Colonel Rt. Hon. G. F.
Dixey, A. C. Lougher, Lewis Stanley, Lord (Fylde)
Drewe, C. Luce, Maj.-Gen. Sir Richard Harman Stanley, Hon. O. F. G. (Westm'eland)
Edmondson, Major A. J. Lumley, L. R. Storry-Deans, R.
Edwards, J. Hugh (Accrington) Lynn, Sir R. J. Stott, Lieut.-Colonel W. H.
Ellis, R. G. MacAndrew, Major Charles Glen Streatfeild, Captain S. R.
Erskine, Lord (Somerset, Weston-s.-M.) Macdonald, Capt. P. D. (I. of W.) Stuart, Crichton, Lord C.
Everard, W. Lindsay MacDonald, R. (Glasgow, Cathcart) Stuart, Hon. J. (Moray and Nairn)
Fairfax, Captain J. G. McDonnell. Colonel Hon. Angus Styles, Captain H. W.
Falle, Sir Bertram G. MacIntyre, Ian Sueter, Rear-Admiral Murray Fraser
Falls, Sir Charles F. Macmillan, Captain H. Sugden, Sir Wilfrid
Fanshawe, Captain G. D. Macnaghten, Hon. Sir Malcolm Tasker, R Inigo.
Fermoy, Lord Macquisten, F. A. Templeton, W. P.
Fielden, E. B. Maitland, A. (Kent, Faversham) Thom, Lt.-Col. J. G. (Dumbarton)
Ford, Sir p. J. Maitland, Sir Arthur D. Steel- Thompson, Luke (Sunderland)
Forrest, W. Makins, Brigadier-General E. Thomson, F. C. (Aberdeen, South)
Foster, Sir Harry S. Manningham-Buller, Sir Mervyn Thomson, Rt. Hon. Sir W. Mitchell
Fraser, Captain Ian Margesson, Captain D. Titchfield, Major the Marquess of
Fremantle, Lieut.-Colonel Francis E. Marriott, Sir J. A. R. Tryon, Rt. Hon. George Clement
Gadle, Lieut.-Col. Anthony Meller, R. J. Vaughan-Morgan, Col. K. p.
Ganzonl, Sir John Merriman, sir F. Boyd Waddington, R.
Gates, Percy Meyer, Sir Frank Wallace, Captain D. E.
Gault, Lieut.-Col. Andrew Hamilton Milne, J. S. Wardlaw Ward, Lt.-Col. A. L. (Kingston-on-Hull)
Gilmour, Lt.-Col. Rt. Hon. Sir John Mitchell. S. (Lanark, Lanark) Warner, Brigadier-General W. W.
Glyn, Major R. G. C. Mitchell, Sir W. Lane (Streatham) Warrender, Sir Victor
Goff, Sir Park Monsell, Eyres, Com. Rt. Hon. B. M. Waterhouse, Captain Charles
Gower, Sir Robert Moore-Brabazon, Lieut.-Col. J, T. C. Watson, Rt. Hon. W. (Carlisle)
Grace, John Moreing, Captain A. H. Watts, Sir Thomas
Grant, Sir J. A. Morrison, H. (Wilts, Salisbury) Wayland, Sir William A.
Grattan-Doyle, Sir N. Nelson, Sir Frank Wells, S. R.
Greaves-Lord, Sir Walter Newman. Sir R. H. S. D. L. (Exeter) White, Lieut.-Col. Sir G. Dalrymple
Gunston, Captain D. W. Newton, Sir D. G. C. (Cambridge) Williams, A. M. (Cornwall, Northern)
Hacking, Douglas H. Nicholson. O. (Westminster) Williams, Com. C. (Devon, Torquay)
Hall, Lieut. Col. Sir F. (Dulwich) Nicholson, Col. Rt. Hn. W. G. (Ptrsf'ld.) Williams, Herbert G. (Reading)
Hall, Admiral Sir R. (Eastbourne) Nuttall, Ellis Wilson, Sir Murrough (Yorks, Richm'd)
Halt, Capt. W. D'A. (Brecon & Rad.) O'Connor, T. J. (Bedford, Luton) Wilson, R. R. (Stafford, Lichfield)
Hammersley, S. S. Oman, Sir Charles William C. Windsor-Clive, Lieut.-Colonel George
Hanbury, C. Ormsby-Gore, Rt. Hon. William Winterton, Rt. Hon. Earl
Hannon, Patrick Joseph Henry Pennefather, Sir John Wolmer, Viscount
Harland, A. Percy, Lord Eustace (Hastings) Womersley, W. J.
Harvey, G. (Lambeth, Kennington) Perkins, Colonel E. K. Wood, Rt. Hon. Sir Kingsley
Harvey, Major S. E. (Devon, Totnes) Perring, Sir William George Woodcock, Colonel H. C.
Headlam, Lieut.-Colonel C. M. Peto, G. (Somerset, Frome) Worthington-Evans, Rt. Hon. Sir L.
Henderson, Capt. R. R.(Oxf'd, Henley) Philipson, Mabel Wragg, Herbert
Henderson, Lieut.-Col. Sir Vivian Pilcher, G. Wright, Brig.-General W. D.
Heneage, Lieut.-Colonel Arthur P. Power, Sir John Cecil
Hennessy, Major Sir G. R. J. Pownall, Sir Assheton TELLERS FOR THE AYES.
Herbert, S.(York, N. R., Scar. & Wh'by) Ramsden, E. Major Sir William Cope and Mr.
Hills, Major John Waller Reid, D. D. (County Down) Penny.
Hilton, Cecil Rentoul, G. S.
Adamson, Rt. Hon. W. (Fife, West) Ammon, Charles George Barnes, A.
Adamson, W. M. (Staff., Cannock) Baker, Walter Barr, J.
Alexander, A. V. (Sheffield, Hillsbro') Barker, G. (Monmouth, Abertillery) Batey, Joseph
Beckett, John (Gateshead) Hirst, G. H. Scurr, John
Bellamy, A. Hirst, W. (Bradford, South) Shaw, Rt. Hon. Thomas (Preston)
Benn, Wedgwood Hore-Belisha, Leslie Shepherd, Arthur Lewis
Bondfield, Margaret Hudson, J. H. (Huddersfield) Shiels, Dr. Drummond
Broad, F. A. Jenkins, W. (Glamorgan, Neath) Shinwell, E.
Bromfield, William John, William (Rhondda, West) Short, Alfred (Wednesbury)
Brown, Ernest (Leith) Jones, Morgan (Caerphilly) Slesser, Sir Henry H.
Buchanan, G. Jones, T. I. Mardy (Pontypridd) Smith, Rennie (Penistone)
Buxton, Rt. Hon. Noel Kelly, W. T. Snell, Harry
Cape, Thomas Kennedy, T. Snowden, Rt. Hon. Philip
Cluse, W. S. Kenworthy, Lt.-Com. Hon. Joseph M. Stamford, T. W.
Connolly, M. Kirkwood, D. Stephen, Campbell
Cove, W. G. Lansbury, George Stewart, J. (St. Rollox)
Crawfurd, H. E. Lawrence, Susan Sullivan, J.
Dalton, Hugh Lawson, John James Sutton, J. E.
Davies, Evan (Ebbw Vale) Lee, F. Thorne, G. R. (Wolverhampton, E.)
Davies, Rhys John (Westhoughton) Lindley, F. W. Thurtle, Ernest
Day, Harry Lowth, T. Tinker, John Joseph
Dennison, R. Lunn, William Tomlinson, R. P.
Duncan, C. MacDonald, Rt. Hon. J. R. (Aberavon) Townend, A. E.
Dunnico, H. Mackinder, W. Trevelyan, Rt. Hon. Sir Charles
Edwards, C. (Monmouth, Bedwellty) Maclean, Nell (Glasgow, Govan) Viant, S. P.
Fenby, T. D. March, S. Wallhead, Richard C.
Gardner, J. P. Mitchell, E. Rosslyn (Paisley) Walsh, Rt. Hon. Stephen
Gibbins, Joseph Montague, Frederick Watson, W. M. (Dunfermline)
Gillett, George M. Morrison, R. C. (Tottenham, N.) Watts-Morgan, Lt.-Col. D. (Rhondda)
Gosling, Harry Mosley, Sir Oswald Webb, Rt. Hon. Sidney
Graham, D. M. (Lanark, Hamilton) Murnin, H. Wellock, Wilfred
Graham, Rt. Hon. Wm. (Edin., Cent.) Naylor, T. E. Welsh, J. C.
Greenall, T. Oliver, George Harold Westwood, J.
Greenwood, A. (Nelson and Colne) Owen, Major G. Wheatley, Rt. Hon. J.
Grenfell, D. R. (Glamorgan) Palin, John Henry Whiteley, W.
Griffith, F. Kingsley Paling, W. Wilkinson, Ellen C.
Griffiths, T. (Monmouth, Pontypool) Pethick-Lawrence, F. W. Williams, David (Swansea, E.)
Grundy, T. W. Ponsonby, Arthur Williams, Dr. J. H. (Llanelly)
Hall, F. (York, W.R., Normanton) Potts, John S. Williams, T. (York, Don Valley)
Hamilton, sir R. (Orkney & Shetland) Richardson, R. (Houghton-le-Spring) Wilson, R. J. (Jarrow)
Hardie, George D. Riley, Ben Windsor, Walter
Harney, E. A. Ritson, J. Young, Robert (Lancaster, Newton)
Hayday, Arthur Robinson, W. C. (Yorks, W.R., Elland)
Henderson, Rt. Hon. A. (Burnley) Saklatvala, Shapurji TELLERS FOR THE NOES.
Henderson, T. (Glasgow) Salter, Dr. Alfred Mr. Parkinson and Mr. B. Smith.

Resolution to be reported To-morrow.