CLAUSE 16.—(Expenditure by Local Authorities on Public Utility Schemes). (Hansard, 8 February 1929)

§ Sir J. GILMOUR
I beg to move, in page 21, line 35, to leave out the word "halfpenny," and to insert instead thereof the word "penny."

§ Mr. W. GRAHAM
I think the Committee is entitled to some explanation of this change, and I would like the Government to tell us what they have in mind in making this alteration.

§ Sir J. GILMOUR
This alteration has been made following the representations which have been submitted to me mainly from the City of Edinburgh, whose representatives pointed out that, owing to the equivalent grant being brought into the pool, the halfpenny rate would not be sufficient to meet the requirements of the city in dealing with various parts of their organisation, and particularly with regard to the Heriot-Watt College and the School of Art. Those were two special cases which were brought to my attention, and I conclude that it would be fair that this increase in the rate should be permitted.

§ Mr. GRAHAM
I do not complain of the specific decision applied to Edinburgh, but I think this Clause deserves a little more closer consideration. As I understand this Amendment, it limits the power of the new department of a 2101 town council and a county council to contribute to any public utility scheme. There is a Sub-section in the Clause which provides that the contribution is not to be paid to any out-and-out public utility enterprise which is apparently open to the town council or the county council under another head. As I understand it, that is in the ordinary way of county or municipal effort. On this side, we recognise that contributions have already been made to certain public utility societies for housing and other schemes, and of course a feature of those societies is the limited distribution. The Secretary of State for. Scotland has mentioned certain cases of that kind, but he has already been driven to increase the rate from one halfpenny to one penny because the produce of the one halfpenny rate was not sufficient. There may be cases in the future where the product of a penny rate may raise the same difficulty, and there are many points likely to arise in the case of a large city where this limit of one penny would be altogether undesirable. For these reasons, I think the Secretary of State might very well delete this limitation from the Bill.

§ Mr. STEPHEN
I would like to put a question to the Lord Advocate. Can the right hon. Gentleman say under what Acts this rate can be applied at all? Are there any public utilities in regard to which the local authorities have power to contribute at the present time? This proposal appears to be a sort of permission to levy a penny rate for certain purposes. Surely, there, must be certain powers or special legislation under which the Government are proceeding. There has always been a limitation to the expenditure of local authorities in regard to certain services of one kind and another, and the Members of the Labour party have from time to time introduced an enabling Bill to give local authorities power to undertake municipal enterprises. I take it that the entry of public authorities into these public utilities will he on the same basis as that which applies to municipal undertakings.

§ The LORD ADVOCATE
In Section 25 of the Education and Local Taxation Accounts (Scotland) Act, 1892, there is a provision which permits local autho- 2102 rities to contribute expenditure as follows: Under any scheme of public utility framed by them respectively"— that is, by the county or county burgh— subject to the approval of the Secretary for Scotland. The amount is to be limited to a penny rate, which will produce more than is now produced under the equivalent grant. There is no doubt that the amount of a penny rate will amply replace what the local authorities are now losing under the present arrangement.

§ Mr. GRAHAM
If the Secretary of State for Scotland has this power of approval which is mentioned in the earlier part of the Clause, why restrict the amount to a penny rate?

§ Mr. MAXTON
I have been trying to understand the explanations that have been given. I did not follow quite clearly the explanation of the Secretary of State, but I heard him say something about the support given to the Heriot-Watt College and the School of Art in Edinburgh, and that they are to be maintained out of the product of a penny rate.

§ The LORD ADVOCATE
At the present moment the Edinburgh Corporation are making substantial payments each year to the School of Art and the Heriot-Watt College under their powers under the Act of 1892, and they desire to be able to continue those payments. We think it is reasonable that they should have that power, and that it should be similarly retained generally for the towns and counties as it exists now under the Act of 1892, and we have made, as we consider, more than ample provision for a similar distribution. My right hon. Friend the Secretary of State, in answer to the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham), gave the reasons for retaining the limit on the amount that could be applied to what are really external subjects.

§ Mr. MAXTON
The examples quoted by the Secretary of State seemed to me to be particularly unfortunate ones, because, under the Education Act, the education authorities can, and do, subsidise and maintain out of the Education Fund educational institutions that are not directly under their control. The 2103 education authorities arc presently granting considerable sums by way of subsidy to privately-owned schools and privately-owned teaching institutions of one kind and another. I do not know what the extent of the subsidy is. in the City of Glasgow, but I know that such subsidies are given to the School of Art, and we have had many debates here about the subsidies given to the Agricultural College in various Estimates. I want to know if all these subsidies that are presently given are to be met by the town council or the county council, in fulfilling this new function as the education authority, out of the product of a penny rate, or if the statutory provision that is already made under the Education Act will be maintained unchanged. The Under-Secretary nods his head, but, so far as regards this Clause and the explanation of it by the Secretary of State, one would assume that these two specifically teaching institutions which he has mentioned in Edinburgh are going to receive merely the product of a penny rate, and presumably all similar institutions in other parts of Scotland are to be maintained out of what will be a very considerably reduced sum under the de-rating scheme. I do not know how the Lord Advocate can say that this will be a very large sum, more than adequate to meet all the charges, because I am quite sure that the Secretary of State has no very accurate estimate of what the product of a penny rate will be after the de-rating scheme has taken its full effect.

§ Mr. ERNEST BROWN
As far as Edinburgh is concerned, I can explain the matter to the hon. Member for Bridgeton (Mr. Maxton). The Edinburgh Corporation have made a report on the Bill, and it includes a paragraph with regard to this particular Clause which, perhaps, I might read to the Committee, as I think it puts the matter very clearly. It says: Clause 16 authorises the Corporation to make payments to public utility schemes not otherwise competent to the council. The explanation of this is that the Corporation have power at present to use the equivalent grant in this way. This grant is being abolished, and the provisions of the Clause are in substitution for the existing power. The extent of the power at present is measured by the amount of the grant. In future the expenditure is not to exceed a sum representing the produce of a rate of a 2104 halfpenny per £. The expenditure on such purposes hitherto has been well within this limit. Speaking from memory, I think a penny rate in Edinburgh at the moment raises £20,000, and a halfpenny rate, that is to say £10,000, has been, up to the present moment, found more than sufficient to meet the needs which are now covered by the equivalent grant. Therefore, Edinburgh will be getting, under this arrangement, more than double what it received before. Even under de-rating, a penny rate will raise, instead of £20,000, a sum of £18,400. What is proposed now is that in place of the equivalent grant— I do not know what the exact amount of it is, but, obviously, from this report it is less than a halfpenny rate in Edinburgh —the Government are now proposing to give powers which will enable the Corporation to raise more than double that sum for application to these purposes. The only other point is that which was put by the right hon. Gentleman the Member for central Edinburgh (Mr. W. Graham), who wishes to widen the area, but that, of course, is another point entirely. Having regard to the present situation, it is obvious to me that the present needs of the Corporation for these functions will be more than met by the substitution of a penny rate instead of a halfpenny rate for the equivalent grant.

§ The LORD ADVOCATE
I am glad to see that this Amendment has the support of a considerable number of Members opposite. With regard to Edinburgh, the increase from a halfpenny to a penny is because the former was not enough to cover the needs of the Corporation under their present powers. With regard to the point raised by the hon. Member for Bridgeton (Mr. Max-ton), I think that in fact the education authorities are at the present time giving grants to the institutions in question. They give very full grants for the purpose of their powers under Section 9 of the Act of 1918, and, of course, in the future, those two sources of grants will be under the some control. We think it right, however, that something equivalent to the powers under the Act of 1892 should be continued to the county and town authorities. I give that merely as an illustration of what exists to some extent in many parts of the county. I was 2105 not, perhaps, quite accurate in what I said before as to the total amount. The total amount came to £190,000 for the whole of Scotland, and the penny rate over the whole of Scotland would practically come to the same amount, though, of course, the produce of a penny rate varies in different areas.

§ Mr. MAXTON
What I am concerned about is the use of the term "public utility scheme" with reference to teaching institutions. I do not think that they have usually been considered as coming within that title.

§ The LORD ADVOCATE
No. The phrase "public utility institutions or objects" does not occur in Section 9 of the Education Act. There the power is to contribute to the maintenance of schools within their areas, and to any educational institution or agency. Clearly therefore, it must be educational. The Heriot-Watt College and the School of Art are educational, and they are institutions, and, therefore, they are within the ambit of the education authority for a different reason from that furnished by the Act of 1892, which refers to public utility schemes.

§ Mr. MAXTON
In what clause do I find that? Sub-section (2) of Clause 16 says: Nothing in the foregoing subsection shall apply to any payment made for the purpose of any scheme of public utility in pursuance of any power otherwise competent to the council. I assume that is the Clause that empowers a town council to pay out of its funds grants to various schemes that it is carrying on. The Lord Advocate tells us of these two teaching institutions as being the type of thing that they would support. He is putting those things under this definition of public utility, and presumably excluding from the definition educational institutions. I cannot see how, on his own statement, the Heriot-Watt College can be a public utility so far as this Clause is concerned and an educational institution so far as some other Clause is concerned. I should like him to direct me to the Clause which empowers a town council carrying out the functions of the present education authority to subsidise the Heriot-Watt College or the Edinburgh School of Art.

§ Mr. W. GRAHAM
May I supplement my hon. friend's question by trying to state the position as we now understand it in this form: There will be a consolidated rate covering the whole area under this Bill. All these duties are linked up. J gather that under the second sub-section there will be provided from public funds and from the local rates the ordinary run of the expenses of education authorities. But in Edinburgh, and I have no doubt in other parts of the country, the separate institutions with their separate boards, like the Heriot-Watt College and the College of Art, remain, and in that connection there is a certain public utility element, and to make a contribution to that element on that narrow basis this Clause is drawn. Is that the state of affairs as it will obtain under the Bill?

§ The LORD ADVOCATE
Yes.