CLAUSE 41.—(Additional Exchequer Grants to counties.) (Hansard, 22 February 1929)

§ The LORD ADVOCATE (Mr. William Watson)
I beg to move, in page 38, line 36, to leave out the word "quinquennium," and to insert instead thereof the words "fixed grant period."

§ Mr. JOHNSTON
Could not we have from the Lord Advocate a brief statement of the precise meaning of the series of Amendments to this effect which he has put down? We understand roughly that the quinquennium has been dropped, and that fixed grant periods of three, four, and five years are to be substituted. Surely, in an important matter of this kind, the original Bill ought not to be amended without explanation.

§ The LORD ADVOCATE
I am delighted to give an explanation to the best of my ability. This brings the Bill into line with the Amendments that have been made to the English Bill, as the result of a general consultation with the local authorities and others. Instead of the original period divided into three quinquennia, the period is now one of 17 years, divided into a first period of three years, a second period of four years, and then two periods of five years each. Therefore, the expression "quinquennium" is not now appropriate, and we are accordingly inserting the words "fixed grant period" in Its place. It is merely an alteration which is necessary to give effect to the extension that has been agreed upon.

§ Mr. JOHNSTON
The reason being that it is an attempt to meet the apprehensions of the local governing authorities in Scotland that they may not be so favourably situated under this Bill as they were at first led to expect, and, therefore, they do not want to wait for five years before an adjustment is made.

§ The LORD ADVOCATE
No, that is hardly correct. One great advantage of the alteration is that these periods will approximate closely to the date of each quinquennial census.

§ Mr. JOHNSTON
Is it not the case that one reason for the alteration was in order to remove the legitimate apprehensions which existed in the minds of the local authorities?

§ The LORD ADVOCATE
It was the result of negotiations which were invited. I agree that further financial concessions were given. It was the result of long-continued and entirely amicable negotiations.

§ Mr. HARDIE
The original proposals were based on a certain element of measurement called the quinquennium, and the reason for this change is that it was found that the former arrangement would not apply. Otherwise, there would only have been one period of five years, but it was found that the formula could not be bound by a five-year period, and a second period was added; and, when that was found to be inadequate for the purposes of the formula, a third period was added. Now we have this series of Amendments, which seem to me to wipe out the formula. The object of the formula was to adjust the differences between that which existed already and that which was new owing to the introduction of this Bill.
We were told at the beginning that the formula afforded a system of calculation for the purpose of arriving at the balance, whether minus or plus. Now we see that the formula is not going to work. The Government have found that it cannot work, and that it is necessary to get down to something which, if they had studied the matter at first, they must have seen would he necessary to meet a change in the calculations brought about by a new Measure which changed the period, and, therefore, changed the totals. Therefore, they must have something fixed. When they speak of a fixed grant period, what they are fixing is just the difference between what the Bill displaces and what it leaves as it was. When you come to the question of a fixed point in any calculation, it means something that is measured, not by the formula, but by the conditions, the balancing of which, on the minus or on the plus side, was supposed to be guaranteed by the formula.
If the Bill could have been retained in its original form, it might have been possible to have a fixed period of measurement, whether a quinquennium or some different period which might have been anything from one month up to 10 years. Now that this fixed grant 1465 is being given, the position returns simply to what it has been all through, and to speak now of applying the formula on the basis of a measured year is simply to say that you are wiping the whole thing out by giving a fixed grant. We were told in Scotland that 15 years was the period necessary to traverse all the difficulties, and that we were going to have a standard of measurement that could be applied to every little undulation that took place during the application of the Act. It did not take long, when an attempt was made to work it out, to show that a period of 15 years had no relation to the facts, and accordingly another two years were added and the periods are being changed from the three quinquennia to periods of three, four, and five years. If the basis of the formula had any relation at all to the changes which I have mentioned in regard to the local authorities, the measuring period could not have been changed, but it might have been possible to change the value of the factors in making up the formula. This change in measurement is like giving a man a 42-inch yardstick and saying that that is to be the yard. When you change from 36 inches to 42 inches, you know what is going to happen to the man if he is asked to give the same number of yards out of a piece of cloth.
That is just what is happening now. None of these suggestions can be applied in detail as far as the formula is concerned, and Amendments of this kind only show that the Government were in a mess at the start. The Government in these matters are like the man with a concertina who, when asked to play, said that he could not play but he would do his best at the worst.

The DEPUTY-CHAIRMAN
Before, calling on the next Amendment, may I suggest that we should formally leave out lines 4 to 35 without debate, as we did yesterday, and then proceed to take the discussion on the Question that the proposed words be inserted.

§ Major ELLIOT
I beg to move, in page 39, to leave out lines 4 to 35, and to insert instead thereof the words: (2) As respects each subsequent fixed grant period, if in the case of any county the 1466 county apportionment falls short of the standard sum increased by the greater of the two following sums, that is to say—

(a) a sum equivalent to one shilling per head of the estimated population of the county for the appropriate year;

(b) a sum equivalent to one-third of the excess of the county apportionment for the period in question over what would have been the county apportionment for the period in question had the General Exchequer Contribution for that period been the same as the General Exchequer Contribution for the first fixed grant period;
there shall in respect of each year of the fixed grant period in question be paid out of moneys provided by Parliament to the council of the county a sum equal to the deficiency. (3) For the purposes of this section the standard sum as respects any county shall he the amount of the loss on account of rates and grants of that county, so, however, that—

(a) if, for the fixed grant period in question the General Exchequer Contribution is less than the General Exchequer Contribution for the first fixed grant period, the standard sum shall be the said amount reduced proportionately to such diminution in the General Exchequer Contribution;

(b) if, for the fixed grant period in question the weighted population of the county is less than the weighted population of the county for the first fixed grant period adjusted as regards unemployment, the standard sum shall be the said amount reduced (or if a reduction therein has been made under paragraph (a) of this subsection that reduced amount further reduced) proportionately to such diminution in weighted population.
(4) In this section the expression.

§ Major ELLIOT
This Amendment embodies further concessions which were made after the conversations to which the Lord Advocate has referred. In the first place, in the Bill as it stands there is the guarantee of the payment of a sum equivalent to 1s. per head of the estimated population of the county in addition to the standard sum. Certain local authorities pointed out that there might be an increase in the new money, and under those circumstances they contended that it was only fair that they should have some share of that money, although they were not legally entitled to it under the terms of the Statute. Consequently, 1467 we have inserted words securing that they will get a fair proportion of the excess. That is where Sub-section (2) of the Amendment comes in. It provides for the extra share which the local authorities will have over and above what they receive by the working of the formula. I do not think this proportion will affect very many burghs or counties, because most of them gain considerably in excess of what they are guaranteed under this proposal. Even so, if even three counties should suffer under it we think it would be wrong, and we have made arrangements whereby they will be covered by this guarantee. A proposal of this kind operates more in the case of England than Scotland, but that is no reason why we should miss any chance of favourable financial treatment. There is the guarantee of one shilling per head, and, if the amount grows, each county will have a certain share of it.

§ Mr. HARDIE
Why has it become necessary to fix the sum if the formula works fairly? Why is it that a definite sum is now stated?

§ Major ELLIOT
This is the minimum sum. The formula will cover the necessities of the counties, but we make it clear that not only will no area lose, but every area will gain by the operation of the scheme and the minimum put in is a gain of one shilling per head. It is clear that we are giving a fixed guarantee to the local authorities that every ratepayer will gain by the working of this proposal and this Sub-section is in addition.

§ Mr. HARDIE
Does the shilling come out of the total sum to be given?

§ Major ELLIOT
The one shilling per head was specified as far back as the issuing of the White Paper. The new money is going to increase the amount in every area in Scotland.

§ Mr. HARDIE
The new money was supposed to be controlled by the formula, and now I understand that portions of it are to be taken out.

§ Major ELLIOT
This is the minimum. We say that the formula will cover all that is required and more, but we are now giving an additional guarantee that the expenditure will be covered.

§ Sir ROBERT HAMILTON
I beg to move as an Amendment to the proposed Amendment, in line 23, to leave out the words "adjusted as regards employment."
I always deal with figures with some hesitation, and, when a formula is recommended that has been worked out by experts, I hesitate to criticise it. There is a point of considerable importance behind this formula. Take the various sums fixed for unemployment. The transferred sum applicable under the formula of weighting for unemployment has not been definitely given, but it has been estimated at about £200,000, and the question has been asked as to whether that sum is sufficient at the present time. If you work out the formula, the decrease of weighting works automatically on the decrease of the multiplication factor in the formula. If unemployment decreases and the factor of multiplication remains at 10, a decrease would automatically follow and would follow on the decrease of unemployment without the further factor being brought in. If, on the other hand, as we hope will not be the case, unemployment should increase or even if it should remain constant, surely then the multiplying factor should be kept constant as at present. If in the third period unemployment remains constant or even increases, the multiplication factor will be five instead of ten as now. I suggest for the consideration of the Committee that in that case the weighting would be entirely and absolutely an excretion. I would like to know what the representative of the Government has to say on the matter.

§ Major ELLIOT
I am not quite sure that I fully grasp the point of the hon. Member. I take it that he considers that this adjustment with regard to unemployment should not be made.

§ Sir R. HAMILTON
No, that the adjustment should not be made as proposed—that is, the decreasing multiple in the various fixed periods—but that the multiple should remain constant at the present figure of ten. Then, if employment decreased there would be an automatic decrease by reason of the decrease of unemployment and not by the decrease of the power of the multiplying factor.

§ Major ELLIOT
But the multiplying factor is at present, as the hon. Member will realise, very high in order to exaggerate the effects of unemployment. It makes a very considerable contribution in the case of the unemployed areas. If the unemployment decreases, as we hope it will, obviously, that will not be nearly so necessary as it is just now.

§ Sir R. HAMILTON
Then the decrease will follow naturally?

§ Major ELLIOT
Why would it do that?

§ Sir R. HAMILTON
I am afraid that I have not made myself clear. If the multiplying factor remains at ten, and you multiply twenty by ten you get two hundred, whereas if unemployment decreases and you multiply ten by ten, you get only one hundred. There, you have the decrease depending on the unemployment alone, but by the Government scheme the decrease depends not only on the decrease of unemployment, because there also is a decreasing multiplying factor.

§ Major ELLIOT
I apologise to the hon. Member. I think I grasp it now. As a greater and greater proportion of the Exchequer contribution falls to be distributed under the formula, then the tremendous weighting necessary in the first period under the formula will not be necessary. If we continue this enormous exaggeration of the unemployment factor, it will throw quite a disproportionate amount of money in regard to this particular waiting factor. The sum which is already distributed in regard to this is not a sum of £200,000, but a sum of £600,000. The reason for the adjustment is that as the amount distributed according to the formula is increased and the fixed sum decreases the heavy load necessary to give immediate relief for unemployment is by no means so necessary, and will indeed give a wrong result if the factor we are applying to the formula continues for the whole period of the contribution. I hope that I have made myself clear to the hon. Members.

§ Mr. HARDIE
Why in regard to unemployment is there all this trouble taken in finding out by formula and by weighted 1470 population? We have Employment Exchanges which can tell the number of unemployed to a man. Why should all this trouble be taken with this mathematical formula, which takes into consideration the question of tarred roads and public roads, children under five per thousand of the population, and rateable value per head? Why are all these things thrown in as if it were some new way of finding a sixpenny puzzle to he sold in millions in order to give people mental calisthenics? Why should all this trouble be taken when the Government has provided Employment Exchanges and are paying large sums in salaries to officials to keep an exact record of the number of people unemployed. The Government cannot make their responsibilities less in this matter through a formula unless it is their intention to "lose" some of the unemployed through weighting. If you were to take a density factor of four, you would have a complication that would make it impossible of application in any period the Government eared to make. Why do we require this mathematical calculation when we know at the Employment Exchanges what is the number of unemployed unless it is the intention of the Government to find a way of not looking after the unemployed financially? This is quite a good way if the Government desire to mystify people in regard to unemployment and to prevent the nation from taking its responsibility in regard to the unemployed. If the Government are going to have any regard at all to unemployment, they cannot get a proper adjustment under the proposals in this Measure.

The DEPUTY-CHAIRMAN
The hon. Member is quite capable of understanding mental calisthenics, and he should confine his remarks to the particular Amendment, which deals only with the mental calisthenics concerned in the adjustment as regards unemployment.

§ Mr. HARDIE
The real factor in this matter is the one that finds out where the unemployed are with regard to counties, and it is that point I was stressing.

The DEPUTY-CHAIRMAN
Yes, but the hon. Member is going too far. He must not do that. It is merely a question of the adjustment of unemployment in regard to the fixed grants.

§ Mr. HARDIE
You have to get the number of unemployed before you make the adjustment.

The DEPUTY-CHAIRMAN
The hon. Member must not now get people unemployed doing that is not the subject of this Amendment.

§ Mr. HARDIE
If we are going to understand what is meant by this Amendment we have to take into consideration the weighted population of a county in the first grant period. It was that factor applying only to counties—the full density factor—to which I was referring, because, according to the Bill, it is the only one which applies to the counties. I may be wrong from the Chairman's point of view and out, of order—I want to keep within the findings of the Chair in this matter—but I want to make it clear that I am dealing with the population of a county from the first fixed grant period with regard to unemployment.
The fourth density factor applies only to counties in that relation. That was why I was pointing out that the means of discovering the factor in the counties is determined by the fourth density factor. We might have an Act of Parliament clearly understood by the people, and even by the meaner intellects, if we endeavoured to make the position clear, instead of having all this talk about formula and weighting. We ought to deal clearly with the question of unemployment wherever we find it.

§ Major-General Sir ROBERT HUTCHISON
I have tried to follow the explanation given by the Under Secretary with regard to the decreasing value of the different periods, but I am not quite clear on the point. Supposing that unemployment remains the same and is a constant figure, will the factor which is to be applied in the third period be sufficient to cover the needs of unemployment if the unemployment remains constant?

§ Major ELLIOT
Yes, the point is not whether the unemployment increases or decreases but whether the amount of money to which this factor applies increases or decreases. That amount of money increases very rapidly because in successive periods a greater and greater 1472 proportion comes on the formula and a smaller portion remains on the fixed grant. Whether unemployment falls or rises it does not alter the fact that the major sum of money is coming under the operation of the loading factor which is multiplied by ten. Therefore, as a greater amount of money is dealt with by that formula in later years, there would be a disproportionate amount of loading in those districts which suffer most from unemployment.

§ Mr. JOHNSTON
May I ask whether in the unemployment calculations it is only male persons who are unemployed who are counted, or whether a count is taken of unemployed women?

§ The LORD ADVOCATE
There is an Amendment down dealing with that point.

§ Mr. JOHNSTON
Is it going to be accepted?

§ Major ELLIOT
To ease the matter in regard to the OFFICIAL REPORT, I might say that there is a certain allowance which is being made for unemployed women, and that will be discussed at the appropriate time.