HC Deb 15 April 1937 vol 322 cc1209-37

Order for Second Reading read.

3.57 p.m.

The Secretary of State for Scotland (Mr. Elliot)

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

The Bill has four main objects. First it fixes the amount of the Exchequer contribution given by way of block grant to Scottish local authorities. It fixes that for a period of five years. Secondly, it relieves local authorities in Scotland of the payment of contributions under Section 45 of the Unemployment Act, 1934, thereby, I hope, bringing a long argument to an end. Thirdly, it makes provision respecting the calculation of the grant in future fixed grant periods; and, lastly, it amends the formula on the basis of which the larger part of the block grant is distributed among the local authorities. It will be remembered that among the reforms effected by the Act of 1929 was the abolition of the percentage and the assigned revenue grants. There was also carried through the de-rating of agricultural and industrial lands and heritages. There was made available to the local authorities a sum equal to the losses of revenue thus incurred and, in addition, £750,000 worth of new money. That Act provided that the grant should be distributed to the local authorities in the earlier years, partly in proportion to the losses of income which resulted from those reforms, and partly by reference to the new formula which was designed to distribute the grant in proportion to needs; and it was also stated that later the money would be distributed wholly by reference to needs.

As those who have studied the subject are aware, and the remainder of the House may wish to be reminded—for I would not say that everyone is personally familiar with the Act of 1929—the fundamental principle on which the system w as based was that the expenditure of the local authorities in general varies with the size of the population, but that certain classes and conditions of population require more than the average expenditure. In arriving at an allocation of the block grant to the counties and large burghs the population is weighted in relation to the numbers of young children under five years of age, in relation to low rateable value, in relation to unemployment and in relation lo sparsity of population, which is calculated per mile of road. The figures of population were thus weighted so as to take account of these factors wherever they occur either to create abnormal expenditure, as in the case of young children under five, or, as in the case of low rateable value, to hamper the poorer local authorities by yoking them, so to speak, unequally together with their fellows. In the early years of the operation of the new system about one-third of tie block grant was distributed on this basis. The transfer to the new system, in accordance with the provisions of the Act, increases this proportion, and from 15th May next more than half of the block grant will be so distributed.

Now we come to the actual sums involved. With regard to the amount of grant in the next five years, the Bill proposes an annual sum of £6,827,000 per annum, and that is £600,000 more than in the previous grant period. In addition it proposes to relieve local authorities of their liability to make payments towards the cost of unemployment assistance, which is a liability amounting now to about £745,000 per annum. Furthermore, no account is taken, in arriving at this general Exchequer contribution, of the relief afforded to county councils by the taking over of trunk roads, which amounts to about £90,000 per annum. It will thus be seen that the local authorities in Scotland will be better off in the next fixed grant period to the extent of £1,435,000 a year, than they are at the present time—a very substantial sum.

If in Scotland deductions in respect of unemployment contributions and trunk roads had been made on the same basis as in England, there would have been a decrease instead of an increase. The decrease would have amounted to £268,000 a year in the grant for the third period as compared with the second grant period. The difference between that decrease of £268,000 a year and the increase of £600,000 a year proposed in the Bill amounts to 068,000 per annum, and that is the measure of the special Exchequer relief which, if the Bill is passed, will be made available to Scotland. This is not being found by taking money from the well-to-do areas for the benefit of the poorer areas; it is not being found by making Edinburgh carry Glasgow. Edinburgh and the other relatively more prosperous areas are getting their full share of relief.

Let me illustrate the point by giving some of the reliefs which various areas are being afforded as a result of the increase in their grant under the Bill. Here are some of the counties: The relief in Aberdeenshire will be £36,000 a year, which is equivalent to a rate of is. 2d. in the £; Argyllshire, £17,000, equal to a rate of rod. in the £; Lanarkshire, £94,000, equivalent to 1s. in the £; West Lothian, £14,600, equal to 8d. in the £; Banff, £30,000, equal to 3s. 1d. in the £. Take the more highly rural areas. Caithness gets £14,000 a year, which is equal to a 3s. 2d. rate; Ross and Cromarty, £25,000 a year, equal to a 2s. 6d. rate; Shetland, £7,000, equal to a rate of nearly 3s. 5d. in the £. The Lowland counties, Kincardine and Renfrew, also get large sums, in Kincardine equivalent to a rate of 9d., and in Renfrew equivalent to 4d. in the £. I have a list of the counties here, but I am afraid of wearying the House by reading them all. It is my wish to keep to the 20 minutes' ration which is desired for Scottish speakers.

Mr. James Brown

Are all the counties and districts that are not mentioned to get nothing?

Mr. Elliot

No. Many of them are getting very substantial sums indeed. I do not wish to go over all the counties, but counties such as Ayr are getting very large sums. There is no county I have left out which has been left out because it is not getting relief. Let me now give one or two figures for the burghs: Airdrie, £12,000 a year, equal to a 1s. 8d. rate; Paisley, £21,000, equal to an 8d. rate; Dumbarton, £9,500, equal to a 1s. 5d. rate; Greenock, £33,000, equal to a 1s. 2d. rate; Edinburgh, £98,000, equal to a 4d. rate. Even Aberdeen burgh is getting £53,000 a year, the equivalent of an 8d. rate; and Port Glasgow gets £17,000, which is equal to a 3s. 3d. rate.

Mr. Maxton

Why is the Port Glasgow figure relatively so much higher?

Mr. Elliot

Because of the great need which exists there the poverty in that area and the high calls which are made upon the rates in that area. In accordance with the formula Port Glasgow will receive this very large relief.

Sir Douglas Thomson

Why does my right hon. Friend say "even Aberdeen"?

Mr. Elliot

Because it is well known that Aberdeen is very careful of its money and looks after itself very well indeed. It has been said by the hon. Member for Stirling and Falkirk burghs (Mr. Westwood) that the local authorities are not enjoying rating relief equivalent to the figures I have mentioned. These figures are equivalents, and I am giving no undertaking that the local authorities concerned will in fact reduce, or are able to reduce, the rates by these amounts.

Mr. Westwood

These figures by way of relief are given on the assumption that the whole of the cost under the new able-bodied relief system is being removed from the local authorities?

Mr. Elliot

These are the sums which are actually being found by the Treasury in one form or another for the local authorities. They are actually to get these sums.

Mr. Westwood

Are not the figures based on the assumption that the 60 per cent. contribution of the local authorities for the Unemployment Assistance Board is now taken over by the State?

Mr. Elliot

The rates equivalents I have mentioned are calculated on the assumption that the whole of the new assistance is equated to rate reliefs including the assistance derived from the repeal of Section 45 of the Unemployment Act. Whatever the local authorities were paying under Section 45, they will not pay in future, and the calculations are made as I have stated. I do not wish to suggest that the rate reliefs will be equivalent to these sums. I am giving some of the examples of what the proposals mean to the authorities concerned. I have heard it said that Glasgow's amount is over £500,000 a year. I beg the hon. Member for Govan (Mr. Macclean), who interjected a remark just now, not to press me on the point, because I think the second city in the Empire has done reasonably well out of the proposals.

Mr. Neil Maclean

The Glasgow Corporation does not think so.

Mr. Elliot

The council's representatives considered that this was a reasonable and satisfactory bargain when I met representatives of the Scottish local authorities. It may be said that local authority expenditure is already on the way to absorb many of these reliefs, that there has been, for example, a considerable increase in the cost of poor relief in recent years. That is true, but that is to say that in the main the citizens, and especially the poorer ones, are enjoying advantages which they did not previously have. The rise in the cost of social services is due to a number of causes. To some extent it is due to the increased numbers in receipt of poor relief because of the long continued depression. But there are other causes, for example the disregarding of the first 5s. of sick pay and the first 7s. 6d. of National Health Insurance, the first £1 of wound and disability pension, the whole of a maternity allowance and so forth. Relief is on a higher standard. Every encouragement is given to local authorities to administer poor relief with a sympathetic regard to the needs of individuals, and the mere fact that that is happening is not any reason for condemning these proposals and financial arrangements.

Mr. J. J. Davidson

Does the right hon. Gentleman seriously suggest that the rise since 1931, from £600,000 roughly to over £2,500,000, in poor relief in Glasgow alone, was due only to the rise in standards of relief?

Mr. Elliot

I do not say it was due only to rising standards, but I do suggest that the rise in standards has played a very large part. If we examine the figures of the able-bodied poor during that time, we find that in the last three years the numbers have fallen. It is true that the numbers of other classes of poor have risen and that is very largely due to some of those provisions which have been quoted to the House.

Take another example. In recent years more and more attention has been given to the question of the health and nutrition of those who come under the social services. That costs money. But it is not waste; we get a return for it; and the Poor Law has played its part in maintaining the standard of health of the people. Everyone is familiar with the improved death rate, the increased expectation of life, the improved heights and weights of school children. We are dealing with large sums, but these large sums are sums for which we have value. Take one figure, from a recent report of the Medical Officer of Health for Glasgow. He points out that boys of nine years of age in room and kitchen houses are two inches taller and four pounds heavier than boys from similar houses in 1907; and that at 13 years of age they are 2.7 inches taller and nine pounds heavier. The girls show even greater improvements. It is on these smaller houses that the weight of depression has lain most heavily. It is only fair to give credit to the social services for the improved physique which is now shown by the children. Let me say again, however, that the increase in the total amount of rate-borne expenditure would only have warranted an increase in the total grant of a little more than £500,000. Under the Bill the relief to local authorities will be nearly £1,500,000.

As I have mentioned, the whole of the block grants will eventually be allocated among the counties and large burghs on a basis which has regard solely to the needs of each area. For that purpose there is to be calculated for each area a figure of weighted population which determines the share of that area of the total sum available. In our review of the position a formula has been worked out which has more regard to the needs of the poorer areas. Greater weight is given to unemployment and sparsity, and so substantial additional assistance will be provided for areas which stand in the greatest need of it—that is, industrial areas where unemployment is high, and poor and sparsely populated districts like the Islands and Highlands. By the great increases in the grants and the variations in the formula it will be possible, not only to achieve this object without prejudice to the interests of the local authorities elsewhere in Scotland, but to provide increases to practically every area in Scotland.

I now turn to the Bill itself. Clause r provides for the total amount of the General Exchequer Contribution, and it is, in fact, the gist of the Bill. The Clause also lays down a new minimum proportion of grants to expenditure and provides for the repeal of Section 45 of the Unemployment Act. With regard to that minimum proportion, the special relief which has been given to Scotland involves a departure in subsequent grant periods from the provisions of Section 53 of the Act of 1929. That was the Section which laid down the minimum proportion of grant to expenditure. The House can see that if the unemployment contribution and the sum in respect of trunk roads had been deducted from the normal grant, the amount of the grants would have been £5,960,000, and the minimum proportion 23.4 per cent. Clause 1 provides a minimum proportion of 24.6 per cent. with a view to securing the continuance of a substantial proportion of the special relief for Scotland in subsequent grant periods. If the special factors for which allowances have been made disappear entirely, the Scottish authorities might have found a sudden diminution in income in the next grant period for which they had not made provision. This will be obviated by the fact that we have provided for a rather higher minimum than would otherwise have been the case.

Clause 2 provides for the substitution of the revised formula for the existing formula. The new formula is more heavily weighted for unemployment and sparsity. Clause 3 provides that in consequence of the changes in the formula, the weighted population of the first fixed grant period shall be calculated for the purpose of Additional Exchequer Grant as if the revised formula had been operative. It also provides for mitigating reductions in the Additional Grants where there has been a fall in the weighted population. There has been a fall, for instance, in the number of children under five, and that produces a considerable fall in the weighted population of the county; and that and other instances might bear heavily on a county with expenditure which it was not possible to reduce in proportion.

Clause 4 does not affect the amount of the grant payable to the local authorities, but contains provision with regard to the allocation of certain portions of the grant within the county in respect of special rates. With regard to Clause 5, under the 1929 Act all counties gained, but all portions of a county did not gain equally. It was accordingly provided that the losses in any year should be made up as to half by a contribution from the Exchequer, and as to half by contributions from the gaining areas. It was also laid down that after the first five years these contributions would be reduced by one-fifteenth every year so that they would disappear in 15 years. Certain areas represented that annual reductions of one-fifteenth might cause hardship, and consequently Clause 5 provides that if a council satisfies me that there would be hardship in any area, I may make modifications by ordering a reduction of one-thirtieth instead of one-fifteenth. I do not think that there will be many such cases.

Clause 6 takes the place of Section 72 of the 1929 Act. While carrying out the investigation under that Section, the local authorities asked that, in view of the proposed alterations in the formula, which are designed to meet economic conditions existing in some areas, and in view of the possibilities of substantial improvement in certain areas, the working of the formula and the method of distribution within the counties should be again reviewed. This Clause provides for such an investigation. Sub-section (1) relates to the subjects of the investigation, and Sub-section (2) provides that the investigation may take place in whole or in part at the end of the third or fourth fixed grant period as may be determined. I contemplate that the time of the investigation will be fixed in consultation with the representatives of the local authorities. The local authorities of Scotland which have derived such great advantage from the last investigation are particularly interested in the question of a further investigation before any changes are made.

The estimates set out in the White Paper show that the Bill will give substantial additional assistance to the areas which stand in greatest need of it. The total additional relief amounts to nearly £1,500,000, and over £1,000,000 will be devoted to the necessitous areas. Substantial assistance also will be given even to the less needy areas. The local authority representatives, for whose cooperation in the investigation I am very grateful, agree that the results are very satisfactory. I trust that the House will think so too.

4.24 p.m.

Mr. Westwood

The right hon. Gentleman made special reference to the 1929 Local Government (Scotland) Act. But for that Act there would have been no necessity to introduce a Bill of this kind. He described that Act as a reform. With its derating provisions, however, it was one of the most reactionary pieces of legislation ever placed on the Statute Book, particularly in its application to the finances of local administrative bodies. The Bill which we are discussing provides money for the general services of our local authorities in Scotland, with the exception of education which is provided for from another source, and with the exception of public assistance which is provided for from no source, but is a burden which has to be borne entirely by local ratepayers. Special reference has been made by the right hon. Gentleman to the work done by the Investigation Committee, but that committee has no power to deal with the justice of the amount that was being provided nor with the services that were to be brought into the calculations. I can speak with some knowledge of that because I was, fortunately or unfortunately, one of the Investigating Committee. The formula which the right hon. Gentleman has now placed before the House in the Bill is very complicated, and I will not attempt to deal with it. I noted that the Secretary of State himself skipped ably round it and did not try to deal with its constituent parts.

I wish it had been possible, in dealing with the distribution of the money available for the local authorities in Scotland, to have had something far simpler than this formula, something as simple as the formula that was applied by the Education Department in the distribution of the Education Fund of Scotland, A boy in the first standard in a Scottish school could easily have understood that formula. The number of schools with pupils numbering less than 40 are taken first, and then the number of teachers and pupils are considered. In order to meet the needs of the distressed areas, you simply made a deduction of the rate per £ so as to enable fairness to be applied in the distribution of the fund. It was an easily understood formula. Here, however, we have such a formula that the Secretary of State himself, I think, would find it difficult to pass with full marks if he were to try to deal with it. It is the result of the application of the formula that really matters in the distribution of these sums of money, and the Committee which carried through the investigation were satisfied that the money available—then £800,000—could not be more equitably distributed than it was being distributed by the application of the formula under discussion.

The Secretary of State has made special reference to the financial result of the adoption of the recommendation which is shown in Appendix 5 of the White Paper. The benefits to which he has referred, however—the 3s. 3d. per £ reduction in rates, or, as in the case of Falkirk, 5d. reduction, or, as in the case of Stirling, 9d. reduction—entirely depend upon whether the whole of the cost of the Unemployment Assistance Board assistance is now to be borne by this fund or by the National Exchequer. Let us see whether that is how it is working out. I find that instead of being relieved of the present burden of approximately £5,000 a year in respect of the relief of the able-bodied poor, we shall be relieved only of £3,000.

Let me give the position of affairs under that authority, dealing first with payments in cash. On 26th March, 1937, there were four cases in suspense, on which the total outlay was £5 7s. 3d., the town cases numbered 188, on which payments amounted to £174 15s. 11d., and there were 12 other-authority cases on which payments amounted to £10 7s. 6d. In cases where there was payment-in-kind, there were 11 town cases, on which the outlay was £6 16s. 9d., and one other-authority case on which the payment was 15s. There was a total of 216 cases with a weekly liability of £198 2s. 5d. What is to be the position under the new proposals? It is the Unemployment Assistance Board which determines which cases it will take over. It is not taking over full liability, as local authorities were led to believe. Local authorities have rights of appeal, but not to this House, nor to any tribunal other than that set up by the Unemployment Assistance Act, 1934.

Here is the result as it applies to the town to which I am referring, and which is typical of Falkirk, Stirling and the other large boroughs—I am speaking from the large borough point of view. Dealing first with payments in cash, on 2nd April, 1937, after the transfers to the Unemployment Assistance Board, we are left with one case for which we are paying 5s. and of town cases we are left with 84. The Board have taken only 104 cases and left us with 84, and the cost to the ratepayers is £73 14s. Of the other-authority cases they have taken only six and left us with six, the cost to the ratepayers being £4 1s. 6d. As regards payment-in-kind, they have taken over only five of the town cases and left us with six, and of the other-authority cases they have left us with one. Therefore, we are left with 98 cases out of a total of 216, and left with a burden of £83 19s. a week, when we had expected to be relieved of that charge under the pledges, or promises, that under the new formula the burden of able-bodied relief was to be removed from the shoulders of local authorities. To sum up this part of my case, the Unemployment Assistance Board have taken over 118 cases, or only 55 per cent. of the cases, at a weekly cost of £114 3s. 5d., or 56 per cent. of the cost. In addition, there are two cases still pending, on which the expenditure amounts to £3 3s. 6d. The public assistance officer intends to appeal against the decision not to take over eight cases, which affect us to the extent of£6 14s. The net result of all that is that we are left with a burden of £2,720 a year, which is approximately a rate of 2½d.

The Secretary of State made special reference to the increased charges which local authorities have to bear as a result of improvements in the law dealing with public assistance. Public assistance is not one of the ingredients of this formula. In the town which I have taken as an example, and which I have only selected because I happen to be a local administrator there and was thus able to get the figures more readily, the total number on the ordinary poor roll on 15th May, 1934, was 477, and on 15th May, 1936, it was 552, an increase of 75. I am not dealing with persons, but with cases. Then there were a number of old age pensioners; because if we set up a standard of relief for the ordinary recipients of public assistance we cannot allow old age pensioners to starve, and that is what it means, on the miserable 10s. a week provided as pension. On 15th May, 1934, the total number of old age pensioners being assisted by that authority was 276, and on 15th May, 1936, the number was 347, an increase of 71. Taking the two classes together, in 1934 there were 753 cases and in 1936 889 cases, an increase of 146.

Let us see what difference the improvements have made in the cost to the local authority. I am not complaining about the improvements, which were long overdue, but the point is that in the formula there is no provision for the costs that have to be borne by the local authority in dealing with ordinary public assistance cases. The weekly outlay for these ordinary poor cases was £67 7s. on 15th May, 1934, and £89 2S. On 15th May, 1936, the increase being due to the alterations in the law. Those figures are equivalent to an annual expenditure of £3,502 4s. in 1934 and £4,633 4s. in 1936. As a result of those alterations in the law, we shall be compelled on 15th May of this year to budget for approximately £4,500 a year in respect of the ordinary poor. So far as Kirkcaldy is concerned, there will be practically no advantage derived from the alleged additional advantages provided by this Bill, and what applies in the case of Kirkcaldy applies equally in the case of Falkirk. The cost of public assistance in Falkirk next year will be approximately £6,000. All that they have been provided with under the formula is approximately £5,000, so that their rates are likely to be increased rather than reduced. So much for the alleged benefits given to local authorities by this Bill.

There is another department of local government for which this Bill makes no provision. There are the increased charges for policing—for the "speed cops" and the pedestrian crossings and Belisha beacons. We get only 50 per cent. of the expenditure from the Scottish Office and the other 50 per cent. has to be borne by the local ratepayers. There is before us now a Bill, which I am sure will go through, which will bring about a vast improvement in the maternity services in Scotland, but it will add to local burdens; provision will also have to be made for physical training and recreation; and then there is the increased cost of housing. The cost of new houses for which we have received estimates during the last month has risen by 10 to 15 per cent., and that increase has to be borne wholly and solely by the local ratepayers, unless the local autho- rities are prepared to raise the rents, which are already high enough, having regard to the ability of the working-classes to pay.

It will be seen therefore that this Bill does not meet the increased costs which will fall upon local authorities. It provides no solution of the financial problems of local authorities. It is only a patch, just a little less porous than the other patches which have been provided to deal with this great problem of local expenditure. The whole question must be reviewed; a system of taxation ought to be introduced which would be just to local authorities. Even the gentleman who moved the vote of thanks to the Secretary of State when we were discussing this problem with him is one of the greatest advocates of a new system of finance to deal with the problems of local administration. I believe that almost any system would be better than the present —a local income tax for the purposes of local government, or, preferably, a Bill which would give us power to tax land values and enable the community to get for the community the benefits which have been created by the community. That would be better than the Government's derating legislation, which made the problems of local administration 10 times more difficult than they were previously. This Bill reminds me of a grace which I have more than once heard at a Christian Socialist's table: For what we are about to receive make us truly thankful. For what we are entitled to get give us courage and strength to go on fighting until goodness and abundance are distributed to all. So far as this Bill is concerned, we accept the little that is in it thankfully, because we did not expect to get so much from this Government. But we will go on nevertheless fighting until we have a better system of finance to deal with the problems of local government, and we will have the courage to go on fighting until we have a system at least for local purposes of taxation of land values.

4.46 p.m.

Sir Archibald Sinclair

The hon. Gentleman who has just sat down is one of the prime movers in the campaign for limiting the time of speeches and has taken the initiative in asking all speakers to keep their speeches within a limit of 15 minutes. Nevertheless I feel that so interesting was his speech that the House would not willingly have forfeited one of the five minutes by which he has exceeded the limit, and, in case the hon. Member should feel the slightest embarrassment in having entrenched on the time allotted to him let me make to him a free gift of five of my minutes so that after that we shall start again all square and I shall keep within a limit of 10 minutes.

I do not rise to oppose this Bill. In the 10 minutes I have allotted myself I shall have no time to go into the larger question of the 1929 Act, of which, however, I am just as strong a critic as the hon. Gentleman who has just sat down. The question that I think is before us is whether the work of revising the block grant has been well done, and I ought to tell the House quite frankly that I think it has. At the same time I think the right hon. Gentleman the Secretary of State for Scotland will not think me ungenerous if I feel not altogether inclined to give him and the Government quite so much credit as he claims. It is my recollection of the 1929 Act that a statutory duty falls on the Government to maintain the statutory proportion between the total of grants and the total of grant and rate borne expenditure. If it is true, as the right hon. Gentleman said, that local authorities have had imposed on them by the decisions of this House large measures of new expenditure since the 1929 Act was passed, it follows that it is the statutory duty of the Government to provide grants on a scale which would maintain the proportion between the grants and the total of grant and rate borne expenditure by the local authorities.

On what lines has this revision been conducted? It has been conducted, it is clear from the White Paper the Government issued, on the lines of ensuring that local authorities should be afforded, by means of the block grants, assistance which would vary with the needs of the local government services in different areas in relation to the ability of the areas to meet the needs. It is an endeavour to allocate grants scientifically in regard to the needs of the different areas. If the new measures taken by the Government had not been taken, the block grant would have been reduced—the right hon. Gentleman said by £268,000, but according to the White Paper by £245,000. It would have been reduced by one of those two substantial figures. It is now to be increased by £600,000. A genuine effort has been made to meet the different interests of the different areas.

I want to draw the attention of the House to one broad result of that effort. If you take the six localities that have come best out of this revision of the block grant, Shetland, Port Glasgow, Caithness, Banff, Ross and Cromarty and Inverness, you will find that five of those six are in the Highland area. If this is the result of a scientific assessment of the need of the several authorities is it not amazing that those areas should not be entitled to benefits under the Special Areas Act, that they should not be treated as a Special Area by the Government?

I would only say, in conclusion, that I think the formula is good. It has stood the test of time but that does not abate my hostility to the 1929 Act. All the criticisms that I and other Members urged have, I feel, been vindicated by the passage of time. At every meeting of the Convention of Royal Burghs in Scotland strong hostility is expressed to this Act by the representatives of the burghs, and I hope the time will come when it will be radically amended. With one other opinion of the hon. Member who has just sat down I also agree. Just as under the 1929 Act we got derating for industries, prosperous and otherwise, and for farmers, so we ought to have derating for households, and that means the valuation of land, the rating of land values and the transference of the incidence of rating from improvements to site values. With those observations I welcome this Measure and shall be glad to support it.

4.54 p.m.

Mr. G. Hardie

I was surprised to find the last speaker saying that the formula had worked properly. The very fact that the formula has had to be amended proves that it did not meet the need. A formula is something that, when you apply it, always gives you the same result. If that formula is not efficient or sufficient you have got to change it, but it ceases to be the original formula. Then with the new formula you find the Secretary for Scotland hard put to it and trying to make a hush-hush in regard to certain moneys which have fallen to certain places. If the formula had worked properly, as it has not, there would be no need for any hush-hush. No area would have got more than is really needed. But how can you call a thing a formula which fails to do what is said to be the function of the formula? The 1929 Government were in serious difficulties and wanted to camouflage the real truth. So they got a mathematician to make a camouflage formula. I congratulate him on the result. He did it very well indeed. He misled not only the Members of the Tory party, but all the Members of the Front Bench who had to deal with it tried to escape from it when it came up in the House.

If we wanted to find out where there is unemployment we would go to the Labour Exchanges and get the figures of people registered as unemployed. If we wanted to know the needs of those unemployed we would go to authorities who would give the facts. But that would be too straightforward. We send out a surveyor to measure the roads in order to find out whether someone is hungry or is not. It is like a couple of comedians called Flanagan and Allen. One says, "I have got a German Emperor in my bath room." The other says, "What do you mean?" "A Kaiser!" says the first one. "Oh," says the other one, "you mean a geyser." Of all the worst stupidities this is a winner, this formula. Even to-day you are not finding the need under the formula. You cannot do it. As was explained by the Secretary for Scotland the best reason for the differences in different districts is that the need is greater in some. But that need is not measured by the formula. It came through pressure by representatives here in London on the Scottish Office.

The formula has never worked. If it had, it would tell how much had gone in the way of relief as derating and it would have told where that had gone. I have figures in relation to the city of Glasgow in regard to premises that have been de-rated showing that the rent has increased exactly to the amount of derating that was given, in a great many instances taken from the Assessor's Roll. If we are dealing with the subject of distress in an area, suppose you take the upper parts of Lanarkshire, where it is said things are not so bad, the formula does not reach that area at all. There are in those villages, people of the real honest country type, who are suffering no end of torture. They have not had the associa- tions that would enable them to get relief, but, if it had been a formula under which these things were searched out, there would have been no need for those people to be suffering. They and their needs would have been found and met. If we are to have a measurement of needs, why does not the Government adopt the direct method? If there is a hungry man anywhere requiring assistance he should get it. Why are such stupid factors as road measurement and the number of children under the age of five introduced into a formula which might have operated as a formula if it had been properly drawn up? The Secretary of State admitted that he had to go outside the formula, because of the greater need outside it. Should not that be sufficient for the Government to say, "Let us scrap this thing." It has failed everywhere. It has failed in the Highlands; it has failed in the big cities with their industrial unemployment. What is to happen to your "rejects" under this Measure—those who are outside the Unemployment Assistance Board and unemployment insurance? These are to come under something else. I hope that the Government will see to it that this is the last time for us to discuss in this House such an unfortunate thing as that which has been called a formula.

5.3 p.m.

Mr. Guy

I am rather surprised at the attack made by the hon. Member for Springburn (Mr. Hardie) against the formula under the 1929 Act. It is perfectly clear that, though it may not be an ideal formula, it has worked, and under this Bill the formula will work better. It is weighted in favour of the Highland counties, not because of the volume of unemployment which might qualify them to be classified as Special Areas, but very largely because of the great mileage of roads in those areas. One rather curious point about the formula is the consideration given to the number of children under the age of five. I discovered that the reason for that is that Edinburgh has a relatively small number of children under the age of five and does rather badly under the formula compared with other areas. That is clear from the figures given by my right hon. Friend the Secretary of State. The unemployment in Edinburgh is not nearly so bad as elsewhere, and we make no complaint, because Edinburgh did not get as much as other areas under the formula. We consider the equity of the formula is justified. It is based on the principle that the greater proportion of Treasury money should go to the areas whose need is the greater. The needy areas will get a considerably larger sum of money, and while the local authorities, owing to the increased expenditure placed on them, might not be able to lower their rates I am not surprised that they welcome this Measure for the help which it will bring to them from the Treasury.

5.6 p.m.

Sir Robert Horne

I should be ungrateful if I did not express my appreciation of the trouble to which the Government has gone to meet some of the objections raised by myself and by hon. Friends opposite. We have been urging on the Government for some time that the amount of relief given worked out inequitably in regard to the very districts which most required assistance. I gave some illustrations, and compared Glasgow with cities in England which were having a more prosperous time and had much less of a burden to bear in the way of public assistance. In this Bill we have now got—I will not say entirely full redress, but something which goes a very long way towards it. The formula does now take into account the extent of the unemployment in any particular area, and it helps the great, wide, scattered districts like the Highlands, with their sparse populations, that are not nearly so wealthy. It helps those areas whose burdens of rates are heaviest to a greater extent than before. I regard this as a great advance and as an attempt to follow the principle that we have long been urging, that the need of the depressed district is really a national burden. I do not think a great city like Glasgow can complain if an addition of £529,000 is provided by this Bill, in addition to something like £1,000,000 sterling which it was already obtaining for the support of the poor. I give my most hearty support to the Bill.

5.10 p.m.

Mr. Maclean

We shall all agree with the right hon. Gentleman the Member for Hillhead (Sir R. Home) in acknowledging that some redress has been granted to those areas which have been severely hit, but the complain) which is common is the one which is supposed to come from all. Scotsmen, namely, that we are not getting sufficient. It has been observed that the Secretary of State skated very skilfully away from any explanation of the formula. When it was brought to the House originally there was considerable discussion upon it. In all the explanations given by the advocates of the formula at that time, we were informed that it was going to work equitably between district and district. If a formula works properly, whether in manufacture or anything else, it is naturally expected that the product of that formula will be up to standard. If it does not work properly, the product will undoubtedly be below standard and wasted. I challenge the Secretary of State to point out any part of the country in which the formula, as adopted under the 1929 Act, has operated in the manner in which it should in preventing disparities. It was introduced as a formula based on scientific principles, but even now, when the methods are stated to have been adjusted, what guarantee is the Secretary of State going to give to the House that before the next five years are over he will not require to come to the House with a proposal for another change in the formula? You have already destroyed or corrected the formula that was brought in as being the most scientifically prepared for the adjustment of allowances for Poor Law purposes.

I want to bring the Secretary of State back to the facts of the operation of the formula. He has given to Glasgow a larger sum of money than it would otherwise have obtained. He thinks we should be grateful for that, and we are, but we are not grateful for having actually less than we ought to have. It was expected that the Government were going to take over all the able-bodied unemployed and relieve Glasgow and other local authorities of the expense which they have previously had to bear in maintaining them. Undoubtedly, the Government have taken over some, but what is happening, as the hon. Member for Stirling and Falkirk Burghs (Mr. Westwood) pointed out, is that a large proportion of able-bodied unemployed are still being left on the road. The Unemployment Assistance Board officials are throwing back a certain proportion of the able-bodied unemployed who are calculated never to work again. These men have lost unemployment insurance and have gone out of health insurance because of long periods of unemployment. I am minimising the number when I say that in Glasgow there are at least 3,000 men who will be thrown back upon public assistance to be maintained by the Glasgow authorities. That expenditure ought to be borne by the Unemployment Assistance Board, but it will be placed upon the public assistance rates of Glasgow, and the citizens will have to shoulder the burden right through the years until 65.

The Secretary of State for Scotland spoke about a sum of money which was being given as additional. According to the White Paper it works out at is in the on the rates. On the other hand, the expenditure during 1936 on the destitute able-bodied unemployed required a rate of 2s. 8.7d. in the £. Consequently, when the Minister comes forward with a statement that he is giving us back 1s. out of the 2s. 8d. that was paid, he must not expect us to be exceptionally grateful. I suggest that the Secretary of State for Scotland, while not forgetting that he is a Minister of the Crown and must take a broad view of all cases, should remember at the same time that he is one of the Members for Glasgow, which is the hardest-hit city in the Kingdom, in regard to unemployment. Glasgow has paid, during the last 10 years Poor Law relief amounting to over £12,000,000, for poverty-stricken individuals, many of whom had run out of their unemployment insurance benefit and health insurance. No town in the country has had to bear heavier expenditure than Glasgow during the past 10 years. It began two years before the passing of the derating Act, which included within it the formula which we have here, and which is now amended. In considering further remittances to Glasgow, I hope that the Minister will consider carefully the special circumstances in which Glasgow has been placed, that he will make due allowance for the burden which has had to be borne and that he will not seek to place an additional burden upon us.

5.18 p.m.

Mr. McKie

I would join, as a county Member, with the right hon. Gentleman the Member for Hillhead (Sir R. Horne) in congratulating the Minister and the Government upon bringing forward this legislation. I am in agreement even with the right hon. Gentleman the Member for Caithness and Sutherland (Sir A. Sinclair); I feel that I am on sure ground. I understand that we are not to have a Division on this Measure, and that speaks very well for the way in which the local authorities are receiving it. Naturally, we all like to get more, and when any legislation of this character comes before the House affecting any particular interest, it is seldom that some hon. Member does not say that he expected very much more than is being proposed. One is inclined to feel that nothing is being done for the interests at stake. We have had some criticism of this kind on this occasion, about what are alleged to be the meagre increases in the amounts which are to be given for local administration in Scotland.

I cannot speak with first-hand knowledge of the harrowing kind of detail which the hon. Member for Govan (Mr. Maclean) has just given to the House. I am in the fortunate and happy position of representing two counties, neither of which is wealthy in the sense of having a very rich rateable value, but there is, mercifully, very little or no unemployment. I am therefore spared having to come to close quarters with the kind of problem which the hon. Gentleman has so graphically illustrated. I can assure him, at the same time, that I listened with the very greatest interest to all that he had to say on the point. If I might make a protest, it would be that the two counties which I represent are not within the category of those who are receiving the largest benefit. The net gain in the third fixed grant area, after taking account of the discontinuance of the unemployment contributions and the effect of the transfer of trunk roads will be £4,478 for the Stewartry of Kirkcudbright and £5,244 for the county of Wigtown.

On the question of the transfer of trunk roads, when the Bill on that subject was going through the House some of us endeavoured to get the existing loan liability of local authorities removed when the Government were taking over the maintenance of those roads but we were unsuccessful. I remember that I was severely criticised by my local authorities for not going into the Lobby with the right hon. Gentleman the Member for South Ayrshire (Mr. J. Brown) on that occasion. No doubt I should have been well advised to follow his good advice. We were closely associated on that occasion. But, as so often happens at such times, the matter assumed a purely political aspect and those of us on the Government side were quite reassured as to the position of local authorities.

The amount of benefit given to those local authorities, particularly in the case of the counties, owing to the fact that a reduction is being made in the block grant, now that the local authorities have no longer to assume responsibility for these great arteries, will be largely offset in the two counties I represent by their no longer having to maintain a very long stretch of public road, for the maintenance of which it is right that the Government should assume responsibility. While we are receiving this increase we are sensible of the fact that a reduction in the grant is made in respect of roads. We hope that our plight in the future will not be as some anticipate it will be, and that the promise of the Minister of Transport made upon the occasion to which I have referred will be effectively carried out. I am pleased to support the Second Reading.

5.27 p.m.

Mr. Watson

While it is true that we do not propose to divide against the Bill, I hope that the Secretary of State for Scotland will not take it for granted that we are blind to what is done this afternoon. The impression has been created that upon a certain date the Government were to take over responsibility for the maintenance of the able-bodied poor. That impression has been abroad ever since the last Unemployment Assistance Act was passed. My hon. Friend the Member for Stirling and Falkirk Burghs (Mr. Westwood) went into the details and told the House how the new formula will work out. Those of us who have been keenly interested in the unemployment problem for some years have always suspected that when the date came for the able-bodied poor to be taken over the Government would select the individuals for whom they would become responsible and leave a certain proportion of the able-bodied unemployed upon the shoulders of the local authority. I want to know whether in the larger burghs and county areas the local authorities are to be left with a con- siderable number of unemployed to maintain. Up to now the public have had the impression, or have been given it, that the Government were to become responsible for the maintenance of all the able-bodied unemployed.

I am very pleased that the point has been put so clearly by my hon. Friend the Member for Stirling and Falkirk Burghs. He drew attention to another aspect of the matter. Since the Local Government Act of 1929 was passed an endeavour has been made to equalise the burden of the ratepayers of the country, and ever since that time local rates have been rising. This House has been placing additional burdens on the local authorities, and has given them additional duties, which have increased local expenditure, and, while it is true that under the Local Government Act, 1929, and under the Measure which the Secretary of State for Scotland has introduced this afternoon, an endeavour is being made to spread the burden more equally over the whole of the ratepayers of Scotland, the fact still remains that local expenditure has been increasing in recent years, and we should have liked to see brought before the House a much more generous Measure to meet the increased burden that has been thrown upon local authorities.

We were assured that the Measure of 1929 was going to do certain things in connection with our local government system—that it was going to stop overlapping, and that it was going to reduce expenditure so far as administration was concerned. We may have achieved a certain measure of simplification, and we may have been able to stop some of the overlapping that existed before 1929, but I question very much whether our local administration is costing less now than it did before 1929. So far as I am aware, no figures are available showing the cost of local administration now, under the Act of 1929, as compared with the conditions before 1929, but I should be surprised to find that our local administration expenditure is less to-day than it was before the Act was passed. We are not dividing against the Measure; we welcome what has been said this afternoon by the Secretary of State; but he must not take it for granted that we are entirely satisfied with what has been done. We want more relief for our over-burdened ratepayers, because, in every area where there has been heavy unemployment for a considerable time, the ratepayers may make up their minds that they will have to make themselves responsible for the maintenance of their able-bodied unemployed for a very considerable time to come.

5.33 p.m.

The Under-Secretary of State for Scotland (Mr. Wedderburn)

I think we are entitled to congratulate ourselves on the expedition with which we have disposed of this Bill. We shall agree that the importance of the Measure to Scotland must not be judged by the amount of time we have taken over it; and I think we might also add, without any affectation or arrogance, that the value and usefulness of the speeches which have been made is not to be judged by the length of time they have taken up. As we have still four more Bills to deal with, I must endeavour to be equally brief, and will confine myself to trying to answer as well as I can the main points which have been raised and the main questions which have been asked.

The hon. Member for Stirling and Falkirk (Mr. Westwood) said that the Secretary of State had skipped round the formula, and did not describe how it was calculated; and that observation was also made by the hon. Member for Govan (Mr. N. Maclean). I know these hon. Members will agree that, in order to understand the formula, it is necessary to have some assistance, but it is not quite so complicated as one would imagine on first catching sight of the numerous mathematical symbols which it contains. The House will find it in Appendix III of the White Paper. If one were to read out the factors one by one, it would sound, perhaps, a little out of place in a Debate in the House of Commons, but the substance of it is this: There are four factors which govern the weighting of the population figures for the purpose of calculating grants. These are the amount of the rateable value, the number of children under five, the amount of unemployment, and the sparsity of population. The hon. Member for Govan and the hon. Member for Springburn (Mr. Hardie) also said, with some plausibility, that this formula was radically unsound because it had had to be altered so much, and the hon. Member for Govan said that we had had to scrap the formula. I do not think that that is quite doing justice to the formula. It has not been scrapped, but revised, and there was, of course, provision in the original Act—

Mr. Maclean

May I draw the attention of the Under-Secretary to the heading of the fourth column on page 16? It is not, "Suggested Revised Formula"; it is "Suggested New Formula." That must mean that there was an old formula.

Mr. Wedderburn

Let us say that the principles ort which the formula was based have been revised. That was provided for in the original Act, and is provided for in this Bill for the future. The first two factors—rateable value and children—have not been changed at all. The alterations we have made are in respect of the last two—unemployment and sparsity.

Mr. Hardie

Would the hon. Gentleman tell us what is the relation between the last two factors (f) and (g) to (a) on page 16?

Mr. Wedderburn

I do not see where that comes in. The last one that I have on page 16 is W.

Mr. Hardie

That is the wrong one.

Mr. Wedderburn

With changing circumstances, such as occur in an industrial area, you cannot have a rigid formula which will apply for all time; there must be provision for its being revised from time to time.

The hon. Member for Stirling and Falkirk gave us some very interesting figures about the numbers of men who were taken over by the Unemployment Assistance Board on the second appointed day, and the hon. Member for Dunfermline (Mr. Watson) tells us that there was an impression that the State was going to take over the responsibility for all the able-bodied unemployed in the country. I think that perhaps I ought again to make quite plain what the position has always been in regard to that matter. It has never been said that the State would take over the whole of the able-bodied unemployed. The position has always been that the State, on the second appointed day, would take over all the able-bodied unemployed who came within the National Health Insurance scheme. That, of course, is much wider than the Unemployment Insurance Scheme, because it covers practically the whole working population, but there are a certain number of persons who do not even come under the National Health Insurance scheme, and who in any case would always have been left to be dealt with by the local authorities, and not by the Unemployment Assistance Board.

Mr. Maclean

While it is true that a large number may fall out of National Health Insurance, the fact remains that, so long as they are under 65 and have previously been paying into the Unemployment Insurance Fund, they can register at the exchange as able and willing to work. Therefore, they are able-bodied unemployed, and are rated as such on the public assistance roll when they return to it.

Mr. Wedderburn

Yes; I am merely stating the scope of those classes of the population who were to be taken over by the Unemployment Assistance Board. There has never been any doubt as to the qualifications, and it is not a matter, as the hon. Member for Dunfermline suggested, of picking and choosing on the part of the Board; they have to take over all the able-bodied unemployed who, as provided by the Act of 1934, come within the scope of the National Health Insurance scheme.

Mr. Westwood

The point I was making was that we were paid on an expenditure which we carried only provisionally until the second appointed day. We were paid 40 per cent. by the State, and the ratepayers had to provide 6o per cent.; and it is those cases in respect of which we were receiving this 40 per cent. payment that the Board have refused to take over. The Unemployment Assistance Board are exercising to the full their powers under Section 36 of the Act of 1934, which gives them power to determine the individuals who are available for work. If a man happens to be 60 years of age, they put him down as not likely to be normally employed, and, although he is still fully able-bodied, the cost becomes a charge on the ratepayers instead of a charge under the new formula.

Mr. Wedderburn

On any disputed point of that kind the local authority has the right of appeal—

Mr. Westwood

Not to this House or to you.

Mr. Wedderburn

The hon. Gentleman was not quite sure what would be the result of some of the appeals which were going to be made. The 40 per cent. contributed by the State to the expenses of the local authorities in respect of able-bodied unemployed was on the basis that not all of the able-bodied unemployed would come on to the Board, because it was always calculated that a certain number would be altogether outside the scope of the National Health Insurance scheme. The only point at issue is whether certain persons ought to be regarded as coming within that scope or not. I hoped to get fuller and more detailed information before speaking in reply to the figures which the hon. Gentleman quoted, but I will give him all the information we have been able to acquire in the short time available. It was anticipated by the Ministry of Labour that about 100 persons in Kirkcaldy would be taken over by the Board. They did not know the number definitely, but in all cases the local authority has the right of appeal. The figures given by the hon. Gentleman, which, of course, I accept, are that the Board has taken over 118 out of 216, leaving 98, that is to say, the very low fraction of 55 per cent. I cannot check these figures in Kirkcaldy, or say what, if any, is the special explanation of them, but I can say definitely that, if only 55 per cent. have been taken over in Kirkcaldy, it is very much less than the proportion which is being taken over in Scotland as a whole. Kirkcaldy comes in the Dundee district, and in the Dundee district as a whole the number of cases ruled out under the Act does not exceed 25 per cent., 75 per cent. being taken over by the Board.

The hon. Gentleman concluded his speech by reciting the very robust and sturdy grace which well represents what ought to be the attitude of all Scotsmen towards Measures of this kind, "For what we are about to receive make us thankful and enable us to go on fighting for what we are entitled to get." But perhaps the attitude of himself and his friends is better expressed by the grace uttered by the small girl, whose mother had refused to allow her a second helping of pudding, "Thank God for a fairly good dinner."

The right hon. Baronet the Member for Caithness (Sir A. Sinclair) was exceedingly generous in his disposal of time. Having promised to concede five minutes to the hon. Member for Stirling, he only spoke for seven minutes, which left a balance of three minutes for the general benefit of the House. I am very grateful for his support of the Bill. The only point that he made which would seem to require an answer was this. He said that under the existing law which required a certain grant calculated as a proportion of local authorities' expenditure to be paid by the Treasury, and this grant then divided up among them according to the formula, there would have been a very substantial sum available. I think for the sake of clarity I ought to remind the House what that sum would have been. Under the existing law, the amount available for Scotland would have been £6,700,00o, less the Section 45 contributions under the Unemployment Act, which would have brought it down to £5,900,000. The gain to local authorities would have been about £500,000 offset by these contributions. By comparison nearly £1,500,000 is gained under the Bill. The position would be more clear if we compare it with what has happened in England. They were entitled to a statutory increase of something like £4,750,000. Deducting from that the £2,000,000 which had to be paid by local authorities under Section 45, that brought the increase down to £2,750,000. In Scotland the increase of £,500,000 which was due would have been less than the amount payable by local authorities under Section 45. That would have brought down the total payment to £5,900,000, still leaving a net gain to local authorities of £500,000. In fact, while the total gain to which we were statutorily entitled was £500,000, we have another £868,000 which represents new money from the Exchequer.

The right hon. Baronet went on to point out that since the five areas which received the largest amount of relief under this Bill were Highland areas, the Highland areas ought to be treated as Special Areas. I can assure the right hon. Baronet that we are not unmindful of the statement of the Commissioner in his first report, that the only reason why the Highlands could not be included in the Special Areas was that their geographical character made them unsuitable to the particular machinery which we were proposing to apply to these Areas, and we fully recognise that they ought to be accorded special treatment. In regard to the right hon. Baronet's final suggestion, about taxing land values, I am not quite sure whether the taxation of land values in Caithness would produce such a fruitful source of relief as he desires.

While many Members may feel that some different method of distributing these grants might be preferable to that which is proposed in the Bill, I do not think that it will be suggested that the circumstances of Scotland as a whole have not been properly considered. For some years we have had in Scotland a small section of opinion which has been sedulously propagating statements, very often based rather on ignorance than on deliberate misrepresentation, to the effect that the financial policy of the Imperial Parliament is unduly favourable to England. I do not think that that view will be shared by anyone who has any experience of the House of Commons, and the public in Scotland will, no doubt, observe, not only that the relief of nearly £1,500,000 made available under the Bill for Scottish local authorities is nearly a third of the English total, but also that it contains new subventions from the Exchequer which have no counterpart at all in the corresponding English measure, amounting to the greater part of £1,000,000, for the benefit of Scotland alone.

Bill committed to a Committee of the Whole House for Monday next.—[Mr. James Stuart.]