§ 46. Mr. H. G. Williamsasked the Chancellor of the Exchequer whether he can furnish an approximate estimate of the cost, in a full year of operation, to the Exchequer and to the local authorities, respectively, of the legislation since the last General Election, including the Government Bills now before Parliament and excluding from the total any expenditure due to the Defence programme?
§ The Chancellor of the Exchequer (Sir John Simon)As the answer is of considerable length, I will, with my hon. Friend's permission, have it circulated in the OFFICIAL REPORT.
§ Mr. T. WilliamsWill the statement include a full list of all direct and indirect subsidies which have been granted to various industries since the last General Election?
§ Sir J. SimonIf the hon. Member looks at the statement he will see that it does not err on the side of brevity.
Following is the statement:
The incidence and nature of expenditure under Acts of Parliament vary so widely between one case and another that it is impossible to give a figure of total cost "in a full year of operation." While in some cases the cost reaches a stable figure as soon as the service has come into full operation, and thereafter continues at about that figure, there are other cases where the service is expressed to be temporary or where a specified sum is allotted to a service, and where therefore the expenditure disappears after a period, and there is a further type of case of long-term subsidies (e.g., housing subsidies) where the cost grows by annual steps over a long period of years because the expense of the subsidy granted in each year is added to the subsidies already 1698 in payment in respect of the sanctions of preceding years. In estimating the cost of particular measures of legislation it is also necessary, in the majority of cases, to proceed upon certain assumptions and to attach various reservations.
In these circumstances it appears that the information sought in the question can best be furnished in the form of a statement showing as far as possible the estimated cost of particular Acts or groups of Acts in chronological order and indicating the main assumptions made and the reservations attached to each. In the statement the phrase "cost to the Exchequer" means annual cost except where the contrary is clear from the context. Fuller explanations of the financial effect of the various measures are given in the Financial Memoranda which were attached to the Bills on presentation.
In compiling the statement which follows, certain measures involving expenditure of relatively trivial amount have been ignored, as have also any additional administrative costs due to changes in taxation under the various Finance Acts or administrative costs where only incidental to the main purpose of an Act. It has also been assumed that the question does not cover cases in which liabilities have been assumed in the form of guarantees, cases of remission of taxation or waiver of claims to payment, and cases in which expenditure in certain directions has been covered by increased receipts or reductions of cost in other directions. The exclusion of defence expenditure mentioned in the question has been treated as applying to expenditure under the Air-Raid Precautions Act, 1937, and the Essential Commodities Reserves Bill, 1938.
Subject to the above, the information required is as follows:
Milk Acts, 1936 and 1937, and Milk Bill, 1938.
The estimated additional cost to the Exchequer is £742,000. These measures extend the period of operation of the Milk Act, 1934. Section 9 of that Act relating to the Improvement of Quality of Milk Supplied was repealed by the Agriculture Act, 1937, which provided for such expenditure to be defrayed from the Diseases of Animals Account (see under Agriculture Act, 1937).
§ Unemployment (Northern Ireland Agreement) Act, 1936.
§ Additional cost to Exchequer, £112,000.
§ Unemployment Insurance (Agriculture) Act, 1936.
§ Additional cost to the Exchequer, £550,000.
§ Sugar Industry (Reorganisation) Act, 1936.
§ The estimated cost of this Act is £2,550,000. The Act continues, subject to certain modifications, the subsidy in respect of sugar which was authorised by the British Sugar (Subsidy) Act, 1925.
§ Midwives Act, 1936.
§ Maternity Services (Scotland) Act, 1937.
§ The estimated additional cost of the former Act to the Exchequer and to local authorities is £345,000 and £345,000 respectively and of the latter Act £60,000 and £60,000 respectively. These Acts also impose temporary liabilities in respect of compensation to midwives who surrender their certificates.
§ Education Act, 1936.
§ Education (Scotland) Act, 1936.
§ The additional cost to the Exchequer and to local authorities of the former Act is estimated at £1,695,000 and £665,000 respectively, and of the latter Act £235,000 and £95,000 respectively. The total cost to the Exchequer includes £230,000 in respect of the increased cost of children's allowances payable under the Widows', Orphans' and Old Age Pensions Act. The extension of school-leaving age will also have some effect on the State contribution under the Unemployment Insurance Acts but it is impossible to frame a reliable estimate of the sum involved.
§ Air Navigation Act, 1936.
§ This Act which repealed the Air Transport (Subsidy Agreements) Act, 1930, substituted a figure of £1½ millions, payable until 1953, for a figure of £1 million, payable until 1940, as the maximum annual subsidy for civil air transport. It also authorised the payment of a contribution, which has been fixed at a maximum of £12,000 per annum for five years, towards the expenses of the Air Registration Board.
1700§ Merchant Shipping (Carriage of Munitions to Spain) Act, 1936.
§ Additional cost to the Exchequer, £5,000
§ Expiring Laws Continuance Act, 1936, and Special Areas (Amendment) Act, 1937.
§ The Special Areas (Development and Improvement) Act, 1934, was continued under the first of these Acts from the 1st April, 1937, and was further continued and amended under the second Act. No estimate of the annual cost of this legislation can be given, but the following Exchequer commitments (to be liquidated over the next few years) have been incurred between 1st April, 1937, and 31st May, 1938, namely, grants £5,135,000, loans £2,964,000. Part of the sum shown as grants will, in certain circumstances, yield a return to the Exchequer; the figure shown as loans includes a subscription for share capital of a site company under Section 5 of the Amendment Act. Schemes financed in part by the Special Areas Commissioners under these Acts and in part by local authorities under other powers have involved those authorities in corresponding commitments amounting to £1,423,000.
§ Trunk Roads Act, 1936.
§ The estimated additional cost to the Exchequer of this Act in the current year is £1,500,000. The additional cost to the Exchequer of maintaining trunk roads is estimated at £660,000 per annum. No estimate of the cost of improvements in future years can be given, but the figure of £1,500,000 given above is the estimated additional cost of maintenance and improvements in the current year. The effect of the Act was to transfer expenditure from rates to the Exchequer and, as explained below, account was taken in arriving at the block grants under the Local Government (Financial Provisions) Act, 1937, and the Local Government (Financial Provisions) (Scotland) Act, 1937, of savings to local authorities on maintenance.
§ Empire Settlement Act, 1937.
§ This Act extended the Empire Settlement Act, 1922, and substituted a figure of £1½ millions for the previous figure of £3 millions as the maximum expenditure which might be incurred in any financial year on Empire Settlement. 1701 Actual expenditure depends upon the number and nature of schemes qualifying for assistance, the provision in 1938 Estimates being £3,075.
§ Local Government (Financial Provisions) Act, 1937.
§ Local Government (Financial Provisions) (Scotland) Act, 1937.
§ The estimated additional cost to the Exchequer of these two measures may be put at £4,552,000 and £1,345,000, respectively. The whole of these amounts are actual payments to local authorities, but are in the main in respect of increases in their expenditure during the preceding fixed grant period. The additional sums mentioned include the cost to the Exchequer of the discontinuance of Local Authorities' Unemployment Assistance Contribution, and in the case of England and Wales of compensation for the abolition of the Male Servants Licence Duty. When the general Exchequer Contributions for the current fixed grant period were fixed, and the results embodied in the Acts, account was also taken of the savings to Local Authorities under the Trunk Roads Act, 1936, mentioned above, and the Contributions would have been greater by £155,000 had this account not been taken.
§ Diseases of Fish Act, 1937.
§ Additional cost to the Exchequer, £20.
§ Statutory Salaries Act, 1937.
§ Additional cost to the Exchequer, £35,000.
§ Ministers of the Crown Act, 1937.
§ Additional cost to the Exchequer, £37,000 plus a further charge, which cannot be precisely estimated, in respect of pensions to ex-Prime Ministers.
§ Widows', Orphans' and Old Age Contributory Pensions (Voluntary Contributors) Act, 1937.
§ The estimated additional charge to the Exchequer may be put at £1,200,000. As this is a voluntary scheme, no reliable estimate of its cost can be made until the number of initial entrants is known. The financial basis of the Bill is to liquidate the cost of initial entrants over a 30-year period. On the assumption that there are 250,000 male initial entrants and 100,000 women initial entrants, the annual provision necessary for this purpose will be about £1,200,000 as already stated. In 1702 15 years' time the additional burden will begin to fall upon the Exchequer in respect of pensions of special voluntary contributors who have reached the age of 70. No very reliable estimate can be made of the amount of this burden but in 30 years' time it may be between £1,500,000 and £2,000,000 a year. By that time, however, the capital liability referred to above will have been discharged.
§ Physical Training and Recreation Act,1937.
§ The main expenditure under this Act is in the form of capital grants and it is estimated that a sum of £2,400,000 will be spent over a period of three years ending 31st March, 1940. Certain annual expenditure is also involved which may amount to £240,000 a year. This cost will fall upon the Exchequer; some expenditure by local authorities will also be involved but it is not possible to estimate its amount.
§ Livestock Industry Act, 1937.
§ The estimated cost of this Act is £4,575,000. The Act replaces the Cattle Industry (Emergency Provisions) Acts, 1934 to 1936, which provided for the payment of a similar subsidy.
§ Matrimonial Causes Act, 1937.
§ Additional cost to Exchequer, £10,000.
§ Additional cost to the Exchequer, £30,000. No material increase involved in the expenditure of local authorities.
§ Local Government Superannuation Act,1937.
§ Local Government Superannuation (Scot land) Act, 1937.
§ The estimated cost to local authorities of the introduction of compulsory superannuation of officers under these two Acts is £250,000 and £50,000 respectively. The cost of the optional power to provide superannuation for local authorities' servants cannot be estimated.
§ Agriculture Act, 1937.
§ The estimated cost of Parts I, II and III of this Act is £1,282,439, £203,000 and £116,000 respectively. The cost of Part IV of the Act is estimated at £600,000, part of which would have been borne on the Milk Votes but for the repeal of Section 9 of the Milk Act, 1934 (see under Milk Acts, 1936 and 1937).
1703§ Supreme Court of Judicature (Amendment) Act, 1937.
§ Additional cost to Exchequer, £14,000.
§ National Health Insurance (Juvenile Contributors and Young Persons) Act, 1937.
§ The additional cost to the Exchequer is £120,000 declining to £90,000 in five years' time.
§ Unemployment Insurance Act, 1938.
§ Additional cost to the Exchequer, £110,000; to local authorities, £10,000.
§ Blind Persons Act, 1938.
§ The additional cost to the Exchequer is estimated at £160,000. The broad effect of the Act will be to diminish rather than to increase the cost to local authorities.
§ Housing (Financial Provisions) Act, 1938.
§ The estimated additional cost to the Exchequer and to local authorities is estimated at £539,000 and £404,000 respectively. The contributions authorised by this Act are mainly in substitution for those which would have been payable had the subsidies available under the Housing Act, 1936, continued unchanged. The figures given above represent net additions consequent upon the Act in respect of houses and flats estimated to be completed up to the 3oth September, 1942, before which date the contributions will be reviewed. The contribution in respect of each dwelling continues for 40 years.
§ Eire (Confirmation of Agreement) Act, 1938.
§ The additional charge to the Exchequer, as compared with the position existing prior to the Agreement, is estimated at £684,000 p[...] annum. This figure does not take account, on the one hand, of the capital payment received from the Government of Eire or, on the other hand, of the reduction of revenue under the Irish Free State (Special Duties) Act, 1932, and the Import Duties Act, 1932.
§ Sea Fish Industry Act, 1938.
§ Additional cost to the Exchequer, £9,300.
§ Air Navigation (Financial Provisions) Act, 1938.
§ This Bill increases from£1½millions to £3 millions the annual maximum amount which may be paid as subsidies to civil air transport (see under Air Navigation Act, 1936, above).
1704§ Housing (Rural Workers) Amendment Act, 1938.
§ The estimated additional cost to the Exchequer and to local authorities is £110,000 and £106,000 respectively. This Act continues with some amendments until the 30th September, 1942, powers which would have otherwise expired on the 24th June, 1938. The figures given above represent an estimate of the annual cost of this extension at the peak year, i.e. in 1943. This cost will continue unabated for 17 years and disappear at the end of 20 years. From 1947 onwards there will be an offset as payments arising out of the earlier Acts terminate.
§ Housing (Agricultural Population) (Scotland) Bill, 1938.
§ Under Clause I of the Bill, additional charges of £18,000 and £5,500 will fall upon the Exchequer and local authorities respectively. These figures represent the estimated net cost in 1940–41, at which date the basis of the subsidy will be reviewed. The figures for 1940–41 will continue for 38 to 40 years. Under Clause 8 of the Bill, additional charges of £36,000 and £7,000 will fall upon the Exchequer and local authorities respectively. This clause expires after five years but the figures given will continue for 35 to 40 years.
§ Fire Brigades Bill, 1938.
§ The additional cost to the Exchequer is estimated at £25,000. The Bill will involve additional cost to local authorities in certain areas only, and this additional cost is not likely to exceed the produce of a penny rate.
§ Bacon Industry Bill, 1938.
§ The estimated average cost of this measure is £1,000,000.
§ Herring Industry Bill, 1938.
§ The estimated additional average cost of this Bill to the Exchequer may be put at £70,500.
§ Supreme Court of Judicature (Amendment) (No. 2) Bill, 1938.
§ Additional cost to Exchequer £21,000.