CLAUSE 89.—(Provisions consequential on cessation of functions of former authorities.) (Hansard, 30 March 1944)

§ Mr. Ede
I beg to move, in page 62, line 17, at the beginning, to insert: (1) If upon the application of a former authority the Minister is satisfied with respect to any property which was immediately before the date of the commencement of this Part of this Act held by that authority for the purposes of functions exerciseable by them under the Education Acts, 1921 to 1939, that, although the property was so held, it was held upon trust for purposes of such a nature that the transfer thereof to a local education authority would be inexpedient the Minister may by order direct that the property shall be deemed not to have been transferred by virtue of section six of this Act to the local education authority for the county in which the area of the former authority is situated. It will be recollected that on Clause 6 we arranged for the transfer of all property held by a Part III authority to the county council on the appointed day being reached. It has been brought to our notice that some of the Part III education authorities have property which has been left to them by the action of distinguished citizens and other people who clearly desired that the property should remain in local hands. We propose, therefore, this Amendment, so that where it can be proved by the local education authority that, in fact, there is such property, It may remain in the possession of the district council and not be passed on to the county council. Members will have in mind various technical institutes and buildings of that description in different parts of the country which, in the past, when the State took very little interest in this sort of thing, were given by benefactors in the district. At that time the power to spend money on that form of education was limited to whisky money and the product of a penny rate by the local authority. Many of these institutions would not have been founded at all but for the fact that there was a generous benefactor who desired to have this particular service rendered in his home town. In those cases, where such a history can be established, it is only right that the institution should remain with the local 1667 authority to whom it was originally devised.

§ Mr. Hutchinson (Ilford)
I rise only to ask the Parliamentary Secretary a question. One has heard of the provision in cases where property has been left to the local authority. Can my hon. Friend say whether it is intended that the same provision shall apply to those cases where a sum of money has been left on trust to the local aducation authority, for the same purpose?

§ Captain Prescott
I think that this new Sub-section has been introduced as the result of the Amendment put down by myself and my hon. Friend the Member for Faversham (Sir A. Maitland). An undertaking was given then by my right hon. Friend the President of the Board of Education that this would be introduced. I would like to express on behalf of myself, and, I am sure, of my hon. Friend the Member for Faversham, appreciation of the introduction of this Sub-section.

§ Mr. Ede
In answer to the hon. and learned Member for Ilford (Mr. Hutchinson) I am assured that "property" covers money, and that where there is a bequest that clearly was intended for very narrow local use, and there is still need for it, the intention of the person who left the money will be honoured.

§ Captain Prescott
I beg to move, in page 62, line 3o, at the end, to insert: () Where a liability to be transferred by virtue of this Act from a former authority to a local education authority is a liability to repay and to pay interest upon a loan the local education authority shall (unless it is otherwise agreed) from time to time pay to the former authority such sums as are required to meet the loan charges falling due on or after the date of the commencement of this Part of this Act in respect of that loan. In this Section the expression "loan charges" includes the interest payable on a loan and the charges for the repayment thereof whether by means of a sinking fund or otherwise. In moving this Amendment, which stands in my name and the names of several other hon. Members, I would recall that under Clause 6 of the Bill, the 1668 liabilities of the county districts, in so far as they are connected with educational matters, will be transferred to the new education authorities which, as the Bill stands at the moment, will be the county councils. By Clause 89 certain financial adjustments are proposed to be made between the former education authorities and the new education authorities—the county councils—by virtue of the transfer of the property rights and liabilities of the former education authorities. It will be appreciated that several of the former local education authorities have raised loans for educational purposes, and the Amendment with which I am now dealing, is concerned with those loans. In some cases, the loans have been raised by way of creating a mortgage and in other cases by the issue of stock, and the repayment of the loan and interest thereon has been made a charge on the general rate funds of the former local education authorities, As far as I am aware, there is no provision in the Bill for the alteration of this charge, and, consequently, the former education authority will remain liable for the repayment of the sum and interest thereon.
It is suggested by the Amendment that it would be most convenient and obvious for the local education authority that is to be created—that is the county council —from time to time to pay to the former education authority, the loan charges which will become due on those loans. It will be appreciated that, in many instances, where loans have been received by way of mortgage or the issue of stock, the loan is not devoted entirely to education purposes, and that a certain part of the capital fund may have been raised for purposes other than education and it would be impossible to decide upon any allocation. I would like the Committee to know—no doubt the right hon. Gentleman is already aware of the fact—that there is a precedent for the Amendment. It is contained in Section 117 of the Local Government Act, 1929. In that case it was the transfer of certain highways from district councils to county councils was under consideration, and a provision was inserted in that Act similar to the Amendment now proposed.

§ Mr. Ede
We are advised that these words are unnecessary, but the powers given to my right hon. Friend under this Clause enable him to make any such 1669 adjustments as may be necessary. Therefore we do not regard it as necessary that these words should be inserted.

§ Mr. Hutchinson.
The answer which we have just had from the Parliamentary Secretary does not entirely meet the point put by my hon. and gallant Friend a moment ago. The difficulty I see about this Amendment is that these authorities have raised loans on the security of a mortgage charged upon the general rate fund of the authority, or, in some cases, they have raised loans by the issue of stock, the security of the stock being the general rate fund of the authority. The difficulty that I see, and which I would like the Parliamentary Secretary to clear up, is this, that there does not appear to be envisaged in this Bill any provision by which the terms of these mortgages, or of these loans, can be varied. I see nothing in the Bill which will enable the Minister to release the authorities from their obligation to meet this repayment of the loan or payment of the interest, and to transfer that obligation to another authority. As I understand the Bill, the Minister has very wide powers to deal with different authorities, but does not, as I follow it, have power to deal with the persons who advance money on the mortgage or who subscribe to the stock. It would help those of us who are interested in this matter if the Parliamentary Secretary could point out quite clearly the section which gives the Minister power to adjust these mortgages or interest on stock.

§ Mr. Loftus (Lowestoft)
I rise to support the point put by my hon. and learned Friend the Member for Ilford (Mr. Hutchinson) and I would also like to appeal to the Parliamentary Secretary to make his answer a little more definite. He said the Board would have power to do this. Can we have a stronger assurance that this will be done, because it is unfair that the property should be transferred, and the liability for building the property should continue to be a charge on the local rates?

§ Captain Prescott
Before the Parliamentary Secretary replies, may I say that I quite appreciate that under Sub-section (2) of Clause 89 it would be possible for the local education authority, that is to say the town council, to pay to the former education authority the interest and loan charges on these loans. I quite appreciate that that can already be done in the 1670 terms of the Bill without the insertion of this Amendment, but the point I wish to make, and it was ably put by the hon. and learned Member for Ilford (Mr. Hutchinson), is that no provision is made for the alteration of the charge. It is under those circumstances that I and my hon. Friends consider it necessary that this Amendment should be inserted.

§ Lieut.-Commander Joynson-Hicks (Chichester)
I find myself in the same difficulty as my hon. and gallant Friend who has just spoken. I think the provision is an exceedingly important one, because very large issues may arise from it. I venture to suggest that if it is not rather clearer than it appears to us to be in the Bill at the present time, there may be a very weighty amount of litigation arising upon an exceedingly difficult and technical point which, being a member of the profession myself, may seem to me to be very desirable but which, on the other hand, is not what we want to set out to achieve in this particular Bill.

§ Mr. Graham White (Birkenhead, East)
If there is any doubt about this question at all, and if the hon. Gentleman cannot give us a definite assurance on the matter, it would be as well if it were referred to again on the Report stage, because while it may be arranged to transfer funds to the authority in question, there does not appear to be any guarantee that those funds will necessarily be applied to any particular mortgage. The possibility of litigation appears to be very considerable and I think the Committee ought to be assured very definitely on the point.

§ Mr. Ede
No one is more anxious to preserve the local authorities from being involved in litigation than I am, and anything that I can do to keep them out of the Law Courts on issues like this, where I know thousands of pounds can be spent quite easily, I shall be quite willing to do. I am advised that the words "making of such adjustments" in Sub-section (2), line 26, cover the cases that my hon. and gallant Friend and my hon. and learned Friend have in mind, but I agree with my hon. Friend the Member for East Birkenhead (Mr. G. White) that, after the weight of legal authority which has been brought to bear on me, I certainly would not like to make any dogmatic pronouncement on the subject at the moment. We will examine these words to see if they 1671 cover all the cases that have been mentioned to-day, and any cognate cases that ought to be brought within their scope. I am sure that my hon. and learned Friend the Member for Ilford and my other hon. Friends who are associated with this Amendment will be willing, when I have the answer, to give me the benefit of their opinions upon it before we reach the next stage of the Bill.

§ Captain Prescott
I understand that the Parliamentary Secretary is in complete sympathy with the views which I have expressed and, in view of the assurances which he has so kindly given, I beg leave to withdraw the Amendment.

§ Mr. Keeling (Twickenham)
I beg to move, in page 62, line 36, at the end, to insert: and in such directions the Minister shall have regard to Section one hundred and fifty-one of the Local Government Act, 1933. This Amendment seeks to invoke Section 151 of the Local Government Act, 1933, which Section provides a convenient machinery for the financial adjustments which may be necessary under Clause 89 of this Bill, and I hope that the Parliamentary Secretary will accept the Amendment.

§ Mr. Messer (Tottenham, South)
I sincerely hope that the Parliamentary Secretary will not accept the Amendment, though it appears quite innocuous and simple. What it in fact asks is that the Act relating to compensation, the Local Government Act, shall be used in this instance. What does it mean? The Amendment is a particularly mean Amendment. If it is carried, it means that the richer boroughs in Middlesex will gain instead of playing the part that they should play in equalisation of rates. If there is one thing that commends this Bill, and makes it necessary that the county council shall be the local education authority, even if we delegate all administrative functions, it is the fact that there is to be a county equalisation of rate, If this Amendment is carried, however, it means that the borough, part of which I represent, will be adversely affected. The table is too complicated to go into but, in short, what it means is that Tottenham would have to raise £900,000. It would do that by means of a loan. That loan would be spread over a 1672 period of years and instead of Tottenham, which is a poor borough, being assisted, it would have to stand the responsibility, in addition to other things, for paying the interest on that loan. I realise, of course, that Middlesex stands in a special position; it is a county which is completely urbanised, where every county district is contiguous to the other. There are no stretches of rural country dividing one from the other. In fact, it is so completely urbanised that its position is more relative to a large town than to a county in the ordinary sense. If the Amendment were carried the Middlesex County Council would have to take from some parts and pay to others, with the consequences to which I have just referred. I do not want to delay the Committee, but if the Amendment were pressed I should have to produce figures which would take some time to explain. Therefore, I hope the Committee will see the wisdom of not interfering with the fundamental principle of the Bill—equalisation of the county rate —which would be destroyed if the Amendment were carried.

§ Mr. Ede
My hon. Friend the Member for South Tottenham (Mr. Messer) has put the case against the Amendment very clearly and very forcibly. If we are to get the benefits of the larger area of the county, so that the burden is evenly spread over the county, it would be impossible to get this by accepting this Amendment. It not only incorporates Section 151 of the Local Government Act, but by doing so, it brings in the consequential provisions of Section 152, and in Section 152 (1, b) we should be involved in the assessment of the burden claims, as they are called, which would result in the kind of operation which has been mentioned by my hon. Friend the Member for South Tottenham. The Amendment would clearly cut across the whole of the principle of the Bill and the Government are, therefore, unable to accept it.

§ Mr. Keeling
Is there any provision for arbitration in the event of dispute about these financial adjustments?

§ Mr. Ede
In Clause 89 (2) we deal with the way agreement is reached and in Clause 89 (3) with the power of the Minister to deal with these matters when there is no agreement.

§ Mr. Keeling
Arbitration is not contemplated?

§ Mr. Ede
The Minister is the arbitrator.

§ Lieut.-Colonel Heneage (Louth)
I would like to ask the Parliamentary Secretary whether this Clause would cover a certain case I have in mind where the use of a school, built by a private individual and let to a local education authority for many years, is denied to that individual's heirs?

§ Captain Prescott
I take it that the Amendment in my name and that of my hon. Friends—in page 62, line 36, as set out on the Order Paper—has not been selected, Major Milner.

§ The Chairman
No, I thought it was covered by the Amendment which stood in the name of the hon. Member for Twickenham (Mr. Keeling), which has just been negatived. But the hon. and gallant Member can discuss the matter on the Motion now before the Committee if he wishes to do so.

§ Captain Prescott
I wish to call the attention of the Committee to two important matters. The first deals with financial adjustments consequential upon the alteration of boundaries in county boroughs or urban districts. In recent years there have been readjustments of boundaries of non-county boroughs and urban districts, when these boundaries have been enlarged and certain territories have been taken from a county council and incorporated in a non-county borough or urban district. In such cases, the functions for elementary education in the added area have come under the charge of the non-county borough or urban district. The result has been, in many cases, that the county council has received payments of all kinds from the non- county borough or urban district. In the first case, it has received payment for the actual building of the schools which have been transferred, and, in the second case, in view of the fact that the revenue the county council had received from the area which had been ceded exceeded the sums spent on elementary education, it has often occurred that the county council 1674 has received payment or payments from the non-county borough or urban districts for the increase in burden. In some cases where the readjustment of boundaries has taken place the financial adjustments have not been completed. Under the provisions of this Bill, in the case of non-county boroughs and urban districts, the county council will become the local education authority and schools will be re-transferred to the county council. I would suggest, for the consideration of the Minister, that under these circumstances it would not be right that the county council should retain all the money which had been paid to them by the non-county borough or urban district in respect of those schools. It is true that for a certain period the non-county borough or urban district will have had the use of these schools and that it would, therefore, be equitable that some adjustment should be made and smite return made of the money they have made over to the county council.
The second point is the continuance, or otherwise, of payments for the increase of burdens. For instance, in the case of Crosby £8,000 a year is paid, which is the actuality of the increasing burden in their case. I am sure it would never be suggested that it would be right that such payment should continue. There are a number of towns affected in this manner. To mention a few there are Cambridge—which will strike a friendly note in the mind of the President—Kidderminster, Lancaster, Blyth, Bromley, Stretford, King's Lynn and Tunbridge Wells. There is a further point. It will be appreciated that in some cases non-county boroughs and urban districts have to raise a special rate of 1d. or 1.33d. for the provision of technical and higher education, and they have borne this cost quite apart from the county rate and the contribution they have paid to the county in respect of higher education. As a result of this Bill all the educational facilities which they have provided, and which they have themselves paid for, will be transferred to the county council. It is suggested that the non-county boroughs and urban districts which have borne this additional cost should receive some recompense from the county council or somebody for the moneys which they have expended in this manner. I would therefore ask my right hon. Friend to consider the points I have mentioned and, if he can, introduce some Amend- 1675 ment to cover the matters that I have endeavoured to explain.

§ Captain Bullock (Waterloo)
I should like to draw attention particularly to the Borough of Crosby. This was not an extension of a non-county borough. It was the case of a new borough. It was incorporated and given its Charter in 1937. The borough council then became the education authority as far as elementary education was concerned, and payment was made to the Lancashire County Council of a sum not exceeding £8,000 a year. I believe, also, that certain payments were made in respect of buildings. The borough council made elaborate and well thought out plans for education which were cut short by the war. They have continued to pay the £8,000, and as a result of this Bill they will be handing back their authority to the Lancashire County Council. I suggest that they should certainly not go on paying this £;8,000, which they might be forced to do, and also that a sum of money should be returned to them for the expense that they have had during the years of the war as the result of the plans which they are unable to carry out. When the Bill becomes law the borough will be considerably more highly rated as regards education than heretofore.

§ Mr. Ede
These, again, are adjustments which will be carried out under the Clause. With regard to the case which has just been presented to us, surely for a time the authority have been enjoying local self-government in this matter and for 'that period they must shoulder all the responsibility of autonomy. When the period of autonomy comes to an end, as I understand it, the payment of £8,000 will cease, but during the period they have enjoyed autonomy that was the price that this House attached to it, and I do not think they have the right to say, after having enjoyed it for all that time, "Now that we are going to lose it, will you please repay us the money Parliament has decided ought to be paid during the time we enjoyed it." I do not think there is any case for paying back the money.

§ Captain Prescott
The payments will automatically cease.

§ Mr. Ede
Yes. When we come to the question of the penny rate, as it is colloquially known, raised under Section 1676 70 of the Act of 1921, that was a rate levied by boroughs and urban districts before the Education Act, 1902. It was associated with the old technical instruction Act, and a good many technical institutes and other buildings were erected under it, sometimes with assistance from the county council, and sometimes out of the borough or urban district rate. I am a trustee of such a technical institute at Epsom, which was erected on a 50–50 basis by the Surrey County Council and the Epsom Urban District Council on the condition that Epsom raised their share out of the penny rate.

§ Sir A. Southby
And to the best of my knowledge you carried it out exceedingly well.

§ Mr. Ede
We have not had a meeting for ten years. Since the hon. and gallant Gentleman has alluded to it, I have twice been the sole surviving trustee. There, again, while the authorities had the power to raise the money they enjoyed a great measure of control in respect of it. Now that the liability for maintaining the institute passes to the county council there seems to me to be no reason why fresh money should be raised. Neither is there any case for any repayment of the money that has been paid hitherto either, by agreement, to the county council or sometimes entirely by the urban district council or borough.

§ Captain Prescott
The county council, being the education authority, is taking over these colleges and schools. It is true that they will be liable for their maintenance, but is it not considered right that some payment should be made to the former local education authorities who have shouldered the burden?

§ Mr. Ede
If there is a remaining liability in respect of the building—supposing it has been built out of a loan and the annual charges have been charged against the rates—clearly that liability passes to the local education authority. Up to the time the building passes over, the urban district or borough council, as the case may be, will have certain rights in it and will be associated with the management until the date that it passes over to the county council. If there should be any case where it can be urged that an undue proportion was raised out of revenue—it could not amount to much on the basis of a penny rate—clearly that would be 1677 one of the adjustments which would have to be considered by my right hon. Friend when the transfer takes place, if agreement was not in fact reached between the county council and the district council. We have, in this Clause, endeavoured to have an instrument so flexible that we shall be able to deal with some of these very intricate cases, and, in view of the assurance that I gave my hon. and learned Friend just now, I hope it may be felt that the Clause is sufficient to enable the reasonable thing to be done.

§ Mr. Hutchinson
As I understand the hon. Gentleman's reply it is his view—and I agree with it—that there is already power in the Bill to make these adjustments which the Amendment seeks to introduce. I agree that there is power to make adjustments to this end, and I understand that it is the intention of the Minister to see that these matters are adjusted in a fair and equitable way. Still, I would suggest that it is desirable that an Amendment should be introduced laying down in broad outline the terms on which these adjustments ought to be made. The Bill provides that in the first instance the authorities concerned shall seek to make an agreement with regard to these matters. I suggest that it would be a good thing to put into the Bill something which to some extent would control these agreements, so that when the authorities sit down together to make their agreement, they know at least some of the things which have to be the subjects of agreement between them. Unless that is done, I feel that it will have the result of producing disputes between the authorities, which will then have to be taken to the Minister for his decision. I suggest that these disputes could, to a large extent, be obviated if my hon. Friend would look at the Clause again before the Report stage and consider whether it might not be desirable to put into the Bill some of the matters to which he has referred.

§ Mr. Ede
I thank my hon. and learned Friend for supporting me in the first part of his speech. I think that this is the first time that one of His Majesty's Counsel, learned in the law, has expressed his support of a poor layman who has to grapple with them in all parts of the Committee.

§ Mr. Hutchinson
This Clause is so wide that anyone could safely say that the Minister has power to do almost anything.

§ Mr. Ede
I shall, therefore, have to examine the Clause very carefully to see that, in the phrase that my right hon. Friend used the other day, I do not clip his wings in trying to do something for the hon. and gallant Member for Darwen (Captain Prescott). We cannot turn this arrangement into a sale-and-purchase arrangement. This is a transfer of liabilities, rights and duties, and an adjustment on those lines is all that we contemplate under the Clause. My hon. and learned Friend has certainly suggested a wide field which we can explore between now and the Report stage to see if it is necessary or desirable to give more definition to what the subjects of agreement will be. We will examine that, but in view of his commendation of the width of the Clause, we shall be unlikely to want to narrow it.

§ Captain Prescott
The Parliamentary Secretary gave a reply to my hon. and gallant Friend the Member for Waterloo (Captain Bullock) about the special case of Crosby, but he did not refer in general to non-county boroughs and urban districts which had had an alteration of boundaries. I fully appreciate that we cannot work it out on the basis of sale and purchase, but there have been in those cases definite cash payments for school buildings or by way of increased burdens, and I suggest that, either by a specific Clause or by agreement under Clause 19, it will be necessary to take those payments into account and give them great consideration when the final adjustment is made.