LOCAL GOVERNMENT(FINANCIAL PROVISIONS) (SCOTLAND) BILL

HC Deb 11 December 1945 vol 417 cc259-97

Order for Second Reading read.

5.20 p.m.

The Joint Under-Secretary of State for Scotland (Mr. Thomas Fraser)

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

This Bill is a purely Scottish Bill corresponding to the Local Government (Financial Provisions) Bill for England and Wales to which the House gave a Second Reading on 30th November. Its purpose, like that of the English Bill, is to provide for an interim adjustment in the block grant payable to local authorities by increasing its amount during the present and the next two financial years.

As hon. Members will be aware, the amount of the existing block grant, and the method of its distribution, were fixed by the Local Government (Financial Provisions) (Scotland) Act, 1937, by reference to the circumstances existing in the year 1935–36. In the ordinary course of events the amount of the grant would have been revised, and the method of distributing it reviewed, in respect of the years 1942–47. That revision and review would have been based on the circumstances of 1940–41. A further revision, relating to the circumstances of 1945–46, would then have been undertaken in time to take effect during the five year period 1947–52. It was apparent in the early years of the war, however, that circumstances were so abnormal and all facts by reference to which the grant is normally calculated and dis- tributed were so disturbed that it would be unwise and quite impossible to tackle the revision which should have taken place in 1942. The grant originally fixed for the years 1937–42 was accordingly continued by the Local Government (Financial Provisions) (Scotland) Act, 1941, until such time as Parliament might otherwise determine. It is equally clear that conditions are still so abnormal and the future level of local expenditure so unpredictable that a revision of the grant for the five years 1947–1952 is at present out of the question.

The level of rates in Scotland, as in England and Wales, remained fairly steady during the war years until about 1944, but it became evident from the returns received and summarised in the return published on 19th June that in the year 1944–45 rates generally had begun to rise, partly as a result of rising costs and partly as a result of the resumption of works or services postponed or suspended because of the war. The rise in rates over the level for 1938–39 amounted on an average to approximately Is. in the £in the year 1944–45. This increase in local expenditure is being maintained, and the rates are being increased in consequence, notwithstanding the additional assistance being given by grants in aid of education and other services. Some interim adjustment of the block grant was therefore thought to be essential, and it was agreed with the Associations of Local Authorities that it should cover, the years 1945–48. That is to say it should cover the last two years of what would normally have been the 1942–47 block grant period, known as the Fourth Fixed Grant Period, and the first year of the subsequent block grant period—that is, the period 1947–52—known as the Fifth Fixed Grant Period.

Once this decision had been taken, that is, the decision to introduce an interim, grant, the first question was to decide what the total amount of the increase in Scotland should be. If it had been possible, the first step in arriving at this figure would have been to calculate what would have been the amount of the block grant payable in each of the three years in question had the normal revisions in respect of periods beginning 1942 and 1947 taken place. This, unfortunately, was out of the question, because in Scotland the necessary data were not available, and could only have been obtained after very considerable delay by calling on local authorities for detailed returns. It was therefore decided, as a wholly exceptional Measure—and I want to impress on hon. Members that it is wholly exceptional—and without in any way creating a precedent, to increase the Scottish grant by the Goschen equivalent —that is eleven eightieths—of the amount by which the grant is proposed to be increased in England and Wales. This is an exceptional Measure and we do not intend that it should be taken as a precedent, but I would like to assure Scottish Members that I have enough information about the actual expenditure of the Scottish local authorities and other relevant factors to say that this method of arriving at the amount of new money is not un-favourable to Scotland.

On this basis the block grant in Scotland will fall to increase by £1,375,000 in the present year, £1,512,500 in 1946–47, £1,675,000 in 1947–48. The amount of the grant at present is £6,827,000, so that the increase brought about by this interim grant amounts to 20 percent. in the first year, 22 percent. in the second and 24 per cent. in the third year. These increases represent an average rate relief, calculated on the 1944–45 valuation, of 7.7 pence in the £in the first year, 8.4 pence in the second year and 9.2 pence in the third year. Having arrived at the total amount of the new money to be given to local authorities in Scotland, the Government had next to consider on what basis that total should be allocated among the local authorities concerned On 30th November, when my right hon. Friend the Minister of Health moved the Second Reading of the English Bill, he explained that he was proposing a most complicated method of distribution, and he said that it was designed to give preference to the areas which on the basis of their level of expenditure and rateable value would, in his opinion, be rightly regarded as poor areas. We put the position before the local authorities in Scotland and found that there was general agreement among them. Their decision was quite unanimous that the English formula was quite unsuited to Scottish conditions and would not have resulted in the equitable apportionment of the new money. Consequently, that decision having been taken my right hon. Friend the Secretary of State asked the Associations to propose an alternative method of distribution. In the course of time they submitted a scheme, and I am today moving the Second Reading of this Bill which gives effect to the proposals of the local authorities. The scheme is being given effect to in Clause 2 and the Schedule to the Bill. These provisions, although not based on any uniform principle, appeared to the Government to be broadly equitable, and it was therefore decided that Parliament should be asked to sanction them.

The distribution proposed in the Bill having, as I have said, been proposed by the local authorities, is generally accepted by them. There are, however, one or two authorities who would have preferred to see the whole of the new money allocated on the basis of the figures of weighted population used in distributing a portion of the existing block grant. Others have asked for modifications designed to increase their own share of the total amount of the new money. The allocation of the new money on the basis of weighted population among the industrial areas and the large burghs would not however have been readily defensible, even if such a course had been acceptable to the Convention of Royal Burghs and the Association of Counties of Cities.

My right hon. Friend would have found it difficult to have accepted such a proposal had it been made, but it was not made, and he has seen fit to accept the proposal made by the burghs themselves. The available figures of weighted population were calculated by reference to the circumstances of 1935–36, and since there is heavy weighting for unemployment, and in view of the considerable change of circumstances during the last ten years, these figures and the formula by which they were arrived at have become in good part obsolete, and could not have commended themselves to my right hon. Friend as the yardstick by which the new money would be allocated among the large burghs. It is true to say that under the provisions of this Bill that weighted population has been used in calculating the distribution among the counties of their share of the new money. In their case the degree of obsolescence of the 1935–36 figures and the formula is somewhat less than in the case of the large burghs.

Of the other variations in the method of distribution proposed by individual county councils it is sufficient to say that none of them—and there were a few pro- posals put forward by county councils—.produce results which over the country as a whole could be regarded as more equitable than the proposals of the Bill. I would like to give an assurance that when I discovered that there were some local authorities, particularly county authorities, who disagreed with the formula proposed in the Bill, I immediately convened a meeting of all the county councils when the whole matter was thrashed out. It became obvious at that meeting that no formula other than that adopted by the County Councils Association would have secured general acceptance among them. There was some sympathy for one or two of the county councils who were not getting out of this formula the amount to which they thought they were entitled. Generally speaking they did not criticise the total amount of the money. Their only concern was the method of distribution, and as I have said, the method adopted is that which commends itself to the vast majority of the county councils concerned. The distribution of the new money gives a substantial measure of relief to all areas, and should materially assist those whose needs, measured by their resources, are the greatest.

It should be emphasised that this Bill represents an interim settlement of a problem of which the urgency and importance are fully appreciated. Steps are to be taken at an early date to review the block grant formula, and as the Minister of Health has already indicated, the Government have in mind that after various proposals which affect the functions of local authorities have been given effect to a more general review of local Government finance will have to be undertaken. The review of the formula will have to be done between now and 1947, and, as I have indicated, it is necessary, if we are to alleviate the position of the local authority at all, to have an interim Measure such as I have brought before the House today, to give some assistance to the local authorities; and as I have said, we are giving it for the period that commends itself to the local authorities concerned.

If I might turn to the Bill for a moment, hon. Members will see that Clause 1 (1) merely fixes the total amount payable. Subsection 2 of the Clause ensures that in calculating the amount of block grant in future fixed grant periods, the whole of the expenditure of local authorities, including what they get from new money paid under this Bill, and any other special grants, is taken into account. Clause 2, taken with the Schedule, decides the apportionment, and it is worth mentioning here that we have not made any adjustment in capitation grants to small burghs and landward areas, such as was provided in the English Measure. We have not provided for any adjustment because in consultation with the local authorities we were advised that it was not desirable to do so. There was no call for it, and in any case an adjustment would only have been made at the expense of the county authorities. Clause 3 of the Bill is somewhat technical, and merely applies certain provisions of the Act of 1929 to the new money, in the same way as they apply to the existing block grant. That is the Bill, and I anticipate that it will have an easy passage. The local authorities concerned seem to be generally happy about the amount of the money that is being granted in this Bill; the local authorities themselves decided the method of distribution; and for those reasons I anticipate an easy passage for the Bill through the House.

5.39 p.m.

Mr. J. S. Ċ Reid (Glasgow, Hill head)

Every Scottish Member must be well aware of the magnitude and urgency of the problem of local finance in Scotland, and although it is perfectly true that the hon. Member will get his Bill, it is essential that we should point out what a trumpery Measure it is compared with the problem which has to be faced. Under this Bill we are only getting less than 6s. per head of the population per annum, and this is supposed to be, in the words of the hon. Member, an interim settlement of our difficulties. Our problem is immensely worse than in England. In the document "Return of rates," to which the hon. Gentleman referred, it is made plain that the average for the whole of Scotland, good areas and bad, for 1944–45, was 12s_3d. in the £.That does not sound much to an English Member, and one of the troubles about our system of rating is that it sometimes does not sound much to us. If that is converted to the English method of reckoning rates it comes to over 17s. in the £over the whole of Scotland, and there have been further large increases since then, Glasgow now has a rate of 17s. in the £. Again, that does not sound very alarming to those accustomed to the English method of computation, but when I say that for every £which the owner of a small dwelling house can keep in his possession after he has paid owner's rates, the local authorities take 26s. or more, that is a position unparalleled in any part of England, or indeed Wales, which has always been regarded as the most difficult part of the United Kingdom for local authority finance. Glasgow is far from being the worst area in Scotland. Several large burghs and a good many districts of counties are considerably worse. In many of them, if the English equivalent were taken of the rate now in operation, it would considerably exceed 40s. in the £. The hon. Member has explained that this Bill is not designed to meet the Scottish position at all. It is quite true that the data were not available. We cannot complain at the end of the war that we cannot yet design a Measure to meet Scottish problems, but let us be quite clear about this: This Bill is a purely interim Measure which simply gives to Scotland eleven-eightieths of what has been thought necessary for England, where the problem is very much easier than in Scotland. It was always easier in England, but whereas, as was explained by the Minister of Health in the Debate on the corresponding English Bill, the rates of local authorities in England have remained constant throughout the war, and in some instances have dropped, in Scotland the position is very different. In Scotland the expenditure started to rise from the year 1943–44. It rose in the year 1944–45 very materially and it is rising very materially again in this current year.

I think it is worth noting the differences in the Explanatory Memoranda of the Bills for the two countries. In the case of the English Measure I read this in the Explanatory Memorandum:

The end of the war means that the expenditure of local authorities will start rising again. On the front of the Scottish Bill, on the other hand, I find: …expenditure of local authorities is now rising. That is an understatement, because it has been rising for the last eighteen months. Accordingly, a Bill which is designed, as this Bill is, merely to give the appropriate share of the money required for England, where the rise has not yet started, is plainly inadequate for Scottish needs. I shall not complain that the hon. Gentleman has not got a better bargain as yet, but I say that he will have to get a better bargain next time.

If I may again take Glasgow as an example, because it is the place the figures of which I am most familiar with, the rise in rates since the beginning of the war has been 2s.6d.in the £—from 14s. 6d. to 17s.—against the Minister of Health's statement that this Bill was designed for a position where there has been no rise. And what does Glasgow get? Eightpence in the £, as against a rise of half a crown. In the English Bill, what does the corresponding sort of area get? In Merthyr Tydfil, where the position is very little worse than in Glasgow if you take into account the corresponding system of rating, it is 2s. 9d., and in West Ham, where the position is very much better than in Glasgow, it is 1s. 9d. Perhaps we have got to wait a little while in Scotland before we get proper treatment. We must not be in too much of a hurry, but that sort of thing cannot go on, and it will have to be cured, in my submission, pretty quickly. I welcome what the Minister of Health said in the Second Reading Debate:

It may be held by hon. Members in all parts of the House that a revision of the block grant formula alone will not be sufficient. …I am sure that is so. He went on:

it is also necessary to undertake a more fundamental examination of the basis of local government finance. …"—[Official Report, 30th November, 1945;Vol. 416, c. 1794.] I entirely agree with that but what I think is not suitable to Scottish conditions is the next paragraph, where he says that we ought to wait to see what will be the effect upon local government functions of the various pronouncements which the Government will be introducing in the course of the next few years. It may be that England can afford to wait so long. We cannot; and we cannot afford, during the interim period, merely to accept eleven eightieths of what the English Minister of Health happens to get from the Treasury on an argument from conditions which are ever so much easier than they are in Scotland.

I realise the difficulties under which the Joint Under-Secretary has been working. The Secretary of State, we all regret, has been through a pretty prolonged illness, and we are very glad he is now understood to be well on the way to recovery, and it would not be fair to ask his subordinates to raise complicated issues of this kind with the Cabinet in his absence. But I do ask the hon. Gentleman to get his right hon. Friend, as soon as possible, to treat this whole matter of local finance as one of great urgency, and to follow his own line and to refuse to drag at the tail of England. If England can afford to wait for some years, and if England's needs can be met by some comparatively moderate modification of existing circumstances, well and good, but we must have earlier and different treatment so far as our local finances in Scotland are concerned. I hope the Secretary of State for Scotland will make that perfectly obvious to his colleagues in the Cabinet.

This would not be a proper occasion to enter into the possible remedies. It would be quite out of Order and I will therefore only say one thing on that. There is the Sorn Report, which has the assent of Members of all political parties, but does not carry us all the way; some people may think it does not carry us very far. But it is a good start, and I would hope, therefore, that if the Secretary of State is unable—as I am sure he will be unable—to devise a complete solution within the course of months—no one thinks it could be done—he would consider whether he could not make some progress on the lines of the Sorn Report, or something like it. Existing burdens, which already weigh upon us, will grow in extent. Estimates have been made of increased expenditure on education, and even if we put no more burdens on local rates, the amount of rates is bound to go up during the coming years. I doubt very much whether any reliefs that have even been suggested by Ministers, will counteract that inevitable rise. In face of that situation, I do not think that it is right that any new burdens should be put on local rates in Scotland, until we have some drastic modification of the existing system. We on this side reserve the right to object strenuously to the imposition of any new rating burdens of any kind—any material burdens—on the Scottish local finances until there has been a very material alleviation of the position in one way or another.

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

May I interrupt to get to know what the right hon. and learned Gentleman means by that? He says he will reserve to himself the right to object strenuously to any new burdens. Does he mean legislative burdens, or the provision of new schools, which are an everyday burden on the local authorities at the present time?

Mr. Reid

I thought I made that clear, I said the existing burdens, such as education, would necessarily grow, and they will grow. Schools are very necessary. Even more necessary are teachers, and they have to be properly paid, and we all recognise that. What I mean is that if the Government are going to carry out their social reforms, they must find some other method of financing them than off the rates, until they have remodelled the rating system to a considerable extent. I welcome social advances, and I realise they are going to be very expensive. But what I say is, that we have already exhausted the possibilities of rates in many areas and the Government are asking for collapse in local finances if they put any more burdens on rates before they have achieved their reforms. Therefore, in the intervening years—I hoped it would be months, but I am afraid it will be years —in the intervening period, I ask the Government to devise some other method of financing their reforms, rather than the method of putting 50 per cent. on the rates.

To sum up, we agree that this Bill should be passed. We agree that so far as it goes, and it is not very far, it does meet a need. We cannot say that the Joint Under-Secretary ought, in this Bill, to have done any more. It would not be fair to expect him to do more. But we do say further action of a drastic kind will be needed in the immediate future, and we hope that the Secretary of State for Scotland, having returned in good health, to his office, will be able to tackle this question energetically and quickly, and if he does so, I too hope that we can give him our enthusiastic support.

Mr. McLean Watson (Dunfermline)

I do not often agree with the right hon. and learned Gentleman the Member for Hillhead (Mr. Reid) but I agree with him as far as this Bill is concerned. It is a miserable little Bill and does not meet the situation which we know to exist in Scotland in regard to local finance. The right hon. and learned Gentleman added that it was as much as we could expect, because we are still tied to the Goschen formula of eleven-eightieths of expenditure, and that limits the amount that can be provided under this Bill. But I agree with the right hon. and learned Gentleman, that we require something a great deal more drastic before we are out of our difficulties with regard to local finance in Scotland. I certainly did not agree with him however on this point—that we should strenuously oppose any changes that are going to mean additional expenditure to the local authorities. He instanced the new Education Act, which was passed before the end of the Coalition Government, as an Act which will cause a considerable increase in expenditure in Scotland. There are other Measures that have been passed, and other Measures coming along, which will undoubtedly increase our local expenditure, and we require, as the Joint Under-Secretary indicated, that the local authorities and the Government should sit down together and discuss the whole question of local finance.

The right hon. and learned Gentleman the Member for Hillhead seems to have forgotten that the sort of speech he made this afternoon has been made before from the Opposition side. It seems to be the type of speech often delivered from the Opposition side. When a Member changes from one side of the House to the other, he changes his speech. The line that the right hon. and learned Gentleman took this afternoon, was exactly the line we took when the Local Government Bill of 1929 was before this House. We said the same things about the finances of the scheme, then that the right hon. and learned Gentleman has been saying this afternoon. But we on this side agree with that view. That is the difference between us—we have not changed. We believed in 1929 that more money should have been put into that Local Government Bill, that we should have had a new formula, and not the Goschen formula that was continued in that Act of Parliament, and that more money should be given to Scotland for local government purposes. Undoubtedly, local rates have been rising in Scotland. If the Financial Memorandum to the English Bill is correct, that local expenditure in England will arise only after the war has ended, whereas the right hon. Gentleman has pointed out we are not in that position in Scotland. Our local rates have been rising during the period of the war. In 1943, 1944, and this year, the whole tendency, both as far as large burghs and counties are concerned, has been for rates to rise. They have been rising the whole time, and they will rise more rapidly as soon as we put into full operation such Acts of Parliament as the new Education Act and others, which are bound to increase local expenditure. I hope, therefore, that my hon. Friend the Joint Under-Secretary will convey to the Secretary of State the fact that we on this side of the House are just as anxious as the right hon. and learned Member for Hillhead for a full and frank discussion between the Government and the local authorities, on the question of local expenditure. We must state here, however, that, so far as our social services are concerned, our local government services, they must not be curtailed. We want improvements, in addition to the Education Act, which will undoubtedly increase expenditure in Scotland. We have a huge housing problem to face and other things which will add to local expenditure, and the position in Scotland is really serious. It was serious, as a matter of fact, in 1929, and it is just as serious now, proportionately, as it was in 1929.

I do not want to raise any feeling between county areas and burghs. The hon. Gentleman who moved the Second Reading of the Bill drew attention to the fact that the money which is available is to be distributed on a different basis from the block grant system. Under the Act of 1929, involving the block grant system, questions of unemployment and population had to be taken into consideration in apportioning the grant as between one local authority and another. The Joint Under-Secretary stated with regard to the money that is available, that no provision is made for that system which was introduced in the Act of 1929, and that questions of population and unemployment were not to be taken into consideration in the allocation of this grant. I agree with that principle. The position today is different from what it was in 1929 so far as unemployment is concerned. There may have been, in certain areas in Scotland—for example, certain large burghs and industrial areas—cases of considerable unemployment in 1929, and that was taken into account when we considered that Measure. The position has been different during the period of the war, and, after all, this is a very limited Measure providing as it does for three years.

I, therefore, agree that there could not be introduced into the distribution of this money that principle of population and unemployment in order to help what are called the poor areas to get a larger proportion of the grant. After all, what is the test of a poor area as against another area? Is it because a local authority has a higher rate? A local authority may have a high rate prevailing in its area, but that may be due as much to a low assessment or valuation as to actual poverty existing in that area. It is a question of assessment. If properties in the burgh have been considerably undervalued or under-assessed, undoubtedly there is a correspondingly high rate. So that the rate prevailing in any particular burgh is not a real test of the position in that burgh.

I do not wish to speak very long because I know there are other hon. Members who wish to discuss an important matter of this kind. But I want to say that I thoroughly agree with the right hon. and learned Gentleman, and I hope if he happens to change from one side of the House to the other before this matter is dealt with, he will not change his mind. I do not reprove him for changing his mind, because I do not think he was here in 1929 when we discussed the Measure now in operation. I agree with him that we do require to have this question of local finance in Scotland completely overhauled, and a proper understanding reached as between the central authority and the local authority. I know that hon. Members opposite and their friends in Scotland are very anxious to have the English system of rating introduced into Scotland. I think that in days not far distant, we may have some very hot discussions on that particular subject. I suppose we shall be shown how the system of rating in Scotland affects the rating authority, and how another system affects it, but, whatever the system, as far as local rating is concerned, I hope there will be agreement on both sides with regard to the financial position of the local authorities in Scotland. We should have had a better arrangement in 1929. We have suffered as the result of an Act which was passed at that time, and we now require the block grant system to be overhauled so that more money will come from the central government and less from the pockets of the local ratepayers.

6.6 p.m.

Mr. J. L. Williams (Glasgow, Kelvin-grove)

In attempting to address this House for the first time, I know I shall receive the sympathy and tolerance which have been extended to so many other hon. Members in the past few weeks. Like previous speakers, I wish to extend to the Minister my welcome of the provisions of this Bill. I know they will be welcome so far as they go, but in the estimation. of many people, the amounts will be too small and dissatisfaction will be expressed at the fact that we are still on the old unsatisfactory basis so far as local government finance is concerned. So far as I can see, we are continuing on that basis. I know there is a promise that the matter will be considered before very long, and I feel the sooner something is done the better, because there cannot be a very fair distribution if the basis of the distribution remains the same.

There are a few points I would like to raise, but not those mentioned by the hon. Member for Dunfermline Burghs (Mr. Watson), such as the English or the Scottish systems of rating, or under-assessments and over-assessments. I leave those to the older Members. There are some points with which I am very much concerned. The question was asked in the last few days in connection with the English Bill as to when we would have a real costing system for the social services carried on by the different towns. Emphasis has been laid upon the need for having a costing system for a given service in every given town. There are some things which, it occurs to me, should be gone, into when the promise made by the Minister is implemented in regard to reforming the system of. local government finance. Let us take, for example, the policy of giving a service in an industrial town as against running a corresponding service in a non-industrial town. In the industrial town we will find a wide range of social conditions inseparably connected with the industrial development of the town, which will not apply to the same degree in the more commercial and less industrial towns. Take, for example, a town made-up very largely of working class tenements. How are we going to measure the cost of the maintenance of public parks in that town as compared with the maintenance of public parks in a town which is made up very largely not of tenements but of ordinary cottage dwelling houses? Take as another example a city or a town which is traversed by a big river. How are we to maintain a free system of bridges and ferries for that town as compared with another town which has no such problem to face? Again, we have one town blessed with educational endowments which have been handed down for hundreds of years, while another town has no such blessing and has to do without it. We find a great many such inequalities in relation to maintaining different services, and it is a point which has been overlooked so often in comparing the position of one town with another in regard to finance.

There is also the point of securing equity in regard to the contributions of the ratepayers in the different towns. Both in industrial towns and commercial towns we come back to the fact that, in the main, values are based not on industrial or commercial properties, but on houses and shops—to the extent of 80 per cent. Many of those houses in the industrial towns are small and old. Here is a point which should be kept in mind in regard to values in all the industrial towns. A great many of the houses are substandard, and consequently their rateable values have to be substandard. As many as 20 per cent of the houses in some towns have only one or two rooms, with the result that the rents correspond with the size of the houses, and rateable values correspond to the rents. Yet, it is into those districts that we must put public money in the shape of public assistance, public health, public parks and open spaces, public baths and all the different services, to make up for the con- gested conditions, until one is fairly soon convinced that nothing is as costly as poverty. I cannot speak with long experience of local government as can some hon. Members with whom this House has been blessed from the day when the Radical Mayor of Birmingham, Joseph Chamberlain, came to the House of Commons. From that day this House has not been without the value of great municipal experience. But my experience of local government has been only for a comparatively brief period. I know the Minister will say that it is not the intention of the Bill to remedy the points which I have mentioned. I will only make one pertinent point there; because of that, it will be much more difficult to effect a fair distribution of the moneys provided in the Bill.

6.15 p.m.

Mr. Alexander Anderson (Motherwell)

I feel myself happy tonight in being the first to extend the congratulations of this House to the hon. Member for Kelvin-grove(Mr. J. L. Williams), upon a well-informed and thoughtful maiden speech. I am certain that when he takes the opportunity of intervening more frequently in Debate we shall value his contributions, coming as they do from one who has a well-informed mind and a nice quiet method of delivery.

I want, on behalf of the local authorities of Scotland, to welcome this little Bill, not because it is a good Measure—it is a mean little Bill—not because it deals adequately with the situation with which it is supposed to cope; but because it is at least some tardy recognition from the Department that the problems of local government administration in Scotland require help. During the six years of war the rates in England have been relatively static, whereas in Scotland we have had to face constantly rising municipal costs, increases in wages, increases in cost of materials and the provision of services of greatly increased size for the population. They have led to a steady increase in the costs of our municipalities. Today, we are faced with still greater increases, towards which we get only this sum of £1,375,000, from the Treasury. We welcome, however, that small amount. Actuarially, it may be according to the Goschen formula, but it bears no relation whatever to the actual needs of the local authorities of Scotland, if they are to maintain the efficiency of the services which they are called upon to administer.

The services which they administer are responsible for the health and happiness of 5,000,000 people in this Island. We welcome the Measure, too, because it gives us a promise that in 1947–48 the whole of the relationship between the local authorities and the Treasury will be reviewed. I would warn this House that if the central authority is to impose upon local authorities ambitious new measures, which may be highly necessary but will give us more costly services to administer, there will need to be a completely new orientation of the local authorities in Scotland in regard to the Treasury. Otherwise our ratepayers will be asked to pay rates beyond their capacity to pay and, what is even more serious, our capacity to attract to Scotland those lighter industries which we need will be jeopardised by the fact that the high rates will be a deterrent factor.

Nevertheless, we welcome the Bill. All the local authorities in Scotland welcome it, but there are many authorities in Scotland who do not welcome the method by which the money is to be apportioned. I was very glad to hear from the Minister that he could not say that the money was being divided upon any principle. It was being divided by what he called, euphemistically and optimistically, general agreement among the local authorities of Scotland. Actually, the position is this: First of all, there is no principle on which this money is divided. It is a most haphazard business, in which certain local authorities have come out very well. It is divided, in regard to burghs, on population plus rateable value. In counties it is divided on weighted population plus rateable value. The results are sufficiently to be judged by themselves.

When the Local Government Act, 1929, was passed, a formula was devised, an empirical formula if you will, but one which met the needs of Scotland and the wants of the case. It met that case so successfully that from then to now it has never been challenged. It was a formula, as may have seemed to some people, based entirely upon the unemployment factor. The weighted population takes into consideration many factors, for ex- ample, the number of children under five in relation to the population. It deals with this very vexed question of rateable value, because one of the factors is a percentage when the rateable valuation per head is less than £12 10s. My burgh has a rateable value of £7 8s. per head, so even in that very formula there is an allowance for low and high rateable values. The formula also, very rightly, takes into consideration the question of unemployment. When people are congratulating themselves that the unemployment factor does not count, may I remind this House that, in my burgh today, the percentage of unemployed to the insurable population is 15 per cent., and that in Lanarkshire, industrial Lanarkshire, we can see the cloud of unemployment coming between us and the sun of prosperity? It may not be very long, unless this transition is short, before we may be very glad to go back to the weighted population formula, if local services in Lanarkshire are to be carried on properly.

We had a formula which operated to everybody's satisfaction, but because this Measure was being brought forward hurriedly and because it was initiated under Coalition auspices at a time when agreement was more important than equity, we found the formula departed from. I do not stand up here for the old formula. I believe that some necessary alterations should have been made, but I say that the method by which this allocation has been made does not follow any formula. It does not adhere to any principle and there is no system whatever about it. The only way we can judge it in the West of Scotland is by asking, How does it work? I elicited from the Minister who is to reply, in answer to a Question in this House, certain significant figures.

These show that if the formula is obtained by agreement, two bodies in Scotland are suffering most from this method of agreement. First, there is the position of the larger burghs. The only association to which the larger burghs can belong is that mediaeval anachronism the Convention of Scottish Burghs. A dozen large industrial burghs are islanded among all the rest of the burghs in Scotland. Those smaller burghs have been shorn by the 1929 Act of many of their powers, and their interests are bound up with the counties in which they carry on their services. When it comes to the question of interest, they automatically go with the counties in which they are situated and not with the larger burghs, where they might normally have belonged if they had been free burghs.

The result is that the Convention of Scottish Burghs can get agreement by a majority, but it is an agreement which has hurt the large industrial burghs. If we look at the actual facts elicited by this division we can see that something is completely wrong. We find, for example, that those burghs, generally speaking, with the lowest rates, the highest valuation and the least percentage of unemployed, get a larger sum, and that the industrial burghs get less. I do not want to make invidious distinctions but, obviously, from this method of allocation, it seems perfectly certain that the City of Edinburgh has become what I might call the spoilt darling of the Scottish burghs. I find, for example, that in 1945–46 the City of Edinburgh gets £79,990 more under the new method of allocation, while my industrial burgh, a hard hit burgh striving to produce decent citizens, to provide adequate services, to cover up the decline of coal and do away with the obsolescence of the heavy steel industry, will get from this generous method £8,000 less than it would have got under the old formula. The rates of Edinburgh are 8s. 3d. in the £, while the rates of Motherwell and Wishart today are 14s. 7d. With this process continuous for two years, in 1947 the City of Edinburgh is going to get £97,000 more than under the old formula, while my town's deficit is going to increase and we shall get almost £10,000 less. I do not care what the principle or lack of principle on which this thing is allocated; the figures themselves show that there is something wrong with the method of allocation.

When we come to the provisions of Clause 2 we find that the Western counties, the industrial counties, are getting their allocation on the weighted population, which includes the density factor calculated by the amount of population to the mile of roads, a very heavily weighted factor. Lanarkshire, Dumbartonshire and Renfrewshire, three counties which may be classified as counties, but which have wide open spaces will share, because they are classified as counties, in 47 per cent., which they secured after a most unsavoury wrangle with the burghs, instead of 53 per cent., but the bulk of those counties is urbanised. They do not get the benefit of the density factor in their weighted population, with the result that they get the worst of all possible worlds.

An extraordinary position arises in the counties, where we can actually see how the system works The county of Dumfries, with a rate of 8s. 8d., where rates have fallen during the war by is. 4½d., gets a rating relief of 11.7d. in the £The county of Dumbarton, with a rate of 10s. 6d. in 1944–45, which even with this grant has risen by 10d. this very year, gets a relief equal to 5d. in the £. We find that Banffshire gets 26.2d., that Aberdeenshire gets 18d. for their relief while Lanarkshire gets 10.8d. allowance. The whole thing is crazy.

I do not expect that at this late stage it will be possible to make much change. In any case, we have the rate for this year, and our ratepayers most reluctantly will have that money drawn out of them. I implore the Minister to consider the future two years. It is a shame, indeed, I say deliberately it would be a crime, against the industrial West of Scotland if this method of allocation is perpetuated for two more years. I am not here as a mendicant to plead for pennies for Lanarkshire nor am I here as a huckster to bargain with the Scottish Office, but we want this money allocated in accordance with equity and we do not care what the formula is. I can assure the House that there is a deep feeling of dissatisfaction among the larger burghs in Scotland, and particularly among these three counties of Dumbartonshire, Renfrewshire and Lanarkshire, at not having got a square deal. We look to this House and to the Scottish Office to see that, in the two succeeding years, we get a square deal.

6.29 p.m.

Sir William Darling (Edinburgh, South)

I am very interested in this subject from two points of view. I prefer to deal with the larger aspect first, on which we shall get the greatest measure of agreement. As the hon. Member for Motherwell (Mr.A.Anderson) has quite properly said, this is a miserable Bill, a contemptible Bill, and when I think of the promises, the expectations and the hopes that even I had of His Majesty's Government, I think they might have secured a larger measure from the Treasury than this miserable sum of £1,375,000.

Mr. Gallacher (Fife, West)

Is the hon. Member aware that the Bill is the product of a Tory-dominated Government?

Sir W. Darling

I am grateful for the intervention. I am not aware of that, because I read on the Bill in front of me these words: Bill presented by Mr. Secretary West-wood, supported by the Lord Advocate, Mr. Buchanan and Mr. Thomas Fraser. I shall believe that it is a Bill put forward by a Tory Government when I see the hon. Gentleman voting against it. I, like other Scottish Members feel keenly about this matter, and I think it has brought us unity in pressing upon the Government and the House of Commons the inadequacy of the 11/80ths allocation. I do not know if Englishmen have followed at all closely the history of Scotland during these war years. For most of Scotland it has been a period of depression and unemployment. It is known to this House that in 1939, when we wanted to set up our industries in Scotland, the factories were used for storage purposes, and we were not able to offer that share in the war effort which we would otherwise have been able to do. Do the English and Welsh Members of the House and those of Northern Ireland, know that we have had to export the greater part of Scottish labour to supplement the needs of England and Wales? Do they know that we have had to export our women folk from Dundee and from Lanarkshire in order to strengthen the industrial equipment of other parts of this island, and that this futile and foolish policy is reflected in this 11/80th grant? Unless this part of the United Island can be diverted from placing all its valuable economic and administrative assets in the South-East of England, we are doomed to extinction in the next war.

There is some overwhelming passion to develop this great capital and county of London. There are 8,000,000 inhabitants in London, 3,000,000 more than in the whole of Scotland. There is a tendency in the administration of the country to favour the development and redevelopment of the population of London. London was threatened by Julius Caesar, by William the Conqueror, by the Spanish Armada, by the first German war, and it was almost extinguished by the second German war. Yet you continue placing all your most valuable administrative and economic assets in the most dangerous and vulnerable parts of this island. You are continuing to do it. Now I am told that you are going to rebuild London. Scotland has been, and is being, placed at a disadvantage compared with the rest of the island. Let me remind hon. Members once more of what happened during the war, when our great ports were bombed out, when Portsmouth and Plymouth were attacked. The naval vessels were hurried up to Rosyth, and the Government pleaded with the shipping of the Clyde to get busy. It happened again and again in wartime.

All the Scottish Members of this House have a duty to impress on this House of Commons that the allowance made from the Treasury of £1,375,000 under the 11/80ths grant, is contemptible and mean. There are, in my country, great human assets, great industrial assets, great social assets. It is not the least valuable part of Great Britain, and I appeal to those who speak for other burghs and parts of Scotland to cherish that valuable national asset and to reinforce it, stimulate it, to encourage it because it is indeed a very precious one. The first of my adjectives, applied to this Bill, is one which I am sure every Scottish Member will agree with in relation to the help which the Treasury is so niggardly in offering for Scottish needs and conditions and problems. It is contemptible, and mean; and the only gratification I have is the feeling that it will not be for longer than two years. The hon. Gentleman who introduced the Measure assured the House that this is an interim piece of legislation, and I am quite glad to accept it as such. It has been commented on that there are fairer schemes under this administration than under the previous one. They may be good or they may be bad, but the proposal is certainly not a very attractive one to me.

I have dealt with the larger Scottish aspect. Now I feel I shall have to descend to the domestic squabble for which we Scottish Members are perhaps better equipped. I would like to join with the hon. Member for Motherwell (Mr. A. Anderson) in congratulating the hon. Member for Kelvingrove (Mr. J. L. Williams) upon his maiden speech. There are good and great men who come out of Glasgow, and I am delighted to join in congratulations to the hon. Member. The hon. Member for Motherwell fulminated against this Bill and compared his burgh with the Capital City. I have taken a lot of trouble to look out some figures which do not seem to bear, out the somewhat dismal picture he presented. I was going to rise, if I had the good fortune to catch your eye earlier, Mr. Speaker, to draw the attention of the House to the somewhat scurvy way in which the Capital City of Edinburgh has been dealt with, as compared with the lesser burghs and counties, and had some figures worked out which very substantially support that view. I should be glad to exchange these with the hon. Member for Motherwell, although 1 do not wish to score debating points in the argument which is bound to be based on these comparisons.

I have here a chart of the apportionment of the Exchequer grant relating to the three years 1945–46, 1946–47, and 1947–48. I take Motherwell and Wishaw, because, although the hon. Member has not mentioned this, they go together in this matter. The apportionment per head of the population—and there is a good population in Motherwell and Wishaw—is £1 14s. 11d., whereas the apportionment per head of the population given to the City of Edinburgh is only £1. That is for the period 1945–46. If I take 1946–47, again Motherwell and Wishaw has £1 15s. 5d. and Edinburgh £1 0s. 7d. For the year 1947–48, in prospect, the apportionment for Motherwell and Wishaw will be £1 15s. 5d., while that per head of the population of the capital city will only be £1 1s. 3d.

Mrs. Jean Mann (Coatbridge)

May I ask whether the hon. Member would agree to the weighted population formula, in exchange for half valuation, half population?

Sir W. Darling

I would agree to the formula as submitted, but what I am endeavouring to do is to answer the suggestion that the City of Edinburgh is very advantageously placed, in comparison with other burghs and other cities. This, I think, is the answer. It may not be a complete answer, but it is an answer which cannot be gainsaid. The comparisons need not stop there. Lanarkshire County for the year 1945–46 gets £2 0s. 4d. These are basic figures, which, as I said before, cannot be gainsaid. I suggest that what has been said of the apparent advantages which have been conferred by this formula upon the City of Edinburgh are unjustified by the figures. There are other ways of looking at this matter. The hon. Member for Motherwell, as a burgh treasurer, has, I am sure, the facility to manipulate figures to suit his several cases, and I have no doubt that he has had much experience in that direction, but let me quote some more figures. The rate burden per head in Edinburgh is £5 1s. 11d., but in Motherwell it is £2 19s. 4d. The grant in round figures at the present moment for Edinburgh, based on the £5 1s. 11d., is 1s. That based on Motherwell's is 4s. 4½d. In Edinburgh now we are to get is. 6½d. but in Motherwell they will get 5s. 0½d.

It does seem to me that there is a grievance, if there is one at all, on behalf of the Capital City which, unlike Mother-well, has not had the continuous period of full employment which it has enjoyed during the last three to four years. Edinburgh is looked upon as a wealthy city. It is a frugal, a prudent city, which has always kept its rate burden the lowest of the United Kingdom, 7s. 11d. in the £, or at any rate it was until last year. That is usually not a demerit. Motherwell has other advantages for which I could speak, and so have other burghs in similar circumstances, and that is, that it is included as a development area. Factories have been built there, or are going to be built there. Motherwell, I think I am right in saying, is to have the services of the Special Housing Association to supply good housing. Edinburgh enjoys none of these advantages. We have never been in a development area, and we are not included up to now in the area in which the Special Housing Association is to operate. The other burghs and cities will benefit from the operation of the Trunk Roads Bill, but Edinburgh will not. Motherwell will benefit by the special grants which the Lanarkshire education authorities will get, but Edinburgh will not be so advantaged.

These are some of the factors which, in my opinion outweigh, even the arguments of the hon. Member for Motherwell. I think it would be unfortunate if there were to be any domestic squabbling about these matters. Edinburgh accepted the old formula and we are accepting the new formula. We think it is a fair one. Edinburgh has a prudent, frugal civic management that is not always seen in other parts of Scotland. The population of the City of Edinburgh may not be subject to the degree of unemployment of the industrial districts, but there is this factor. It includes a very large number of persons, I think very worthy ones, who have retired and are living upon fixed Incomes and who have suffered very severely from the incidence of Income Tax. They have to pay for social services which they do not require, and which they cannot use.

This is the "new poor" of my city, and I think that they are entitled to some consideration. Edinburgh is not even solely a commercial or a financial centre. We have, however, in our midst, the burgh of Leith, and no part of this country has suffered grimmer unemployment, more continuous and more devastating, than the burgh of Leith. Consequently, I think we are entitled to say that this new formula is fair to other parts of the country; they are all getting more, much more, and none are getting less, and it is for that reason that I have taken the trouble to quote the example of the City of Edinburgh.

6.44 p.m.

Mrs. Jean Mann (Coatbridge)

I welcome this Bill, or rather the supplementation of the Exchequer block grant. I do not think there is sufficient of it, and what there is, is not equally or even equitably divided. However, what we have of it is I say quite acceptable. I do not agree with my hon. Friend the Joint Undersecretary when he said that it should materially assist those whose need is greatest. Actually, the quarrel that the Lanarkshire Members have with this Bill is precisely that it fails to do that. The hon. Member for South Edinburgh (Sir William Darling) has just told us, in very strong and unmistakable terms, that he is not pleased with what it does for Edinburgh, but who are those whose material need is greatest? I do not think it is Edinburgh—a very fine city, with crisp air and high winds, and a very clear atmosphere, uncontaminated by the dirt, smoke and depression of industry. In my constituency the sky is darkened long before one gets there because it is surrounded by industry, which is not even planned apart from its houses; its huge, monstrous works are close against its houses and its air is darkened. There is a dull depression constantly over the burgh, which has a very high incidence of respiratory disease and a rate of 17s. Id. in the £—still rising.

My hon. Friend the Joint Undersecretary has divided this in a very unfortunate way, because according to his formula, based on half population and half valuation, Edinburgh runs from £66,000 for the weighted formula to £146,000, whereas my constituency will have to carry a loss of practically £10,000 for each of the three years. £10,000 per annum means 100 per cent. That is very considerable indeed. The same applies to the burgh of Airdrie, where we shall suffer approximately 58 per cent., because of the different method of calculating the block grant.

Sir W. Darling

Does the hon. Lady mean 58 per cent. less than they received before?

Mrs. Mann

No, not less than we had before, but less than we would have had if the formula which we wanted had been adopted, namely, the weighted formula. But we have had to accept the formula based on half valuation and half population, and we do not like it;58 per cent. is the difference between the two.

Sir W. Darling

Can the hon. Lady tell us how much more her burgh will be getting than it got under the old grant?

Mrs. Mann

About £6,000 for Airdrie and £10,000 for Coatbridge.

Sir W. Darling

They are getting more, then.

Mrs. Mann

I know it is true that we are going to get something different in the future, and I hope my hon. Friend the Joint Under-Secretary may review it again later on. I would like to repudiate most emphatically the suggestion made by the right hon. and learned Member for Hillhead (Mr. J. S. C. Reid) that the Sorn Committee Report would in any way assist Scotland. I should also like to point out that that report was not unanimous as he said; there were two Members of the Labour Party on the Commission, one of whom entered a dissenting memorandum. If we examine the Sorn recommendations, what are they? Would they put another penny into the pot for distribution to the people of Scotland? Not at all. My right hon. and learned Friend well knows that there were two recommendations from that Committee. One of them was that the tenant should pay any future increases in our rates. Will that help anyone in Scotland except the owners? The second, to encourage private enterprise to build owner-occupied houses, was that such houses should only carry a combined rate of 5s. in the £. As Glasgow's combined rate is 17s., one wonders who is to contribute, who is to subsidize the new owner-occupier who is recommended for a 5s. combined rate. I do not think that the recommendations of the Sorn Committee would assist Scotland in any way, and I do hope that the Under-Secretary will give serious attention to the really embarrassed condition of Scotland, dependent as it is almost entirely on the heavy, and therefore the export, industry of our country.

6.52 p.m.

Mr. Gilzean (Edinburgh, Central)

Although I have from time to time asked a question in this House, this is the first occasion on which I have ventured to raise my voice in Debate. Having regard to that fact, I am sure that I shall have the kind indulgence of every Member here.

I would like to say right away that I rather deplore that the Debate should have taken a turn which seems to indicate some rivalry, as between community and community. This Bill is a very good Bill. I agree with the right hon. and learned Member for Hillhead (Mr. Reid) that perhaps it might have been built on more generous lines, and I do not suppose that there is a single Member on either side of the "House who would seek to deny that, but it seems to me that there is not the least doubt that it is a step in the right direction and, if it is somewhat limited, that can be cured at the end of three years. I do deplore this discrimination between community and community, and particularly do I deplore it when a special reference is made to the city in which I was born, the city which I have served in a public capacity for over 20 years. I will agree with anyone who says that my native city is hard-fisted so far as municipal administration is concerned. It has always been exceedingly careful of public expenditure. There is an explanation for that. There was a time in the history of the city when it was completely and absolutely bankrupt and had to make a composition with its creditors, and to fund its debt at 3 per cent. It took something like 80 years to liquidate that debt. If anyone who is interested in good literature wants something worth reading, he should consult Lord Cockburn's "Memorials of his Times," in which he will find the whole story.

I also think it is entirely wrong to compare the rating of one city with that of another because, generally, the basis of comparison is completely wrong. There is only one basis of comparison that is likely to show the truth, and that is not to compare the rates themselves, but the pressure per head of the population of those rates. A remark was made to the effect that the Glasgow rates were 17s. 0d. and that the Edinburgh rates were 7s. 11d.—actually now they are 8s. 3d. —but still the Glasgow rate is more than double that of Edinburgh. When the formula of pressure per head of the population is applied, it is found that the pressure per head in Edinburgh is £5 3s. 2d. and in Glasgow £8 0s. 10d. This falls far short of the double rate which the other figures would seem to indicate. We must, therefore, examine this question quite dispassionately. It is true as has been said, that under these new proposals Edinburgh will get something very much less than it would have got on a population basis, and less than any town in Lanarkshire, or even the County of Lanarkshire as a whole.

I, therefore, suggest that the best thing to do is to accept this Bill and make the most of it, and resolve that when the opportunity comes along we will seek to evolve something much better. We have been told—we have almost been twitted with the fact—that Edinburgh is a beautiful city, and I would be the last to deny that. I glory in its beauty, but I want hon. Members to keep in mind that I could take them into parts of Edinburgh that are at once a challenge to Christianity and a reflection on our civilisation. It is altogether wrong to imagine that there do not exist in Edinburgh conditions that give us cause for shame, and, I hope, a resolve for amendment in the future. The only thing I can add is this. Let us take what we are getting and seek to make the best of it, resolved, not in division, but in unison, to seek something in the near future which will make for the betterment of Scotland as a whole.

7.0 p.m.

Mr. Willis (Edinburgh, North)

I rise to support this Bill. Like a former speaker I am not altogether satisfied with the generosity with which Scotland is being treated, but it is in accordance with the formula laid down, and why the hon. Member for South Edinburgh (Sir W. Darling) should condemn this Government for that formula is rather beyond me. The condemnation should have been levelled many years ago and should not arise at this juncture. However, given that sum of money, the question is how is it to be divided, and that seems to be the issue that has caused controversy in the House tonight. The money could have been divided on the same basis, I understand, as the grant had been divided in England, but the Scottish local authorities refused to accept that as a basis. It then fell to the local authorities to devise a basis on which they would prefer to have it divided, and it is only fair that my hon. Friends in front of me should remember that the present allocation as between the burghs and the counties and as between different burghs and between different counties is, and has been, accepted by the majority of counties and burghs in Scotland.

We have had some arguments adduced as to why this allocation is not a good one. I do not wish to enter into the controversy about facts and figures. Facts have been introduced to demonstrate one case and facts brought forward to demonstrate another, and most of us are well aware that we can produce figures to support any arguments we like to make. But it is suggested that we should not have changed the old basis on which the calculation was made. I venture to suggest that that basis has itself changed. The old formula is based on facts which have changed. It is based, for instance, on the weight of population, the number of children under five, and the incidence of unemployment, and if anything has altered during the past five years it is the incidence of employment and unemployment. As the basis of the formula has changed, I suggest that the method of calculating that formula should also be changed, and I think the local authorities were correct in changing it. I suggest that the formula, if we accept the 1936 basis for working out this matter, would undoubtedly work out much more favourably for those counties complaining because of the fact that unemployment is one of the factors, and that unemployment was larger in those quarters at that time, but I am rather amazed that my hon. Friend in front of me should be looking once again to high unemployment figures in the West of Scotland. I have a rather greater faith in this Government than that. I do not think the country should look to high unemployment for several years. The difficulty should not be to find employment but to get the materials and a sufficient number of men to meet the many needs of this country.

That was the main argument with which I wanted to deal, the change in the basis. Secondly, there is the factor of unemployment. If we take the position during the past four or five years the counties that are complaining in Scotland are those that have been comparatively fortunately placed. That is a fact which is being forgotten. The counties in the West of Scotland have been fairly prosperous, and whilst it may be true that the county councils of Dumbartonshire and counties have suffered as the result of the blitz it is not true to say that the others have suffered, and their share of the prosperity has probably been, as is usually the case, much greater than the share of towns such as Edinburgh which do not rest on an industrial basis.

I think, therefore, that the Bill and the allocation of the money as between counties and counties and burghs and burghs is a fair one, and I trust that the Government will not give way to the pressure being exerted to change it without giving the matter very careful consideration. It is true that we have to face the fact that enormous burdens are being placed upon local authorities. The in- creased expenditure they will be called upon to bear in connection with extended educational facilities, housing, the social services, and higher wages for nurses will throw an immense burden upon them, and I would like to impress upon my hon. Friend the necessity for considering this at the earliest possible moment. We are getting three years' grace, but I think it has to be tackled very early if we are to get out of the mess, because that is all what we are in at the present time. We are trying to ride two horses at once; we are increasing expenditure without calculating the method by which we are going to meet that expenditure. We seem to be rather dilatory in tackling that problem, so 1 urge on the Government the necessity for dealing with it at the present time if these schemes are to go forward as we wish.

7.7 p.m.

Mr. McAllister (Rutherglen)

My intervention will be a very brief one. The right hon. and learned Member for Hill-head (Mr. J. S. C. Reid) has described this as a "trumpery Bill." The hon. Member for Dunfermline (Mr. Watson) described it as "a miserable little Bill." The hon. Member for Motherwell (Mr. A. Anderson) called it "a mean little Bill," and the hon. Member for South Edinburgh (Sir W. Darling) "a contemptible Bill." I cannot enter into that competition of adjectives. I think it is just a workmanlike little Bill intended to cover a difficult period and to get over a particular obstacle at this moment. The remarks made by my hon. Friend the Member for North Edinburgh (Mr. Willis) about my colleagues from Lanarkshire looking forward tinder this Government to a period of mass unemployment are really, I suggest, a distortion of the very admirable and lucid argument that was put forward by my hon. Friend the Member for Motherwell. We are not looking forward under this Government or any other Government to the unemployment we knew so well in Lanarkshire between the war periods, but we are looking forward to regenerating Lanarkshire and regenerating Scotland, and this Bill is at least inadequate for any such purpose. It ties us down to the eleven-eightieths grant formula, and that is a formula about which no Scottish Members on either side should be in the least degree happy. I would appeal to the Under-Secretary of State for Scotland to say in his reply that it is the intention of the Scottish Department to go into this whole matter with the Treasury in order that Scotland may get a fairer deal from the Treasury than she has received in the past.

I must disagree with my hon. Friend the Member for North Edinburgh, because the formula is not one that even the Under-Secretary claimed was an equitable one, but a formula which was reached, he said, by agreement with the local authorities concerned. The hon. Member for Motherwell pointed out that there was no adequate machinery whereby the assent of the local authorities could be obtained and that, in fact, the advantage undoubtedly lies with great and wealthy cities as compared with the depressed and derelict parts of the country. We are quite happy to accept this formula for this year, but I appeal to the Joint Under-Secretary of State for Scotland to tell us that he will go into the matter again in the hope that a new formula may be devised for 1946–47. In these conditions, I am sure every hon. Member will be happy to give the Bill support. But it is a very qualified support. None of us wants to boast about this Bill; we commiserate with the Joint Under-Secretary of State in having to deal with it.

7.11 p.m.

Commander Galbraith (Glasgow, Pollok)

My first duty is to congratulate the hon. Member for Central Edinburgh (Mr. Gilzean) on a very effective maiden speech. We have listened to him in the Scottish Committee on numerous occasions, and I think the speech we heard from him tonight contained just the kind of well reasoned arguments we would expect from him. We would look forward to hearing him on many occasions in the future. I am sure that you, Mr. Speaker, will have been gratified in finding in the House tonight, on the part of the Scottish Members, agreement on two subjects. It is not usual to find that Scottish Members agree even on one subject, but tonight there has been complete agreement on the fact that the eleven-eightieths formula does not deal adequately with Scotland in connection with the rating position. I do not think there can be any doubt about that, following the argument which was put forward by the right hon. and learned Member for Hillhead (Mr. J. S. C. Reid). He seemed to me to prove conclusively that the needs of Scotland are not being met adequately under the Goschen formula. I hope that, in view of the unanimity which has existed on the Committee, the Under-Secretary of State for Scotland, when he returns, will be able to press the Cabinet very strongly for more generous consideration in regard to the rating burden in future.

The other point on which there seemed to be unanimity of opinion was that the time had come when the whole question of local government finance required to be reviewed. I hope that, following this Debate, the Under-Secretary of State and the Secretary of State, when he returns, will press that matter very strongly. The burden has become almost intolerable at the present moment. There is no doubt it is going to increase, and the matter must be dealt with as one of urgency. I hope also that the Government will consider what they can do with regard to the Sorn Report, and whether the time has not come when legislation should be introduced to meet the findings of that Report. We are agreed on those things, but we do not seem to be at all agreed on the question of the allocation of this money which is to come to us. Various suggestions have been made in that connection, but I feel, with the hon. Member for Motherwell (Mr. Anderson) that what we want is that any sum that is coming to us shall be divided equally and equitably. I suggest, however, that it will take almost the wisdom of Solomon to satisfy all the Members from Scotland in that connection. It may be a trumpery Bill, a contemptible Bill, but still the relief given under the Bill is very much needed. While it might have been greater, it is very much welcomed at this time, and therefore, I hope the House will give this Bill a Second Reading unanimously.

7.14 p.m.

Mr. T. Fraser

I can speak again only with the permission of the House. First of all, I would like to congratulate my hon. Friend the Member for Central Edinburgh (Mr. Gilzean) and my hon. Friend the Member for Kelvingrove (Mr. Williams) on their very well informed maiden speeches. Both of them have had long experience on local government, and this evening we have been treated to the vast knowledge which they have acquired of the problems of local government in their long periods of office. I am sure I am expressing the views of hon. Members in all parts of the House when I say it is our hope that we shall be privileged to listen to the two hon. Members very often in the future.

In the course of the Debate, hon. Members on both sides of the House seemed to have gained the impression that the block grant is allocated to Scotland on the eleven-eightieths formula. That is quite wrong. There has been a suggestion in the course of the Debate that we ought to get away from the Goschen formula when deciding on the allocation of the block grant. The position is that it was only on this occasion, because we did not find it possible to get together all the data to decide on the amount that would have been Scotland's due—I gave an assurance categorically that it would not be taken as a precedent—that we agreed to accept eleven-eightieths of the amount to be granted to England as an interim grant. We were satisfied, from the knowledge we had of the Scottish local authorities' accounts, that we had not come out of the bargain badly. Nevertheless, the right hon. and learned Member for Hillhead (Mr. J. S. C. Reid) rather criticised the Measure because he was sure we had not got our due share of the moneys being distributed at this time.

He quoted some figures indicating the differences in rate levels and valuation levels between England and Wales and Scotland, but I really think he got the position just a little wrong. He must know just as well as I do that a penny rate in England and Wales is equivalent to four-fifths of a penny rate in Scotland, and there are many decisions taken for the United Kingdom on that basis. He also said that local authority expenditure in England and Wales had not increased during the war years, but that is not quite true. The reason for the local authorities in England and Wales making their demand on the central Government at this time for additional money is that their expenditure has increased during the war years. I said in the course of my earlier speech that local authority expenditure in Scotland had not increased very much in the early years of the war, and it did not. The same was true of England. In many parts of England and Wales expenditure went down in the first three or four years of the war, and that was equally true in Scotland.

Commander Galbraith

I think the hon. Gentleman will agree that my right hon. Friend was quoting the Minister of Health on the subject, and was not seeking to give a false impression, but was merely taking a quotation from the speech of the Minister of Health.

Mr. Fraser

That may be so. He also quoted the words printed on the face of the English Bill saying that the expenditure will rise in the years immediately ahead. That is equally true of Scotland. I suggest to the hon. and gallant Member that he might look at the Official Report of the Debate which took place on 30th November, and he will see that the English Members were not slow in informing the Minister of Health that the local authorities in England had indeed incurred increased expenditure during the war years. The average increase in rates in Scotland in 1943–44 over 1938–39 was 3d. in £, and the increase in 1944–45 over 1938–39 was 1s. in £.

While dealing with the points raised by the hon. and gallant Gentleman and the right hon. and learned Member for Hill-head, I will say quite categorically that the Government have no intention whatever of introducing legislation on the Sorn Report. The Sorn Report proposed a ceiling for owners' rates and we have no intention at all of introducing legislation to introduce that ceiling, appreciating that it can only be done at the expense of the occupier. The right hon. and learned Gentleman, when considering the levels of valuation in England and Wales as against Scotland, tried to prove how badly we were coming out of it. I gave earlier the average rate relief in Scotland as 7.7d. in the £ in the first year, 8.4d. in the £ in the second year, and 9.2d. in the third year. Allowing for the difference in the levels of valuation, these reliefs correspond to reliefs in England and Wales of 9.6d. in the first year, 10.5d. in the second year and 11.5d. in the third year. The actual reliefs in England and Wales under their Bill are 7.5d. in the first year, 8.3d. in the second year and 9d. in the third year. We are not coming out of this allocation of money as badly as hon. Members, I am afraid in all parts of the House, have suggested.

Mr. J. S. C. Reid

I do not think that I suggested we were getting less than our proportion. I suggested that our problem was very much more acute than the English problem and that, merely on the question of proportion, it got us nowhere.

Mr. Fraser

The block grant is not allocated at all on the basis of the Goschen proportion, and the allocation on the basis of that proportion this time is purely an exceptional measure. I have been trying to indicate to the House that we have got rather more than our share because the allocation has been made on the basis of that proportion. The Scottish local authorities seem to be fairly satisfied with the amount of money that has been granted to them under the Bill. There was a time when they asked for a certain sum of money; they asked for £2 million, but they did not expect to get it. Of that there is not any doubt. Under the provisions of the Bill they will get an average of £1,500,000 a year for the next three years. I can assure hon. Members that when I met the representatives of local authorities in Edinburgh there was no considerable complaint. There was murmuring here and there about the amount of money, but, generally speaking, it was regarded by local authorities as being satisfactory. They were applying themselves rather to the question of distribution.

My hon. Friend the Member for Dun-fermline (Mr. Watson) seemed to assume that this money was being allocated by the weighted population, taking into consideration unemployment. Unfortunately, others have complained that we are not doing that, and we are not, except in the case of the counties. The money being allocated to the burghs is on the basis, as to 50 per cent., of the comparative populations—not weighted populations, which take account of the unemployment figures for 1935–36, which are completely out-of-date—and as to 50 per cent, of rateable valuations. My hon. Friend the Member for Motherwell (Mr. A. Anderson) in criticising that formula called attention to the needs of Motherwell and Wishaw and other large burghs in Lanark-shire, and of the County of Lanark-shire, as against the needs of the City of Edinburgh. He quoted the figures which I gave in reply to a Question in the House the other day. He did not, however, make a careful analysis so that he might inform us that of all the burghs in Scotland, Edinburgh gets the least rate relief. It gets relief equal to a rate of 5.6d. in the £in the first year, 6.1d. in the second year and 6.1d. in the third year. The Burgh of Motherwell gets a relief of 7.7d. in the first year, 8.4d. in the second year and 9.2d. in the third year. The hon. Member for Coatbridge (Mrs. Mann) also mentioned her constituency. Airdrie has a relief of 8.4d.in the first year, 9.3d. in the second year and 10.1d. in the third year. The Burgh of Coatbridge has a rate relief of 8d. in the £in the first year, 8.8d. in the second year.and 9.6d. in the third year. Taking Lanarkshire as a whole, I am afraid that the hon. Gentleman the Member for Edinburgh, South (Sir W. Darling) painted rather an accurate picture when he indicated that, whereas some of the large burghs in Lanarkshire and the County of. Lanarkshire as a whole were getting a total rate relief altogether by way of grant of something like £2 per head of the population, the City of Edinburgh was getting a rate relief of £1 per head of the population. These are telling figures.

It has also been said that one could not expect anything other than a Bill such as this because it was so obviously a Coalition Measure. The right hon. and learned Member for Hillhead and the hon. and gallant Member for Pollok (Commander Galbraith) know that it is not a Coalition Measure; it is a Bill that we had to produce after we took Office. Most of the consultations with the local authorities, and with the Treasury as to the amount, have taken place since we assumed the responsibility of Government. My hon. Friend the Member for Motherwell, in quoting these figures and making his argument for a review of this apportionment at the end of the first year—before we had paid over the money for the second and the third years—also dealt with the County of Lanarkshire, and the County of Dunbarton. There was a certain amount of inconsistency in his argument. When arguing for the burghs he said it was wrong to depart from the formula of weighted population and to bring in this other factor, that of rateable valuation. He criticised the allocation as far as it affected the counties because the whole of the county allocation was made on the basis of weighted population.

Mr. A. Anderson

I would like to correct that impression. The point I made was that on the population figure they got no benefit because of the fact that, while they had wide thinly populated areas they also had a highly urbanised area which negatived the density factor of their weighted population and so got the worst of both formulas.

Mr. Fraser

I am obliged to my hon. Friend. We have to look for a formula which is to be acceptable and equitable. There is a principle in the formula adopted by my right hon. Friend the Minister of Health which was wholly unacceptable to local authorities in Scotland. They would not have it at all. My right hon. Friend asked the local authorities in Scotland to propose themselves a formula that would be acceptable to them and that would be equitable in all respects. None of them found it possible to suggest to my right hon. Friend a formula more acceptable than the present one, and that formula has been adopted. I met them in conference in Edinburgh to see whether some other formula could be reached. We could not get any agreement at all; there was no other formula that got any measure of support from the other authorities. So far as Lanarkshire is concerned, I think it stood alone; no other county in Scotland was prepared to back Lanarkshire in the suggestion they made. Certainly, Renfrewshire and Dunbartonshire did not support Lanarkshire in the proposals they were making for the allocation of the money, and, likewise, the other counties, who had a great deal of sympathy with Dunbartonshire, as all of us have, because we see how badly she has come out of this formula, have been unable to suggest a formula which is acceptable to Dunbartonshire without being inequitable to the rest of the counties in Scotland.

I think those are most of the points raised in the Debate, but I might finish up by replying to the final point made by the hon. Member for Motherwell who asked whether we could have these provisions for one year, appreciating the urgency of getting something through. The hon. Member also asked me whether we could undertake to consider an alternative formula for the ensuing two years. Unfortunately, I cannot give that undertaking. We could not contemplate further legislation in less than a year's time. The local authorities have agreed with us that all the necessary information will not be available, and indeed, that is why they agreed that this interim grant should be payable for three years, and not merely to the end of the present Fixed Grant Period. They agreed that all the relevant data would not be available to allow us to introduce permanent legislation until about 1947, so that there would be no point in my giving way now and promising to look at it again in a year's time.

There is no inequity in the distribution of the money among the large burghs, as has been suggested. If the suggestion of the hon. Member for Motherwell were accepted, so far as the distribution of the money among the burghs is concerned, then Motherwell would get more, and so would all the large burghs of Lanarkshire, but Edinburgh would get very much less, and it is well worth while remembering that each of the other cities in Scotland would get less. Glasgow would get less, if the hon. Member's formula were accepted. Dundee would get less, and where is there a city that has been harder struck by unemployment than Dundee? For these reasons, we feel we could not give way, and I do not think there will be any justification for taking this matter back to see whether we could get a more equitable formula for the last two years of the three-year period. In the circumstances, I hope the House will now agree to the Second Reading of the Bill.

Question put, and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee.