HC Deb 14 December 1945 vol 417 cc815-37

Considered in Committee.

Clause 1 ordered to stand part of the Bill.

CLAUSE 2.—(Apportionment amongst counties and county boroughs.)

11.56 a.m.

Mr. Bowen (Cardigan)

I beg to move, in page 3, line 6, at end, add:

(4) The Interim Supplementary Exchequer Contribution for any particular year shall not be payable to any county or county borough whose rate poundage did not exceed twelve shillings in that year and the total of the sums so withheld from such authorities in respect of that year shall be apportioned amongst those county or county boroughs whose rate poundage exceeded twelve shillings in that year on the basis prescribed in this section. I do not want to take up the time of the Committee by reiterating the point I made and the arguments advanced on the occasion of the Second Reading of this Bill. There are two observations I would like to make in supporting this Amendment. The Parliamentary Secretary, in winding up the Debate on the Second Reading, commented on the criticisms passed on the Bill and said that they amounted to this—that the Bill would not do what it never set out to do. My criticism, and it is a criticism which I invite the Committee to support, is that this Bill does not do, or at least does only in a feeble and half-hearted way, what it purports to do and what the Minister said it should do. This Amendment is put down with the object of bringing the letter of this Pill more into conformity with the spirit and substance of the Minister's argument.

We were told by the Minister that this Bill was to provide for interim payments over a period of three years to local authorities, and principally to the poorer authorities, to enable them to meet their obligations while the financial position of local authorities in relation to the central government, were under review. We were told that the object of the Bill, and I do not expect that it is for one moment in dispute, was to see that the burden of maintaining social services in this country was more equitably distributed, and also to enable local authorities, and in particular the poorer ones, to have an appropriate minimum level of expenditure on social amenities, without incurring an intolerable burden of taxation. I suggest that this Bill as it stands, does not achieve either of those objects, and if this is not done, even in a small measure, then the bias in favour of the poorer authorities must be substantially increased. I suggest that the Amendment is a practical way of increasing the necessary bias.

The authorities I have particularly in mind are the sparsely populated rural agricultural areas. The arguments which I wished to bring forward were set forth in admirable fashion in the Minister's speech on the Second Reading. I should like to quote his words: What we must take into account is here … the necessity of seeing to it that the payment which is made, actually goes to those authorities really in need of it. He went on to say: There are some local authorities who obviously do not require much additional Exchequer assistance."—[OFFICIAL REPORT, 30th November, 1945, Vol. 416, c. 1797–8.] I suggest that the terms of this Bill, as they stand, are contrary to those expressions of policy. The terms of this Bill actually provide funds for every local authority in this country. If that is so, and I think my interpretation is correct, then it must be contrary to the policy which the Minister expressed. The precise object of this Amendment is to draw a line between those local authorities which are really in need of financial assistance of a temporary character, and those who are not in need, and to see to it that the latter do not receive moneys under this Bill. The Bill at present only means that the Exchequer is being extravagant at the expense of the poorer local authorities.

12 noon.

As hon. Members will note, the specific figure mentioned in the Amendment is 12s. I am not suggesting that there is any particular magic in that figure, although I do suggest that, in regard to the rich local authorities, it is a generous figure and might well have been placed higher. If this Amendment is accepted it will eliminate from the benefits of the Bill many authorities which do not deserve to benefit. The money thus withheld from the rich authorities would, when distributed amongst the poorer authorities, be of very considerable assistance to them. If this. Amendment is accepted it will produce a greater bias in favour of the poorer authorities, and will give a greater degree of equity as amongst the poorer authorities.

I do not wish to develop here all the arguments raised on the Second Reading that a bias, a very distinct bias in favour of the poor local authorities, should exist in relation to these financial provisions. The greater burden falls upon those authorities least able to bear it, and there can be no doubt that the expenditure of the poor local authorities is not determined by choice but by necessity. Local authorities of the type which I represent nave no prospect of increasing their rate income. Contrary to the position throughout the country generally, while their rates have increased during the war they have not been in a position to increase their rate income. If this Bill is to meet the commitments to fulfil the objects expressed in relation to it, an Amendment in these terms should be accepted.

May I ask the Committee to consider for a moment what it means in terms of social services and amenities to the peoples of the local authorities involved? The withholding of these grants from the rich authorities will not, in any way, reduce the standard of amenities enjoyed by the people of those areas. There would be no diminution in the health or other social services as a result of the retention of the money provided by this Bill as it now stands. On the other hand, if the money withheld from the rich authorities were made available to the poor authorities, it would prove a great boon. Take the position in my own county, with a rate at present of 21s. 8d. That rate poundage exists merely to maintain a minimum standard of social amenities, and if the local authority is to be put in a position to undertake any form of reconstruction and improvement of their social services, a greater bias than this Bill provides at the moment must be created. I do not wish to detain the Committee any longer, but there is one expression the right hon. Gentleman the Minister used in the course of his speech on the Second Reading which, I respectfully suggest, sums up the whole situation. He said:

I hate making the fat fatter in order to make the lean just a little less lean."— [OFFICIAL REPORT, 30th November, 1945, Vol. 416, c. 1798.] That, I suggest, is precisely what this Bill does at the moment. It is providing funds for the rich authorities at the expense of the poor authorities. If the Minister does not wish to make the fat fatter, why provide any money for those authorities whose rates are below 12s., when by doing so it follows inevitably that he is able to make less provision for the lean and poor authorities? I ask the Committee to consider this Amendment sympathetically, bearing in mind what it means in terms of social welfare. It will give an opportunity for the poor local authorities to carry out a greater measure of social welfare in their districts, whereas it does not inflict any degree of hardship on the richer authorities.

Lady Megan Lloyd George (Anglesey)

I should like to reinforce the very forceful claim that has been made by my hon. Friend in support of this Amendment. The Government themselves have recognised the force of the case put by him. They have redrafted the block formula and they have, no doubt, weighted it to a certain extent in favour of those areas most heavily burdened by rates, but they have not gone far enough. We think they have not gone nearly far enough, and the purpose of this Amendment, as my hon. Friend has said, is to equalise the burden to a greater extent than the right hon. Gentleman contemplates at the moment under the Bill. What will happen under the Bill if it goes through as it is now? In the Financial Memorandum are set out some examples of what will happen. Take, for instance, Merthyr Tydfil, which is one of the worst instances and has a rate of 29s. Under this Bill it will receive an amount equal to a rate of 2s. 9d. That is, there is no doubt, a relief, but it will still leave Merthyr Tydfil with a crippling rate. Take again West Ham, because this is definitely not exclusively a Welsh problem, although it does bear most heavily on certain areas in Wales. West Ham has a rate of 21s. 6d., and under this Bill will receive the equivalent of is. 9d.

At the other end of the scale we come to Bournemouth which, with a rate of 9s., will get, it is perfectly true, a very small relief, but still a relief of ½d. Surrey, with an average rate for the whole county of 11s. 2d., will receive 3d. benefit under this Bill. Why? Why should these places receive relief? Here is a case where a means test should be applied. The Minister may say, "We are applying a means test in this Bill," but it is not nearly ruthless or drastic enough. I believe that under the Bill as it stands some of the areas which have been quoted by my hon. Friend—and many other instances could be quoted by other hon. Members—will find it extremely difficult to undertake their responsibilities in the years to come if the rates remain as high as they will even after the relief under this Bill has been granted. Not only will they find it difficult to maintain their services, but they will find it difficult to develop their social services under the various Acts which have been passed by this House and those which, we hope, will be passed very shortly. The plain blunt answer is that they cannot undertake this development without burdening themselves with an absolutely crippling rate.

It is those very poor boroughs that are in the greatest need of social services. They are the backward areas. They have the greatest need for good housing, for improving their schools, and for carrying out developments of all sorts. This is a vicious circle, and this Bill will not make it possible for them to break out of that vicious circle. Bournemouth has no unemployed to speak of, and no slum areas. If there are one or two old-fashioned schools, they are paragons and models compared to the schools in some of the rural areas in my country. And in some of the urban areas as well, for this is by no means an entirely rural problem. Yet Bournemouth will receive the equivalent of a ½d. rate. That will not make very much difference to Bournemouth, as my hon. Friend has pointed out. It will not enable Bournemouth to carry out any great developments. But if we were to withdraw that relief from Bournemouth, and from other places in the country whose rate is comparable, and distribute that amount to the poorer local authorities, it would make a great deal of difference to their future.

Let me give one or two instances of what is happening at this moment in Wales, because the problem there is really glaring. The 1d. rate per thousand acres in England and Wales works out at £16 per thousand population, while in the six rural counties of North Wales it comes to just over £1. The product of a 1d. rate in my constituency is under £700, and the housing situation is appalling. There is no water supply. We hope to get it in the near future, but it will be a very great burden to carry. We shall have to have a sewerage scheme, and that will be a very great burden. How can we do these things with a penny rate producing under £700, and our rates standing at something like 17s.? It is not possible. It is a handicap, and a stumbling block to progress in those areas. In one county in North Wales the education rate alone is 9s. 3d.—as much as the total rate in Bournemouth, yet Bournemouth will receive relief under this Bill. While these totally disproportionate rates obtain, it is no good talking about giving equality of education to the children of the rich and the poor. There will be no equality of opportunity as between the child in the poor area and the child in the rich area. Take again the highway charge—9s. 6d. in the constituency of my hon. Friend, 10s. 6d. in another of the counties in North Wales. That is almost as high as the total rate in the County of Surrey, and yet Surrey will receive a 3d. relief under this Bill. The public assistance rate is 4s. 8d. in one of the North Wales counties.

The right hon. Gentleman says, "Yes, but this is only an interim Bill, it is only going to cover three years." But these will be three very critical years. They will be the years when we hope to begin the work of social reconstruction. Why should those counties be left out? Why should they be crippled, and unable to have the same chance of taking advantage of all these things as the richer areas? I and my hon. Friend are not bound to the particular figure of 12s. if the Parliamentary Secretary can meet us on another figure, but I urge and beg him to equalise this tremendous burden and see that the poorer areas get a fairer and squarer deal.

12.15 p.m.

The Parliamentary Secretary to the Ministry of Health (Mr. Key)

I have every sympathy with the hon. Member for Cardigan (Mr. Bowen) and the Noble Lady the Member for Anglesey (Lady Megan Lloyd George). As one who has spent well over a quarter of a century in the service of one of the poorest local authorities in the country, and who, if I may say so, organised a very effective rates strike some 20 or 25 years ago, 1 think it can be held that I have real sympathy with the case that has been put forward. We must, however, look to the purpose of the Bill and see whether we are carrying out that purpose. This Bill arises from the fact that since 1942 there has been mounting, as far as the local authorities are concerned, a debt from national funds because of the failure to deal with the block grant under the Local Government Act, 1929. Under the block grant, all local authorities in the country have been suffering a loss of income. What this Bill sets out to do is to try and distribute amongst those local authorities during the next three years a sum of money which will be some form of compensation for the money they have not so far received. In the intervening period before 1948, we hope to be able to go into the whole question of the formula that governs the distribution of the block grant, and perhaps get a better distribution of it.

What we are now dealing with is the distribution of this interim money. All local authorities would be due to receive something out of the £10,000,000 in the first year, but we did take the opportunity, in the way in which we distributed it, not of following slavishly the 1929 formula, but of introducing a new formula for its distribution in order that out of the £10,000,000 the poorer authorities should get more than they would under the block grant formula and the richer authorities should get less than they would under the block grant formula. This leads to a greater equalisation, as far as rates are concerned, than would have been the case if the money had been distributed under the block grant. That equalisation will be carried further step by step in each of the succeeding years. When we come to distribute the £11,000,000, greater equalisation will result, and when in 1947–48 we distribute the £12,000,000, there will be even greater equalisation.

What would be the result of accepting this Amendment? Its effect would be that 15 counties and 19 county boroughs would receive none of this £10,000,000, and therefore, there would be a sum of money that might possibly be distributed amongst the other authorities. If it were distributed in that way, the result would be that on the average the increase that would be given would be the equivalent of a rate of less than 1½d. to the receiving authorities. The Amendment provides that no money should go to a county authority where the rate is less than 12s., but how is that rate of 12s. for a county authority arrived at? The county authorities are not rating authorities. They do not levy rates. If one decides upon a rate of 12s. in a county, it means that one must take all the rating authorities in the county area, total their rates and divide the amount by the total rating value of the county, and get the 12s. What might be involved? It might be that if there were a very poor industrial area with a rate of 21s. in the £ and a rural area with a rate of 8s. in the £, the result would be that the county rate would be 12s., and therefore, the urban area would be robbed of the amount that would have come to it out of the grant of £10,000,000. Surely, that would not be dealing justly and fairly with the poorer areas. What we have to see is that the poorer areas get the amount that would come to them.

I know it will be said that under that Bill, where a county authority receives no proportion of the new grant, there must, however, be provided a fund for the distribution of the per capita grant to the individual local authorities. This means that in the case of the 15 counties I have talked about, there is no money coming out of the £10,000,000, but they have got to levy a rate in their county area to provide a sum of money for distribution among themselves. That does not seem to be a very real way of giving them extra money, because all it means is that each of them puts something into the pool to pull something out, and there is no great gain that will come to any of them as a result of that. Let me tell hon. Members that this formula has been definitely weighted in favour of the poorer authorities, with the result that out of the £10,000,000 to be distributed 88 per cent. of the money will go to the poorer authorities—those authorities which have a rate poundage higher than 12s. If we distributed the money in the way suggested in the Amendment, what would be the result? Middlesex and London would get grants because their rates happen to be above 12s. Northumber- land and Westmorland would get nothing. Does anybody say that that is a means of distributing £10,000,000 according to the relative poverty of the area concerned? Take, again, the county boroughs. Birmingham, Bristol, Liverpool and Manchester would receive grants under the Amendment, but Newcastle, Plymouth, Darlington and Southampton would receive nothing. Take, again, the ordinary boroughs; Bath and York would be in, Exeter and Canterbury would be out. Is that held to be a fairer distribution of the £10,000,000 than is provided under the Bill?

Mr. Bowen

Surely the basis of the distribution under the Bill is on the rates poundage of the authorities?

Mr. Key

It is not. The distribution of the money under the Bill is on the basis of the expenditure of the local authorities upon the total services provided The greater their expenditure on their services, the greater the amount they get. In addition, I may add that the greater their need because of what has happened in the last five years, the greater the amount they will get. What is being taken as the basis of the distribution is not merely the expenditure that arises out of what is got from the rates, together with what is got from the block grant of 1929, but to that expenditure is added the extra expenditure which has been met by the extra grants of £15,000,000 that have been given to the specially distressed areas during the war. There is, therefore, added on to their ordinary expenditure that extra contribution as a weighting to give them something more out of the £10,000,000. I am convinced that any attempt, whether one takes 12s., 13s., or 10s., to carry out the distribution of the £10,000,000 in the way suggested in the Amendment would introduce far greater inequalities and far greater wrongs to the poorer local authorities than would be involved in the present method of distribution. Therefore, not merely can we not accept this Amendment, but we should be violating the very thing we want to do if we attempted to do anything on the lines suggested in it.

Mr. Pargiter (Spelthorne)

My hon. Friend the Parliamentary Secretary has given a very generous interpretation of this Amendment. A county rate is the amount of the rate precepted on the local authority by the county and does not include the amount raised by the local authority for its own purposes. I know of very many areas where there is a local rate approaching 12s., but a county rate of about 6s. or less. In that case, the county rate being 6s., on a strict interpretation of the Amendment, nothing would go to that county, in spite of the fact that it was levying a rate of perhaps more than 12s., or a rate very nearly approaching 12s., and there would be no relief for that area. In considering the Amendment, we must bear in mind that a county rate poundage is only the amount levied by the county on the county districts.

The hon. Members who have spoken in favour of the Amendment have used the argument of rates and have carefully avoided any reference to the amount paid in rates per head of the population. I know that in some areas which are called poor areas, after allowing for the amount paid in rent and rates, it is estimated that many of those areas have actually a greater free balance left than many industrial areas where the rates and rents are high. Surely the qualification as to whether an area is rich or poor must be the ability of the individual ratepayers to pay. One cannot say that essentially rural areas are necessarily very much poorer than areas which are considered to be well-to-do. 1 do not include, of course, places like Bournemouth, but I include a very large number of industrial areas where I am satisfied they are very hard hit. Although their rate poundage may be lower, the amount they are paying per head in rates is double the amount that is being paid in many areas which are classified as poor. I ask the Parliamentary Secretary to consider. on the Report stage, reducing the 8d. which is being used for weighting to not more than 4d.

12.30 p.m.

The avowed function of the block grant formula, as originally devised, was to even-out the differences between the richer and poorer areas. If it has done that job at all effectively, then, obviously, there is no cause for any further awarding of this additional grant, which ought to be dished out fairly and squarely over the whole of the authorities. The cases which my hon. Friend opposite put are cases which will not be met under the existing system of rating. We have to get away from this if we are going to do anything with regard to the amenities of the countryside. I have every sympathy with them. I believe it has to come. We shall not be satisfied with a mere revision of the block grant formula, or even with an additional dole from the Government Department. We shall need a complete overhaul and revision, so that there may be a fair distribution of the burden of service over the whole of the community and that it shall not be spread over part of the community as at the present time. What does it do? In effect, you could have a rich person living in a service flat, and paying little in rates or contributions as far as social services are concerned, and another person, with a large family, living in a large house and being hard put to it in having to pay the rates in respect of those larger premises. There is no equality about that.

This is still going back to 1601, when the basis at that time was that each village had to be responsible for its poor, and its method of assessment was the amount of its holding of land. When everybody was holding land and could afford to pay for holding land, there was very little to pay in tax. That system was entirely altered. We shall have to alter this system, but we cannot alter it merely by playing about with this particular Bill; there is no possible hope of doing that.

The Government should accept an alteration by the substitution of 8d. for 4d., which is precisely the opposite, a movement in the other direction. I will give an instance with regard to the question of poor areas. What are poor areas? I have instanced Middlesex, with a loan of indebtedness, at a high rate per head, of £20,000,000. There were urgent services to be provided, and we have had to borrow the money and do the job. This is a permanent debt around the neck of the ratepayers of Middlesex. I would contrast that with Cumberland. Middlesex, under a distribution of 8d. would get about 5½d. in the first year. I will take one of the areas which is always considered to be one of the very poor areas: Cumberland will get a rate, in proportion to the amount distributed on capital grant to county districts. They will get a rate of 14.4d. for a very long time. Cumberland has been able to allocate a 2S. rate for debt redemption and now has no capital debt at all£that is, 14.4d. against Middlesex, 5.5d. Is there any equality in that? There is no equality at all so far as the present system is concerned. I ask the Parliamentary Secretary, while, obviously, the Amendment, as drafted, would be utterly impossible and unworkable, to consider very carefully whether he would include the figure of 4d. in Class 2 instead of 8d., as is included?

Mr. Clement Davies (Montgomery)

With the penultimate part of the hon. Member's speech, I am in entire agreement. There is no equality, and there cannot be any equality until we either do away with the rating system altogether, or get a proper system of organisation. I am very glad to hear that what we were saying in the last Parliament is now being repeated on the Government Benches opposite. I hope hon. Members opposite will join with us in demanding that the time has come to bring our system into relationship with modern needs, and not follow a system which was devised in the reign of Queen Elizabeth. Time and time again, I have had to point out the difficulties that arise because of this system. I am terribly disappointed with the speech that I have heard from the Parliamentary Secretary refusing to accept this Amendment. It is the sort of speech that we were accustomed to hear during the last Parliament, and although the country has changed, and although the faces on that side of the House have changed, it seems to me that the sentiments of the last House still continue and that they arc ready to bring into effect the high hopes that we had created in the minds of the people. After the poll had been declared, though my own party has been reduced to the small numbers that we are, I did tell my own people that I had a new hope that the social services they so long needed would now be brought into effect, that the bad conditions from which we have so long suffered would now be remedied. How can we possibly end bad conditions when we are suffering, first of all, from a very low income, and, consequently, from a crippling burden on rates. I am glad to see my right hon: Friend the Home Secretary. He and I have so often discussed the effect of these rates, especially with regard to education; they are imprinted as strongly and effectively upon his mind as they are upon mine. How is this Bill going to help us to give, in my county, or the county of the hon. Lady the Member for Anglesey (Lady Megan Lloyd George), or my neighbouring county of Cardigan, that system of education which ought to be national, when we are burdened with schools over 100 years old and a system which ought to have come to an end ages ago?

Wherein lies the fairness of this? The hon. Gentleman talked about some form of compensation. Compensation, as a general rule, is an attempt to try and fight the inequalities from which a man suffers to bring him up to equality. Does he regard this as some form of compensation? Then, it is a misuse of compensation. I will give a few figures. The hon. Lady has given what is the position in her county. A penny rate in the county of Angle sey produces under £700. The schools there are a disgrace to civilisation. I have described the houses in a report —one of them I have described, using the words used in the locality, as a "death house." That is the system that we want to see ended. How can you end it when you are offering merely this. It is a system about which I and my colleagues have protested throughout these years, and it ought to have been ended years ago. They have been lacking in proper drinking water for all these years, and there are in Anglesey most attractive' places which are regarded as health resorts, and yet they cannot give them proper water. The hon. Lady in the last. Parliament had to support the bringing in of a Bill, at long last, to give Anglesey water. The cost of that scheme is going to be over £500,000, and that will only bring water. It will not deal with the other side of it, namely, carrying away the waste water and the sewage. That will cost another £500,000—a million pounds' burden upon a county, where a penny rate is producing less than £700.

We have been talking about the reallocation of industry, and a proper distribution of the populace. How is a fleabite of a Bill of this kind going to help such a situation? How can you expect people to remain in our rural districts with a burden of this kind? No wonder that from the rural areas, as I have so often had to point out, we have had one form of export, that is, our young men and our young women who would not stay under the conditions, and which we cannot correct under this form of giving the social services assistance. I would point out wherein these tremendous difficulties exist. The right hon. Gentleman the Home Secretary for a long time has been a prominent leader of the Surrey County Council, and has done very wonderful work. A penny rate in that one county produces over £54,000, or did prior to the war. I can only remember the figures prior to the war. A penny rate in the whole of seventeen counties in Wales, including the county boroughs, produced before the war only £45,000, and a portion of the whole geographical county of Surrey, as part is included in London, produces far more than the whole of the seventeen counties.

Compare the penny rate, for example, of any one of the county boroughs, which are really what I might call residential places. I forget now whether Bournemouth is a county borough, I think it is. Compare that with the county borough of my hon. Friend the Member for Merthyr (Mr. S. O. Davies) which has provided more towards the wealth of this county than any other single county borough or place, and a place that was, in its hour of distress, forgotten by this country. How these people kept up their spirits throughout those terrible times is just a miracle. How much are we going to help the county borough of Merthyr?

The hon. Gentleman has just said: "If I distribute this in the way we have been working, I shall deprive 12 counties and a certain number of county boroughs of any assistance at all under this scheme. But these are the very counties that do not need assistance, and if I distribute among those of you who need assistance, it will mean a penny farthing rate." We are grateful for a crumb, under the difficulties from which we suffer. I do not know how we can possibly face up to the new situation. From our rural areas, just in the same way as from the industrial areas, young men and young women have gone away and have fought for this country for six years. They can come back to our industrial areas and there will be work for them. When they come back to our lovely counties we shall have to tell them to go away. We shall have to say, "We have nothing for you." We cannot induce industries to come into our rural areas when people are asking (1) "What are your amenities? What kind of houses have you for our working people?" We have to say, "Rotten" or "non-existent." Then they ask, "What is the cost of electricity? "

These are the problems which the Government ought to be facing. This Amendment might not bring us much, but it would be at any rate on the right lines. It would show that the Government are genuinely interested in the conditions of the people as they really are. If they accepted the Amendment, it would be a preliminary to much bigger things in which we are interested—a real equalisation all round, a real national standard so that all local authorities would have an equal chance. I again express my deep disappointment that there is not a more radical spirit on the Government Front Bench prepared to deal with these matters. Call it "Socialist" if you like, but I would leave out the "ist" and call it a better "social" spirit. I am sure that it is there and that what is needed is the courage to carry out the measures that are really necessary.

12.45 p.m.

Mrs. Leah Manning (Epping)

I do not like the Amendment and I think that it has many faults, but I am going to associate myself with my hon. Friends below the Gangway on the other side, as a protest in the first place against the fact that there are much larger sums of money owing to the local authorities than are now being given back to them under this Bill. There is a lot of leeway to make up for money that has not been spent during the war, and the Minister could have been much more generous than he is prepared to be in this Bill. I am very anxious that no attention should be paid to the reactionary suggestions made by my hon. Friend who sits below me. My main reason for associating myself with my hon. Friends opposite is that we have to put into operation in the near future schemes which local authorities are now preparing and which will be before the Minister of Education shortly. Those schemes of education will place on local authorities an almost intolerable burden if they are in anyway to implement the new Education Act. The people who will suffer most because the local authorities cannot put the Act fully into operation are the rural areas. We had from the Front Bench a little over a fortnight ago a first-class plan for agriculture. Are we to expect the people who are to put agriculture on to its feet to go on living in the sordid and mean agricultural areas unless more money is spent on their social services and amenities? I do not know whether the Parliamentary Secretary has any knowledge of rural schools and housing. He may know a great deal about a poor town area, but I doubt whether there are many people on the Front Bench who know the rural areas as hon. Members opposite and as I, who live in a rural area, know them. We know schools which have no lighting, water or sanitation—

The Deputy-Chairman (Mr. Hubert Beaumont)

The hon. Lady is getting extremely wide of the Amendment.

Mrs. Manning

I am sorry, but one gets carried away by the necessities of our rural areas so far as housing and general amenities are concerned. If the Parliamentary Secretary is not prepared to accept the Amendment, can we have some hope that something more will be done for the rural areas, which cannot help the rating situation. One of the reasons why I do not like the line being drawn at 12s. is that many authorities have low rates because they are reactionary and do not provide the social services that ought to be provided. There should be some encouragement and help to those areas whose rateable values are so low that they find impossible to do anything with the great schemes of education, agriculture, housing and other matters which the Government are proposing. If some help could be offered to them my hon. Friends who put the Amendment before the Committee would be grateful. It is as a protest against what these poor areas have to suffer that I associate myself with the Amendment, with which, from some points of view, I do not agree.

Dr. Corlett (York)

I have great sympathy with the Amendment although I think that it is badly drawn. I made my maiden speech in the House in opposing the restoration of the 50 per cent. grant to Bournemouth. I do not think that Bournemouth has any case for it, nor can we argue on the lines on which my hon. Friends have been arguing. There is no reason why we should ask Bournemouth ratepayers to subsidise the ratepayers of other places. There is the ques- tion of uniformity of assessment. I have had considerable experience of this subject, and I find that rich areas complain bitterly that many of the poorer areas deliberately under-assess in order that their rates may be high, while many rich areas deliberately over-assess so that their rates may be low and the area be attractive. Surely the issue is far bigger than this. The Government are left with a legacy of piecemeal legislation which has been going on for years. The time has come when we should decide which are national and which are local services. We cannot go on with those quasi-national services which must be met in some way by local contributions. I do not see how we can reach a formula to meet the distressed areas so long as we allow some burdens to be national and some local.

We must decide which services should be outside local rates altogether. I hope we may not have to decide that education should be outside the local rates. It would not be easy to do it because the local authorities would object. They like to have some say in the administration of their areas, and they cannot have any say unless they bear some part of the cost. Finance and administration cannot be divorced. The difficulty always has been to decide who shall finance a service and who shall administer it. I spent some years trying to find a formula which I thought would be helpful in meeting this problem, but the biggest stumbling block was that the local authorities might want too much power. In a county like Durham, where there are a number of past free authorities, some do not like being absorbed in the county area and losing some of their powers. This problem is not so simple as hon. Members who proposed the Amendment suggest. The method proposed in the Amendment is not the way to tackle the problem; it must be tackled on much bigger lines.

Mrs. Manning

What else can you do? We have an alternative under this Bill.

Dr. Corlett

I want a fundamental change. My objection is the same as that which I took in regard to social security. Rather than play about with the question of pensions, I held that we should get down to a completely new scheme. We have played about with these things for years and have been too satisfied with accepting crumbs which did not get us anywhere. Somebody became keen on school meals and we had a try at it. Then somebody became keen about physical training, and we had a try at that.

The Deputy-Chairman

The hon. Member is following the rather bad example set by the previous speaker and is being led away from the Amendment.

Dr. Corlett

So long as we go on in this piecemeal way we shall get nothing but crumbs. We must finally tackle the question which of the various services shall be borne by the State and which by the localities.

Mr. Sparks (Acton)

I have listened with great interest to the discussion on the Amendment, and I find myself in sympathy with a great deal of what has been said. I hope that my right hon. Friend will note what has been said because I believe it will help to convince him of the urgency of this problem. In fairness to him, he made the position clear on Second reading and said he had a great deal of sympathy with the point of view that has been expressed this morning, but that this was not a comprehensive measure to effect a real solution of the fundamental problem. It was, he said, an interim measure to provide some additional relief to local authorities in consequence of the stabilisation of the block grant. It is, therefore, to some extent unfair to be unduly critical when we know that this Bill is but an interim measure and not a solution of the main problem.

The Amendment is impracticable. It specifies that a rate of 12s. shall be the determining factor whether an authority shall derive benefit from the Bill. As my right hon. Friend has pointed out, counties are not rating authorities, and I am interested to know how we are to arrive at a county rate of 12s. A rate of 12s. in one part of the country may be totally different in its demands per head of the population than in another part. It may well be that if a person is paying a rate of 13s. in one county, he pays much less than a person in another county who pays 10s. This matter is bound up with the question of assessments, which now vary from one part of the country to another. Therefore, to lay down a hard and fast limit of 12s. is not the best method of effecting a fair distribution of this grant. Reference has been made to some authorities where the product of a 1d. rate is considered to be very high. In the constituency I represent a 1d. rate produces about £3,450.

That may seem a considerable sum of money where a penny rate produces only £700. But we have very considerable expenditure to meet. Our population is nearly 60,000. We are an industrial borough. We are losing, from the operation of the derating legislation, a rate of 3s. 2d., and our rate is 13s. 8d. in the £, but 3s. 2d. of that our ratepayers are having to make good through losses from derating.

1.0 p.m.

One hon. Member has spoken about Middlesex. We have some complaint to make about Middlesex, because, of that £3,450, the product of a penny rate, the county council take nearly two-thirds of it. We very often wonder what they do with it, but we do know that, in Middlesex, in recent years, there has been very considerable extension and development, and the county council has been called upon to incur great expense on the development of roads, education and all kinds of services. It seems to me, how over, that we cannot, at the moment, justly deal with this problem of local taxation, because the whole position is in a state of flux. I understand that steps are being taken to transfer quite a number of functions from the local authorities to county authorities. Education is one. I come from an area which was a Part III authority, which had control of our elementary education system, of which we were very proud.

The Deputy-Chairman

The hon. Member is wandering afar. Education is not under discussion; therefore will the hon Member keep to the Amendment?

Mr. Sparks

I will go back to the Amendment, Mr. Beaumont. In conclusion, I would like to say that I hope it will not be thought that, because, in some areas, where a penny rate produces what appears to be a considerable amount, therefore, our boroughs can afford to receive no benefits from this Bill. I think the Bill will give us, approximately, the advantage of a 2d. rate. I hope that my hon. Friend will be able to convey to the Minister of Health what has been said in a general way on this Amendment, and the feeling of the Committee that the time has come when comprehensive steps should be taken to put local taxation on a more satisfactory and sound basis than it is at the present time.

Mr. Ivor Owen Thomas (The Wrekin)

I take this opportunity of making my maiden speech. I have attempted to grasp chances which have offered themselves on previous occasions—spotlight occasions—but up to the present, I have failed. Perhaps it is no loss, either to myself or to the Committee, to take this opportunity of making my maiden speech on the somewhat mundane matter of local affairs, because, on such a subject, we come down to the "brass tacks" of the daily lives of the people. In passing, I might confess that, in regard to the wording of this Amendment, I am not seeking either to praise it or condemn it. The Bill, in my opinion, is merely another patch on the patchwork quilt of local government finance. It is inevitable, in discussing provisions of such a temporary Measure, that the whole field of local government finance and administration must come under review, because we cannot discuss a Bill of this kind without raising the whole issue of local government finance, and I challenge the Minister to give us anything in the way of a review, analysis or description of this Bill without involving a review of the whole field of local government finance.

I represent part of the county of Shropshire, being the representative of the Wrekin Division of that county. Recently, I have had consultations with local government officers, both in regard to the county council and the local urban district councils, and if there is one thing that stands out in my mind as a result of those conversations, it is that the time has come for the whole field of local government finance to be recast and remoulded. It is hopeless to expect that this Bill is going to be anything more than a temporary further delay, in facing that fundamental problem. I see that, in the county of Shropshire, they are dealing, as in every other county at present, with the question of education. In that county, out of all the educational establishments, 80 per cent. will have to be, not rebuilt or repaired, but totally eliminated and new structures built— practically a new scheme of educational establishments. Incidentally, in that connection, I might mention this fact, which has a bearing on the Bill. I am informed by the chief education officer of Salop, that the extra grant from the Ministry of Education received under the recent Education Act has been swallowed up in meeting the costs of the new Burnham Scale salaries for teachers. Therefore, it is inevitable that the additional cost involved in the rebuilding or building of a new educational system, will largely fall upon the county rates.

I am going to make one positive, practical suggestion arising from the presentation of this Bill at this moment. Unless we are to have more than a mere repetition of such Measures, the Government will have to face the whole question of local government. There is, just starting its labours, a Commission dealing with local government boundaries. In my opinion, the results of that Boundary Commission will prove futile unless the whole field of local government finance and services is also reviewed and dealt with, alongside that Commission of Inquiry, and I suggest that the Government now or very soon, will have to tackle the fundamental problem of local government administration and finance, covering the whole field of social services, which local government has any part in administering.

I suggest that the Government should seriously consider the setting up of a Royal Commission to examine the whole functioning of our local government administrative machine, not only from the point of view of boundaries, but from that of responsibility for finance and actual administration of such services as education, water, gas and nearly the whole gamut. I think that, as a result of the contributions made in the Committee this morning, the Government will take their courage in both hands and determine that a new start with a new scheme, shall be made in tackling this urgent question of local government services. I am convinced that, if they are going to be satisfied with this Bill, it merely means another little patch on the big patchwork quilt. It will only increase the area of that big patchwork quilt; it will get no nearer the fundamental problem, but will merely be playing about with it.

Mr. Key

May I give my hearty congratulations to my hon. Friend who has just spoken for a very informative, and, if I may say so, a very well delivered speech? I am certain that, "in the future, when local government problems are before us, his contributions will be very valuable to us in their consideration. I should like also to give him this little piece of advice—not to allow himself to be led away by the very expert people who have spoken before him into making a Second Reading speech on the Committee stage of a Bill, because by far the majority of the speeches made this morning were not dealing at all with the substance of the Amendment which is really under consideration. We said, in the Second Reading Debate, that we were going to use this intervening period for a careful analysis of the block grant formula and scheme of distribution. We admitted that there was a great need for looking at the whole problem of local government finance, but said that it was no use trying to do that at this particular moment, when local government services and everything else are in the melting pot, and we did not know exactly what we had to make provision for.

I want to go back to the point that we are dealing with here, not with the whole problem of local government finance, but with an attempt to make good to the local authorities the losses they have suffered from the failure to deal with the distribution formula under the block grant, and I want to protest against the statement made by the hon. Member for Epping (Mrs. Manning) that, even after what we have done here, there is a great deal of leeway to make up so far as local authorities and their grants are concerned. I claimed on Second Reading, and I claim here now, that we are giving more in this way, together with the —15,000,000 that had been given before, than the deficits that are still there. I also want to say that, so far as the problem with regard to schools and services in rural areas are concerned, I guarantee that, in the 15 county areas which would be robbed of any income from the block grant under this Amendment, the schools are the worst rural schools that one could find anywhere in the country. I do not see that it will help to improve the services if those counties cannot get contributions from this national grant on the ground that their rates are below 12s. in the £ and that therefore they are not to get anything at all.

I have one other thing to say about this Amendment which shows how absolutely impossible it is for us to accept it. Take two local areas, one with a rate of 12s. 1d. and the other a rate of 11s. 11d. The one with the rate of 12s. 1d. could be given out of this fund the equivalent of an 8d. rate, and as a result its rates will fall to us. 5d. The other area, with a rate of 11s.11d., will get nothing at all. How can it be claimed that that is a sane and sensible way of distributing money amongst areas according to their need or their ability to meet the charges they have in front of them? The Amendment would be no help at all in the distribution of this money, and I hope the Committee will not entertain it.

Amendment negatived.

Clause ordered to stand part of the Bill.

Clauses 3 to 9 ordered to stand part of the Bill.

Bill reported, without Amendment; to be read the Third time upon Monday next.