HC Deb 18 February 1948 vol 447 cc1173-86
Mr. Piratin (Mile End)

Before we begin, Major Milner, I had in mind to ask Mr. Speaker before you took the Chair whether my Amendment to Clause 3 can be taken at this stage. It is in page 2, line 40, leave out from "shall," to end of Clause, and insert: be used to adjust the rateable value for England and Wales to a figure which ensures that the aggregate of the Exchequer equalisation grants for each financial year shall amount to not less than twenty-two and one-half per cent. of the expenditure met from rates and the equalisation grants in the preceding financial year, of county borough councils, county councils, and the other local authorities in the counties.

The Chairman

I must remind the hon. Member that that is for my consideration. I will consider whether to select it or not, and I will inform him later.

Mr. Turton (Thirsk and Malton)

I beg to move, in page 2, line 28, leave out from "than," to end of Subsection, and to insert: one hundred and fifty, by the percentage represented by the proportion which the difference between the population thereof and one hundred and fifty bears to one hundred and fifty. This is the complicated question of the sparsity factor in the Exchequer grant. The Committee will recollect that in the 1929 Act provision was made so that those districts which had a population of less than 200 to the mile of road would get an increased weightage for that factor. In 1937, Parliament decided that that sparsity factor should be revised, and that those who lived in areas where the population was less than 300 to the mile of road should get increased weightage. In this Clause the Minister has taken a reverse decision; he has decreased the sparsity factor so that the only weightage given shall be where the population is less than 70 to the mile of road, and it is minimised by the fraction of one-third introduced.

I submit that this is a harsh injustice on the more rural parts of England and Scotland. If I may illustrate it by an example from my own county, £750,000 has to go on our county rates a year, which is a very heavy burden on an agricultural community. In addition, the cost of taking children to school—an obligation which we in Parliament placed on the local authorities under the recent Education Act—has increased the cost of those services from £46,000 a year to £150,000. Although we have that increasing burden on a local authority, which arises from the fact that the population is reasonably sparse—it is in fact 100 to every mile of road—under the Bill as drafted they do not get one penny extra in weightage.

The Amendment is to give weightage in all cases where counties have a population of under 150 a mile of road. While appreciating the Minister's argument that his rateable value factor, which comes in Subsection (1) will have an effect to the advantage of the remote areas, we say he should add to that by giving this extra weightage for population below 150. If this is not done, the effect will be a great disparity between those ratepayers who live in remote districts but do not enjoy the services given to ratepayers living in urban districts. For instance, farmers and farm workers living often some distance from a county road, whose children have to be taken a long way to school, do not get all the facilities of those who live in urban areas.

I cannot understand what magic there is in the number 70 which the Minister, with a certain Welsh ingenuity, has taken. We could not find out what were the numbers of persons per mile of road in England and Wales until this week, but now I think I know why the Minister chose that figure. Apparently by choosing 70, the majority of the Welsh countiesseven—come in and get the advantage, but of the English counties only some four come in. If the figure had been 80, the position would have been different. The effect of my Amendment would be to increase by three the number of Welsh counties affected, but to increase by 20 the number of English counties affected. That is really a fairer division between the Principality and the major partner in the United Kingdom.

I do not see why, with all our sympathy for Wales, we should put down a figure that will help Wales and not help the scattered rural communities in the counties of England. It is surprising that Cornwall and Cumberland, as well as my own county, are not regarded as counties where the sparsity factor comes in. It is quite true that Cornwall is just out but, if the Minister made it a higher figure, he would bring in both Cornwall and Cumberland. If hon. Members will look at the reply given by the Minister on 13th February this year, they will be surprised how the Minister has cleverly defined this Bill so as to include all Wales and to exclude all the remoter parts of Britain. I hope the Committee will agree with this Amendment, and make the sparsity factor more fair, and one which covers typical rural areas of England, Wales and Scotland.

4.0 p.m.

The Minister of Health (Mr. Aneurin Bevan)

This matter has been discussed before. We had a very considerable discussion on the Committee stage, where the hon. Member for Thirsk and Malton (Mr. Turton) failed to make his case. Since then, he has been reflecting about it, and has tried to find some ulterior and almost sinister motive behind the figure selected by me. I can assure him that, anxious though I am to secure that the Welsh counties are fairly treated, I have not manipulated mathematics in order to bring about this result. What actually brings about this result in Wales is that many more counties get substantial equalisation grants.

The benefit from the sparsity factor is two-fold; first, it is because the Welsh counties have been grossly neglected over many years and are exceedingly, poor, and the other cause, which has probably not occurred to the hon. Member so far, is that it happens to be an exceedingly mountainous area and even the hardy Welshmen do not cultivate the land on top of Snowdon. The sparsity factor, therefore, brings in the Welsh counties to a greater extent than the more luscious English counties.

If we gave a greater weighting for sparsity, other parts of Great Britain would receive less of the equalisation grant. In fact, the sparsity factor is not of itself absolutely necessary in order to enable the poorer counties to attract substantial shares of the equalisation grant. As the hon. Member himself admitted, the rateable value per head of these areas is already so low often not only because of their poverty, but also because of the fact that various Parliaments have exempted agricultural hereditaments from rating entirely and that fact enables them to receive substantial shares in the equalisation grant. The sparsity factor is added in order to deal with extreme cases.

This matter has been argued over and over again and I do not think it necessary to spend much of the time of the Committee upon it. The Amendment in its present form is completely meaningless and I have been trying to find out what it means. I do not complain, because hon. Members have not the same facilities with regard to drafting as have Ministers, and I would not resist the Amendment simply because it is not an appropriate vehicle for the purpose the hon. Member has in mind. It is, however, an Amendment which I cannot accept in itself.

Lieut.-Colonel Elliot

I think the Minister proves too much. He adduced strong arguments that even his hardy fellow countrymen did not cultivate the top of Snowdon. But Inverness also suffers from mountains, and so does Argyllshire. Being a Welsh speaker he may be able to translate the war cry, "Cruachan! suas E!" which means "Look out for yourselves, the Campbells are here." Believe me, they did that because the dangers of extracting a living from their mountain fastnesses were great, and it was very necessary to raid the fatter lower provinces. But it is an odd coincidence that the formula works out so mathematically in favour of one part of the United Kingdom as against another. The right hon. Gentleman will be acquainted with the maxim that justice has not only to be done, but should be seen to be done.

We appreciate that he is dealing with this matter in other ways, that rateable value covers the main part of the distribution, and that the sparsity grant is merely brought in as a sort of additional weightage. This does not come only from ourselves, but many of the local authorities closely concerned in the matter still feel a sense of grievance. We have modified the suggestion which we made on the Committee stage and have reduced the sparsity weightage. But when we get sparsity weightage such as this—before the 1939 Act in the County of Argyll it was 123,000, whereas under this Measure it will be 11,000, and in Inverness it was 144,000, which now becomes 19,000—one cannot help feeling that many of the counties have a sense of grievance about it.

This is the first time we have had an opportunity of discussing this Measure with the whole of the Members interested present, and I appeal to hon. Members from other Scottish Divisions, Lanarkshire, for instance, which comes off very badly. Previously Lanarkshire had a weighting of 276,000 for sparsity and the hon. Member for North Lanark (Miss Herbison) will be well acquainted with the great degree of sparsity in the upper ward of that county. What does it get under this Measure? Nothing at all. I suggest that to drop from 270,000-odd to nothing at all is the sort of thing which makes a county feel it has had somewhat raw treatment. I ask the Minister to see whether he cannot make some sort of concession on this point. We do not bring up this point again simply because we want to hammer on the nail until we split the board, but because there is uneasiness among the local authorities, who feel that the Minister and the Secretary of State for Scotland have given them rather harsh treatment.

Mr. Oliver Poole (Oswestry)

The Minister is hardly fair in saying that this very important matter has been discussed at great length over and over again. We spent 20 minutes over it in Committee. His speech today does not give any reason to suppose that he has really gone carefully into the whole matter which we tried to put before him. I find it difficult to follow his arguments, because he seems to make out that the sparsity weighting does not matter at all. If that is so, why have it? It is admitted on all sides that counties which are sparsely populated must have advantages given to them, and we are trying to show that the line which the Minister has drawn is too low and falls very harshly on certain counties.

The right hon. Gentleman was courteous enough to give me detailed information for which I asked the other day, and from it I noticed that the county I represent, which has made representations to me, has a population per road mile of 76, which does seem to bear out the point we made in Committee, that the figure on which the Minister has decided is far too low. I very much hope that the right hon. Gentleman or the Parliamentary Secretary will be able to give some further information on this, because it does not seem that this formula has been worked out with great care. It does seem, from the point of view of the expenses which these scarcity population districts have to carry, that they are suffering a grave injustice. I hope that we shall not pass from this Clause without further reassurance on this matter.

Mr. Heathcoat Amory (Tiverton)

We have listened with care, both upstairs and this afternoon, to the explanation which the right hon. Gentleman has given why this formula was chosen. I am left with the impression that in practice it will not work out well. He has told us that the sparsity factor, except in extreme cases, is not really necessary because the matter will be dealt with by the equalisation grant. That is not actually and completely so. The method that has been chosen to give effect to the sparsity weighting is really inadequate, particularly, as my hon. Friend the Member for Oswestry (Mr. O. Poole) has said, in the case of these intermediate authorities whose density is just over 70 but well below the average. The sparsity factor is important because in practice considerable extra costs fall on such authorities.

The sparsity factor here is undoubtedly negligible. I think it amounts to one-quarter of one per cent. spread over the whole country. Twelve counties benefit but only six of them benefit considerably. I agree that in the extreme cases the formula suggested is adequate. Radnor nearly doubles its actual population under the formula, while the increase in Montgomery is nearly 50 per cent. In my own county, Devon, I do not think the position will be met under this formula at all successfully. We have a population per mile of about 64. As far as we can see the sparsity weighting will work out in our case to an increase of about 4 to 5 per cent. of our population, which will mean a rate relief of something like 6d. in the £. We know that the extra cost falling on the rates due to sparsity is very much greater than that.

Mr. Bevan

How does the hon. Member know?

Mr. Amory

We believe that. We estimate it from careful calculations that have been made in the light of the best evidence we can get. I suggest one or two headings which will bear that out. Take education. Under the old block grant there was a sparsity factor; under the new grant there is to be no sparsity factor. Conveyance alone, a matter referred to by my hon. Friend the Member for Thirsk and Malton (Mr. Turton), which naturally falls on the rates, is at present about 4d. and

will in the foreseeable future rise to at least 6d. There, at once, a benefit has gone.

Mr. Alpass (Thornbury)

But the hon. Member's county will get that back in other directions, such as in administration.

Mr. Amory

On the contrary, our administration costs are higher, because of sparsity, for sewerage, water, police, fire and ambulance and such matters. We have 7,000 miles of roads in Devon, and on unclassified roads the whole expenditure falls on the rates. Our officials travel two million miles a year on administrative duties, taking these things together. I am only quoting Devon as an example which is intermediate in this respect. It is an authority to which justice is not done under this formula. If we are to have sparsity weighting why not have a formula which will cover the point as well as we possibly can? I suggest that this formulat requires remodelling if it is to prove effective in practice.

4.15 p.m.

Colonel Wheatley (Dorset, Eastern)

It has occurred to me that if one takes the example of a county in which there is one non-county borough, one may find a large portion of the population, up to as much as a quarter, in one corner. That will make the sparsity formula work out badly for the rest of the county. The county is sparsely populated because a large portion of the population is in one corner. For that reason alone the formula laid down in the Bill requires looking into again. I hope that the Minister will take up this point and think over the matter again before we finally part with the Bill.

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee divided: Ayes, 271; Noes, 117.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Piratin

I have an Amendment down in page 2, line 40, to leave out from "shall," to the end of the Clause, and to insert: be used to adjust the rateable value for England and Wales to a figure which ensures that the aggregate of the Exchequer equalisation grants for each financial year shall amount to not less than twenty-two and one-half per cent. of the expenditure met from rates and the equalisation grants in the preceding financial year, of county borough councils, county councils, and the other local authorities in the counties. I had hoped that it might be called, but, as the Chairman saw fit not to call it, I propose to say a few words before this Motion is put. I raised this point on the Committee stage. I hope it will be given further consideration now, although I acknowledge that the matter was fairly discussed in the Committee. It does, however, deal with this Clause, which is one of the key Clauses of the Bill, and one which can set the pace for better or worse for the whole purpose of the Bill, or this part of the Bill.

I would wish to see a granting arrangement made in regard to expenditure, and not merely the topping up of local rateable values to the national average rateable value. I feel that this is one of the defects of this Clause and of this part of the Bill. Subsection (3) gives power to the Minister to increase in subsequent years the amount provided in relation to the proposed sum of £33 million. I would have liked to see something which goes beyond that, and which indicates a minimum. When I moved my Amendment on the Committee stage I proposed 25 per cent. but I was not adhering to 25 per cent. What I wanted was a minimum. The present figure works out at about 17 per cent., but it is not the percentage, it is this principle in which I am interested, and which I propose to develop in the point I am making.

It is recognised on all sides that the expenditure of local authorities is increasing. If the Minister adheres to the sum which happens to be fitting for this coming year, it will mean that, in subsequent years, there will be less granted to the local authorities though their expenditure goes up. The Minister may answer that he will also be a ratepayer, and will therefore make greater contributions as the rates go up. That is perfectly true. It does not, however, alter the fact that the rates will go up. It merely means that he would be a ratepayer at a higher rate. If a local government authority is now rated at 15s. in the pound and the Minister makes his contribution on the basis of a ratepayer, it means that the rateable value for which he takes responsibility, and the subsequent rate, goes up to 17s. It is true that the contribution from the Minister will increase accordingly, but it is equally true that the contribution from each local ratepayer will increase. My contention is, therefore, that, in view of the fact that this expenditure is likely to increase in the coming years, this Clause should be wider in its allocation of the grant than it is at the moment.

4.30 p.m.

I want to repeat an argument which I made earlier, because I do not think that the Minister gave it sufficiently serious consideration. Theoretically it is possible for this grant to be wiped out on the basis that, as in succeeding years the rateable value of the lower rated localities goes up, the time could be reached when the gap between the lower rateable values, as they exist today, and the average rateable value, will be so small that the amount to be granted to make it up to the average will be infinitesimal. I do not think that the Minister dealt with that question sufficiently. Though I admit that it is theoretical, nevertheless it is in line with the policy of the Government in trying to raise the standard of life, and the rateable value of industrial property, and so on, in all parts of the country which are at the moment backward in that respect.

If the Minister wants to challenge this point, I would inform him of something of which I was not aware when we dealt with this question in the Standing Committee. We who are connected with the Stepney Borough Council have received information from the borough treasurer that the arrangements being made for London—which I grant are separate from the arrangements for the whole of the country, though the principle remains—make it likely that the Stepney rate will be over 20s. At the moment it is 18s. 6d. Last year it was 16s. 3d. On the new basis, it is likely to be over 20s. An hon. Gentleman dissents, but this is a fact. This is information from the borough treasurer arising from the negotiations of the Metropolitan Boroughs Standing Joint Committee with the Minister. If that is the case this year, and if the local authorities are to be burdened with further expenditure in coming years, then here is an argument in favour of meeting the point which I have attempted to make. I suggest that the Minister should review the matter further.

In this respect the Clause is inadequate to the extent that the Exchequer grant is being linked to rateable value. That in itself is not a bad basis; but a far more important and a much better basis is the expenditure of the local authorities. The Exchequer grant is not being linked with that expenditure. In the proposals which I put before the Minister I tried to suggest that a combination of the two is possible. If he cannot accept my proposals, there may be other ways which he and his advisers may discover of putting this into the Bill. I hope that further consideration will be given to the matter.

Clause ordered to stand part of the Bill.