Clause 1.—(GOVERNMENT CONTRIBUTIONS UNDER RURAL WATER SUPPLIES AND SEWERAGE ACT, 1944.)

HC Deb 07 March 1955 vol 538 cc36-76

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

3.38 p.m.

Mr. George Brown (Belper)

My right hon. and hon. Friends and I have not put any Amendments to the Bill on the Order Paper because we felt that, as the Bill is so bad in its conception, so fundamentally indecent, the only Amendments we could have put down would have been wrecking Amendments, and we preferred not to table such Amendments. However, unless we can have better answers to our questions from the Government than we got on Second Reading, the Order for which the Leader of the House, very prudently, put down for as late at night as he could get it, so that the public outside should not know what he was up to, it will be very difficult for us to allow this Clause to stand part of the Bill.

For the benefit of those hon. Members who, naturally enough, were not here for Second Reading at the very late hour at which it was arranged by the Leader of the House, who did not listen to the debate then, and does not propose to listen to the debate now—though I would congratulate him on that, for it is a Bill of which I, too, should be ashamed if I were in his position—let me point out what this Clause, which is, in effect, the whole Bill, does. In the words of the Parliamentary Secretary to the Ministry of Housing and Local Government, it increases the charges that will fall upon the taxpayers for installing the same amount of piped water supplies and for taking away sewerage at the same rate as that which would have obtained without that Clause. In other words, we pay in England and Wales alone £19 million more and, if my figures are correct, in Scotland £8½ million more for the privilege of doing the same amount of work. In the Second Reading debate nobody sought to answer that point.

Here, I want to digress for a moment to enter a very solemn protest. In Committee we had the benefit of the attendance of a Treasury Minister in discussing what is, in effect, a Treasury Bill, but he did not address us. It will be within your recollection, Sir Charles, since you had the unfortunate duty of sitting there during the exchanges, that we had considerable difficulty in getting the Treasury Minister to rise to his feet even on his own Motion for the Money Resolution. This afternoon, on what is, I repeat, a Treasury Bill, we are completely without the attendance of any Treasury Minister.

The questions that my hon. Friends and I want to put are wholly financial ones, because this is a financial Bill. I want to ask about the financial operations and the financial consequences. Is it treating the Committee reasonably when no Treasury Minister attends? Should we not have the Financial Secretary to the Treasury here? This is his business. It is not the business of the Parliamentary Secretary to the Ministry of Housing and Local Government.

I see that there is a representative from the Government Whip's Office here. I should like to ask him whether an attempt will be made to bring the Financial Secretary to the Treasury here, so that he pays attention to his business. His business is to be here defending a Motion which has wholly financial considerations. I believe that they are bad ones, but presumably the Government believe they are good ones. I assure the Government Whips' Office that if the Financial Secretary to the Treasury stays away and we get, as is almost certain, no real information from the Parliamentary Secretary to the Ministry of Housing and Local Government, the Bill will run into considerable trouble.

We on this side of the Committee believe that we are entitled to put our questions to the Ministers concerned. I am very glad to see the Lord Advocate here. I understand that he made a very successful debut a few nights ago. He may be a better Lord Advocate than we have been accustomed to under this Government in the past. I am emboldened to believe that that is so, because I could hardly believe it to be otherwise. But, with respect to the Lord Advocate, I doubt whether he is an authority on the Treasury. I doubt whether he knows what made the Treasury come to this view.

The Parliamentary Secretary said, when he introduced the Bill, that the Bill came before us now because of a review that was carried out last year of Departmental expenditure. That review was not carried out by his Department. It was carried out presumably by the Treasury. On the basis of it, the Treasury decided that it was worth while spending £27½ million more than it would otherwise spend.

The first question I want to ask is: how did the Treasury come to that decision? What is the compensating benefit to set against the extra £27½million? I do not see how the Parliamentary Secretary to the Ministry of Housing and Local Government will be able to give the answer to that question, and I repeat that I hope we shall have the Financial Secretary to the Treasury here to attend to what is obviously his duty.

When the Parliamentary Secretary to the Ministry of Housing and Local Government opened his speech on 22nd February he used these words: This is primarily an internal financial transaction, but I am aware that a great many hon. Members are extremely interested in these grants. They govern the speed"— these are the operative words— at which we can bring piped water and sewerage to the rural areas …"—[OFFICIAL REPORT, 22nd February, 1955; Vol. 537, c. 1188.] 3.45 p.m.

Leaving aside the point that we do not want to bring sewerage to the rural areas but we want to take it away—assuming that is what the hon. Gentleman meant—the point I want to put is: how do these grants under this Bill, in the new form, affect the speed at which we bring water to the rural areas and take sewerage away? What is the effect on the speed? It does not seem to me that it can have any effect at all. It seems to me that all it does is, as I said, to increase the cost of doing it at the same rate that it is being done now. If I am wrong about that—and the hon. Gentleman was unable to point out where I was wrong in the Second Reading debate—I would like him to answer that question now.

My first point, therefore—what is the compensating advantage to set against the extra £27½ million?—is one that only the Financial Secretary can answer. My second point is one that the Parliamentary Secretary to the Ministry of Housing and Local Government can answer—namely, how does he make good his boast that this affects the speed at which we do it?

My third point, I should have thought, is for the Financial Secretary who is so shy about coming into this Committee. In column 1189 of the OFFICIAL REPORT of 22nd February we are given the figures of the progress so far made. We were told by the hon. Gentleman that we paid out £16 million, we have promised for schemes in progress £10 million, and we have promised for schemes in an advanced stage of preparation £9½million, making a total of £35½million and leaving a balance unpledged of £9½ million out of the original £45 million.

In view of the claim that this Bill and the grants under it affect the speed at which we can do this, I want to know how much longer will the £9½ million last. Since the hon. Gentleman said that we have committed ourselves to about £9 million for sewerage and about £8 million for water in the last year, it looks to me as if, at this rate, we have barely got another year's resources left. It seems to me in that case that, instead of bringing in a Bill to increase the cost of all that we have so far undertaken, it would have been more to the point if the Government had brought in a Bill to provide rather more for the future.

The villages in my constituency and those of my hon. Friends which are now without a piped water supply and without a rural sewerage scheme, will find it very cold comfort, when they ask when they are to get theirs, if they are to be told, You cannot have yours because the money which we have got to finance your scheme is, instead, being used to increase the cost of the other schemes which have already been agreed. It seems to me that the £27½ million would have been much better used on financing an extension to the schemes, on financing additional work, instead of adding to the profits that the money lenders are to make out of lending their money for the old schemes. Perhaps the Parliamentary Secretary will tell me how long the £9½ million will last and how much more work we could have done if we had used the £27½ million for the purpose of extending the schemes instead of increasing the interest rates.

Another question I want to ask is this—and this, again, is a question for the Financial Secretary, because I really do not see how the Parliamentary Secretary can answer it. I hope he is reinforced with a battery of shrinking Treasury maidens in the place to which we do not normally refer, although, however attractive may be the virtues of the Treasury maidens, they are not nearly so attractive to me as the Financial Secretary would be if he were here. The £9½ million is what we have left under the old scheme. How much will we now have to spend to achieve the same amount of work as that £9½ million would have achieved in the old way?

He was good enough to give us an elaborate financial calculation. Having read the report of his speech, I am reinforced in what I thought when I heard it—a view which I tentatively expressed and which I now confirm: the hon. Gentleman read his brief so well that he ought to be Financial Secretary and the Financial Secretary ought to be in his place.

As reported in column 1190, he gave a remarkable calculation showing that £18,600,000 was extra—and I invite the hon. Member for Kidderminster (Mr. Nabarro), one spirit on the other side of the Committee to whom I might reasonably appeal on this subject, to bear this point in mind: the Parliamentary Secretary told us, as reported in the last complete paragraph of column 1190, that the increased payment which we had to make on the £27,600,000 was £67 8s. for every £100, so that the increase on the total of £27,600,000 was £18,600,000. In other words, for every £100 worth of work to be done we now have to find another £67 8s. which is why we have to find an extra £18,600,000 to finance £27,600,000 worth of work. Is it not a fantastic suggestion that work which could have been done for £27,600,000 should now cost us another £18,600,000?

That brings me back to the original point: what is the compensating advantage which the Treasury has found for wasting £18,600,000 of our money to do what we had already contracted to do for £27,600,000? What is the point of putting up the cost by an extra £67 8s. for every £100 worth of work?

I thought that the Treasury was now engaged on a deflationary operation. I had the extreme pleasure today of lunching with the distinguished city editor of a large newspaper which supports the party opposite, and he went to great pains to explain to me that not only was the Chancellor of the Exchequer engaged in a deflationary operation but that it was highly necessary for him tobe so engaged.

How can it be deflationary to put up the cost of every £100 worth of work by £67 8s.? Such a procedure sounds to me highly inflationary. We on this side of the Committee are not supposed to understand these things as cleary as do hon. Members opposite. [HON. MEMBERS: "Hear, hear."] I said that we are not supposed to; I did not say that we did not understand them as well as hon. Members opposite. I should have thought that this operation was inflationary, because if we add two-thirds to the cost we must be inflating the cost. What is the compensating advantage?

The Parliamentary Secretary said that we now have £9.5 million left to spend. By how much will that rise? To over £15 million? To very nearly £16 million? Am I right? The £9½ million worth of work which we have left will now cost us £16 million or thereabouts to carry out. I should like to know the exact figure so that I know where I am.

I have one other question to ask at this stage and then we shall be glad to hear the Parliamentary Secretary. I hope he will speak long enough for the Financial Secretary to be found in his fastnesses across the road, because I give notice that if he treats the Committee with contempt I shall seek to move a different Motion sometime during our discussion. We are quite serious in our belief that the Financial Secretary should be here. He is the appropriate Minister and it is not reasonable that he should stay away. I am assuming that he is to be brought here, but if that does not turn out to be the case, then I promise the Parliamentary Secretary that he will not get this Clause without considerable trouble on the way.

In the last complete paragraph of column 1189 the Parliamentary Secretary discusses what he means by very small grants, which are the only grants which will continue to be paid by capital sums. He said that those very small grants were of £1,000 or less. All the others will be amortised. This, again, is a question for the Financial Secretary: how can it be reasonable to amortise £1,500 or £2,000 over thirty years? How can it be reasonable not to pay, straight away, £1,500 or £2,000, which could easily be carried in the ordinary way, thus saving all the interest charges?

Why does the Bill fix the figure at £1,000? If the hon. Gentleman wants to do what to me is a quite absurd and indefensible operation, then surely £5,000 or £10,000 is more like the figure at which we should start. The £1,000 is ridiculous; it might as well be £500 or £100. This was only the Parliamentary Secretary's statement of the administrative intentions of the Government. Had the figure appeared in the Bill we would certainly have moved to substitute another figure.

The Parliamentary Secretary ought to consider giving a promise to the Committee that he will consult his hon. Friend the Financial Secretary, when he arrives from his fastnesses across the road, about giving an undertaking that the limit will not be £1,000 but something much nearer £5,000 or £10,000 so that at least we can save the interest charges on the hordes of very small grants.

I have put to the Parliamentary Secretary a few questions to go on with. We shall be interested to hear his answers. This seems such an indefensible and illogical Bill, however, that it is quite unreasonable to expect a Departmental Minister to defend what is, on his own admission, a Treasury Bill. We hope that we shall hear comments not only from him but also from the Financial Secretary.

Mr. Eric Fletcher (Islington, East)

On a point of order, Sir Charles. You have heard from the speech made by my right hon. Friend the Member for Belper (Mr. G. Brown) that a number of very important issues relating to the financial implications of the Bill have been addressed to the Financial Secretary to the Treasury—questions which nobody other than a Treasury Minister can answer. We are in this difficulty: the Financial Secretary has not yet arrived. He is within the precincts of the building and is prepared to address the Committee on the next Bill, the Public Works Loans Bill. Indeed, these two Bills are very much inter-related.

I ask you, therefore, as a matter of order, whether, in view of the circumstances, it is not impossible to proceed with the consideration of this Bill in Committee until the Financial Secretary is present and whether it will be possible for me to move a Motion to the effect that consideration of the Bill be postponed until we have considered the Public Works Loans Bill. For the second Bill, the Financial Secretary will be here.

The Chairman

The second suggestion would not be possible and the first does not arise.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. W. F. Deedes)

Perhaps I may address myself to the five questions—I think there were five—which the right hon. Member for Belper (Mr. G. Brown) put to me. I think we discussed two of them fairly fully on Second Reading.

Let me first take the biggest point, a point of substance, on which I can clarify his mind a little. It concerns the balance of money outstanding—of the £45 million voted in the 1951 Act, which increased the previous amount of £15 million to £45 million. Under Clause 1 (3) the sum of money counting against the £45 million will remain under this arrangement, for purposes of calculation, as it is now; that is to say, only the capital sum, and not the capital sum plus interest, will be calculated against the £45 million.

The right hon. Gentleman asked me specifically when the £45 million will run out. It is a little difficult to answer because we are working all the time on forward contracts but, broadly, I think we shall want further authority from the House for additional expenditure in 1956–57. In other words, we have about 18 months to go at the present rate of expenditure—and I stress to the right hon. Gentleman that our rate of expenditure on this score against the £45 million will not be increased by the terms of the Bill.

4.0 p.m.

The other point which the right hon. Member asked was how this would affect the speed at which we went forward with rural water and sewerage schemes. As I said on Second Reading, the limiting factor in the amount we could spend each year on rural water and sewerage is the sum of capital grant which the Treasury makes towards those schemes, that is to say, for England and Wales about £5 million in respect of £17 million worth of work. It is the Treasury contribution which limits the amount we can spend more than the total capital expenditure involved—the £5 million rather than the £17 million. The effect of this provision is to require from the Treasury not a capital sum each year of £5 million or £6 million, but the amortised sum, the sum which is under discussion.

As I said, we have now got water supplies and sewerage on an ascending line and it is certainly the aim of the Department with which I am associated that we should keep them on that ascending line. Obviously, we shall be subjected to much less likelihood of any sudden need for economy reducing the amount available for a capital sum under this arrangement. We shall be drawing annually from the Treasury a very much smaller sum than we now require.

The right hon. Member repeated the question he asked on Second Reading, why we had chosen this method and this moment for choosing this method. I can only repeat what I said first, that this point was noticed during a review of Government expenditure last year and it was thought that, in view of the fact that during the last twenty years the contribution to rural water supplies and sewerage had risen from about £1 million a year to £8 million it was reasonable that the service should now be put into the same category as housing, education and things of that sort and financed on the basis of amortisation rather than by direct capital contribution.

Mr. G. Brown

What I asked was what was the compensating advantage for the extra expenditure of £27½ million? What do we get out of it?

Mr. Deedes

The immediate saving this year is about £6 million. Instead of a capital sum there will be the interest payments on the outstanding charges. The immediate saving will be about £6½ million, I think, but I should like to check that.

Mr. Brown

Are the Government saying that they so badly need an extra £6 million in the "kitty" for this year that they prefer to spend an extra £27½ million over the next thiry years in order to get £6 million in their hands this year?

Mr. Deedes

That is not what the right hon. Member asked. He asked where the saving would be made. I replied that it would be about £6½million. I think that those were the substance of the questions the right hon. Member asked me. He made much of the additional cost over thirty years on the money to be spent, but all money, including money for housing and other public services raised in this manner, attracts a rate of interest, which has to be paid. There is no difference in the cost here from the cost on items of expenditure by means of the Public Works Loan Board, or in any other way.

Mr. Victor Collins (Shoreditch and Finsbury)

Had the Parliamentary Secretary been present at Question Time today he would have heard an Answer by the Minister of Health about increased cost of building new hospitals arising from the increase in interest rates. The answer was quite correct, that there was no increased cost because that came out of revenue. The hon. Gentleman, therefore, is quite wrong in saying that all public expenditure of this kind must attract an interest charge.

Mr. Deedes

I do not think that the point made by the hon. Member for Shoreditch and Finsbury (Mr. Collins) is quite relevant.

I should like to make this point before the right hon. Member for Belper asks me about it. The alteration in the rate of interest by ¼ per cent. will, of course, affect the figure which we discussed on the last occasion. The sum of £19 million, which is referred to in the Financial and Explanatory Memorandum, will be increased by about £1,100,000, but that is unlikely to remain a permanent and fixed rate for the thirty years we have under discussion.

Mr. Brown

Do I understand that we are being asked to pass a Bill for which the financial authority covers £27½ million and we are being told straight away, even before we start, that it is known that that amount will not be sufficient? Is not this further evidence that we ought to have the Financial Secretary to the Treasury with us? At what stage. Sir Charles, would I be in order in moving such a Motion as that referred to by my hon. Friend the Member for Islington, East (Mr. E. Fletcher)? The Financial Secretary alone knows about these things.

The Chairman

I could not commit myself in advance, but I certainly cannot accept such at Motion now.

Mr. Deedes

The right hon. Member for Belper should consider that on Second Reading I gave the House certain financial information about this Bill and it seems most important that on this occasion up-to-date information should be given to the Committee. I anticipated a request by the right hon. Member and was disappointed with him when he did not make that request. I anticipated a request from him for information on this point and it is fair that it should be given to the Committeee. The sum is about £1,100,000 and that is an estimate on the £19 million mentioned in the Financial and Explanatory Memorandum. I hope that the right hon. Member will concede that the points he made have been met.

Mr. E. Fletcher

I do not think that anyone in the Committee will agree for a moment that the Minister has met the points raised by my right hon. Friend the Member for Belper (Mr. G. Brown). I listened carefully to the five questions which my right hon. Friend put and I do not think that the hon. Gentleman has answered, or even attempted to answer, more than one.

The reasons are obvious to the Committee: the hon. Gentleman cannot answer, because it does not lie within his knowledge or competence to answer those questions. They can only be answered by the Financial Secretary to the Treasury, the Economic Secretary to the Treasury, or the Chancellor of the Exchequer. I think it is a great affront to the Committee that we do not have a Treasury representative present when there is a Bill before the Committee dealing with nothing but finance and local authorities. I think it particularly insulting to the Committee that we are asked to debate it in circumstances in which the Committee knows perfectly well that consideration of this Bill will be followed immediately by consideration of a Bill of which the Financial Secretary to the Treasury is in charge, and when he is within the precincts of the House. It is an intolerable situation.

My right hon. Friend made a very important speech and asked a number of very pertinent questions. We not merely did not get a satisfactory answer, but got no answer at all. I have a number of other questions to ask. Before I ask them, may I say that it is perfectly obvious to me that the Minister will not be able to answer them because they are questions which can be answered only by the Financial Secretary to the Treasury. Therefore, Sir Charles, I hope that if I or some of my hon. Friends have to repeat those questions at a later stage when the Financial Secretary arrives, you will not think that we are detaining the Committee unduly. We have a duty in this matter.

In the short speech he made, the Minister attempted to suggest that this method will save the Treasury money this year and, no doubt, a large sum in subsequent years. What is the position of the local authorities? We have heard not a word about that. The burden of these water supplies and sewage disposal arrangements falls upon the local authorities and boards. Under the 1944 Act, they were entitled to rely upon an undertaking from the Treasury that they would get certain contributions, and they have incurred commitments based upon those Treasury undertakings. They have borrowed some of the money and are having to pay rates of interest. They have had certain grants, but are now told that the grants towards capital obligations will be rescinded and will be replaced by some other kind of grant.

There is a vast difference in the accounts of any local authority between. capital expenditure and revenue expenditure. Revenue expenditure varies in accordance with the rateable value of a local authority, the valuation list, the value of hereditaments and the rate, but capital expenditure is quite different and the accounts kept by borough treasurers and the treasurers of water supply undertakings are very complicated.

There are some questions I want to ask the Minister, but I am sure he will not be able to tell us the answers. I hope very much that someone has sent for the Financial Secretary, but we have not heard whether that has been done. It is surprising that nobody responds to assure us on that, but let us hope that the Financial Secretary will come. If the Treasury is to save money, how much of the money that it saves will fall upon the local authorities? What will happen to the money which has been borrowed by local authorities, either from the Public Works Loan Board or, as some of them may well have borrowed it, from outside sources? How will the repayments be dealt with? Is it really suggested that, in future, the Treasury can make a revenue payment under the Bill and treat it as a capital repayment in respect of a capital obligation? Is that the kind of financial arrangement that this Government have now descended to? It makes nonsense of all the ordinary accepted canons of administration both by the central Government and by local government.

I want, next, to raise this curious question of the rate of interest. I understood the Minister to say that since the date of introduction of the Bill, the cost involved upon the Treasury—that is, the estimated expenditure referred to in the Memorandum—has risen from £19 million to £20¼ million. May we have some further explanation of that? Is it suggested that that is due to the recent increase in the Bank Rate? Is it due to the recently announced increase in the rate of interest payments on loans granted by the Public Works Loan Board?

Surely the Minister knows perfectly well that that increased rate of interest does not apply to past loans; it applies only to future loans. Any local authorities who borrowed in the past at the old rate of interest continue to pay that old rate of interest during the currency of the loan. We should be told how much of this money has been borrowed at the old rate of interest.

How many local authorities find themselves in the predicament that, having relied upon the Government undertaking to make a capital contribution, they postponed their borrowing at the old rate of interest, knowing that they would get their capital contribution, but now find that they must borrow at a higher interest rate? Are they to be penalised because they waited until they actually wanted the money? Must they suffer from this comic change in the arrangements which, for a quite unexplained reason, the Government have thought necessary to introduce and to commend to the Committee without any explanation whatever?

Mr. G. Brown

The First Lord of the Admiralty is here.

Mr. Fletcher

We are very glad to see the First Lord of the Admiralty.

Mr. Brown

But he is not the man we want.

Mr. Fletcher

I have no doubt that the First Lord of the Admiralty, even though he cannot help us with matters relating to the Navy, can help us with matters relating to rural water supplies and sewerage. At any rate, we are getting nearer the mark.

We do not expect the junior Minister to help us on this matter. It is, presumably, too much to expect the Chancellor of the Exchequer to attend, but I suppose there is some relationship between the First Lord of the Admiralty and rural water supplies. Is that really the best that the Government can do? I have never known a Government treat the Committee with such contempt in the matter of the Ministers they send into the Chamber.

4.15 p.m.

I have put two questions which occur to me on a cursory examination of the Bill. I do not pretend to be an expert on this matter, but from the questions which my right hon. Friend has asked and the halting, hesitating and unsatisfactory reply which he received, it is obvious to me, as it will be to a number of my hon. Friends, that we cannot proceed satisfactorily with the Committee stage of the Bill unless we get sensible, authoritative answers to these financial questions, as we are entitled to have, so that we can understand the Bill.

Mr. G. Brown

May I ask you whether at this stage, Sir Charles, you will accept the Motion, "That the Chairman do report Progress and ask leave to sit again?"

The Chairman

I am unwilling to accept that Motion.

Mr. G. R. Mitchison (Kettering)

On a point of order. The Financial Secretary to the Treasury is not present to deal with financial questions, but there are several Lords Commissioners of the Treasury, who, as "usual channels," are, no doubt, particularly fitted to carry questions of water supply or sewerage. In the absence of any other officer of the Treasury, would it be competent to ask them and would it be within order that they should reply?

The Chairman

Both things would be quite in order.

Mr. Denys Bullard (Norfolk, Southwest)

I am greatly interested in rural water supplies and sewerage and I thought there was some point in what the right hon. Member for Belper (Mr. G. Brown) said about the small schemes and maintaining them by lump sum payment, as my hon. Friend the Parliamentary Secretary had said would be done for the still smaller schemes. I thought that there was a case for the extension of the limit to above the figure of £1,000 which has been referred to. But during our discussions on the Bill, both on Second Reading and in Committee, I have been greatly confused by what the right hon. Member has said, and I should like to make sure that my idea of the financial arrangements was right.

So far as I can see, the main development over recent years with regard to rural water supply and sewerage schemes has been an increase in the number of schemes which have been put into effect. That must be right. I understood from my hon. Friend's answer the other evening that the main obstacle, which originally was shortage of labour and materials, had now disappeared and was rather a financial obstacle.

When my hon. Friend answered late the other evening, he pointed out that expenditure in England and Wales had risen from £12 million in 1953–54 to £14 million in the following year and £17 million this year, which is a trend we are all anxious to see continued. I do not know the sewerage schemes total figure for 1953–54, but there appears to have been an even greater increase proportionately. In 1954–55 the figure was £7 million, and this year 1955–56, it is to be £9 or £9½ million, which is a considerable and welcome increase.

I should like to take up the right hon. Member for Belper on his English. He said that the point of the scheme was not to bring sewerage to the rural areas but to get it away from them. But the point of the scheme is to bring sewerage to the rural areas and to take sewage away from them. I thought it proper to point that out to the right hon. Gentleman, who is always so meticulous in these matters.

If the payment of lump sums by the Ministry of Housing and Local Government has reached the stage where the Ministry thinks that the right method is not to make lump sum payments of these larger amounts but to raise the money on a loan basis, I cannot but think that that is a proper and reasonable thing to do. I cannot conceive of any development in the countryside which is more suitable for financing on a loan basis than the provision of rural water supplies and sewerage schemes.

I should have thought that these were provisions which would benefit our heirs and successors for generations to come and that it was, therefore, very proper to spread the financing over the years. I cannot see why there should be all the objection to the Clause which we have heard expressed today and on Second Reading.

I take great comfort from the fact that my hon. Friend the Parliamentary Secretary to the Ministry of Housing and Local Government said on Second Reading that the Bill would provide more flexibility in making financial arrangements with the local authorities and to that extent must ease and not hinder our progress. The Bill is designed to make it possible for more rural water supply and sewerage schemes to be approved. That is certainly what all of us who live in the rural areas want.

Mr. J. McInnes (Glasgow, Central)

While my right hon. Friend the Member for Belper (Mr. G. Brown) regretted the absence of the Financial Secretary to the Treasury, I must also regret the absence of the Secretary of State for Scotland and the Joint Under-Secretaries of State, because I must say with all due respect to the Lord Advocate that they are more conversant with the structure of Scottish local government and its financial relationship with the central Government than is the right hon. and learned Gentleman.

I assume, however, that the Lord Advocate is aware that the Scottish local authorities are opposed to the Bill. They are opposed to it for a variety of reasons. I do not want to enumerate them all, but I should like to refer to at least two of them. In the first instance, the local authorities express their opposition because of the additional administrative work which will be involved in accounting for the numerous grants towards revenue expenditure. Secondly, they assert quite emphatically that local authorities will incur greater expenditure by way of higher borrowing since they will have to raise loans for the total capital outlay that is involved.

I should like to place the statement made by the Scottish local authorities against the statement made by the Parliamentary Secretary to the Ministry of Housing and Local Government when he said, on 22nd February, that the Bill … will make no difference whatever financially to the local authorities. In the same speech the hon. Gentleman said: … I am anxious that there should be no suggestion that the local authorities pay any more. The Bill will put nothing at all on the local rates."—[OFFICIAL REPORT, 22nd February, 1955; Vol. 537, c. 1227.] That is not the feeling of Scottish local authorities and, as far as I can understand my right hon. Friend the Member for Belper, it is not the feeling of the English local authorities.

Undoubtedly, additional burdens will fall upon local authorities apart from interest charges. Let us assume that a local authority is involved in capital expenditure of £1 million for some scheme. Normally, it would borrow £500,000 and be given a grant of £500,000. Now it has to borrow the full £1 million and face the cost of the fees, Stamp Duty and other items. The fees alone at 4s. per cent. would mean an additional £1,000.

I do not know the views of the Lord Advocate. Even at this stage I should like him to intervene to indicate whether or not he is conscious of the opposition of Scottish local authorities. I hope that he recognises that the next Bill on the Order Paper, the Public Works Loans Bill, also places an intolerable burden on local authorities, because it follows the same lines as the Bill which we are now discussing. I assert, as I have frequently asserted before, that if we have many Bills of this kind it will inevitably lead to a complete breakdown of the finances of local authorities. I hope that at this stage the Lord Advocate will express his opinion on the views of the Scottish local authorities.

Captain J. A. L. Duncan (South Angus)

I welcome the presence of the Lord Advocate to answer any complaint that there may be from Scotland about the Bill. The right hon. Member for Belper (Mr. G. Brown) and the hon. Member for Islington, East (Mr. E. Fletcher) threatened to create an awful row about the Bill, but the right hon. Member for Belper seems to have frightened away all the ex-Cabinet Ministers on his own side of the Committee. I do not know whether it was the right hon. Member's week-end speech that frightened his friends and enemies, but I do not think that he has very much right to complain about the absence of a junior Minister on this side of the Committee when there is not a single ex-Cabinet Minister on his side.

Mr. G. Brown

Do I understand that the hon. and gallant Gentleman is advancing the doctrine that it is the business of ex-Ministers on this side of the Committee to attend in order to carry the Bills of the present Government because their own Ministers are unable or unwilling to do so?

Captain Duncan

No. The point is that the right hon. Gentleman is taking this Bill so seriously—[HON. MEMBERS: "Why not?"]—yet not one of the right hon. Gentleman's ex-Cabinet Minister friends or emenies is here to support him.

Mr. Brown

We do not want the Bill.

Captain Duncan

It does not lie with the right hon. Member to complain and allege that there are not Ministers on this side of the Committee capable of carrying the Bill through the Committee stage.

This Bill applies to Scotland and I want to raise one or two points which have been put to me by the Association of County Councils in Scotland. Unlike the hon. Member for Glasgow, Central (Mr. McInnes), my reading of the letter from which I think the hon. Member has been quoting does not make me believe that the local authorities oppose the Bill.

Mr. McInnes

The hon. and gallant Gentleman should read the second paragraph.

Captain Duncan

I have read it very carefully. If I read the whole letter I might be here for half an hour. The local authorities are very anxious that the statement made by the Parliamentary Secretary to the Ministry of Housing and Local Government on 22nd February will apply to Scotland and will be carried out to the letter in Scotland. That statement was: … I am anxious that there should be no suggestion that the local authorities pay any more. The Bill will put nothing at all on the local rates."—[OFFICIAL REPORT, 22nd February 1955; Vol. 537, c. 1227.] Does that apply to Scotland? That is all that I want to know.

The Association of County Councils has made two or three points. It says, first, that there is a possibility that the local authority which wants to carry out a £1 million scheme, and borrows half of the million, will have to pay 4s. per cent. borrowing charges if it borrows from the Public Works Loan Board and may have other expenditure if it borrows that money from other sources. Is that covered or is it not? Is there to be additional expense for the local authority or not?

4.30 p.m.

Then it says that, if the money is borrowed in stages as the work proceeds, the interest rates may rise although the financial arrangements between the Department and the local authority may have been come to some time before. Are the interest rates actual rates or are they notional rates fixed before a scheme starts? Will they be allowed for in the Government contribution?

Lastly, if the contribution is to be paid half yearly instead of every month as at present there may be extra borrowing in between periods. Therefore, in that way there will be extra expense to the local authorities. It is on those three points that the Association seeks an assurance, and I hope my right hon. and learned Friend the Lord Advocate will be able to answer, because in the last few years we in Scotland have got on with rural water supplies and rural sewerage schemes. It is on the right lines on which we are moving and we do not want it to be stopped for reasons of shortage of capital, difficulties in raising capital or for any other reason.

We want this work to go on. In my county of Angus a large number of water supply schemes are being undertaken with even bigger ones projected in the next year or two. We do not want them to be held up, and I hope the Lord Advocate will be able to give the assurances for which I have asked.

Mr. Thomas Fraser (Hamilton)

I hope that the Lord Advocate will be able to say a word or two in reply to the Association of County Councils in Scotland. Reference has already been made to the letter which every Scottish Member has received from the Association. It is clear from that letter that there was no adequate discussion with the Association, otherwise it would have asked the Minister at the discussion the questions which it is now asking in this letter.

I spent some years at the Scottish Office, as a junior Minister. We never introduced a Bill into this House that had such an effect upon local authorities or was so important to them as this is without having adequate discussions with the local authorities. I should like to know to what extent the local authorities were consulted before this Bill was introduced.

Some hon. Members might think that this Association is only one of the associations for local authorities in Scotland, but it is the only one interested in rural water supplies and rural sewerage. This Association represents all the authorities that are affected by the provisions of this Bill. It is clear that there was no adequate discussion with its representative, and we should like to know whether there was any discussion at all.

Might I mention one or two points which the Association has asked to be considered in connection with Clause 1? It says: There will be additional administrative work involved in claiming and accounting for the numerous grants towards revenue expenditure. We are asking, is that true? I think it is bound to be true, but we have to be told by the Government whether it is or not. If it is true, then the Association is right in the second point, namely: Such additional work, falling both on the central and local authorities, does not appear to be consistent with the general principles of the Report of the Local Government Manpower Committee (Scotland). What is the use of setting up a committee and getting recommendations from it as to the means of bringing about economies in central Government or local administration if the Government are forthwith to introduce legislation which runs absolutely counter to the recommendations of the Local Government Manpower Committee (Scotland)? We ought to be told why that is so.

The third point made by the Association is this: The Government will be called upon to spend more money since interest charges will be incurred. That is what we argued during the Second Reading of the Bill.

The fourth point is: Local authorities will incur greater expenses by way of higher borrowing fees since they will have to raise loans for the total capital outlay involved. That is the point raised by my hon. Friend the Member for Glasgow, Central (Mr. McInnes). If that is right, the Parliamentary Secretary is not quite correct when he says this will impose no additional burden on the local authorities. He may very well say that the burden is not great, but these local authorities are not able to bear great burdens, which is why we had to legislate to provide for help towards water supplies and sewerage services.

The Association further states: Complications will arise from changes in interest rates during the constructional period. That may not seem to be very important, but I think it may be of considerable importance. Those schemes are under construction for very long periods. Hitherto, local authorities in Scotland, in carrying through those constructional schemes, have had payments to account several times in the course of construction. I wonder whether the Government imagine that the local authorities will borrow money at several periods during the construction of a scheme. Since the Government have altered the interest rates about five times in the last three years, and some of those schemes take three years to complete—I can think of one that has taken five years to complete, the Daer water scheme, which does not come under this Act but which was started by the Labour Government under Section 3 of the Distribution of Industry Act, 1945, an Act discontinued by the present Government—there are bound to be complications, as the Association says, arising from this change-over. We want to know what the position is. The hon. and gallant Gentleman the Member for South Angus (Captain Duncan) mentioned other difficulties referred to by the Association in its letter. I hope we shall have a full reply. I think I heard the hon. and gallant Gentleman say, "So do I." If he does not get a suitable reply I hope he will join with some of us on this side of the Committee who propose to take appropriate action if there is no suitable reply to our questions.

The Government have got themselves into an awful muddle over this matter. It is not at all surprising that, despite all the blandishments that have been offered, the Financial Secretary has not yet appeared. In the Second Reading debate, the Parliamentary Secretary will remember that many of us chided him about this Government forcing local authorities to provide rural water supplies on hire purchase, and I myself made the point that my constituent, Mrs. Brown, was having her freedom to buy her television set on hire-purchase terms restricted because the Treasury were compelling local authorities to have water supplies on hire purchase.

Two days later the Chancellor of the Exchequer came to the Box opposite and imposed further restrictions upon hire purchase. Yet his Department supports this Bill, which takes hire purchase into a sphere where it has not been hitherto. So we do not know what the Government want, and although the name of the Financial Secretary is on this Bill, which is largely a financial Measure, it is not surprising that he has not come along today. How can we expect the Financial Secretary to justify this Bill, which advocates hire purchase of things that nobody seems to want, when the Chancellor has said that we must restrict it?

The local authorities do not want it, nobody wants it. The Government, with an income of a little over £4,000 million a year, cannot afford £17 million for rural water supplies. Yet they can afford to see tens of millions of pounds being spent on commercial television and the like—for whether it is done by capital payments or on hire purchase does not matter to them—but they are not willing to find £17 million, £18 million or £20 million a year to provide adequate rural water supplies. They say, "You must take this on hire purchase. We shall pay for it over the next twenty-five to thirty years." It is not good enough and, unless we get a much more satisfactory answer than we have had hitherto, some of us will feel disposed to show our opposition to this Clause.

Mr. John Baldock (Harborough)

I want to ask my hon. Friend the Parliamentary Secretary how this Bill is likely to affect the payment of grants to rural water supplies in England which come within the rather unusual category of the rural district of Market Harborough in my constituency.

The problem is that about half this rural district has no water supply, and that half is developing into an arid area—or whatever the opposite of an oasis is—because it is a dry pocket in the middle of a considerable surrounding area amounting to counties, all of which have either had a water supply for a considerable time, are just getting water, or are just about to get it.

The unfortunate half of this rural district, which is an important agricultural area, will be left with no possibility of water supplies other than the promise of connection to a large scheme known as the River Dove scheme, which, on the most optimistic forecast, will not materialise for five or six years, and will probably be twice as long, because it has been anticipated for seven or eight years and has not yet been begun.

It appears likely, therefore, that this unfortunate area will remain without any supply of water, with all the extremely uncomfortable conditions which that entails, such as schools without sanitation or water, houses the occupants of which have to dip in brooks yards away, which dry up into pools of dirty water with which they have to bath or else use water carted by the local authority in a tank. And all these conditions are in a district where the whole of the surrounding area has a proper water supply.

It is not surprising that the unfortunate residents of that area, as well as the farmers who want to turn over to T.T. milk production, are concerned about the position, and at the idea that there is no apparent possibility of getting any water, or even a faint hope or promise for at least six or seven years, and probably considerably longer.

4.45 p.m.

The only way by which water could be provided easily, either immediately or in the near future, would be if the network of distribution of the River Dove works were to be put in this half of the rural district now, with a local water supply which is said to be available and which has been investigated thoroughly by the surveyor of the local authority, being connected to it for the time being. The trouble is that temporary works would have to be carried out to provide water for this network until the River Dove scheme is connected to it.

Although such works to provide temporary water for the scheme would not require a great outlay, unless the Government are able to make a grant for a sparsely populated rural district such as this one, it would be impossible to carry them out because that would impose a high rate on an area of low assessment, which cannot be highly rated since it is principally agricultural.

I hope it may be possible for my hon. Friend to look into this matter, and that this Bill may facilitate such an operation, so that, for a comparatively small sum, this large area could be provided with water under the terms of this Bill until the major scheme is connected to the temporary one.

Mr. F. H. Hayman (Falmouth and Camborne)

I should like to follow the example of the hon. Gentleman the Member for Harborough (Mr. Baldock) by introducing a constituency point. In my constituency there are still many parishes without a piped water supply, and many schools without a proper sewerage system and without piped water. I would remind the Parliamentary Secretary of the large village of Stithians, which has a large all-age school, where the local education authority is unable to improve the offices properly because the position of the school is such that an independent sewerage system could not be put in, even if water were available. Therefore piped water must come first and the sewerage after. I am not quite sure of the exact number of children in the school, but it is about 120.

As this is a debate on a Bill which is largely financial, it is opportune to consider carefully just how capably a provident person provides when dealing with his own finances, especially if they are limited. He does not get things on hire purchase if he can buy them outright, and I always thought that every local authority was considered to be a wise and provident authority if it made provision each year for small capital sums to be provided out of revenue. Indeed, this Bill exemplifies that argument because it specifies that £1,000 may be spent out of revenue on any capital scheme. The absurdity is that the sum of £1,000 is altogether too low. A local authority may find itself in possession of such balances that it would prefer to spend £2,000, £3,000, £4,000, or £5,000 on the scheme in order to clear it out of the way and have no ensuing financial burden.

I have made a few calculations. This Bill specifies that an additional £19 million is to be spent in England and Wales on interest on borrowed money, and £8½million in Scotland. From what the Parliamentary Secretary said earlier, we assume that there may be additions to those figures because of the rise in the Bank Rate. I calculate that about 5,000 school places a year can be provided for £1 million, so that for £19 million we could have 95,000 school places in England and Wales and, for £8½million, 42,500 places in Scotland, making a total of 137,500. Assuming, according to the Minister's Second Reading speech, that the sum is to be spread over 30 years, it averages about 4,500 school places per year.

This sum is really being thrown away. As my hon. Friend the Member for Hamilton (Mr. T. Fraser) said, the country's annual budget is about £4,000 million. The Chancellor is attempting to save a very small sum in relation to that figure to ease his Budget this year. He will not ease the Budget in the coming years because he will not be in his present office.

An interesting fact which must strike all hon. Members—it is also a serious one—is that for every £100 spent on sewerage and water schemes we have under the Bill to find an extra £67 8s. or perhaps £70 in view of the increase in the Bank Rate. That is absurd. It is bad administration and bad finance. The Government claim that they are provident and that they have saved the country from ruin, and yet they cannot find this paltry capital sum but must resort to hire purchase.

Mr. Mitchison

There is one question that I want to ask at the risk of annoying some of my Scottish hon. Friends. It emerged on Second Reading that the average rate of grant in Scotland was about 60 per cent. of the cost of schemes and in England about one-third; that is, the Scots are getting from public funds about twice as much in proportion as the poor English are getting.

I wonder if the reason for that is that there is often a county council grant in England and perhaps no corresponding grant in Scotland. I believe the county council grant is often of about the same amount as the Government grant. If that is the system, it is a thoroughly bad one. County councils are already finding it none too easy, if not impossible, to keep their rates down, and the county council rates fall in the long run on the county district authorities concerned with the rural schemes. Therefore, to rely by way of a defence on the county grant is, financially, nonsense, and it is nonsense of the peculiar Treasury kind that inures to the benefit of the Treasury.

I hope we shall be told that the disparity is recognised, and that at long last some measure of justice will be done to England by allowing a corresponding contribution from public funds to English schemes. This is, of course, a question that can only properly be answered by the Treasury. In the continued absence of the Financial Secretary, our only hope seems to be a break in the conventional silence of one of the Lords Commissioners, who would, no doubt, tell us all about it. Failing that, I suppose we shall have to have a combined answer in chorus from the two Government representatives present—the Lord Advocate and the Parliamentary Secretary to the Ministry of Housing and Local Government.

The next question that I want to ask is one which remained unanswered throughout the Second Reading debate. I am going to try to help the Parliamentary Secretary by suggesting an answer. My question is "Why has the Bill been brought in?", or, more simply and more accurately, "Why does the Bill contain this one operative Clause?" I asked the question, and I was told that the reason was that we were spending so much a year on these schemes that we had to spread the payment in this way and equalise it with housing and education.

It seems to me to be pure nonsense to suggest that the extent of the expenditure on matters of this sort is comparable with what is spent, and rightly spent, on housing and education. The fact of the matter is that there was a review, and some person with an over-tidy mind thought that it ought to be put on a yearly basis. This reminds me of the old lady who was able to pay for the wireless set but felt bound to buy the television set on hire purchase. Surely the Treasury could manage this much. There must be some other reason.

I am a very simple-minded person, and I think I have found the reason. Let us look at the amounts that are going into the next Budget. They were given by the Parliamentary Secretary. On the old basis the figure was £8 million this year; on the new basis, if he passes the winning post in time, the figure may be only £1½ million. Is not what is happening—I am just suggesting the answer to the Parliamentary Secretary—that in order to keep a little more up his sleeve this year, when there may be a General Election, perhaps to distribute it elsewhere, the Chancellor is introducing the Bill to save this immediate expenditure? I suggest that he is mortgaging the future to have a little more to play with for General Election year purposes.

I will be even more unkind, and suggest that he is really doing it at the expense of local authorities. I will tell the Committee the reason why I say it is at the expense of local authorities. I pointed out to the Parliamentary Secretary on Second Reading that one of the subsections of the Clause was a very remarkable one in that it obliged people who had been promised a lump sum to accept annual payments instead, whether they wanted to or whether they did not. My hon. Friend the Member for Falmouth and Camborne (Mr. Hayman) has pointed out that a lump sum payment might suit local authorities much better if they were using a reserve or for some reason of that kind.

I hoped that some regard might be paid to the sanctity of Government promises—I suppose that is too much to expect from the Conservative Party—and that we might have had an Amendment to make this somewhat shattering change at least depend upon the consent of the local authority concerned. However, that has not happened, and I am compelled to come to the conclusion that all this is really at the expense of the local authorities, in so far as it is not simply a mortgage of the present to be paid off in the future.

5.0 p.m.

The Lord Advocate (Mr. W. R. Milligan)

It might be convenient for the Committee if I intervened at this stage to attempt to deal with one or two of the matters which have been raised by hon. Members on both sides of the Committee arising out of the questions which have been asked by certain Scottish local authorities.

Mr. William Ross (Kilmarnock)

On points of law?

The Lord Advocate

Not primarily on points of law, but I might at the same time deal with one or two.

The hon. Member for Hamilton (Mr. T. Fraser) asked whether there had been any meetings with the local authorities. The position about that is that certain informal meetings took place, and at those meetings the local authorities said that they wished to make representations after seeing the terms of the Bill. Following on the publication of the Bill, certain recommendations were made at an interview, and thereafter a letter, to which reference has been made, was circulated by the local authorities.

Mr. McInnes

Will the Lord Advocate define what he means by informal meetings? Either the local authorities met representatives of the Scottish Office at Edinburgh, or they did not. Was it merely a telephone conversation?

The Lord Advocate

I imagine that it was a meeting in Edinburgh, but I will have that information before I sit down.

The second point raised by the hon. Member for Hamilton was the suggestion that the local authorities thought that more administrative work would be required of them in the event of the Bill being passed into law. That matter has been looked into, and the view which we take is that there will certainly not be more and might be less, because certain calculations, which under the present procedure have to be made about work done and the like, will not have to be made in the future, and there will generally be payments of a more even nature. We are satisfied that there will certainly be no material extra work to be done, if any at all.

Another point raised by several hon. Members on both sides of the Committee was whether the cost of raising a loan, which was referred to as the 4s. per £100, would be met. Our position is that we divided that aspect of the matter into two parts, the first being present schemes which are in course of payment at the present moment, in respect of which any costs incurred would be met at the appropriate time by the Government, and the second being new schemes in respect of which the cost of 4s. per cent. will form part of the capital cost and rank for grant. I remind the Committee that in neither case will these costs rank towards the £20 million, in other words, that the ceiling will not be affected by the payment of these costs.

Another point made by hon. Members was about the variations of the loan charges; that is to say, where in the course of a scheme various advances are made to the local authority, the rate of interest may vary during that period. I quite agree that it may vary up or down. The view that we take is that the rate of interest, so far as the Government are concerned, should be the rate of interest in operation at the commencement of the scheme. If the rate goes up, then one side suffers slightly, if it goes down, then the other, each taking the rough with the smooth.

The next question related to the six-monthly payments instead of payment at shorter periods. I think that this particularly applies to Scotland, but when my hon. Friend the Parliamentary Secretary to the Ministry of Housing and Local Government speaks later he will explain any distinction that there is in all these matters between Scotland and England. So far as I have gone at the moment, I do not think that there is any distinction whatsoever, but the matter was raised by Scottish local authorities, and that is why I am attempting to deal with it.

In Scotland, local authorities have been accustomed to receive payments at slightly shorter notice than have, I understand, authorities in England. The local authorities in Scotland are afraid that they may have to meet a contractor's bill before they have been able to make arrangements for what I might call their chief loan, and that they will accordingly have to have a smaller, but immediate, loan to finance and meet the particular payment which is falling due. I can see the possibility that such a situation might arise, but I can assure Members of the Committee that if it did we would see that an interim payment was made to tide the local authority over in respect of the immediate payment which was required, and so no additional borrowing would be necessary.

I think that the last point which was raised by hon. Members was the query as to whether there would be periodical payments during the scheme, or if payments would be made at the end of the scheme. I can give an absolute and unqualified undertaking that in the ordinary case they would be made as the work went on. The one possible exception would be where a scheme was not very large, and an arrangement was made, at the request of the contractor, that the whole payment should be made at the end. In such circumstances local authorities would not have to borrow, and accordingly no payment would fall to be made until the end of the scheme.

I think that I have answered the points that have been made. In reply to the earlier query of the hon. Member for Glasgow, Central (Mr. Mclnnes), I can now say that I have been informed that the beginning of the conversation was on the telephone but there was, as I told him, on 28th March, an interview which was followed by the letter to which reference has been made.

Mr. Ross

Can the Lord Advocate tell us whether local authorities approve of the Bill, whether they wanted the Bill, or would they rather not have had it?

The Lord Advocate

I think that the local authorities' letter, of which, no doubt, the hon. Member has a copy, speaks for itself. It is wrong to say that the local authorities opposed the Bill. They wanted certain assurances, in view of the terms of the Bill, and I hope that, having got those assurances, they will not only not oppose it, but will heartily welcome it.

Mr. Ross

On the point of the meaning of words—I prefer the Lord Advocate's opinion on matters like that rather than on social and political matters—the letter says: The underlying purpose of the Bill is to enable the Government to switch over …. There can be no doubt that the present method of payment of grants by lump sum payments is much to be preferred by local authorities …

Mr. M. Turner-Samuels (Gloucester)

Would the Lord Advocate elucidate this point? I understood him to say that, if it became necessary, interim payments would be made. Would he indicate to the Committee under what authority those payments would be made?

The Lord Advocate

Certainly.

The hon. and learned Member has inquired about interim payments, which is a particularly Scottish point. That was to meet the exceptional case where the local authority—as it now has to do at the beginning of a scheme, and in the case of a scheme going on when the Bill becomes law—has to make arrangements for borrowing to finance a scheme. The authority will not actually need the money until payment is required by the contractor, whoever that happens to be. It may be that in exceptional cases, before the authority can make its arrangement with the loan authority, the contractor's account falls due. The local authorities, as I understand it, were afraid that they would have to borrow especially to pay that account. What I said at the time was that we would meet them by an interim payment which would avoid the borrowing altogether.

Mr. E. G. Willis (Edinburgh, East)

1 should like to clear up the point made by the Lord Advocate about rates of interest. If I understood him correctly, he said that the rate of interest which the authorities would pay would be that which was in operation at the time the loan or scheme was approved. That raises what appears to be a rather interesting point. Obviously, it would be in the interest of the local authorities to have the scheme approved with the higher rates of interest to cover them against the eventuality of falling rates of interest.

On the other hand, it would be in the interest of the Government to approve the scheme at the time when the rates of interest were low, because that rate would be the fixed one. I should have thought that if the local authority applies for approval and sanction at a time when rates of interest are high, there will be a tendency on the part of the Secretary of State to delay it for a while unless the Government are to sanction works of capital expenditure precisely at the time when they are trying to follow a policy of reducing works of capital expenditure. That is a peculiar position for the Government to place themselves in if they wish to play fairly with the local authorities. I wish that the right hon. and learned Gentleman had said more about it.

The Lord Advocate

It would be extremely difficult to take a rate of interest other than the rate of interest which was in force when the loan was first made. It is apparently suggested that, somehow or other, the Government should use their influence to take a date when the rate of interest was high to suit their own book. I do not think that it is open for hon. Members first to say that the sum is so incredibly small that the Government might as well pay capital sums straight out and then to suggest that the Government will regulate the finances of the country by taking into consideration a slight benefit by entering into these loans on a certain date. It is essential to take the rough with the smooth.

Mr. T. Fraser

The Lord Advocate said that the meeting with the Scottish local authority association took place on 28th March. He omitted to tell us the year. He may have meant 28th February of this year. If he did, that was most improper, because the local authorities were then having their meeting some days after the Second Reading of the Bill. Scottish local authorities are accustomed to better and more courteous treatment than that.

Mr. Deedes

Perhaps I might now respond to some of the points made by English and Welsh Members as opposed to those made by the Scottish Members to whom my right hon. and learned Friend has replied. I should like to add one point that I overlooked in reply to the earlier remarks of the right hon. Gentleman the Member for Belper (Mr. G. Brown) about very small grants and the sum of £1,000. I am prepared to have a look at that. When the sum becomes £1,150 and it is on the wrong side of the line and therefore has to be spread over a period of 30 years, that certainly merits examination. I should like to consider that.

The hon. Member for Islington, East (Mr. E. Fletcher) asked two principal questions which, I gathered, he thought I would not be in a position to answer. I may not be able to satisfy him, but I will do my best. The first was about the position of the local authorities. Will they, or will they not, be worse off under the scheme? We stressed on Second Reading, and I want to stress it now in detail, that financially the local authorities will not be worse off, principally because the interest that they are required to pay will be covered by Government grants, though it is true that they will have to raise more money.

In other words, at the end of the 30-year period they will not have paid any more than they would under the old system. There was an additional point made by my right hon. and learned Friend about Scottish authorities and borrowing fees. The matter was mentioned by the hon Member for Islington, East. Any additional charge under that head—this applies not only to Scotland but to England and Wales—will be met by the Government at the appropriate time. On that point of detail I can say that the local authorities should not suffer any financial change at all under the new system.

Perhaps the Committee will bear with me if I explain the position. At present we pay the whole amount of grant when a scheme is finished. On a very big scheme we pay about half the sum half way through. Now nothing will be paid until the end of the scheme, but with a big scheme involving two or three con tracts the first payment will be made on completion of the first contract. As soon as the first third of the scheme is completed the payment will begin. There fore, substantially, the position should be the same as now in the ultimate outcome.

5.15 p.m.

The hon. Member for Islington, East also wanted further estimates involving the new rate of interest. He wanted to know the effect of the extra 1/4 per cent. Perhaps I might take the same parallel as that I took on Second Reading, working it out from a small sum to a larger sum for the benefit of the Committee. At the time of the Second Reading the equivalent half-yearly payment on £100 at 3¾ per cent, was £2 15s. 9¾d. and it will now be £2 17s. 6½d., the difference amounting to 3s. 6d. a year.

Mr. G. Brown

There must be a far thing in it somewhere.

Mr. Deedes

Perhaps I should say approximately 3s. 6d. a year. When I spoke before, the aggregate of such payment over 30 years was £167 8s. It will now be £172 12s. 6d. An increase which was £67 8s. for every £100 becomes £72 12s. 6d. The final breakdown, or rather the last figure in the calculation, is that the increase on £27,600,000 is there fore £20,044,500, and before it was £18,600,000. I hope that the hon. Gentle man will accept those figures as providing the details for which he asks.

My hon. Friend the Member for Norfolk, South-West (Mr. Bullard) asked about recent progress in water and sewer age work. Perhaps I can assist by giving the figures for the last three years of payments in respect of the two. In the financial year 1953–54 the amount spent—the total amount; this has no bearing on grants—was £7,200,000 on water and £5,250,000 on sewerage, a total of £12,500,000. In the financial year 1954–55, £7 million was spent on water and £7million on sewerage, a total of £14 mil lion. The figures at that point were equal. In the forthcoming financial year, 1955–56, we estimate that £7,500,000 to £8million will be spent on water and £9million to £9,500,000 will be spent on sewerage, a total of £17 million. It will be seen that work on water has slowed down and that on sewerage has been increased.

The hon. Member for Hamilton (Mr. T. Fraser) made the point that this policy accorded ill with the recent steps taken on the subject of hire-purchase. The object of the restrictions on hire-purchase was to damp down demand. There is no question of damping down demand for rural water and sewerage. I have already explained that there is no desire to do that. In fact, we intend to spend rather more. Far from damping down on rural water and sewerage, we are going to spend more than we have spent in previous years. I hope, therefore, that the hon. Gentleman will accept that there is some difference in principle between the two things.

My hon. Friend the Member for Harborough (Mr. Baldock) asked about the Market Harborough water scheme, about which we have been in correspondence. I can make two points about that which I hope will satisfy him. The first is that the River Dove scheme was approved two months ago and will take five to six years to complete. The second is that we are offering the rural district council a grant towards an interim measure to serve until the River Dove scheme is in operation.

The hon. and learned Member for Kettering (Mr. Mitchison) spoke about the disparity in the rate of grant as between Scotland and England. I admit that this is perhaps a point which would bear looking into, though I am in this difficulty that I am not answerable for what Scottish water schemes the Scottish Office sees fit to make grants to. However, I will look into the point, and if I can give the hon. and learned Gentleman an answer which satisfies the South of the Border, I will do my best to do so.

As far as I am able, I have met nearly all the points that have been raised on both sides of the Committee, and I hope that that fact will go some way, though I realise that it will not go all the way, towards satisfying the right hon. Gentleman.

Mr. G. Brown

As the Parliamentary Secretary to the Ministry of Housing and Local Government so fairly says, he has done what he can to answer the points raised. But the fact remains that he has been unable to answer any one of them. That has not been due to any lack of willingness on his part, but to the fact that he is not in a position to answer them. I am not complaining about his attempt to do so. It was a most gallant, as well as a very pleasing and lucid attempt. It is not his fault if he has to deliver a brief on behalf of an absent Minister who, at the moment, is lurking in the dungeons of the corridors down below.

I should think that the Financial Secretary to the Treasury must be having a most nerve-wracking time. He cannot be sure whether, if he puts his head through the door, he will be nabbed for this Bill or will be nabbed for the next one. I hope that the Lords Commissioners to the Treasury are organising a good kind of relay system in order to make quite sure that the hon. Gentleman gets the tip in due course. This unwillingness of the Financial Secretary to be present is the most outrageous case of contempt for the House that I have yet seen in my 10 years or so in it.

Every single hon. Member who has spoken has prefaced his remarks by saying, "I want to ask some financial questions on what is a financial Bill," but, despite every request that has been made, the Minister has obstinately stayed away from what is his first duty to this Committee. I was always told by old Parliamentarians that the first duty of a Minister was to be in the Chamber when business affecting his Department was under consideration, but this Minister, who would not even get up on the Money Resolution and who had literally to be dragged to his feet, has this time stayed away rather than run the risk of being questioned.

I see, looking through the door behind you, Sir Charles, that the hon. Gentleman is no longer lurking in the corridors below, but is in the ante-room outside. It is a pity that his courage which has brought him so far will not bring him through that door. It is quite clear that he is not going to come in, but is going to an ante-room even farther away. It was not the sight of him that we wanted, but the sound of his voice. The point is that he has put his hon. Friend in a most difficult position.

I originally asked the Parliamentary Secretary what financial compensating advantage the taxpayer or the Treasury—the two are really synonymous—was to obtain for the extra £27½ million, or more like £29 million, that we have to pay. The hon. Gentleman did not get my point. He assured me that the total amount of sewerage and water works done will be the same, that they will not be reduced by the extra costs. That I know, but somebody, either the over-tidy-minded gentleman to whom my hon. and learned Friend the Member for Kettering (Mr. Mitchison) referred, or the Chancellor of the Exchequer, went probing around over this, found that they could save £6 million in this year at the cost of spending £29 million in the next 30 years, and decided to do so.

The hon. Gentleman gaily avoided the question put to him by my hon. and learned Friend which was: Is it in fact the Government's case that the basis for spending this extra £29 million is so as to be able to distribute £6 million in some way in the Budget? Is that the point? The hon. Gentleman cannot answer that. Of course he cannot. The only person who could answer it is a Treasury Minister. At various times during this debate the Government have sent in to look after us the First Lord of the Admiralty, the Parliamentary Secretary to the Board of Trade, one of the Joint Under-Secretaries of State for Scotland and the Parliamentary Secretary to the Ministry of Health. We have had a variety of Ministers coming in, but none of them could answer the point any more than can the hon. Gentleman.

Is the reason the Government are going to make up for an extra £29 million—£72 in every £100—of work done in order to be able to bring into this year's Budget £6 million to help the Chancellor to give something away for electioneering purposes? If that is the reason, it is a downright miserable and nasty one. If it is not, then why is it that we cannot get any answer out of them? The hon. Gentleman told us that the money was already voted under a Bill, and, in case the hon. Member for Ealing, South (Mr. Maude) was asking his question with a view to incorporating the answer in his regular article in the "Farmers' Weekly," let me point out that he cannot take credit for the money because it was voted by a Government of which he is not a supporter.

If the money is going to run out in a year's time—it cannot be 18 months, be cause the hon. Gentleman told his hon. Friend that he was going to increase the aid this year—then why did not the Government wait for a new Bill in order to vote more money before making the change? It would at least have been intelligible if we had had a Bill which voted more money for rural water and sewer age, and if the opportunity had been taken in that Bill to say that, in order to spend more money, we should change the basis. Even though that may not have seemed acceptable to some of us, at any rate the two things could have gone together. Instead, we are given this one-Clause Bill which the Ministers are not willing to defend in order to change the basis retrospectively in relation to some expenditure of public money which already is nearly all expended. It does not make sense.

I can quite understand that the Parliamentary Secretary cannot give me a compensating advantage. This, as my right hon. Friend the Member for Battersea, North (Mr. Jay) said, can only be de fended on the ground that it is a trick to get £6 million to play with this year, and the other side of the trick is that the £29 million must be taken away from the tax payers over the next 30 years in order to make that possible. That does not seem to me to be sensible government. It does not help the cause of rural water supplies and sewerage, and it is either a downright silly thing or a mean trick.

All that we have got out of this debate is a promise that the hon. Gentleman will review the £1,000, which he told us would be the limit under which these new arrangements would operate, with a view to putting it further up. I am very glad that he is going to do that, and I hope that he will put it up to some much more substantial figure, and not merely sufficiently to cover the odd £150 about which he spoke. I am bound to say that a Bill which adds—as the hon. Gentleman

now corrects his arithmetic—£20,024,000 to the cost of doing the same amount of work simply in order to get an extra £6 million to play with this year, seems to have no basis on which we can possibly support it.

5.30 p.m.

At one stage, when working out his figures, we got him down to the last farthing. If we said that this was a farthing-minded Government we should be about right. Trying to save a farthing here and there in order to be able to give something away is as far as they can get. We cannot possibly accept a position in which the cost of work in progress is increased by three quarters without any compensating increase in the amount of work done. We cannot accept a Bill of this kind, for which the Departmental Minister will not answer and, as a protest both against the Bill and the outrageous conduct with which the Financial Secretary has treated the Committee, we shall certainly divide against the Clause.

Question put:—

The Committee divided: Ayes, 182; Noes, 140.

Division No. 41.]	AYES	[5.31 p.m.
Aitken, W T.	Crowder, Petre (Rulslip—Northwood)	Hopkinson, Rt. Hon. Henry
Alport, C. J. M.	Deedes, W. F.	Horobin, Sir Ian
Anstruther-Gray, Major W. J.	Digby, S. Wingfield	Howard, Hon. Greville (St. Ives)
Armstrong, C. W.	Dodds-Parker, A. D.	Hudson, Sir Austin (Lewisham, N.)
Assheton, Rt. Hn. R. (Blackburn,W.)	Doughty, C. J. A.	Hughes Hallett, Vice-Admiral J.
Baldock, Lt.-Cmdr. J. M.	Drewe, Sir C.	Hylton-Foster, Sir H. B. H.
Baldwin, A. E.	Duncan, Capt. J. A. L.	Jremonger, T. L.
Barber, Anthony	Eden, Rt. Hn. Sir A. (Wrwk & Lgtn)	Jenkins, Robert (Dulwich)
		Johnson, Eric (Blackley)
Baiter, Sir Beverley	Eden, J. B. (Bournemouth, West)	Jones, A. (Hall Green)
Bell, Philip (Bolton, E.)	Elliot, Rt. Hon. W. E.	Joynson-Hicks, Hon. L. W.
Bell, Ronald (Bucks, S.)	Errington, Sir Eric	Kerby, Capt. H. B.
Bevlns, J. R. (Toxteth)	Erroll, F. J.	Kerr, H. W.
Bishop, F. P.	Fell, A.	Lambert, Hon. G.
Black C W	Finlay, Graeme	Leather, E. H. C.
Bossom, Sir A. C.	Fisher, Nigel	Legge-Bourke, Maj. E. A. H.
Boyle, Sir Edward	Fleetwood-Hesketh, R. F.	Legh, Hon. Peter (Petersfield)
Bromley-Davenport, Lt.-Col. W. H.	Fletcher-Cooke, C.	Lennox-Boyd, Rt. Hon. A. T.
Brooke, Henry (Hampstead)	Foster, John	Linstead, Sir H. N.
Brooman-White, R. C.	Fraser, Hon. Hugh (Stone)	Lloyd, Maj. Sir Guy (Renfrew, E.)
Brown, Jack (Govan)	Fraser, Sir Ian (M'cmbe & Lonsdale)	Lloyd-George, Maj. Rt. Hon. G.
Buchan-Hepburn, Rt Hon. P. G. T.	Galbraith, T. G. D. (Hillhead)	Lockwood, Lt.-Col. J. C.
Bullard, D. G.	Garner-Evans, E. H.	Longden, Gilbert
Bullus, Wing Commander E. E.	Cough, C. F. H.	Lucas, Sir Jocelyn (Portsmouth, S.)
Burden, F. F. A.	Gower, H. R.	Lucas-Tooth Sir Hugh
Butcher, Sir Herbert	Graham, Sir Fergus	McAdden, S.J.
Butler,Rt.Hn.R.A.(Saffron Walden)	Gresham Cooke, R.	Maclay, Rt. Hon. John
Campbell, Sir David	Grimond, J.	McLean, Neil (Inverness)
Cary, Sir Robert	Grimston, Sir Robert (Westbury)	Macleod, Rt. Hn. Iain (Enfield, W.)
Channon, H.	Hall, John (Wycombe)	Macmillan, Rt.Hn.Harold(Bromley)
Churchill, Rt. Hon. Sir Winston	Harris, Frederic (Croydon, N.)	Macpherson, Niall (Dumfries)
Clarke, Col. Sir Ralph(East Grinstead)	Harrison, Col. J, H. (Eye)	Maitland, Cdr. J. F. W. (Horncastle)
Clarke, Brig, Terence (Portstnth, W.)	Harvey, Air Cdre. A, V. (Macclesfd)	Maitland, Patrick (Lanark)
Cole, Norman	Harvey, Ian (Harrow, E.)	Manningham-Buller, Rt. Hn. Sir R.
Conant, Maj. Sir Roger	Heald, Rt. Hon. Sir Lionel	Marlowe, A. A. H.
Cooper-Key, E. M.	Heath, Edward	Marples, A. E.
Craddock, Beresford (Spelthorne)	Hill, Dr. Charles (Luton)	Marshall, Douglas (Bodmin)
Crookshank, Capt. Rt. Hn. H. F. C.	Hill, John (S. Norfolk)	Maude, Angus
Crouch, R. F.	Hinchingbrooke, Viscount	Milligan, Rt. Hon. W. R.
Crowder, Sir John (Finchley)	Hirst, Geoffrey	Molson, A. H. E.
Mott-Radclyffe, C. E.	Rayner, Brig. R.	Thomas, Rt. Hn. J. P. L. (Heref'd)
Nabarro, C. D. N.	Redmayne, M.	Thomas, Leslie (Canterbury)
Neave, Airey	Rees-Davies, W. R.	Thomas, P. J. M. (Conway)
Nicholson, Godfrey (Farnham)	Remnant, Hon. P.	Thompson,Lt-Cdr.R.(Croydon,W.)
Nield, Basil (Chester)	Renton, D. L. M.	Thornton-Kemsley, Col. C. N.
Nugent, G. R. H.	Ridsdale, J. E.	Touche, Sir Gordon
Odey, G. W.	Robertson, Sir David	Turner, H. F. L.
O'Neill, Hon. Phelim(Co. Antrim, N.)	Roper, Sir Harold	Turton, R. H.
Ormsby-Gore, Hon. W. D.	Ropner, Col. Sir Leonard	Vosper, D. F.
Orr, Capt. L. P. S.	Russell, R. S.	Wakefield, Edward (Derbyshire, W.)
Page, R. G.	Savory, Prof. Sir Douglas	Walker-Smith, D. C.
Peake, Rt. Hon. O.	Schofield, Lt.- Col. W.	Wall, Major Patrick
Perkins, Sir Robert	Scott, Sir Donald	Ward, Hon. George (Worcester)
Peto, Brig. C. H. M.	Sharples, Maj. R. C.	Waterhouse, Capt. Rt. Hon. C.
Peyton, J. W. W.	Snadden, W. MoN.	Wellwood, W.
Pickthorn, K. W. M.	Stanley, Capt. Hon. Richard	Williams, Rt. Hn. Charles (Torquay)
Pilkington, Capt. R. A.	Stevens Geoffrey	Williams, Paul (Sunderland, S.)
Pitman, I. J.	Steward, W. A. (Woolwich, W.)	Wiliams, R. Dudley (Exeter)
Powell, J. Enoch	Strauss, Henry (Norwich, S.)	Wilson, Geoffrey (Truro)
Prior-Palmer, Brig. O. L.	Studholme, H. G,	Woollam, John Victor
Raikes, Sir Victor	Sumner, W. D. M. (Orpington)
Ramsden, J. E.	Sutcliffe, Sir Harold	TELLERS FOR THE AYES:
		Mr. Oakshott and Mr. Wills.
NOES
Acland, Sir Richard	Gordon Walker, Rt. Hon. P. C.	Noel-Baker, Rt. Hon. P. J.
Allen, Arthur (Bosworth)	Greenwood, Anthony	Oliver, G. H.
Allen, Scholefield (Crewe)	Grenfell, Rt. Hon. D. R.	Owen, W. J.
Attlee, Rt. Hon. C. R.	Griffiths, David (Rother Valley)	Palmer, A. M. F.
Bacon, Miss Alice	Griffiths, Rt. Hon. James (Llanelly)	Pannell, Charles
Benson, G.	Griffiths, William (Exchange)	Pargiter, G. A.
Beswick, F.	Hall, Rt. Hn. Glenvil (Colne Valley)	Paton, J.
Bing, G. H. C.	Hamilton, W. W.	Pearson, A.
Blackburn, F.	Hastings, S.	Plummer, Sir Leslie
Blenkinsop, A.	Hayman, F. H.	Rankin, John
Blyton, W. R.	Healey, Denis (Leeds, S.E.)	Reeves, J.
Boardman, H.	Henderson, Rt. Hn. A. (Rwly Regis)	Reid, Thomas (Swindon)
Bottomley, Rt. Hon. A. G.	Hobson, C. R.	Robinson, Kenneth (St. Pancras, N.)
Bowden, H. W.	Holman, P.	Rogers, George (Kensington, N.)
Bowles, F. G.	Holmes, Horace	Ross, William
Brockway, A. F.	Houghton, Douglas	Shinwell, Rt. Hon. E.
Brook, Dry den (Halifax)	Hudson, James (Ealing, N.)	Short, E. W.
Broughton, Dr. A. D. D.	Hynd, H. (Accrington)	Silverman, Julius (Erdington)
Brown, Rt. Hon. George (Belper)	Hynd, J. B. (Attercliffe).	Silverman, Sydney (Nelson)
Burke, W. A.	Isaacs, Rt. Hon. G. A.	Simmons, C. J. (Brierley Hill)
Burton, Miss F. E.	Janner, B.	Slater, J. (Durham, Sedgefield)
Callaghan, L. J.	Jay, Rt. Hon. D. P. T.	Soskice, Rt. Hon. Sir Frank
Castle, Mrs. B. A.	Jeger, George (Goole)	Sparks, J. A.
Champion, A. J.	Jeger, Mrs. Lena	Stewart, Michael (Fulham, E.)
Chetwynd, G. R.	Johnson, James (Rugby)	Strachey, Rt. Hon. J.
Clunie, J.	Key, Rt. Hon. C. W.	Stross, Dr. Barnett
Coldrick, W.	Kinley, J.	Summerskill, Rt. Hon. E.
Collick, P. H.	Lawson, G. M.	Sylvester, G. O.
Collins, V. J.	Lewis, Arthur	Thomas, Ivor Owen (Wrekin)
Corbet, Mrs. Freda	Lipton, Lt.-Col. M.	Turner-Samuels, M.
Craddock, George (Bradford, S.)	Logan, D. G.	Ungoed-Thomas, Sir Lynn
Daines, P.	MacColl, J. E.	Wallace, H. W.
Dalton, Rt. Hon. H.	McInnes, J.	Warbey, W. N.
Davies, Harold (Leek)	McKay, John (Wallsend)	Weitzman, D.
de Freitas, Geoffrey	McLeavy, F.	Wheeldon, W. E.
Deer, G.	MacPherson, Malcolm (Stirling)	Whiteley, Rt. Hon. W.
Delargy, H. J.	Manuel, A. C.	Wigg, George
Dodds, N. N.	Marquand, Rt. Hon. H. A.	Willey, F. T.
Dugdale, Rt. Hn. John (W. Brmwch)	Mayhew, C. P.	Williams, W. R. (Droylsden)
Ede, Rt. Hon. J. C.	Mellish, R. J.	Williams, W. T. (Hammersmith, S.)
Evans, Albert (Islington, S.W.)	Messer, Sir F.	Willis, E. G.
Fernyhough, E.	Mikardo, Ian	Wilson, Rt. Hon. Harold (Huyton)
Fienburgh, W.	Mitchison, G. R.	Winterbottom, Ian (Nottingham, C.)
Fletcher, Eric (Islington, E.)	Morgan, Dr. H. B. W.	Yates, V. F.
Follick, M.	Morrison, Rt.Hn.Herbert(Lewis'm,S.)
Fraser, Thomas (Hamilton)	Moyle, A.	TELLERS FOR THE NOES:
Gaitskell, Rt. Hon. H. T. N.	Mulley, F. W.	Mr. Wilkins and Mr. John Taylor.
Gibson, C. W.	Neal, Harold (Bolsover)

Question put and agreed to.

Clause ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Bill reported, without Amendment; read the Third time and passed.