INDUSTRIAL RATING BILL

HC Deb 27 April 1956 vol 551 cc2143-225

Not amended (in Standing Committee), considered.

11.31 a.m.

Mr. Eric Fletcher (Islington, East)

I beg to move, That the Bill be now read the Third time.

We are having a most interesting week this week with Private Members' Bills, and I venture to think that this Bill is by no means the least important of those under consideration. You will be aware, Mr. Speaker, of the circumstances in which this Bill comes before the House for Third Reading. It was carried on Second Reading by a substantial majority. It passed through its Committee stage unamended. There were no Amendments down on Report. As will be seen, the Bill has the classic merits of brevity and simplicity. Nevertheless, I think that its importance is in inverse ratio to its length.

The Bill is not a partisan Bill in the ordinary sense. Its Second Reading was moved by my hon. Friend for Acton (Mr. Sparks), to whom we are all indebted for the way in which he has piloted it through the House. It was seconded from the Government benches and has the full support of local authorities throughout the country, and it has been blessed in various forms and documents by both political parties.

Although it is not a partisan Bill. I feel that in moving its Third Reading I must make two assumptions. First of all, I must assume that its Third Reading will not be unopposed, and, therefore, I must argue the merits of the Bill. Secondly, I feel entitled to assume that hon. Members opposite will listen with an open mind to the arguments put forward, because it would really make a travesty of our Private Members' procedure if on such Bills hon. Members were not prepared to vote in accordance with the merits of the arguments put forward.

I propose to make a few remarks, first of all, upon the historical setting of the Bill, secondly, to say something about the effect which it will have on industry, thirdly, to say something about the effect which it will have on local government, and, finally, to answer some of the criticisms made about the Bill on Second Reading. I do not propose to weary the House with a large number of statistics, nor, I hope, to repeat the very full and cogent, though very temperate, arguments put forward by my hon. Friend the Member for Acton in opening the Second Reading debate.

The House will be aware that there is a wide and fundamental principle of public interest involved in the Bill. Indeed, it goes to the roots of local government finance. It involves not only the relationship between local authorities and industry, but also the relationship between local authorities and the Exchequer and, what I think is probably even more important, it also involves the degree of autonomy and independence to which local authorities are entitled.

The operative words of the Bill are contained in Clause 1, which proposes to repeal Section 68 of the Local Government Act, 1929, and Section 45 of the Local Government (Scotland) Act, 1929. If I confine my remarks to England and the effect of derating and the abolition of derating in England, I am sure that Scottish Members will not interpret that as being in any way disrespectful to the similar claims of Scotland where, as I understand it, the arguments are almost, if not entirely, identical.

Mr. George Thomas (Cardiff. West)

England and Wales.

Mr. Fletcher

I meant England and Wales.

Mr. Thomas

My hon. Friend must not assume Wales.

Mr. Fletcher

The 1929 Act introduced a measure of reorganisation not only of local government but also of local government finance. By that Act industrial freight transport hereditaments as well as agricultural hereditaments were relieved of rates to the extent of three-quarters of the burden which they had previously borne. It is unnecessary to say any more about agricultural hereditaments because they are outside the scope of this Bill, and therefore it would be out of order for me to discuss the position with regard to agriculture.

We are concerned with the rerating of industrial and freight transport hereditaments. The first point to notice, I think, is that prior to the 1929 Act all industrial hereditaments, like shops and residential premises, and like all other hereditaments, had paid and had expected to pay their fair share of the rate burden in order to contribute to the expenditure of local authorities. Rates were paid on the basis of the rateable value of all hereditaments within the confines of the local authority. In those days there may have been criticism about the way in which one category of premises and another were in relation to each other assessed for rate purposes, but the principle was that, according to their rateable value, all hereditaments should contribute towards the expenses of local authorities.

I do not think it is necessary for me to enter into a subject which concerned the House to some extent on Second Reading, the rather philosophical discussion about the basis on which rates should be levied—for example, whether there is a real distinction between what was called a tax on the function of premises as distinct from a tax on income. I am prepared to rely on the fact that prior to 1929 the rating of industry was regarded as normal, sensible and fair.

In this connection, it is important to emphasise the reasons why the change was introduced in 1929. That change, which had the support of both sides of the House, was justified by these special economic conditions which prevailed in 1929. At that time there was widespread unemployment, there were large numbers of liquidations of companies, the bankruptcy courts were full and commercial failures were common. It was at that time, in the interests of our national economy, that industry as a whole was given both a stimulant and a relief.

For that reason, industry was relieved of three-quarters of its rate burden. Local authorities were compensated by a block grant from the Exchequer. It is unnecessary to go into the details of how the block grant and the Exchequer contributions have worked. The very complicated formula which was introduced at that time and subsequently varied from time to time has given a great many headaches to those in Government or local government service who have had to understand something of its abstruse calculations and other mysteries. Some local authorities may have gained; others certainly lost. I doubt whether any local authorities were ever really satisfied by the compensation they received in 1929 and subsequent years as the result of a block Exchequer grant being substituted for the old form of full rating of industry.

The House should know something of the size of the problem. As far as my researches have gone, I gather that the amount involved in the last year for which figures are available was of the order of £40 million. In other words, if this Bill had been in operation two years ago and industry had been fully rated, local authorities would have received from that source something of the order of £40 million. It is not so easy to calculate what the position would be today in the light of the new valuation lists which have been published throughout the country. My hon. Friend the Member for Acton made a calculation—and I do not think the figures have been challenged—that as a result of the new valuation lists under the new structure the figure of loss to the local authorities would be of the order of £108 million.

It does not follow that the benefit which local authorities would receive would also be the cost to industry. The cost to industry would be very much less. I doubt whether it would be half that, because rates are an allowable expense for Income Tax purposes and can be set off against profits. Therefore, as far as one can judge, the total cost over the country to industrial concerns as the result of rerating would be half, or rather less than half, of the amount which would flow into local government treasuries as a result of this Bill being passed.

I want now to state the case for industry paying its fair share of rate contribution. I do not propose to dwell on the fact that unless industrial concerns pay their fair share a much heavier share of rate burden inevitably falls on the owners and occupiers of residential premises, shop keepers, and all the miscellaneous classes who were not relieved from the full rate burden in 1929. Nor do I want to argue the case that industry benefits from local government services, though I think it was disputed by one or two hon. Members opposite. I should have thought it was obvious that industrial concerns owning and using and making profits out of premises in an area benefit from, and indeed are dependent upon, the services provided by local authorities just as much as the residents in those areas.

There is a more potent argument. The well-being of our national life requires not only that industrial concerns should be fully rated but that industry should be far more closely associated than it is today with the affairs of local government and its administration. I will take as an illustration what is perhaps the most important local government activity, namely, education; not only education in general but technical education and the burden of providing it. We have not yet had the full debate we shall have in due course about the Government's White Paper on Technical Education, and I do not want to anticipate that today; but there are certain aspects of this subject which, in my opinion, are vital in this connection.

It is conceded on both sides of the House that it is a fundamental need at the present time to stimulate and build up technological and scientific education, to build many new technical colleges and to increase as much as we can the number of students, both full-time and part-time, who have access to technological studies.

It might well have been possible for the Government—and I may want to argue one day that it is what they should have done—to have said that this is a national problem and that this great programme must be undertaken and financed by the State, through the universities or a body similar to the University Grants Committee established for the express purpose, with a Minister charged with the duty of concentrating the national energies on technological education. The Government decided otherwise, and I therefore want to follow in their application to this Bill the implications of that decision.

The Government decided that this great responsibility should be left to local government authorities. In paragraph 71 of the White Paper they say: There are those who argue that a college of advanced technology cannot be successfully administered within the framework of local government. In fact, I personally would argue that. But the Government go on to say: The Government do not accept this. Local authorities take great pride in such colleges and often have been willing to find more money for them than the pressure on national resources has allowed them to spend. To remove these colleges from local control against the wishes of the authorities could be justified neither by past experience nor by the hope of better results from a more central control. Accepting that statement—and it is a most important decision for the Government to make—what are the consequences? The consequences are that the vastly increased number of technical colleges which are going to be built as rapidly as possible throughout the country are going to be administered by local government authorities.

The Government are also urging industry to facilitate all kinds of schemes, called "sandwich schemes," to enable people to sandwich the work they do in the factory with education in technological colleges. One of the things the Government are planning and urging industry to do is to provide far more abundant opportunities for workers of all grades, particularly research workers, to get the benefits both of academic training and of practical experience. That is a great call on industry. Surely it follows that if there is to be success industrial concerns must be aware of their rating responsibilities to the local authorities in whose areas they operate.

Surely it is inconsistent with those great schemes to relieve industrial concerns of rate burdens. I should much prefer to see them fully rated in order that captains and leaders of industry could play a much fuller part in the affairs of local government than they do at present. If they were conscious of the full rate burden instead of being relieved of three-quarters of it, they would be more concerned with the plans of the Government in this respect. As we all know, if one pays money towards a particular objective one tends to take more interest in it than otherwise. Therefore, in the first case I put one of the simple arguments for the abolition of de-rating on the ground that that would produce a greater link, a necessary link, between industry and local government.

I now want to turn to the effect which I believe this Bill—if passed—would have on local government itself. It is almost trite to say—as almost everybody who has been associated with local government during the last two decades, whether as members of local authorities, as chief officers of local authorities, or in any other connection, knows—something has gone wrong with local government in recent years. Indeed, in a pamphlet recently issued by one authority on the subject, Mr. Hanson, Lecturer in Public Administration at Leeds University, writes: There are people, and they are by no means ill-informed, who take the view that local government as an institution is on the way out. I believe that was an over-statement, but I think we would all agree that it would be a very sad thing for our national life if it were true. I think it would be difficult to exaggerate the importance—not perhaps always easy to define—which local government, experience of work in local government and all the manifold activities of local government play in the contributions they make to our national character, our national institutions and the success of our national life. However, there is a great deal of truth in Mr. Hanson's observation. Everybody knows that in the last two or three decades there has been a prevailing sense of frustration in local government.

That sense of frustration is due, I think, to two or three main causes. Partly it is due to the fact that there has been too much control of local authorities from Whitehall. Secondly, it is due to the fact that local authorities have been too dependent on Exchequer grants and have had inadequate independent revenue from local sources. Therefore, we believe in the abolition of derating because of the immense effect that it would have on building up independent revenue of local authorities, giving them a greater sense of autonomy and independence, and doing something to cure criticisms such as the one I have just read, that local government is on the way out.

During recent years a great deal of thought has been given to various plans of one kind or another which have been propounded for enabling local authorities to raise revenue from various sources. It is significant to point out that the Society of County Treasurers—and no body could be better qualified to form an opinion on this subject—in a recent report on the whole question of local government finance, and having reviewed various alternative formulas for obtaining more local revenue, said that it came to the conclusion that the best relief for local authorities would be to rerate industry in full. It is very satisfactory to have that support.

I now want to answer some of the criticisms that were made of the Bill on Second Reading. There was a very odd speech by the hon. Member for Henley (Mr. Hay), who has not been able to be present this morning. As I understood his speech, he attempted to attack the Bill on two grounds. First he was at pains to argue—as indeed the Minister subsequently argued, but I shall come to the speech of the Minister later—that the 1929 legislation was intended to be permanent. Then the hon. Member said that the proposals in this Bill ought not to be considered apart from a general review of local government and local government finance which the Government were considering. [HON. MEMBERS: "Hear, hear."] I gather that those arguments have the support of hon. Members opposite, and I propose to deal with them. In a long speech, the hon. Member for Henley, who was one of the strongest protagonists against the Bill, came to this conclusion: Those are some of the main arguments in favour of the retension of derating. The hon. Member went on to say: I do not regard all of them—together or individually—as conclusive, and my own mind is very much open upon this point. So that his opposition was lukewarm, to say the least.

Mr. Peter Smithers (Winchester)

Will the hon. Gentleman go on and read the following sentence of my hon. Friend's speech?

Mr. Fletcher

Certainly. It states: Of one thing I am absolutely certain, and it is that all the arguments—pro and con—must be examined with care before legislation is passed by the House."—[OFFICIAL REPORT, 16th March, 1956; Vol. 550, c. 717.] I entirely agree. It would be quite wrong to expect the House to pass a Measure of this kind without close examination. But I venture to think that we have already had that close examination. There was a full day of debate on Second Reading, a full Committee stage, and now we have all the time available on Third Reading.

If I am not trespassing upon the indulgence of the House, I wish to say something about the arguments of the Parliamentary Secretary. After all, they were the only serious arguments advanced against the proposals of my hon. Friend. The Minister said two things. He seems first to have thought it necessary to argue that the legislation of 1929 was intended to be permanent. But surely the Parliamentary Secretary could not have been serious about that? Surely, even if he really thinks that in 1929 the Conservative Government thought unemployment was a permanent feature in our society, that does not close his eyes to re-examining the position now, when unemployment has been cured and industry is flourishing? Nothing is static in local government affairs—

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. J. Enoch Powell)

Perhaps the hon. Member will look at my later intervention when I clarified my meaning. It appears in column 779 of the OFFICIAL REPORT.

Mr. Fletcher

I am obliged. I think that in fairness to the Minister I should quote his intervention. He said: I said that it was implicit in the structure of the 1929 Act."—[OFFICIAL REPORT. 16th March, 1956; Vol. 550, c. 779.] I am glad that we have that on the record, because it exonerates the Parliamentary Secretary from being committed to what I should have regarded as a stupid argument. In fact, that argument is in complete contradiction to the further reason which he gave for opposing the Bill. His other reason, probably the more substantial reason, was exactly the reverse of his argument about the 1929 situation being permanent and it is the chief point which we have to meet. The hon. Gentleman argued that this Bill ought not to be passed because, as he said, the Government are at present reviewing the problem of local authority finance in all its aspects.

I am glad to hear that they are, because such a review is overdue. Whatever conclusions may result from this comprehensive review, we believe it fundamental to begin by the rerating of industry. We believe that for the reasons I have tried to mention; because of the effect on industry, because of the necessity to revive local government and because of the tremendous importance of technological education. We believe it fundamental that the basis of any review of local government finance should be the abolition of derating.

No doubt there will be plenty of consequential adjustments to be made once the derating of industry has been abolished. Details about Exchequer grants will have to be considered. But that is the duty of the Government. We all realise that if local government receives this additional revenue in the time-honoured and traditional form in which local authorities should get their revenue, namely, from the ratepayers, various consequences will follow. Local authorities could not expect to get the same contributions from the Exchequer as before, and we all know there would have to be detailed calculations about Exchequer equalisation grants and so forth. Today we are not concerned with that, but rather with the fundamental principle. These other matters could follow later. I do not regard it as any objection, therefore, to say that the Government are considering a review of local government finance.

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

My hon. Friend may not be aware that in the Scottish Standing Committee we are at present discussing a Bill which alters the rating proposals for the crofters in Scotland. Their rates will be increased and so this argument does not hold much water.

Mr. Fletcher

I am obliged to my hon. Friend. I was not aware of that. But I would earnestly ask the Minister and hon. Members opposite to accept the principle which I am trying to argue—that although all kinds of detailed and consequential adjustments may be necessary, this House should decide as a matter of principle, for reasons of overriding national importance, including the effect on industry and local government.

Mr. Albert Evans (Islington, South-West)

My hon. Friend must be aware that the House has already decided upon the principle embodied in the Bill. The House has agreed the principle.

Mr. Fletcher

The Bill has received a Second Reading, and I hope that it will receive a Third Reading. But I am very anxious that it should not merely be carried by a numerical majority, but that the reasons for giving the Bill a Third Reading should be recognised as valid and convincing.

12.8 p.m.

Mr. W. E. Wheeldon (Birmingham, Small Heath)

My hon. Friend the Member for Islington, East (Mr. E. Fletcher) has given us a very comprehensive review of this problem and it would be difficult to avoid some degree of overlapping in following him.

I wish, first, to turn to one or two points made during the Second Reading debate against the Bill. The hon. Member for Henley (Mr. Hay) said that industry should be rated solely in respect of the direct benefits it receives from the local authorities. To quote his own words: I think the basis upon which rates should be levied on industry should be the direct value of the services which it receives and are rendered by the local authority."—[OFFICIAL REPORT, 16th March, 1956; Vol. 550, c. 716.] That point of view was supported by hon. Gentlemen opposite and I wish to consider it for a moment. I think there is no validity in that contention. Why should we not apply a principle of that kind in other directions than to industry? What about other people affected by local government expenditure? There is the man who has no children at school—are we to relieve him from the very heavy expenditure incurred in terms of local education?

Take public libraries. Is the man who has no need to use the public library because of his private means to be excused from the local library rate? The same applies to public baths. Is the man who never uses the public baths to be excused in the same way? Let me put the case in an extreme form. Is the man who does not cast his vote in the municipal elections to be relieved of the expenditure incurred by the local authority in registration and other election procedure? The argument is absurd; it does not hold water. These matters have been considered over many years and it is clear that industry receives very considerable benefit from municipal activity.

Industry creates its own special problems. Local authorities in industrial areas may have very heavy financial liabilities which do not arise in non-industrial areas. Technical education, which was used as an illustration by my hon. Friend the Member for Islington, East, is already an enormously expensive item in local authority finance. In Birmingham, in the industrial centre of the country, we are building a new technical college that will eventually cost about £10 million. Does anybody suggest that that college is not primarily for the benefit of industry? Of course it is.

Industry is demanding, and rightly, higher and higher skill in terms of technology, and the cost will have to be borne by local authorities. [HON. MEMBERS: "NO."] Very well. I did not want to go into the details of local government finance with which I thought most hon. Members were acquainted. If hon. Members want the matter put precisely, let me say that quite a substantial proportion of the cost of technical education will have to be borne by the ratepayers. To that cost industry should make its proper contribution.

Another example is highways, which are costing a tremendous amount of money. We have completed a stretch of highway in Birmingham about a mile in length, costing approximately £250,000. If we had been thinking solely in terms of ratepayers other than industry we should not have needed that highway. Industry demanded it; and, what is more, since the completion of the highway, industry has come forward voluntarily and said, "Now that you have completed this highway, it has saved industry thousands of pounds." Are we to say, therefore, that industry gains no benefit from highways or from many other matters which I could mention?

One other point, mentioned during the Second Reading debate by the hon. Member for Epping (Mr. Finlay), concerns public libraries. He asked what benefit industry got from them. My contention is that industry gets a great deal of benefit from public libraries. In my city, in Sheffield, and in many other cities, the research libraries and the reference libraries are used almost exclusively by industry or its representatives. In that way industry gains considerably from library expenditure by the local authority.

I turn to plural rating. It was stated on Second Reading that there was no case for rerating of industry because of plural rating, but if that argument applies to industry it should be applied also to the shopkeeper. He must pay rates on his shop and on his private premises. If the Tory Party adopts that argument, it says that the whole rating burden should be placed on tenants. Let it say so openly and let us tell that to the electors during the coming municipal elections. Increased rates as well as increased rents: is that the new Tory policy?

The businessman very often lives in an area outside that of the local authority where he has his business. If he was rated solely in respect of his private residence, we should have a distortion of local authority finance much worse than we have today, because the rate payments in those cases would flow into the coffers of the suburban local authority which, generally speaking, has no heavy burdens. That would be a matter for regret.

The point made by the Minister on Second Reading, that we must wait for the general review of this subject, is completely unsound. Rating is basic to local authority efficiency and should be regarded as the basis of any planned system. If the Minister does not accept that argument, there is still another one to be disposed of. What is the Minister to do about industry? Is he to say, "Industry is to continue to receive this dole and to be relieved from payments. It is to be treated generously at the expense of other ratepayers"? Surely no hon. Member will stand up and justify the continuance of such a dole and such an imposition on other ratepayers.

No section or group of ratepayers should be in a privileged position in relation to the remainder. If we can assume continuance of the rating system, then a proper rate contribution should be made by industry. When we have achieved that, let us build up our rating system. If industry needs relief, it should get it openly from the central Government and not, as at present, through the local authorities.

My colleagues and I who represent the City of Birmingham have received letters from our local authority expressing support for the Bill and taking pleasure in the fact that the Bill has reached its Third Reading. I am certain that many other hon. Members have received similar communications from their local authorities. That is significant, because in local authorities, as in this House, there are contending opinions; but there is virtual unanimity on the question of the rerating of industry.

The various local government associations have on many occasions expressed their wish that this abolition should be brought about. They regard this de-rating, quite properly, as an injustice that should be ended. They look at the loss of valuable income—income which is lost even when we take into account the old block grant under the 1929 Act and the equalisation grant under the 1948 Act. That opinion, which has been and which is being expressed by local authorities, is shared to a very large degree by the citizens whom those local authorities represent. Householders, shopkeepers, members of chambers of commerce and the like have also protested, and protested strongly, against the continuance of derating.

I do not want to give many figures this morning—I gave a number on Second Reading—but perhaps the House will bear with me while I give one or two to illustrate what this loss of income means to my own city, Birmingham. There, we have six firms—and I can give the names if they are required—whose names are well known to every hon. Member of this House. They are household names. Under derating, those six firms are, between them, relieved to the extent of £600,000 of rateable value each year. Industry in Birmingham will this year pay on £1,149,000, whereas if it were fully rated it would pay on £5,290,000, Birmingham, therefore, is losing approximately £3,800,000 of rateable value, and if that sum were brought into account in the current financial year we in Birmingham could reduce our rates by no less than 3s. 7d. in the £.

My last point has been touched upon by my hon. Friend the Member for Islington, East but I think it is worth emphasising. The chief concern is not the financial aspect as such but the general desire for good local government. The hon. Member for Epping stated this point quite well, I thought, in the Second Reading debate. He then said: What is the kind of local government that we desire? Do we wish it to be dominated from the centre, or do we think that we should have a local government organisation in which the words 'local' and 'government' are underlined and given some power? He went on to say: There is too much central control in financial matters, and that leads to an unhealthy degree of reliance upon the apron strings of Whitehall"—[OFFICIAL REPORT, 16th March, 1956; Vol. 550, c. 720–721.] I agree completely with those sentiments. It is true that local government over the last few years has been extremely frustrated by this too-close control by Whitehall.

Mr. John C. Bidgood (Bury and Radcliffe)

The hon. Member does not point out the main reason for that, which is the "Forge the Link with Whitehall" campaign which he and his friends started.

Mr. George Thomas (Cardiff, West)

Never heard of it.

Mr. Wheeldon

I think that the hon. Gentleman opposite will have to go further back than the pamphlet which he quotes if he is to state the case against Whitehall control of local authorities. This is not a recent matter, of course; it goes back over a good many years. The only point I make is that in recent years this control has become even more frustrating than it was before.

Perhaps I may quote the opinion of someone who is not a politician but a well-known figure in local government finance—Sir James Lythgoe, former Treasurer of the City of Manchester. He has said: The extent of this dependence in the case of many local authorities, where the effect of derating is severe, has reached alarming proportions. My final quotation is from a statement made by the Association of Municipal Corporations, which reads: The essence of effective local government is that each area shall be free within reasonably wide limits to give rein to its local genius, to make its own experiments and to bear the consequences of its own decisions. Every fresh narrowing of its local resources makes it more dependent upon Government subventions, more subject to detailed control from the centre and less individual in its dealings with its own inhabitants. Vigorous local government can only exist on a basis of adequate local finances. The enactment of this Bill would provide local authorities with a much better opportunity for that independence which most local authority people would say is highly desirable at present, and which is absolutely necessary, in my opinion, if we are to restore the vitality of local government. I regard local government, as I think do all hon. Members, as a most effective instrument in the maintaining of that idea of democracy which we have in this country. Over the years it has done excellent work in the maintenance of our democratic system. The passing of this Bill would help local authorities very considerably. It would provide them with additional finance and would also remove, or help to remove, that sense of frustration from which they suffer at the present time.

Much of the interference and control from Whitehall arises from the fact that a considerable amount—indeed, virtually all of the expenditure of local authorities is controlled by very tightly-drawn strings indeed. If, from that point of view alone, we can do something to help local authorities, we ought to do it, and I believe that the passing of this Bill will be a good start in that direction.

12.28 p.m.

Mr. Kenneth Thompson (Liverpool, Walton)

I beg to move, to leave out "now" and at the end of the Question to add "upon this day six months".

I know that this will deceive no hon. Member into thinking that we will come back refreshed and invigorated by the Summer Recess to put the Bill on the Statute Book with wild enthusiasm, the Amendment being, of course, the Parliamentary device for rejecting the Bill on its Third Reading.

Mr. W. T. Proctor (Eccles)

On a point of order, Mr. Speaker. Is it in accordance with the procedure of this House to seek to move such an Amendment without notice?

Mr. Speaker

This Amendment does not require notice.

Mr. G. R. Mitchison (Kettering)

Further to that point of order. Is this a manuscript Amendment, Sir?

Mr. Speaker

No, the Amendment can be moved verbally.

Mr. K. Thompson

I was confident, Mr. Speaker, that you would not allow any breach of orders to have reached the stage I had reached when I was interrupted.

I hope it will not seem inconsistent if, having moved this Amendment, I now congratulate the hon. Member for Acton (Mr. Sparks) first for having introduced the Bill, and, secondly, for having got it as far as this stage. There is no one who is interested in the well-being of local government—and I think we all share the views of the hon. Member for Small Heath (Mr. Wheeldon)—who has not often given consideration to this question of the rating or derating of industry.

It is equally true that no one who has given any consideration to this question can have failed to realise how confused and how confounding are the arguments for and against rerating industrial hereditaments.

Mr. Charles Royle (Salford, West)

Will the hon. Gentleman permit me—

Mr. Thompson

I would have thought it would have been more convenient to the House if I were allowed to speak without interruption.

The arguments dealing with this subject are both confused and confusing. To imagine, as the hon. Member for Acton did, and as apparently many of his hon. Friends still do, that we can put right all the problems of local authority finance which have been referred to by the hon. Member for Islington, East (Mr. E. Fletcher)—[HON. MEMBERS: "Oh."]—if hon. Members will listen to what I have to say before indulging in extravagant interruptions, it will perhaps be of benefit to the general debate.

To imagine that by dealing with this single question of the reintroduction of rating of industrial hereditaments we shall solve the financial problems of local authorities or contribute materially towards restoring the independence of local authorities, is to make a great mistake. It is precisely because the Labour Party, when it had responsibility from 1945 to 1951, realised how complicated this problem was that it did nothing about it, and it is because we also realise how difficult it is that we are reluctant now to rush or to be driven into hasty and what could turn out to be ill-considered actions.

We and all who are concerned with local government know that there are very grave financial problems facing local authorities at present. It is not surprising that the town clerk to whom the hon. Member for Small Heath referred should have written to him asking him to support this Bill. It is not surprising that the Association of Municipal Corporations, of which I have the great honour to be a vice-president, should have written to some hon. Members of the House asking them to support the Bill. Of course, any accretion of locally garnered finance to a local authority would represent some degree of immediate relief and would probably give the local authority some sense of being less dependent on central government financial aid. But that is surely a temporary, local and specialised matter. The real problems of local authorities today will not be solved, nor will they be very materially affected, by the passing of this Bill.

We ought to get our proportions right. In a total expenditure by local authorities of well over £1,000 million, we are simply dealing here with a sum of less than £40 million. Nobody who knows anything whatever about the problems of local government will delude himself satisfactorily that that small sum in relation to the large total amount involved represents any real solution to the problems of local authorities.

Because we realise this, and because we have sought to find a proper solution to as many of the problems of local government as we can, my right hon. Friend the Minister some time ago announced that he is carrying out a complete and wide-ranging review of the problems both of local government finance and of the structure and functions of local authorities generally.

It would be wrong for me to go too far along the lines which the hon. Member for Islington, East pursued in discussing whether the new system of technological education should be financed wholly by the local authority, or by part-local and part-national finance, or wholly out of national funds. But if that problem exercises his mind in relation to technological education, it ought properly to exercise his mind in relation to a good many other local authority activities as well. He ought also to be concerned not only with who should pay for these operations, but who should exercise control over the functions.

Mr. E. Fletcher

It does.

Mr. Thompson

I am glad to know that it does. It is a proper mental exercise for him. What conclusion has he reached from these matters? He was good enough to inform the House that he had reached no conclusion at all about it, or that he would possibly take a certain line of action, but he was prepared to rush in with no conclusion about how this part of local authority finance should be dealt with, although it is only one small part of a very complicated and interlocked pattern of local authority finance and functions. The same arguments apply over the whole field to which my right hon. Friend and the Parliamentary Secretary are at present devoting their energies.

I hope that the House will reject this Bill at this stage, because it is out of time and would tend to prejudge many very important and far-ranging matters upon which the Ministry is already engaged and to which this House ought to be giving its well-informed attention when all the factors to be considered are available.

We cannot consider the effect of the re-rating of industry without considering what have already been called its consequential effects. Probably the most contentious and difficult of these is the effect of rerating of industry upon the distribution of the main Exchequer grants. There will be a good deal of difference of opinion both between the two sides of the House and, I imagine, among Members on each side, about how the present Exchequer equalisation grant is distributed. I myself hold the view that the present basis of distributing the grant, according to a system related to average rateable value rated per head of the population, is wrong and unfair.

I should have thought that I would have got a good deal of support from the hon. Members for the various Birmingham constituencies on that point. Those hon. Members have now discovered that "all is not gold that glisters," that the £1,600,000 a year that came to them before revaluation has now disappeared. I very much hope that they will throw their weight into the arguments which have been advanced by those who want to see the grant put on a sounder basis. We would have welcomed them on our side in that argument, before that revaluation opened their eyes to the distortions—

Mr. F. Blackburn (Stalybridge and Hyde)

Why did not the party opposite do something about it?

Mr. Thompson

I only mention it. I only want to show how complicated and difficult are all these questions of local authority finance, in support of my case on the question whether we should re-rate industry and whether it should be done as an isolated act. It certainly should not be done carrying with it the apologia with which the hon. Member for Islington, East began his speech when he said that this is only chipping at the problem, that it does not apply to agriculture or to Scotland, for very good reasons, as we know. [HON. MEMBERS: "It does apply to Scotland."] The reason that it cannot properly apply to Scotland is that Scotland is not yet properly rerated. Until that is done, the whole question of the basis on which grants are to be distributed falls to the ground. I very much hope that the House will support my Amendment.

12.39 p.m.

Mr. Geoffrey Rippon (Norwich, South)

I beg to second the Amendment.

I am sure the promoters of the Bill recognise that they have had a very good run for their money, and I am sure it has been a much better run than they seriously expected when they first introduced the Measure. I associate myself entirely with what has been said in this debate and on Second Reading on the subject of the valuable contribution that has been made by the hon. Member for Acton (Mr. Sparks) and his hon. Friends in raising this matter and in allowing it to be discussed in the way that it has. He has certainly done a great service in showing the great strength of feeling which undoubtedly exists on this subject of derating. I very much hope that he and his hon. Friends will be content to leave it at that for the time being.

I do not want to repeat, as the hon. Member for Islington, East (Mr. E. Fletcher) has done, all the arguments raised on Second Reading. I felt then that all that need be said, and indeed more, about derating was said on that occasion. I should like, however, to take up the point raised by the hon. Member for Small Heath (Mr. Wheeldon) when he said that there was virtual unanimity in local authority circles on this matter. I would suggest that that is not entirely true. For example, the Local Government Chronicle, in its issue of 10th March, said: It has been apparent for some time that the full relief given by the 1929 Act was working inequitably, but we doubt whether it can be confidently argued that full liability should be imposed. Apart altogether from the argument about the merits or otherwise of derating in present circumstances, I am sure that the hon. Member for Acton and his supporters must realise as well as anyone that an intolerable situation would be created this year if Parliament were to pass this Measure at the present time in its present form. As Lord Chief Justice Holt prophetically observed in 1701, an Act of Parliament can do no wrong although it can do some things which look pretty odd. I would certainly say that that observation would apply to this Bill if it were passed at the present time.

As it stands, it is anomalous and impracticable. First of all, it will be noted that, although it is a deceptively simple one-Clause Bill, it leaves completely undefined the operation of the repeal, the measures that are required to implement it and the rights of the ratepayers which would have to be considered under it. It makes none of the consequential amendments in the existing law that we would expect in a Measure of this kind. It leaves on the Statute Book what would become unnecessary, useless and complicated definition provisions on industrial and freight transport hereditaments, and the valuation officers would still be required to apportion the net annual value of these premises and put them in a separate part of the valuation list.

Apart from these factors, the reason why, above all, I support this Amendment is that if the Bill were passed, as hon. Members opposite know perfectly well, it would this year reduce the finances of local authorities to a state of nothing less than absolute chaos. [HON. MEMBERS: "No."] Oh, yes, it would, because the valuation lists now in force and upon which current rates have been made would have to be altered, and altered piecemeal, by proposals made by the valuation officers or local authorities on the ratepayers in relation to each individual hereditament. It is not simply a case of making a proposal to increase the rateable value of the premises in that list to provide for the payment of full rates on the basis of the present assessment. In every case, as hon. Members opposite know, the gross values would have to be reassessed because the rental value of premises which are fully rated is not as high on those premises as it is if they are derated. Whenever there was any alteration in the present list in respect of which a proposal was made in accordance with this Bill, the individual occupier would come forward and make application for a proportionate reduction in the rateable value. I am sure that is a very serious practical objection which hon. Members opposite must appreciate.

There is the other objection which the hon. Member for Islington, East brushed aside, but which he knows, from his great experience of local government finance, cannot in fact be brushed aside except for purposes perhaps of a local election to which some hon. Members opposite significantly referred. As my hon. Friend the Member for Walton (Mr. K. Thompson) has said, the Exchequer equalisation grant and the education main grant would have to be recalculated and redistributed in accordance with the amendments in their rateable value. That would have to be done at a time when, as hon. Members opposite are perfectly well aware, both formulae have to be reviewed this year. The result of that recalculation and redistribution in present circumstances—and I hope that there will be some amendment to these formulae this year—would mean many authorities now clamouring for the abolition of de-rating would lose much of the benefit which they have been led to expect.

As the hon. Member for Small Heath said, one can perhaps best put one's argument by reference to the views of the local authorities with which one is best acquainted. I would say that the responsible local authority view on this matter is the one which has been adopted by the London County Council, which has decided to take no action in support of this Bill, because of the timing and because of the immediate practical difficulties. That is without prejudging in any way the ultimate settlement of this question, in which we on both sides of the House have a great deal of interest. I think that the reason which led the London County Council to this view may be of interest to hon. Members opposite, because London is one of the areas which, rightly or wrongly, under the present system receives no Exchequer equalisation grant at all and, therefore, might be expected to be one of the local authority areas which would benefit most from the terms of this Bill because there would not be any deduction from its Exchequer equalisation grant.

Section 68 of the Local Government Act, 1929, which this Bill proposes to repeal, provides that the rateable value of industrial premises should be one-quarter of the net annual value. In London, the net annual value of property is approximately £114½ million. The rateable value at the present time, with industry derated, is £104,900,000. If this Bill became law and if it were—and this is the important thing—to increase the rateable value to the net annual value, we would have in London this year a rate of 6s. 1½d. instead of 6s. 8d., but in spite of the obvious attractions of this to any local authority the London County Council has decided not to support the Bill for four reasons.

Mr. Sparks (Acton)

I have had a letter from the Standing Joint Committee of the Metropolitan Boroughs of London, which includes all the London local authorities, which has advised me that it supports this Bill and hopes that it will be passed.

Mr. Rippon

I am not talking about the Metropolitan Boroughs Standing Joint Committee but about the views expressed by the L.C.C.

Mr. C. W. Gibson (Clapham)

The L.C.C. has made no decisions of any kind on the Bill. What the Finance and the General Purposes Committees decided was that it would make no representations pending the inquiry which was promised by the Government.

Mr. Rippon

I am very much obliged to the hon. Member, who always makes most helpful and valuable interventions in these debates.

I want to indicate the reasons which led the L.C.C., through its committees, to that conclusion. The first reason is that the removal of derating would have a depressing effect on rental values of industrial and freight transport premises and, for this reason, the present net annual value would not be maintained. That links up with the point that I was making about the fact that the introduction of the Bill at this time, involving as it does the making of fresh proposals in respect of each individual property, would inevitably involve the occupier in making his own proposals for the reduction in the assessment of his property upon which the net annual value would not be maintained at the present figure.

Secondly, the L.C.C. takes the view that the increase in rateable value would, in the absence of any adjustment of the grant formula, result in a reduction of some £500,000 in the education grant.

Thirdly, the London equalisation scheme at present contains a weighting in respect of industrial and transport premises, in that the weighted population of a borough is the population multiplied by the net annual value and divided by the rateable value. This weighting would disappear if the Bill became law and, presumably, some revision of the scheme would be necessary. That, of course, will apply to other counties also, which will have to consider the recalculation and redistribution not only of the Exchequer grant but of the inter-county grants also.

Fourthly the Finance and the General Purposes Committees of the London County Council, as the hon. Member for Clapham so helpfully pointed out, have taken the view that derating is only one of a number of related issues and that it would be inappropriate to consider it except as part of a comprehensive review of local authority finance.

Mrs. Lena Jeger (Holborn and St. Pancras, South)

Surely, the London County Council is the least significant authority that it is possible to quote in this connection. Would the hon. Member, with his experience of London local government, not agree that all that the L.C.C. does is to send a subvention out to the Metropolitan boroughs, who are, in fact, the real rating authorities in London, and that, therefore, the views of the Metropolitan Boroughs Standing Joint Committee are of infinitely greater importance than those of the London County Council?

Mr. Rippon

I am amazed to hear that from somebody who has been a member of the London County Council. I hope that the hon. Lady is not referring to the L.C.C.'s political complexion when she refers to its insignificance. I should not have thought that the activities of the L.C.C. were insignificant in relation to London local government or that the people of London were unconcerned in the fact that it spends £120 million a year. Whether it raises that money through the Metropolitan boroughs or not, it is the authority which is responsible for the expenditure, and it has an interest in the way in which it is collected. That is a sufficient illustration of my point concerning responsible local authority opinion which recognises—hon. Members opposite know it perfectly well—that the Bill cannot be brought into force at this time without causing considerable difficulty.

Mr. G. R. Mitchison (Kettering)

This is very interesting. Can the hon. Member give any idea of the views of Norwich? That, and not London, is the place he represents.

Mr. Rippon

I am sure that the local authority in Norwich, which is a very responsible body, fully appreciates the practical difficulties of bringing the Bill into operation at the present time. [An HON. MEMBER: "We all do."] I am not suggesting in the case either of London or of Norwich that they do not have a considerable interest in the ultimate settlement of this problem.

Mr. Mitchison

What are the views of Norwich?

Mr. Rippon

The hon. Member for Islington, East and his hon. Friend the Member for Small Heath have criticised the Government for alleged failure to amend the basis of the Exchequer equalisation grant and to consider the question of derating at an earlier date so as to coincide with revaluation. They know perfectly well that that is an impractical suggestion.

The responsible view on this has been expressed in the 12th April, 1956, issue of Rating and Income Tax, which, I think hon. Members will appreciate, takes an objective view of these matters of local government finance. It states: Finally, the Government is criticised for its failure to have a plan for reforming local authority finances ready to coincide with the revaluation. Unfortunately, such a plan cannot be produced in vacuo, and it would have been undesirable to produce one already rendered partly obsolete by the very valuation on which alone any consideration of the incidence of Exchequer equalisation grants could be based. The consequential effects of the delay on business premises may be unhappy, but that should not have been avoided at the expense of a seriously defective scheme for overhauling local finances. In all the circumstances, I hope that good sense will prevail on this matter and that the promoters of the Bill, having achieved what, we all appreciate, is their primary object of raising the matter and showing the strength of feeling among local authorities about it, will now agree to the Amendment in the light of the categorical assurances which the Government have given, and which, I have no doubt, will be reiterated today, that the comprehensive review of local government finance is proceeding as quickly as possible and that the whole question of derating will be considered as an integral part of that review. I hope that hon. Members opposite will be satisfied with that assurance and that they will not create the impression in the country that it would be possible to implement the Bill at this time without serious consequences.

12.56 p.m.

Mr. William Stones (Consett)

Being pleased to be given this opportunity of speaking on behalf of the vast majority of people in my constituency, I shall respond by making my remarks as brief as possible.

Quite different points of view have been expressed, not only in this House but outside, on the merits and principles contained in the Bill. I feel convinced that the view is widely held that if ever there was a real need for the relief of industry from a heavy burden of rates when the derating Act of 1929 was passed, it no longer exists.

During an industrial depression one could feel, as Members of the House felt in 1929, that everything that could be done for industry ought to be done; and so the remission of 75 per cent. of the industrial hereditaments by that Act was possibly justified. However, so far as one can ascertain from recourse to the writings of experts in these matters, industry is now prosperous. The present-day market value of stocks and shares seems to substantiate this view.

I think, therefore, that now that industry is in a good position financially, it is an appropriate time to call upon the owners of industry to pay their proper share in the way of rates and that the full rateable value of their hereditaments should be taken into account by the local authorities when making their rating demands.

Some local authorities are hit more hard than others by the Derating Act. I wish to draw the attention of the House to the position only of local authorities in my constituency, in which there are two urban districts, Stanley and Consett. In the case of the Stanley Urban District Council, the net annual value of all industrial hereditaments amounts to £122,759. This amount is reduced by derating to £30,681. Stanley, therefore, loses £92,078 in rateable value. I do not have the figures for the Consett Urban District on the new assessments, but I can quote the figures under the old assessments prior to the recent revaluation. In this case, the net annual value of industrial hereditaments was £116,782, and there has been a reduction of £87,399 by derating. Despite what has been said by hon. Members opposite about the possible effects of the Bill, I can say, on behalf of the Consett and Stanley Urban District Councils, that we could do very nicely with the additional rateable value which the Bill would provide if it became law.

I know that my hon. Friends have advanced reasons why we need additional rateable value, and I have no desire to bore hon. Members by reiterating them. It is true, however, that we believe we should derive a lot of benefit if the Bill were passed. I know that adjustments of the Exchequer grant would certainly be made, but we still believe that we should benefit.

Apart from the financial aspects of the situation, we should apply our minds to what appears to be a gross injustice to many owners and occupiers of shops and other trading establishments, who are called upon to pay their full share while owners of industry are favourably treated. I have attended meetings at which responsible representatives of trading organisations and other establishments in my constituency have said that they have been very seriously affected by the new Rating and Valuation Act. At those meetings very decided views were expressed with regard to the unfairness which resulted from the continued operation of the 1929 Act—and I believe that those views are justified. On behalf of these people, who are smarting under a sense of injustice, I appeal to hon. Members to give the utmost support to the Bill.

1.3 p.m.

Mr. Harold Gurden (Birmingham, Selly Oak)

Having heard the points put by hon. Members on both sides of the House, I rise to support the Amendment. I do so not because I do not agree with the principle of the Bill; indeed, I do. As the hon. Member for Small Heath (Mr. Wheeldon) has said, Birmingham is particularly interested in this matter and has made representations to all hon. Members who represent Birmingham constituencies. As has been said by some of my hon. Friends, however, it would be extremely dangerous to deal with this matter quite separately from all the other serious matters involved in local authority rating, and many other problems of local authorities.

I agree almost but not quite entirely with what the hon. Member for Small Heath has said. He was reasonably fair in supporting the Bill, but a little unfair in not going deeply into the matter of other local authority finance, especially the Exchequer grant. Birmingham has already suffered through the loss of that grant.

The other point which I question is the hon. Member's assertion that if the Bill became effective there would be a reduction in rate of about 3s. 7d. in the £ in the case of other ratepayers in Birmingham. The hon. Member knew quite well that at the conference which took place here with the Birmingham civic authorities it was stated quite clearly by them that there just was not enough money flowing into the rate fund in Birmingham and that they were looking for additional sources of revenue.

I have been a member of that local authority for the past ten years and am therefore particularly concerned in the matter. There is a strong group of members on the city council which is not quite strong enough yet to determine how much the rate should be in Birmingham, and whether any of this 3s. 7d. in the £, which would flow from an adjustment in industrial rating, should go back to the ratepayers. At least two city councillors have said that the rate in Birmingham should be considerably higher than it is at the moment. They think that it should be 20s. in the £—and they are not colleagues of mine. One councillor has resigned from his party because he thinks that the rate should be higher.

It is quite clear that in the case of a very large city such as Birmingham there is a considerable risk that some of the extra money which would be available if the Bill were passed would be used to increase local authority expenditure. The question is whether more money is really necessary. None of us who serve on local authorities can be unmindful of the fact that it is often very easy for grant-aided committees to say, "We might as well have the money; the Government will pay it out." I am not suggesting that that is always the case, or that there is a great deal of irresponsibility, but it is so easy to spend a little more money when one is informed that a Government grant of about 50 per cent. will be received.

I believe it was the right hon. Member for Ebbw Vale (Mr. Bevan) who said that it was very difficult to put the eggs back into their shells. In fact I am sure he said that, but I am not sure whether it was in connection with this matter, although I believe that it was. It is a great compliment to my right hon. Friend that the party opposite thinks that there is something which their Government could not do but my right hon. Friend is capable of doing. Surely we must allow my right hon. Friend to do it in his own time. Many of us on this side of the House have considerable confidence in him. We believe that no time will be wasted in considering the matter in all its aspects. I will not go into that at the moment, because the points have been covered already and we know how necessary it is to consider all aspects of local authority rating in connection with this matter.

I am particularly concerned about the nationalised industries. To what extent are they to be rated? To what extent in the future will they pay rates? We must never forget that we allow the nationalised industries to compete with the very industries which the Bill proposes to rate in full. In my opinion, it would be much fairer to wait for the complete review to see to what extent we ought to rate the nationalised industries in comparison with other industries. They are very strong competitors with some of the industries in Birmingham. I want to know to what extent they will have to bear their share of the burden.

Mr. J. T. Price (Westhoughton)

I do not know why the hon. Member is introducing this red herring, since under the terms of the Bill the nationalised industries will be rated on exactly the same basis as private industries, just as they are now.

Mr. Gurden

Sufficient has been said, and I have read sufficient, to convince me that I need to hear a lot more on the subject before I can believe what the hon. Member has said. I am not at all satisfied that the nationalised industries would willingly bear their burden of the full rates.

Mr. J. A. Sparks

Nothing in the Bill affects the rating of the nationalised industries. It does not apply to them.

Mr. Gurden

Many other factors will have to be taken into consideration in the review which is taking place before we know for certain what the nationalised industries will pay. If it is a fact that they will be placed on complete parity with other industries, I shall be satisfied that they are on a fair and competitive basis.

Birmingham industries will be affected seriously if they are called upon to pay the full rate. Let us not hide the fact that derating would affect the cost of living not only in Birmingham but all over the country. Moreover, if we allow the authorities to have the full rate from industrial rating, that must seriously affect the Exchequer. The money which industries paid in rates would be reflected in their taxable profits. If there is to be an addition to the cost of living, should the Bill be passed, that is a serious item.

Hon. Members opposite have said that the derating of industry forms a subsidy, but we must not forget that de-renting, if we may call it that, is a subsidy for the other ratepayers. The industrial ratepayer is not the only ratepayer receiving a subsidy.

I am fully confident that my right hon. Friend is reviewing this matter with no waste of time and I should therefore be quite satisfied to wait for six months in the certain knowledge that in principle my right hon. Friend would not disagree entirely with the Bill. I think it would be better to await the review before reaching the decision whether or not industry should pay the full amount.

1.14 p.m.

Miss Elaine Burton (Coventry, South)

If I understood the hon. Member for Selly Oak (Mr. Gurden) aright, he feared that if the Bill were passed it would have the effect of sending the cost of living still higher. I do not remember the exact figure, but I recall reading in the London Evening Standard, towards the end of last week, two letters from customers who had been to shops to buy some shoes. One was told that the cost of those shoes was to rise by 12s. a pair in the immediate future.

That increase was not due to an increase in the cost of labour or the cost of materials, but simply and solely due to the revaluation rates which those shops now had to meet and which, as is so often the case, was being passed entirely to the consumer. The business was not attempting to carry the increase at all. I do not know whether the hon. Member has thought of that aspect. Hon. Members on this side of the House do not take the view that if industry pays its fair share of rating, it should, therefore, have the right to pass all the additional cost on to the consumer, as is so often done today.

In his last few sentences the hon. Member for Norwich, South (Mr. Rippon) spoke about good sense, and hoped that we on this side of the House would have the good sense to leave the Bill where it is. The hon. Member obviously showed remarkably good sense from his point of view in not telling us what decision his own local authority has taken on this matter.

Mr. Rippon

I raised the position of Norwich in the Second Reading debate, showing the very considerable benefit which Norwich would derive from the abolition of derating, particularly in the matter of the Exchequer equalisation grant. I hope I then expressed the views of Norwich about derating. All I was saying this morning was that Norwich, being a very responsible although Socialist-controlled authority, would, I am sure, appreciate the practical difficulties of implementing the Bill at this time.

Miss Burton

I do not wish to be rude, but I do not know whether the hon. Member belongs to the legal profession; I asked a simple question as a lay person. I simply asked him whether the local authority in Norwich supports the Bill or does not support the Bill, and I will gladly give way to enable him to answer that question.

Mr. Rippon

I thought I made it clear that the Corporation of Norwich, like most members of the Association of Municipal Corporations and other bodies, have for a long time in principle urged the abolition of derating—

Mr. J. T. Price

And, therefore, support this Bill?

Mr. Rippon

And supported the principle of the Bill.

Miss Burton

I gather that in layman's language the answer is, "Yes, they support the Bill." In passing, I might say that we should get on a lot quicker if we had fewer lawyers in the House.

I congratulate my hon. Friend the Member for Acton (Mr. Sparks) on what he has achieved with the Bill. If I may return to the hon. Member for Norwich, he was surprised that my hon. Friend had got his Bill so far. Of course, it was not only due to superb generalship, which far out-weighed that of hon. Members opposite at the various stages of the Bill; it was also due to the fact that local authorities in the country want the Bill. Furthermore, as the hon. Member knows, there has been no great desire on the part of hon. Members opposite to have to vote against the Bill. I think he appreciated that.

An hon. Member opposite—I do not know whether it was the hon. Member for Norwich, South, but I think it was not—quoted from a local authority magazine in an effort to prove that the local authorities did not want this Measure. From what I have been able to find out, I should say that the Association of Municipal Corporations and all the associations which speak for local authorities are with us on this side of the House in the effort to abolish the derating provisions of the 1929 Act. Certainly, I have had no information to the conrary. Therefore, I do not think it is at all strange that the Bill has progressed successfully as far as it has, and I hope it will reach the Statute Book.

I referred just now to the effect on a shoe-shop of the recent revaluations. I do not propose to give examples of how other shops are affected. There is not any doubt, however, that the position of the shopkeepers is today most inequitable in view of the additional burdens being put upon them, burdens which, as every hon. Member knows, would be considerably smaller if industry paid its full share of the rates. There is no doubt about that.

We in Coventry have lost the benefit of an equalisation grant of £193,000 as a result of revaluation. I have here some figures which show the rateable value lost to the City of Coventry, and I think it is significant that this has increased so much in the last decade. The loss was 12 per cent. of the remaining rateable value of the City of Coventry in 1945, and now it is 21 per cent. If we bring that to cash instead of percentages we find that during the ten years between 1945 and 1955 the rateable value lost by the derating of industry is £3,649,000. Some hon. Members opposite may not think that very much, but I take the view that £3½ million is a lot of money for a city to lose. The figure in 1956 alone, which relates to the new values, is £831,000.

The Minister has had a letter from the Town Clerk, on behalf of the City of Coventry Corporation telling him that if industrial derating were abolished the Coventry rate would be 12s. 11d. instead of 16s. 3d., because industry's full share would be £829,500.

The hon. Member for Norwich, South, said that local authorities' finances would be in chaos if the Bill were passed. We in Coventry have no fear of being in any chaos whatsoever. We think that the passing of the Bill would result in a much more equitable sharing of the burdens.

Mr. Rippon

I was not referring to chaos in the long term, but to the immediate practical difficulties of making alterations in the valuation lists.

Miss Burton

My own local authority does not feel that it would be in any immediate practical difficulties.

Mr. Sparks

No alterations would be necessary at all.

Several Hon Members

rose—

Miss Burton

Hon. Members can answer my hon. Friend the Member for Acton if they catch the eye of the Chair. I prefer to rely on what my hon. Friend says from his great knowledge, backed by my own local authority, which does not feel it would have any difficulty whatsoever.

Mr. Sparks

The local authorities, for their new valuation lists, have already assessed industries at their maximum rateable value. The amount which appears in the White Paper is 25 per cent. of the assessment. The local authorities have the full assessments in their rate books already.

Mr. Rippon

Would the hon. Gentleman not agree with what I said, that the rateable values which are now written in the valuation lists are values assuming derating, and that if industries were rerated the rateable values would have to be revised?

Mr. Sparks

Quite incorrect.

Mr. Rippon

It is not.

Mr. Sparks

It is.

Miss Burton

If I may be allowed to continue, I would remind the House that the Government claim that they have been responsible for a good deal of factory extension since 1950, and in cities like Coventry there has been a good deal, but in any district where normal extensions and developments occur there are parcels of properties going up which rank for derating.

Coventry takes the view that this is a struggle between the local authorities on the one hand and Whitehall on the other, and it believes that this is a matter of local autonomy. I thought that that was a view supported by the party opposite for a good many years. As the Parliamentary Secretary will know, the case advanced by the Association of Municipal Corporations is based on the principle of local autonomy.

There are five points which arise, and I shall state them only briefly because I do not want to take too much of the time of the House. First, we in Coventry know that the derating provisions were intended, first, to give relief to industry and to assist the recovery of industry, but we are doubtful whether, even in 1929, the benefit to individual firms was as great as was hoped by those who introduced derating. However, we are sure that circumstances have changed so much that it is extremely difficult to justify the existing relief.

Secondly, if, in spite of these changed conditions, the Government still consider it necessary as a matter of national policy that special assistance should be given to industries, we believe that the relief should be given direct from the national Exchequer and not indirectly in the form of a concealed subsidy at the expense of the local rating system. I should have thought that that would have been acceptable to every hon. Member.

Thirdly, my local authority feels that derating reduces the incentive, of which we hear so much from the party opposite, to the representatives of industry to make their full contribution to the management of local affairs.

Fourthly, although the Government grants to local authorities were introduced in 1929 as a measure of compensation for losses due to derating, changes in the grant system have resulted in many local authorities, of which Coventry is one, ceasing to receive grant although they still suffer losses due to derating, as I said at the beginning.

Fifthly, we feel that the grant to local authorities for loss of rateable resources due to derating, limited as it is, increases the dependence of those authorities upon the central Government for income which is essential for the effective carrying on of local services. Furthermore, local authority officials believe that the system of grants-in-aid is administratively expensive.

I had always believed that it was the policy of the Conservative Party that local government should be local. [HON. MEMBERS: "Hear, hear."] I am very glad that hon. Members opposite agree with me, and I hope that they will uphold their belief in the Division Lobby. Local authorities, in Coventry and elsewhere, feel they should be free to raise this money by rating, rather than that they should be beholden to the Treasury. We believe that there is no other single step by which essential additional local revenue can be more quickly and easily found for local authorities, and I hope that the House will today give the Bill its Third Reading.

1.28 p.m.

Mr. A. E. Cooper (Ilford, South)

A large part of the speech of the hon. Lady the Member for Coventry, South (Miss Burton) was devoted to the problems of Coventry, and I hope she will acquit me of discourtesy if I do not attempt to answer the questions she raised, but—

Mr. Stan Awbery (Bristol, Central)

The hon. Member will give the opinion of his own constituency.

Mr. Cooper

The hon. Member suggests that I should give my own division's opinions. We shall come to that in good time.

The revaluation which has taken place has undoubtedly caused a great number of problems and has revived the problem of the rerating of industry to an extent which might not have been possible without revaluation. Shopkeepers have been particularly severely hit by the new proposals, and, undoubtedly, are attracted by the possibility of a reduction in their rate demands in consequence of the benefits which might arise from the rerating of industry.

What we have to consider is whether, in fact, this Bill has been so thoroughly digested both by local authorities and by this House that the full implications of its proposals are fully understood. I was particularly impressed by one figure used by the hon. Member for Islington, East (Mr. E. Fletcher) this morning, when he said that the amount of revenue lost to local authorities as a result of derating was about £40 million a year. I think that that was the figure he gave. I have not attempted to check it, and I simply use it as an illustration.

We all know, and the hon. Gentleman himself admitted it, that rates are a charge on profits so far as Income Tax purposes are concerned, and if industry has to find an additional £40 million in consequence of rerating, then it follows automatically that the Treasury will lose, approximately, £20 million by way of revenue from Income Tax. Obviously, the Treasury, has to protect the revenue and by virtue of this enormous loss of £20 million there would have to be additional direct or indirect taxation to cover the loss.

Mr. J. T. Price

If the hon. Gentleman is going to make out a case of that kind he must put into the equation the fact that the Treasury, though losing some revenue on account of Income Tax, will also lose the liability for the education grant and the equalisation grant. Let us, therefore, have all the sums in proportion.

Mr. Cooper

I suffer under the disability that I cannot say everything at once. If I am permitted to make my speech in some sort of order I shall cover the point which the hon. Gentleman raises. In fact, he makes the very point which really destroys the case for the Bill, which is that we cannot deal with the problem piecemeal. We have to deal with the problem of local government finance in its entirety, and it is because I believe that to be so that I shall vote against the Bill this afternoon, notwithstanding the fact that my own local authority has asked me to support it.

A fortnight before polling day is a propitious moment for the hon. Member for Acton (Mr. Sparks) to bring this Bill to the House for Third Reading, and I have no doubt at all that if it is rejected today the Labour Party will attempt to make the greatest amount of political capital out of it.

Mr. Awbery

Will the hon. Member?

Mr. Cooper

Consequently, it behoves us to say quite frankly why we oppose the Bill.

My hon. Friend the Member for Norwich, South (Mr. Rippon) quoted a paragraph from the Report of the General Purposes Committee of the London County Council which, I think, gives a very fair appreciation of the problem at the present time. It goes to show that even a strongly Socialist controlled council, when it really examines the proposals or the implications of this Bill, realises that "all that glisters is not gold." It is not without significance that the London County Council has not sought to bring any pressure on this House through its Members to support this Bill.

Of course, individual Members are supporting it because I have no doubt that they can see some electoral advantage in doing so at the present time. It is very easy at election times to persuade uniformed opinion about the merits or demerits of such a proposal, and it is very easy at the present time to hold out to a local authority and to the ratepayers who are smarting under what appear to be excessive revaluations the prospect of a reduction in rates if only this Bill be enacted.

Mr. Willis

Because of increased expenditure caused by the Government.

Mr. Cooper

Over the last few weeks a number of local authorities appear to have contracted out of the national desire for economy, and whereas one had the right to expect when properties were increased in value that there would be a very substantial reduction in rates, in fact, throughout the whole country, there have been very substantial increases in rates.

Mr. Willis

It is Government policy.

Mr. Cooper

Not only Government policy; in many cases it has been wanton extravagance.

It may well be that the present situation will mark an important turning point in local government. We may even find a resuscitation of ratepayers' associations who will snap at the heels of members of councils to see that they do not spend money extravagantly as they have been doing over the past years. However, I am not concerned with any of those things at the present time. I am concerned only with the Bill which we are discussing.

In spite of what the hon. Member for Acton says, there will be confusion in local authority offices as a result of the rerating of industry at the present time. There is no doubt about that.

Mr. Sparks

No.

Mr. Cooper

When the hon. Gentleman makes his speech later today he will have to prove to the House that there will be no such confusion. I am advised by local authorities that there will be confusion, and that there will be difficulties. But, of course, with the prospect of substantial new revenue coming to them, they really do not object to the difficulties which may ensue even though they all admit that there will be such difficulties.

Mr. Sparks

No, they do not.

Mr. Cooper

Even if we are not agreed on that, perhaps we can at least agree that the education and equalisation grants which have been taken into account in the current rates will have to be altered, and that, because of the re-rating of industry, will affect each area differently. It may well be that in some areas the results of rerating may not be an increase in revenue, but a decrease for the reasons which I have indicated.

Mr. Sparks

There cannot be.

Mr. Cooper

I want to say that I agree with the rerating of industry. I think that the case for it is overwhelmingly strong, and I want to see it brought into effect as quickly as possible. At the same time, I want to see it brought in correctly and in a way in which it will do the maximum amount of good. I want to see it introduced in conjunction with a measure covering the whole field of local government finance and not merely in isolation.

I will not go further into the question dealt with by my hon. Friend the Member for Norwich, South concerning the effect on gross rateable values. As a result of revaluation they will, undoubtedly, tend to be depressed because when people rent property they do so on the basis of rent and rates. If rates are high, then rents tend to come down. That is an inevitable consequence, and as a result of the rerating of industry the tendency would be to depress the gross rateable value of property, and that fact has to be taken into consideration.

The nationalised transport undertakings at the present time do not pay their full contribution, but, as a result of previous Acts of Parliament, they only pay from a pool. The future contribution of nationalised transport undertakings and of other nationalised undertakings to the revenue of local authorities must be taken into consideration. Again, I submit that this is just one more indication of the way in which the problem of local government finance must be dealt with in its entirety.

Mr. Sparks

That has nothing to do with the Bill.

Mr. Cooper

The hon. Gentleman says it has nothing to do with the Bill. Precisely; that is the whole point, and I say it is because it has nothing to do with it that this Bill ought to be rejected.

I come now to the general question of equalisation and education grants. The local authorities want more money to spend. The case made by the hon. Lady the Member for Coventry, South was that they should have more of their own money to spend in order that they should be less dependent upon the central authority. The effect of this Bill will in many cases be to put them in that position where they would have more of their own money to spend, but only because the equalisation and education grants would be varied to the extent that they would be receiving less money from the central authority.

Mr. Sparks

That cannot be right.

Mr. Cooper

There is really no point in the hon. Gentleman saying it cannot be so; that is an inevitable consequence of this Bill. If the Bill is put before the House simply to rerate industry on the basis of the repeal of the previous Act, all the consequences which I and my hon. Friends have outlined will flow from it. It is because we know that these difficultes will arise that we believe the proper thing to do is to await the Government's report on local government finance and implement the recommendations which they will make as quickly as possible.

1.38 p.m.

Mr. W. T. Proctor (Eccles)

We are dealing today with the principle of de-rating. That is what the House is to vote on, and I hope we shall not forget that when we go into the Division Lobby. The hon. Member for Ilford, South (Mr. Cooper) has just said that he accepts the principle of rerating and he wants to see it brought into operation as quickly as possible. I never knew an hon. Member who had an opportunity of achieving his desire so quickly as the hon. Gentleman; he can come with us into the Division Lobby and, since a single vote has counted for so much at times on this Bill, he may well be able to bring into being this afternoon the result he desires. How wonderful it will be for him to be able to go to his local authority and say that he has accomplished what both he and the authority wanted.

Mr. Cooper

When I said that I agreed with the rerating of industry, I added that I wanted it to be done in the proper way.

Mr. Proctor

The hon. Member will have opportunity to do it in the proper way this afternoon; this is the proper way. Excellent—once again, the hon. Gentleman will get his full desire. He must be a very happy man to have such an opportunity.

In 1929, there was a case for the de-rating of industry, and we all hoped it would have done something to mitigate the terrible scourge of unemployment. The situation today is entirely changed. In 1929, grants were given on the basis of the loss of revenue by the local authority; but, as has already been pointed out, many of these grants have now been lost to local authorities and they are now in the position of having lost by derating the income from rateable values as well as losing the grants, so that on the basis of elementary justice they are in a quite false position.

I hope we shall deal with that principle, the principle of rerating. My own two councils, Eccles and Swinton, have written to me on this subject. Indeed, I cannot recollect an occasion when opinion has been so complete and so directly expressed by all local authorities in the divisions represented here by Members of this House. It shows they are truly interested in the matter. My two councils have written to me and have asked me to be sure to be here today to vote for this Bill and give my support to my hon. Friend the Member for Acton (Mr. Sparks).

Hon. Members on the other side of the House must remember that we are a democracy, and, while I do not deny that Members of Parliament have a responsible duty to make sure that the affairs of the nation are properly conducted, they must pay attention to the opinion of the mass of the people, or else we cease altogether to be a democracy.

Who supports the Bill? The Trades Union Congress and eight million trade unionists throughout the country support it. The ratepayers—a very large body of public opinion in the country—fully support the Bill. Shopkeepers and businessmen support the Bill. I have not had a single letter from anybody in the shopkeeping business except to say, "Vote for this Bill." Businessmen who are outside the derating privileges at the present time are in favour of the Bill.

I was going to say that local authorities are absolutely unanimous in their support, but there is just a faint possibility that there is some doubt about one, I understand. Otherwise, their support is complete, as has been said. Chambers of trade throughout the country support the Bill. The Chamber of Trade in Eccles and the Chamber of Trade in Swinton have written to me saying they are in favour of the Bill. The National Chamber of Trade is in favour of the Bill.

Who is against the Bill? Where are these people? Never in the history of Private Members' Bills has a Bill been supported by so many and opposed by so few. If we are to have democracy in action here, it is the duty of hon. Members opposite to vote in support of the Bill.

Mr. G. Thomas

Where are they?

Mr. Proctor

I am mindful of the fact that one of the leading supporters of the Bill, the hon. Member for Croydon, North-West (Mr. F. Harris), belongs to the Tory Party. I do not want this Bill to be treated on a party basis. I want it to be supported by the House of Commons. It has gone through Second Reading and passed through the Committee stage. I am rather surprised that the Government did not take an opportunity to state their views whilst we were considering it in Committee; but that is by the way, and perhaps they had nothing to say against it. We do not know what the attitude of the Minister will be today.

I would like to remind the House how reasonable throughout has been the attitude of my hon. Friend the Member for Acton. He has put forward the Bill as the acceptance of a principle which I think is universally accepted. On Second Reading, he said to the Government: I should be quite satisfied to allow the Government to take over the Bill if they are in favour of repeal. If they feel that it is not opportune to introduce repeal immediately then, if the Bill is given a Second Reading, I am sure that in Committee my hon. Friends would agree to insert a Clause to provide for an appointed day. We could give the Minister discretion to name the appointed day. Could he be more reasonable or more ready to discuss the matter than by offering them, in principle, the honour of carrying through a universally approved Measure? Again, in Committee, my hon. Friend repeated his offer which he had made on Second Reading. But the lips of the Minister were sealed. He could not say a word. He, or another member of the Committee, did on one occasion nod during the Committee stage, which created a sensation; but, otherwise, there was absolute silence from the authoritative speaker on the Government side.

This Bill affords an opportunity to the Government to get themselves out of several difficulties. The hon. Member for Ilford, South said that the country was smarting under excessive valuation. Here is a unique opportunity for the Govern- ment to do justice. Rating and valuation are much in the minds of ratepayers, shopkeepers and businessmen now that new valuations are in operation. I wish to draw the attention of the Government to the unique opportunity the Bill gives them to keep their word, which they are pledged to keep.

The Minister of Housing and Local Government, faced with this matter in December, 1954, said: Finally, I should like to emphasise that the pre-war basis for the assessment of dwelling-houses applies only to this first post-war revaluation. As I have explained, there are many factors in the situation and, consequently, we cannot yet be sure how the new basis of assessment will work out in practice. I can only, however, give an assurance that, as soon as the effects of the forthcoming revaluation can be fully measured, the Government will review the situation and consider whether any changes are necessary."—[OFFICIAL REPORT, 6th December, 1954; Vol. 535, c. 22.] I did not take too much notice of that pledge, but shopkeepers thought it was something of real value and represented an honest intention on the part of the Government to do something. I thought it an excuse to get them over the General Election. Since then, they have done little or nothing to deal with that pledge. This Bill gives them a unique opportunity to deal with the matter in a proper and businesslike way.

The pledge has been given and it is now for the Government to seize the opportunity provided by the House of Commons having given a Second Reading—and, I hope, a Third Reading—to deal with the principle of rerating. That does not say that it is the end of everything. My hon. Friend the Member for Acton asked the Government to take over this Measure and let the consequences flow fully and freely from that. It is open to the Government to accept the principle and to make a quick decision on the matter. It would be open to them to say that they would alter the basis of revaluation and to have all valuation on the same basis as 1939 or 1955, whichever they prefer. It would be open to them to say that they do not want to make a profit themselves, but to allow local authorities to have the full value of any contribution from the Exchequer and not to change the volume of the grants as a result of the Bill.

The offer of my hon. Friend to the Government is still open, namely, to accept the principle and let all these consequences flow freely and fully to the benefit of local government, which at present stands in need of assistance. I hope that the hon. Member for Ilford, South, especially, will reflect on the position and realise that here is a wonderful opportunity for him to carry out the desires of his electors, and a wonderful opportunity for the Government to take action to redeem their pledge to the shopkeepers and businessmen.

1.53 p.m.

Mr. Julian Ridsdale

I speak not as a lawyer—the hon. Lady the Member for Coventry, South (Miss Burton) said that a number of lawyers were speaking from this side of the House—and not as an expert on rating, but rather as a layman, indeed as a rustic, on these matters. I welcome the fact that the Minister of Housing and Local Government has made it clear that the general review of local government finance which is now being carried out will include a review of industrial derating.

For my part, I am content to wait for the review before supporting a Bill which would mean that we would be approaching the problem—indeed the important problem of local government reform—in a piecemeal way. As for my constituency, I am concerned especially with the burden which local government expenditure places on the small shopkeeper and the small householder and the small bungalow owner—the most needy section of the community, at least in the Harwich division. I am particularly impressed by the fact that the County Councils Association estimates that with rerating domestic properties would bear 53 per cent. of the nation's rate burden instead of 60 per cent. and commercial properties would bear 18 per cent. instead of 20 per cent.

On the face of that argument it would appear that commercial properties and householders are bound to gain from such an arrangement. However, in the recent experience of revaluation, higher assessments, although they have led to lower rate poundages, have in many cases led to an excuse for more expenditure by local authorities. Can we be sure that if some local authorities place their hands on more revenue they will be economical with it, especially in the county areas, which are so far removed from truly local government? That is my answer to the hon. Lady about hon. Members on this side of the House being interested in local government being local.

Before rating is altered again, I want to be perfectly certain that local government is organised in the best regional areas so as to carry out efficient and economic administration. My county authority of Essex is situated in Chelmsford and administers rural and urban areas. The interests of the urban areas around London are very different from those of the rural area around Colchester. I am convinced that if we are to have efficient administration and good representation, we must separate the interests of the widely dispersed rural areas from those of the more densely populated town areas. Yet if we do so and abolish derating, will not the urban areas become very wealthy and the rural areas become very poor? Clearly this is something we cannot rush into quickly as the immediate passing of this Bill would involve.

What changes would be made in the general Exchequer grant, which was first made not only to compensate local authorities for losses due to derating but also to help the most needy sections of the country? For instance, in the new valuation list for the Borough of Harwich the net annual value of the industrial and freight transport hereditaments is £16,344, which is reduced by derating to a rateable value of £4,294. Obviously the general Exchequer grant would have to be taken into consideration if derating were abolished.

We must surely know by how much before we can vote in immediately approval of the proposal in this Bill. If alone one considers the part that the Exchequer grant plays today in local government finance, I think it could be very arguable whether there is any need to alter the balance of rating as it is done today, for the grant in itself acts as a balance. However, in my view, there is one over-riding argument on local government reform. It is that not only must justice be done, but that justice must appear to be done also.

I have no doubt that, in spite of the Exchequer grant, the small shopkeeper and the small householder are convinced that they are shouldering the increased burden of local Government expenditure. Industry is in a very different state than it was during the great depression when derating was introduced. Indeed, compared with those days, the householder—particularly in the retired and fixed income group—is today suffering from a depression. Yet it is the householder who is asked to bear the chief burden of increased education costs, of increased costs for roads and other amenities, from which, in many cases, industry itself benefits. It is for this psychological reason that I press the Government to consider most carefully the need for abolishing derating. Therefore, I am convinced that to take any such step immediately would be very wrong—[HON. MEMBERS: "Why?"]—because there are many factors to be considered, as I have already explained.

I welcome the fact that a review of local government finance is under way. However, I hope that with the review will be considered the question of local government reform particularly as regards separating the widely dispersed rural and urban areas. How important, if this is to be achieved, is the Exchequer grant to take care of such items as coastal defence, education and the maintenance of roads which a small rural authority could not afford out of its own rates.

I hope that the views I have expressed will help the Government in the task of local government reform, which will prove no easy task. While I appeal to the Government to proceed slowly over this Bill, once the review is complete I would press them to go forward boldly to help local government to be local and not, as in so many cases it is today, a sort of hybrid, neither central nor local and containing many bad and few good features of both.

2.1 p.m.

Mr. Arthur Moyle (Oldbury and Halesowen)

I listened with interest to the speech of the hon. Member for Harwich (Mr. Ridsdale), and I gathered he was implying that increased valuation has been followed by an unwelcome disposition on the part of local authorities to spend more money. The implication which also follows from that argument is that if we have a restoration of the full rating of industry the same experience will result. In fact, quite the opposite is the case, if we take existing facts as a basis upon which to form a judgment.

Recently the city treasurer of Liverpool has had some interesting exchanges in the columns of The Times on this vexed question of grant-aided local expenditure, and of course of non-grant-aided expenditure. According to the city treasurer of Liverpool, since 1950 the grant-aided rate expenditure has increased by 37 per cent. as against the non-grant-aided rate expenditure which has gone up only 23 per cent. If those facts mean anything, the argument must be against the hon. Member for Harwich.

I was astonished that the hon. Member for Ilford, South (Mr. Cooper) should take my hon. Friend the Member for Acton (Mr. Sparks) to task and suggest that my hon. Friend was artful and cunning enough to choose this subject for a Bill because the municipal elections take place in a fortnight's time. The Parliamentary time-table is responsible for the fact that we have this debate today, and I do not think that my hon. Friend ever had the slightest thought about municipal elections when he decided on this choice of subject for a Private Member's Bill.

Mr. Cooper

I did not suggest for one moment that the hon. Member had done this deliberately. I merely said that it was propitious.

Mr. Moyle

At any rate, that was a fair assumption to make about the first part of the speech of the hon. Gentleman. And I will tell the House why I consider that it was rather cheeky of the hon. Gentleman to assume that about my hon. Friend.

If the hon. Gentleman will read the history of the Tory Party, he will discover that in 1929 they were having a bad time; in fact they were up against it, just as they are today. Public opinion was veering towards the Labour Party. In those days they had an astute Chancellor of the Exchequer in the person of the right hon. Gentleman the Member for Woodford (Sir Winston Churchill). I do not mean that the right hon. Gentleman is an astute financier or a financial expert, but he is an astute politician who knows something of the climate of public opinion. During the time the right hon. Gentleman was Chancellor in 1929 the late Mr. Neville Chamberlain introduced the Local Government Bill of that year. In that Measure Mr. Chamberlain did two things. He partially derated industry, two-thirds of it, and he wholly derated agriculture. Not content with that, the Chancellor raided the Road Fund to save a sixpenny increase in Income Tax.

Why was that done? Because the Tory Party were dead up against it and required votes for the forthcoming Election. That, among others, is a reason why derating was introduced. Later the Tory Party lost the Election. The hon. Member for Ilford, South should not therefore talk about party political considerations entering into the judgment of my hon. Friend.

If we read the speech of the then Minister of Health when he introduced the Local Government Bill in 1929, I think we may assume with reason that he considered the derating of industry and agriculture to be not a temporary measure in order to provide relief during the industrial depression of that time but as a permanent change, because he considered it inequitable that industry and agriculture should be rated in that fashion at all. That is the reason why we look with suspicion on the statement made by the Parliamentary Secretary during the Second Reading debate when he referred to the proposed review of local government finance. No reference has been made to what will be taken into account in that review. Are we to understand that the principle of the rerating of industry and agriculture will be considered?

Mr. Powell

I said so during the Second Reading debate.

Mr. Moyle

Yes, but the principle of it has not yet been accepted by the Government.

The attitude of hon. Members opposite to this Bill is that there is nothing much in the restoration of industrial rating by the time account has been had of the loss of the Exchequer equalisation grant and the loss of the educational grant to local authorities. But the Parliamentary Secretary has confused counsel by talking about other grants which may be lost if industrial rerating is introduced. Notwithstanding these hints, the astonishing thing is that there is almost complete unanimity throughout the field of local government in support of the restoration of industrial rating.

I think it is a good thing for a local authority to be responsible basically for its own services and the financing of them. I consider that a sound financial principle if municipal independence is to be preserved. But as a result of this industrial and agricultural derating we had the vexatious block grant, a form of compensation given to local authorities for the loss of rate revenue which was estimated by the then Minister of Health to be about £24 million in respect of industrial derating.

Later, for the loss of these rates, the Exchequer equalisation grant was introduced in substitution of the old block grant. The difficulty is that the block grant was introduced to offset the injustices felt locally after industrial derating, but there was never any consideration subsequently given to new industrial establishments or to additional capital undertakings. They were lost to the block grant.

Take my own local authority, Oldbury—there is nothing like talking facts; they are more reliable than national estimates. It is one of the most heavily industrial boroughs in the country, having a population of about 55,000. We shall gain about £220,000 a year from industrial rerating, subject to the loss of equalisation grants and education grant and other financial evils and perils hinted at but not specified by the Parliamentary Secretary. The average national rateable value per head of the population is £11 8s. 6d., but the Oldbury rateable value is as low as £10 9s. 9d. They are prepared to put up with the losses that they know will follow because they consider they will benefit in the long run.

One of the significant results of industrial and agricultural derating has been the loss of industrial personnel and interest in local government and municipal affairs. This change follows the Act of 1929. Two reasons influence me in this matter. One is that it is a sound principle of municipal government to rest it upon local independence and not upon a vexatious kind of combination between local and national finance. Secondly, it is vital to the interests of local government to have a restoration of industrial interest in local government such as we usually had before the Act of 1929 was passed.

2.13 p.m.

Mr. J. C. George (Glasgow, Pollok)

I do not intend to argue the merits of rerating at this time. [An HON. MEMBER: "Why not?"] Many local difficulties exist in Scotland and give us great doubt about the future of some local authorities finances. I listened to the argument of the hon. Member for Islington, East (Mr. E. Fletcher), who moved the Third Reading of the Bill. He said that industrial leaders had ceased to take any interest in local affairs after the derating of industry and that such interest would be restored after rerating. Industrial leaders did not in Scotland cease to interest themselves in local government; they continued to take an active part and still do, to the great benefit of the country.

That argument—that payment of rates inspires interest—should apply to all those who pay rates and should mean that householders and tenants who pay rates have a great interest in local authority affairs. That is not, however, our experience to date. We all bemoan in England, Scotland and Wales the lack of interest on the part of the ordinary ratepayer in municipal affairs. There is no evidence that rerating is needed to inspire any greater interest among industrial leaders in local authority affairs than they exhibit energetically today.

It has also been stated that if industry is rerated a new incentive will be given to local authorities to get on with their job instead of feeling hopelessly frustrated, because so much of their money comes by way of grants in aid bringing with them tight and tiresome strings from Whitehall. Those of us who have spent many years in local government agree that we should feel better and enjoy greater authority if we raised more of our money locally, but one does not want to exaggerate the probable effects of the rerating of industry. No one pretends that if industry is rerated a major reduction in the Whitehall contribution to local authority finance will be made. We do not want to minimise what re-rating will mean; but do not let us magnify it. In Scotland it is a matter of considerable importance, but what agitates our minds much more is the danger to the equalisation grant, which is a major matter in Scottish local authority finance.

Mr. Willis

If I understand aright the argument of the hon. Member for Pollok (Mr. George), it is that the equalisation grant is a major factor in Scotland while industrial rerating is a minor factor. Is he aware that at the present time the equalisation grant amounts to £9 million whilst rerating would add £6 million to local revenue. Surely there is not all the difference that the hon. Gentleman indicates.

Mr. George

I want to be quite certain what will happen in future in Scotland and what effects rerating of industry will have before I make a decision. The future is so uncertain that we cannot make any definite pronouncement about what will happen in any sphere. On the equalisation grant I can quote the following figures from page 9 of the Rating Review in Scotland; the total estimated expenditure for 1954–55 in Scotland was £57,700,000, while the equalisation grant represents £9,190,000, or 16.41 of the total expenditure, or 3s. 6d. in the £ on the rates. That is indeed a major part of Scottish finance.

We want to know what will happen in many spheres and in more detail than we do at the moment before we can make up our minds on this part of the problem facing local authorities. The Scottish position is different from that in England and Wales. Our whole rating structure is in a state of flux. At the moment a Bill is before the Scottish Standing Committee, the Valuation and Rating (Scotland) Bill. It is in a very delicate transition stage and involves major changes in the rating system of Scotland and in Scottish local authority finance. We shall have to revalue all property in Scotland in the next five years, and there will be a standstill in rateable values within that period. The Bill abolishes all owners' rates in Scotland, reduces the rents accordingly and temporarily adjusts the equalisation grant.

Scotland was a long and silent sufferer under the equalisation grant system, having been underpaid for many years. For years some sardonic statistician in Whitehall has been quietly chuckling at Scottish cupidity, but this is being put right temporarily. If the Bill is passed we shall have higher valuations, but shall we receive a higher share of the equalisation grant as compared with England and Wales? We do not know the effect of the valuation in England and Wales, or what the effect will be in Scotland. The whole future is uncertain and, therefore, to take any definite step such as is proposed by the Bill we are now considering would be wrong. We have heard many quotations showing the attitude of English local authorities towards the Bill, but the great city of Glasgow has taken no action and has made no comment at all on the Bill.

No contact has been made with any Member of Parliament, as far as I know, to support this Bill. Frankly, that is because the future is so uncertain; there are so many imponderables present. In addition, we are assured that a broad, comprehensive survey is being made, and we also know that the results of that survey are a matter not of the distant but of the near future. It is my feeling that there are so many complex, intimate and intricate factors involved that it would be premature to come to any decision in advance of that broad survey.

2.20 p.m.

Mr. George Thomas (Cardiff, West)

The hon. Member for Pollok (Mr. George) has dealt in vague generalities and imponderables but, none the less, has come down on the side on which we expected him to come down, since it is quite clear that the Conservative Party, as a party, is opposed to this Measure. That has become increasingly clear as the debate has proceeded. Unfortunately, it has developed along party lines. On Fridays we are accustomed to deal with non-party, though not always non-controversial, Bills. My hon. Friend the Member for Acton (Mr. Sparks) did his best to keep this along non-party lines when he offered the Government a chance of adopting his Measure.

We have heard many hon. Members advancing their constituency interests, and there is not one hon. Member who has not a direct constituency interest in this proposal. I have the honour to represent part of the newest capital of the British Commonwealth—the City of Cardiff.

Mr. M. Turner-Samuels (Gloucester)

A beautiful city.

Mr. Thomas

A beautiful city, indeed. My hon. and learned Friend shows his usual good sense.

Industrial derating is costing the Cardiff ratepayers £735,000 a year. We have great, heavy industry in the city. Their premises cast heavy smoke over parts of the city, and their heavy traffic uses our roads so it can reach those heavy-industry premises. If this Measure were to pass, the ratepayers of Cardiff would be relieved to the extent of 2s. in the £ in the rates. Cardiff does not benefit from the equalisation grant—we do not receive a penny—and it is clear that this Measure would mean a substantial relief to our ratepayers.

Recently, in common, I suppose, with other hon. Members, I received correspondence from the small Retail Shopkeepers' Association about the new valuation of their premises. I submit that here we have an opportunity to relieve the small shopkeepers and the small business people—who are to be found in good numbers in Cardiff—by ensuring that industry shall make its fair contribution. The great steel industries in Cardiff are not poor. They are making millions of pounds profit. No one need say that the cost of steel will rise if these people are made to pay their fair proportion of the Cardiff rates. Their contribution ought to come out of the excess profits which they are making. They have got away with it for far too long.

The very fact that this Bill is being proposed for Third Reading today ought to be accepted by the House as a sign of our resolve that we have left behind us the ugly days of depression. This is a testimony to our faith in the future. We believe that it is no longer necessary to protect our heavy industry against unemployment and periods of distress. We have waited a long time to move away from the legislation introduced for a Britain in a state of siege from depression. Now we speak in terms of full employment. We have an inflationary, not a deflationary, economy. We have a period when, quite clearly, industry ought to make its fair contribution to the maintenance of local government and administration.

Industry gets the benefit of the education services in Cardiff. In that great city we have a first-class technical college, and have taken great strides towards technical education in other spheres—from which industry benefits directly. Why should not industry, in return, accept its full responsibility? It is hard to understand why the Conservative Party is so reluctant to help the middle classes and the small businessmen who have to bear this heavy burden. Can it be that in the table of priorities which is in its mind the Conservative Party is coming down on the side of its bigger and more powerful friends in heavy industry? It is protecting the strong and not the weak. It is coming down on the side of people, who, I understand, contribute very heavily towards its party political fund.

Mr. Gurden

I wonder why the Socialist Government did not bring in this Measure during their term of office?

Mr. Thomas

That interruption is about as useful as the speech which the hon. Gentleman made, but I will answer his question in due course. When asked a question, it is my privilege to answer it in my own way. The hon. Gentleman spoke in an astonishing manner about the Birmingham Corporation and the irresponsible way in which it spends the rates. If I came from Birmingham, I would have taken strong exception to his words, which will no doubt be read with great interest by his own friends—few as they may be—in that city.

I want to say to the Parliamentary Secretary that this is his big chance. I have no doubt that he is suffering from as many restrictions as local government officers are but, when he replies to the debate, I wish he could say that the Government are resolved that this de-rating Measure is just, that it is overdue, and that they will accept it. Let him say that the Government will fix a day—this year, next year—that they realise that legislation which was passed to meet an emergency, an economic crisis in those ugly days when so many people were unemployed, is not applicable to these days of full employment, and that they will, in the interests of equity ensure that heavy industry pays its fair share towards the maintenance of local government.

2.30 p.m.

Mr. Peter Smithers (Winchester)

I listened with great interest to the speech of the hon. Member for Cardiff, West (Mr. G. Thomas). He began by saying that this was a non-partisan Measure. I certainly think that this is a subject which is susceptible of a non-partisan approach because there is a very great deal of agreement between both sides of the House on the merits of the case and on what is involved.

The hon. Gentleman, with that engaging charm of which he is almost the unique master in this House, then went on to make an impeccable party speech in which we had practically all the familiar elements—gross profits, the bad old days, practically everything except the beer barons. I do not think the hon. Member can pretend in such a speech that this is strictly a non-partisan matter. I wish it were, because I am sure that if this question had been approached from the beginning in a non-partisan manner we would be in a much more constructive and useful state today.

It seems to me that if one approaches this matter objectively on its merits, one cannot but come to the conclusion that industrial rerating, in the present circumstances of the case, makes a great deal of sense and is, indeed, nothing more than justice. But having said that, one has to look at the circumstances of the case and try to make up one's mind whether they are permanent or not.

The hon. Member for Islington, East (Mr. E. Fletcher) said some things in his speech with which I very much agree. He quoted some authority as saying that "everybody knows that something has gone wrong with local government". I do not think that anybody who has served on a local authority for any period of time would deny a feeling of uneasiness about the structure of local government. I for my part very much hope that the review of local government which is to take place will be not merely a review but a review with radical reforms as its result.

The hon. Member for Islington, East went on to say—I wrote down his words—that this question of rerating "goes to the roots of local authority finance". I am sure that it does. If he is right in saying, first of all, that there is something gravely wrong with the structure of local government, and secondly that this question of rerating goes to the roots of local authority finance, and if he is now proposing that this Measure ought to go through the House and be enacted in present circumstances, it seems to me that he has put himself in a position in which one argument contradicts the other.

If one thinks that radical reform in local government is necessary, to start by a Measure which makes alterations in the balance of taxation between one section of the community and another is to assume that that same structure will continue. [HON. MEMBERS: "No."] It is. It is a logical and inescapable conclusion.

Mr. A. Evans

In fairness to my hon. Friend the Member for Islington, East (Mr. E. Fletcher), I do not recall that he said that there was something radically wrong with local government. What he said was that the rerating of industry would stimulate interest in local government.

Mr. Smithers

The hon. Member's recollection is inaccurate, because I wrote down a part of the quotation which the hon. Member for Islington, East read to the House, which was as follows: "Everybody knows something has gone wrong with local government." I agree. The hon. Member for Islington, South-West (Mr. A. Evans) said that the hon. Member for Islington, East did not say that. But he did say that. He read a quotation from some authority whose name I forget. I am saying that if we are going to make radical reforms in the structure of local government, we must also envisage the possibility that the whole weight of taxation as between different sections of the community and as between local and central government must be reviewed.

I do not think that hon. Members opposite can pretend that they or we are at the moment in the position of having in our hands sufficient data on that immensely complicated subject to be able to say that the present precise ratio of taxation as between local and central taxation is the right one. If we cannot be sure of that, it does not make any sense at all to assume that it is going to continue and that within it one should make this particular reform.

Dr. Horace King (Southampton, Itchen)

How does the hon. Gentleman square his argument with the simple fact that by the new rating assessments and without any change of local government structure, we have radically changed the proportions so as to shift the weight of local taxation borne by shops and commerce? Why should it not be equally just to make the adjustment that we now propose?

Mr. Smithers

The hon. Gentleman who, like myself, has served on a local authority, and I think still does, ought to appreciate that in one case one is dealing with the basis of valuation and in the other case one is going to the root of the matter by considering whether or not, regardless of the basis of valuation, the whole of the property valued should be rated. It is, in fact, a totally different matter.

Mr. Willis

I have already indicated that this is being done in Scotland at the present time. The derating provisions for the crofters are being wiped out at a time when the Government are arguing that we should not interfere with derating proposals.

Mr. Smithers

I believe the situation in Scotland is totally and radically different. If the hon. Gentleman does not know that, I think he should be careful in interrupting an English Member in an English matter. I am dealing with this from the English point of view.

Mr. Turner-Samuels

May an English Member interrupt? Would the hon. Gentleman tell us how he justifies excusing a privileged section of the community from paying their rates?

Mr. Smithers

The hon. and learned Gentleman has raised precisely the point that I tried to make earlier. I do not justify it. I very much hope that we shall get industrial rerating in due course. I am strongly in favour of it. I would have thought that the hon. and learned Member for Gloucester (Mr. Turner-Samuels), who we know is eloquent, was also capable of listening to an argument, and I would have thought, with all respect and modesty, that my argument was fairly clear—namely, that to intro- duce industrial rerating now would be to commit oneself to the existing financial structure of local government. That is what I do not want to see done I want to see the structure of local government reviewed radically and not merely in its minor details.

Mr. Turner-Samuels

The hon. Gentleman says that, but the structure is there for everybody else now. Why should it not be there for this section of the community?

Mr. Smithers

With all respect to the hon. and learned Member, I must not abuse the patience of the House by allowing him to interrupt me any more. I merely say that I have put my case, I think, with perfect clarity, and it is that the structure is about to be altered—at least, so I hope. I shall be very disappointed if it is not.

If I may endeavour to come back to my speech from which I have been diverted rather a long way by hon. Members, it seems to me that, for reasons stated on this side of the House, the introduction of this Measure now would not only prejudge far more important issues—although I do not belittle the importance of this issue—but would also mean that we would have really a chaotic state in local government finances in the short run.

If one is really interested in local government reform, I do not think that this is the moment, just ahead of local government reform, as I hope we are, at which to plunge the local authorities and everyone else engaged in the mechanism of local government into an orgy of revaluation, reassessment and readjustment on a basis which cannot be foreseen. That would inevitably be the result of bringing in industrial rerating at the present time. I should have thought that it would have been absolutely indispensable to reassess all the industrial properties concerned because, of course, their values when rerated would be quite different.

If, on the one hand, this process would produce a chaotic state of affairs in local Government finance, I believe that on the other hand it would produce very little benefit to a large number of local authorities.

In opening the Second Reading debate on this Bill, the hon. Member for Acton (Mr. Sparks) gave a very good and comprehensive survey of some of the consequences of industrial rerating, which proceed far further than the great majority of the public and, I think, the great majority of members of chambers of commerce have any idea.

The concept has been industriously put about by those interested in framing this Bill that a great injustice is about to be remedied, and that a very serious burden will be taken off the shoulders of certain types of ratepayers—[HON. MEMBERS: "Here, here."]—I notice that some hon. Members assent. The fact is that if the consequences of industrial rerating are carefully examined in particular cases it is apparent that the ratepayers in a great many boroughs would receive no benefit whatsoever, or at any rate very little benefit, when the equalisation grants are taken account of. By the time one has taken account of places which have very little industry anyway, by the time one has considered the effects of this Measure on company taxation and by the time one has considered that effect on the revenue, the net result is often one of very little benefit.

What I am saying, therefore, is that this Measure has been misrepresented to the nation as something which is certain to benefit all ratepayers who are in particular categories, such as the proprietors of shops. If this Bill had not been brought forward just now when we are about to enter the local government campaign, I do not believe that it would have been so difficult for hon. Members opposite to approach it in a non-partisan spirit, and I think that it would have been much easier for the House to consider it objectively and to agree upon the basis for industrial rerating, about which, I think, there is very little dispute between us.

Therefore, I regret the fact that the Bill is introduced now on the following grounds. First, that it prejudices the introduction of local government reform. Secondly, that it would cast local government finances into a chaotic condition and thus make local government reform even more difficult. Thirdly, that it has been brought forward largely as a party political Measure designed to help win local government elections and that the public has been considerably misled as to what its results would be.

I therefore propose to vote against the Measure. I hope that my hon. Friends at the Ministry will produce comprehensive proposals for local government reform before very long and that they will include a measure of industrial rerating.

2.45 p.m.

Mr. F. Blackburn (Stalybridge and Hyde)

I wonder whether the hon. Member for Winchester (Mr. Smithers) is as ignorant as he pretends to be about parliamentary procedure. He talked about the Bill having been brought forward because of local government elections next week, but he ought to know that it was brought forward because my hon. Friend the Member for Acton (Mr. Sparks) succeeded in the Ballot for Private Members' Bills. Indeed, the date on the Bill is 9th November, 1955. My hon. Friend was very clever if he knew that the Third Reading of the Bill would take place immediately before the municipal elections.

If I understand the hon. Member for Winchester correctly, he thinks that we are approaching this problem in a nonpartisan manner if we say that we are in favour of rerating but vote against it. All hon. Members opposite who have spoken today have expressed approval of the principle of rerating, but have said that the time is not ripe. For some people the time is never ripe to do anything. We are all asked to wait until some review has taken place, and one hon. Member opposite conjured up a fascinating picture of the Minister of Housing and Local Government trying to put an egg back into the shell. The idea seemed to be that if we gave him enough time to practise he would eventually be able to manage it.

The hon. Member for Winchester said that local government is just about to be reformed, or so he hoped. I remind him that when the last Government came into office in 1951 the reform of local government was one of the items in the King's Speech, in 1951, and a Question about it was one of the first which the present Chancellor of the Exchequer, then Minister of Housing and Local Government, had to answer. The reform was to be produced very quickly, so we were told.

I do not think that hon. Members will misunderstand me when I say that I prefer the silence which I understand Government Members exhibited in Committee to the speeches which they have made this morning. I wonder what their thoughts were at that time. Perhaps they were like the man who was asked how he spent his time and who said, "Sometimes I sits and thinks and sometimes I just sits." Perhaps it was as well that hon. Members opposite did not express their views in Committee, because today they have all expressed approval of the principle of rerating but have said that the time is not ripe.

I am surprised that the Amendment should have been moved by the hon. Member for Walton (Mr. K. Thompson), who is a vice-president of the Association of Municipal Corporations. It seems rather strange for him to accept the honour of being vice-president of an association with which he appears to disagree on all major problems. Of course, moving an Amendment to postpone the operation of the Bill for six months is not only a useful parliamentary device, but also a useful device for making certain that one catches Mr. Speaker's eye.

There is no necessity to go back over the history of the 1929 Act, nor the reasons for its introduction, because they have been dealt with adequately at previous stages of the Bill. Suffice it to say that conditions today are quite different from those which existed then. We are considering the Bill in a period of full employment and large profits. It is true that some industries are experiencing difficulties, but everybody will agree that in the main industry is well able to make its full contribution to local finance. In any case, if the Government feel that industry needs financial assistance it could be given by other methods than a concealed subsidy at the expense of the local authorities.

It has been said that this is the wrong time to bring forward the Bill. On Second Reading, the Parliamentary Secretary said it was the Government's view that nothing should be done about derating until further consideration could be given to the relationship between central and local government finance, that the Government had decided to make a comprehensive review of this relationship and that derating would form part of the review. I suggest to the Parliamentary Secretary and other hon. Members opposite that that is not a reason, but an excuse. Passing this Bill would in no way prejudice a comprehensive review of local government finance; it would merely be another factor which would have to be taken into consideration.

Further, we have no indication how long this review will take nor when the necessary legislation will be introduced. The passing of this Bill would give essential help—help which is needed now—to the financially harassed local authorities.

On Second Reading, the Parliamentary Secretary asked whether local authorities would not wish to have a chance to express their opinion, at the appropriate time, on the Government's proposals for local government finance without having the position prejudiced by a Bill of this kind being passed while the review is in progress, but I would point out that, through their associations, local authorities have already made their views abundantly clear on more than one occasion. The views of the A.M.C. are that the general review of central and local finance does not preclude the derating problem from being tackled now and that the Bill should be allowed to proceed.

It seems to me that the tenor of the Parliamentary Secretary's speech on Second Reading was not only against the Bill, but also against industrial rerating, although nowhere have the Government's own intentions been specifically stated. Perhaps we can be told today, if this Bill is defeated, whether the Government will include industrial rerating in the proposals which are to be submitted for consideration by the local authorities. I very much doubt it, for the Government's attitude towards these proposals has been made clear by the fact that they have insisted on the big battalions going into action today.

A belief in the repeal of the derating proposals in the 1929 Act does not in any sense indicate an anti-industry attitude. Circumstances have changed so much since 1929 as to make the existing relief difficult to justify. It is in the interests of industrialists as much as those of other ratepayers that local authorities should have adequate finance to carry out their obligations. It is important that the burden should be equitably shared. Everyone is aware of the feeling of injustice at the present time.

The Minister is well aware of the views of the small shopkeepers, already mentioned this morning, who feel that they have been singled out to bear an increased burden at a time when industry is being asked to pay only 25 per cent. of its assessment. Everyone with any knowledge of local government is agreed that additional revenue must be found, otherwise the rate burden may well become so heavy that a scheme of payments on the lines of P.A.Y.E. will have to be worked out. Increased interest charges and ever-rising prices mean either an excessively high rate or that many necessary and desirable projects have to be abandoned, or both.

This is a particularly difficult year for local authorities, for not until the very end of the financial year will they even know what appeals there are to be against the new assessments. Additional finance may be found by central Government—and I wonder whether this is what the Government want; but it can only mean increased central control, and if local government is to be a vital force in our democratic system, then it is important that it should have the greatest measure of freedom compatible with efficiency.

Nowhere are the financial difficulties felt more than in small industrial boroughs and urban districts. Most of them grew up in an age of different standards, but they have made a great contribution to the economic welfare of the country. In spite of high rates they are faced with problems which are almost insoluble. They have a high incidence of slum property, their sewerage schemes need replacing, their areas need replanning on modern lines. They do not even have the full benefit of the Exchequer equalisation grant, payment from which is made direct to the county council and not to the district councils. Being industrial areas, however, they would greatly benefit from the passing of the Bill.

I appeal to the Government to adopt a policy of giving help to industry where it is needed and not indiscriminately, to call off their big battalions today and to let the Bill go forward and thus give much-needed help to the local authorities. I am sure that the whole House will agree that there is no single step by which essential additional revenue could be more quickly or more easily found for the local authorities.

2.57 p.m.

Mr. G. R. Mitchison (Kettering)

I am sure that every hon. Member in the House today will be willing to renew his thanks to my hon. Friend the Member for Acton (Mr. Sparks) for choosing this subject and giving us an opportunity of debating it, as it now happens, a second time. I am sure that the whole House as well as myself were impressed by the extremely able speeches with which the Motion for Third Reading was moved by my hon. Friend the Member for Islington, East (Mr. E. Fletcher) and supported by my hon. Friend the Member for Small Heath (Mr. Wheeldon).

Since those speeches, however, so far as I have listened to hon. Members opposite I have found the debate becoming funnier and funnier. I have sat here watching hon. Members opposite walking on a tightrope. The way they did it—their varying degrees of agility, and the extent of non-committal which they thought it expedient to achieve—was a constant delight to me. I am personally grateful to each of them for their little exercise in political gymnastics.

It is perfectly obvious what has happened. A large section of opinion—and I believe that it is responsible opinion—in the Tory Party has become convinced that industrial rerating has to come. Some hon. Members opposite have had the good sense to read Labour Party literature on the subject, and to listen to Labour speakers, which has caused them to realise that it is so obviously right that it should come.

Commander Agnew (Worcestershire, South)

Is the hon. and learned Gentleman aware that if we were really relying upon Labour literature we would have expressed surprise at the fact that the rerating of agriculture is not also included in the Bill—because that subject also finds a place in the Labour Party manifesto, "Challenge to Britain"?

Mr. Mitchison

This is a Third Reading debate on a Bill which deals with the rerating of industry, and it raises quite enough questions even in that form. However, if the opportunity occurs for him to do so, I shall be very glad if the hon. Member will introduce a Bill to rerate agriculture. I am sure that we shall have an exceedingly interesting discussion upon it. But we shall not have it today.

I have just said that industrial re-rating is obviously right. Industry was derated at a time of grave economic difficulty, and it was derated for the express purpose of assisting industry in what were or then appeared to be phenomenal difficulties. I am not going into the question of how they arose; this was in the inter-war period, at a time when, speaking generally, the country was governed by a succession of Tory or Tory-controlled Governments. It does not seem to me to matter very much to what extent those who introduced the Measure regarded it as temporary or permanent. They may well have said to themselves, "Things cannot go on being quite as bad as this forever. Some day somebody will replace us by a better Government."

However that may be, the fact is that conditions now are absolutely and completely different. There is no question of assisting industry; the Government and the Chancellor are organising a very elaborate credit squeeze to restrain some of the symptoms of what is admitted to be a heavy dose of inflation. The position is the exact opposite of what it was when industry was derated, and there is every reason, on economic grounds, for rerating industry, just as there was some case—although I do not think that it was a sufficient one—for derating it during the inter-war period.

There is a far more important consideration to bear in mind. The hon. Member for Harwich (Mr. Ridsdale) said that justice must not only be done but must appear to be done. I think that I have heard that phrase before. There is no special reason why rating and local government matters should be wholly exempt from it. Does any hon. or right hon. Gentleman opposite think that any local authority, or any body of ratepayers, really thinks that justice is being done to it?

Let us start with the local authorities. We must remember that they have been put into intolerable financial difficulties and very great financial uncertainty by the deliberate policy of this Government. Right or wrong, it has been a "dear money" policy, and has resulted in an increase in the cost of borrowing. Again, this moment has been chosen to take away from them a considerable amount of help which they had been getting from public funds in respect of one of their most important functions, that of housing those in need. All that is Government policy and local authorities are suffering from it; and they are all not merely suffering, but are angry about it. That is the position at the moment.

What do they see? From their point of view, they see one source of considerable rate revenue continuing to be denied to them, a source which at present, from the point of view of the industrialist, is singularly prosperous. It cannot be tapped by the local authority because of what happened between the wars. Local authorities do not think that justice is being done and are not content to accept the proposition that they ought to get ever increasing grants from a Government if and when that Government gives them.

There are two reasons why they do not think that justice is being done. First, they regard it as inconsistent with the real independence of local government finance, and secondly, they do not regard a Government which has done nothing so far but cut subsidies and cut expenditure as a reliable source of finance for their future commitments. That is the local authorities' position.

I turn now to other classes. Rates are now being paid, if I leave out what is actually a rather large miscellaneous class, by three types of people. First, there is the ordinary householder, who is at one disadvantage against everybody else. From his point of view rates are not a trading expense and, generally speaking, he cannot get anything back on them out of Income Tax, whereas the other two classes can.

The line between these other classes is a highly artificial one. It has been a constant subject of discussion in law courts and by those concerned with local government. On the one side, there is the shopkeeper and a great many people who are verging on to industrial rating but who remain, from their own point of view, just on the wrong side of the line. As the result of the new assessments, those people are paying a heavier share of rates than they were before. Do they think that justice is being done when they see that the third class—the industrialist—is paying only one-quarter of his assessment? Is it not perfectly natural that practically every letter written to hon. Members by chambers of trade and individual shopkeepers mentions the fact that industry is paying only a quarter of what it ought to pay? Do these people think that justice is being done?

Lastly, there is the house dweller, the man who pays most of all this in the long run. His view about it will depend a great deal upon where he comes from, because the effect of derating industry will, naturally, be quite different in different parts of the country. Take the area which is represented by my hon. Friend the Member for Consett (Mr. Stones). If industry were rerated, Durham County is one of the places where the rerating would have most effect.

Broadly speaking, the rerating of industry would have the effect of helping most, even allowing for the subsequent changes of grant, those areas in which there is considerable industry—the industrial areas, the places which, broadly speaking, have most to do by way of local government duties. They have most housing and most improvement of all kinds to do and most services to render, but again, broadly speaking, under present arrangements they are fairly short of resources to do it. Therefore, it would be to some extent, if one so likes to call it, a selective improvement.

I would have put it rather differently. The improvement would remedy an injustice which has fallen rather differently on different types of local authority and on different areas of the country. It has not been nearly so hard, the burdens have not been nearly so unfair, in some of the areas which hon. Members opposite particularly like to represent because they are usually safe Tory seats. It will not make so much difference there; the unfairness has not been so apparent. It is in places like County Durham, some of the northern cities, some of the poorer parts of our big cities, in places which have considerable industrial assessments, that this change most urgently needs to be made.

Now we are told that that is recognised, recognised in various degrees by the tightrope walkers we have heard today. Some of the arguments they made today might very properly have been matters of comment on Second Reading, with the explanatory addition that they were good Committee points, but when those hon. Members opposite who were in the Committee said not a word about them, but sat in dumb and concerted obduracy, does it now lie in their mouths to say, "You could have made the Bill better if you had done this, if you had done that, if you had done the other"? That is carrying political chicanery just a little bit too far—to sit in silence in Committee, concerted and organised silence, and then come here on Third Reading and make Committee points because they have no better points to make.

That kind of thing may be very smart, but I do not think it will go down very well with the people who may be paying increased rates, with the shopkeepers who are smarting under a sense of injustice, and with the local authorities which have been put by this Government into a condition of financial uncertainty and financial difficulty that no Government have ever succeeded in putting them into before. Those are the people to whom we want to give some help today. Why should we wait for a review which, at some uncertain time, the Minister is to produce?

I ask the Government one or two questions, and I hope they will answer them. First, are they prepared to say that it is impossible and impracticable to carry this Measure through now without waiting for the proposed review? Secondly, when we have the proposed review is the admitted unfairness in the incidence of rate burdens at present between industry on the one hand and commerce and the householders on the other to be remedied, or is it not? Thirdly, when is that review coming?

I conclude by saying this to them: that the derating of industry has been unfair for many years; under recent and present conditions it has become monstrously unfair, and by reason of the changes in rating legislation it has not only become monstrously unfair but it has become obviously and monstrously unfair. People all over the country know it now.

Are the Government really to say, because of the minor difficulties which could perfectly well have been remedied by suitable Amendments in Committee, if, indeed, they resisted those difficulties, because of that or because of some indefinite review of local government structure and finance in the future, "We recommend you to vote against this Bill today and to carry on for the time being what we and our hon. Friends know perfectly well to be a real piece of social injustice"?

3.15 p.m.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. J. Enoch Powell)

The introduction of this Bill has afforded the opportunity for three major debates upon the principle of derating, which has enabled the wide range of factors involved to be fully canvassed and exposed to the light of day. But I would submit to the House, with all due respect to the hon. Member for Eccles (Mr. Proctor), that it is not the principle of derating upon which in a few moments we are to pronounce. If this Bill receives a Third Reading this afternoon, then what we shall be deciding is that the full rerating of industry is right to be done now in the middle of this rating year, haphazardly and in isolation.

The question which is before us is whether or not it is possible to isolate rerating from the other connected issues of local government finance. Here I associate myself with the hon. Member for Islington, East (Mr. E. Fletcher), who said that this question of rerating goes to the roots of local government finance. So it does. As soon as we begin to examine it, we find that we cannot extricate it from the other elements of the full picture of local government finance.

Let me take almost at random some of the consequences of dealing with industrial rerating in isolation. If we pass this Bill we shall not be rerating the whole of freight transport. We shall be rerating the Manchester Ship Canal, but not the nationalised canals. We shall be rerating private and minor railway lines, but not the railway lines of the British Transport Commission. We cannot deal with the derating of freight transport without dealing with the pool payment in lieu of rates which is made by the British Transport Commission, and we cannot, is turn, deal with that pool payment unless—

Mr. Arthur Skeffington (Hayes and Harlington)

Why not?

Mr. Powell

Because we cannot rerate one half of freight transport and leave the other half derated. [HON. MEMBERS: "Why not?"] If hon. Members are prepared to defend the anomaly of rating differently two undertakings of the same kind, then I accept it from them, but I am saying that if one is to rerate freight transport properly and fairly, one cannot do it without dealing with the pool payment of the British Transport Commission, and one cannot revise that pool payment without dealing with the pool payments of the other nationalised industries similarly.

Mr. Mitchison

But surely all these pool payments are going to be reviewed next year. Cannot they be dealt with then?

Mr. Powell

The hon. and learned Gentleman is making my point for me, that anything one does and any decision one takes in regard to rerating can only be taken in the context of the review of local government finance which has got to take place in the current year.

A number of hon. Members pointed out that industrial derating is not the only form of derating. My hon. Friend the Member for Harwich (Mr. Ridsdale) and the hon. Member for Oldbury and Halesowen (Mr. Moyle) referred to agricultural derating. If Parliament is to take a decision on the question of derating, it must not take it piecemeal, but must take it on a view of the whole phenomenon of derating, and make a balanced decision upon all the factors concerned.

Throughout this debate it has been recognised that the repeal of derating would have an inevitable repercussion upon the Exchequer grants—not only upon the education and equalisation grants, but upon the whole relationship between locally raised finance and centrally raised finance which is applied for the maintenance of local services. One cannot detach the question of de-rating either historically or practically from the balance between the tax contribution and the rate contribution to the maintenance of local services.

There have been two main arguments in favour of rerating running through these debates. One is that it would achieve a more just distribution of the rate burden. Of course, it is perfectly true that the rerating of industry would reduce by a fairly small fraction the proportion of the rate burden borne by the other classes of ratepayer, though not necessarily the actual rates paid by the other classes of ratepayer.

Mr. Mitchison

The hon. Gentleman told us on Second Reading the fraction was about one-sixth.

Mr. Powell

I said one-sixth was the maximum, on any assumptions or calculations one cared to make. But the major argument which has been used is that it would give local authorities—if I may use the rather slangy expression current in this context—more money of their own. The hon. Member for Islington, East said that "local authorities have been too dependent on Exchequer grants and have had too little revenue from local resources, and therefore", said he, "we believe in the abolition of derating". The hon. Lady the Member for Coventry, South (Miss Burton) said that the compensatory grants which had been given when derating was introduced "increased the dependence of local authorities upon the central Government".

If rerating is to produce the effect which most of its advocates on both sides of the House clearly expect from it, and to which they attach the greatest importance, then that result will only flow if it is accompanied by a corresponding reduction in the amount of Exchequer subsidy in one form or another. Otherwise the outcome will merely be that the rates paid by other ratepayers will be reduced but the amount of local expenditure borne by taxes will remain exactly the same as before, and the purpose of giving local authorities more control over the money which they spend will not have been achieved to any extent.

I will agree that there are very strong arguments at the present time in favour of strengthening the independence, including the financial independence, of local government in this country, and I associate myself with hon. Members who have spoken of the need for strengthening local government at the present time. But we can only consider how to do that, as I have just shown, within the context of the financial arrangements of local government as a whole. That was the reason why the Government took the decision to enlarge the statutory review of the equalisation grants which must take place in the current year into a comprehensive review which would embrace all aspects of local government finance.

Some hon. Members opposite have suggested that this review could have been over and done with long ago. They have forgotten that in the 1948 Local Government Act they themselves provided, quite logically and quite rightly, that the review of the new relations then established between Exchequer and local authorities should first take place when the new valuations came into force this year. Indeed, it would have been nonsense to have based a review of those arrangements—certainly to have based a comprehensive review of local government finance—upon the entirely antiquated data available before revaluation had been carried through and before the new lists came into force.

It was therefore impracticable—I think this must be generally recognised—to have instituted this review much earlier than the results of revaluation could be seen; but the Government have been making good progress with this review, and they plan to open consultations with representatives of local authorities in the autumn, with a view to announcing the conclusions before the end of 1956.

When we are forced by any examination which we make of derating to recognise its intimate connection with the other aspects of local government finance, when we know that a comprehensive review of the whole of local government finance which has become possible as a result of the new valuations is in progress and should reach its conclusion during the current rating year, I put it to the House that it would be irresponsible for Parliament, which is so shortly to have an opportunity of looking at these and connected problems as a whole, to snatch out one aspect—one fraction of one aspect—from this whole subject and deal with that in a one-line Bill.

It is right that Parliament should not legislate upon these important matters without obtaining the fullest view it can on their whole bearing. Certainly it is right that Parliament should not legislate without a due regard to the immediate as well as to the further consequences of what it does. The effect of enacting industrial rerating in this fragmentary form at present would be to involve local government finance in complete uncertainty in the immediate future.

Mr. Herbert Butler (Hackney, Central)

They want to be uncertain.

Mr. Powell

The valuation lists would have to be amended piecemeal by proposals. As soon as those proposals have been made, the occupiers of industrial hereditaments would be entitled to put in—and no doubt would put in—counter-proposals for reduction of the valuations resultant upon rerating, so that the whole valuation lists would be in a state of complete uncertainty for many months, to put it mildly.

Lieut.-Colonel Marcus Lipton (Brixton)

Is it not in that state now?

Mr. Powell

The uncertainty which prevails now is nothing to the uncertainty which would be introduced by this Bill. It has been admitted during the debate that it would mean that the distribution both of the education grant and the equalisation grant would be altered. Local authorities which thought they would get a grant this year would find that they would not get a grant and vice versa. Then hon. Members opposite say, "It is all right; this will all come out in the wash. We recognise that there are consequential changes to be made, but those can come along in later years." I submit that we ought not to legislate in such a way that local authority finance is chopped and changed from one year to another.

Mr. G. Lindgren (Wellingborough)

Would not the hon. Gentleman agree that since 1951, with ten changes in interest rates, local authority finances have been in complete chaos?

Mr. Powell

The hon. Member might as well say that alterations in price levels and other factors had involved local authority finances in chaos. What we are concerned with is the structure of local government finance and the relation of local to central resources. If we are to alter that—I am sure the authors of the 1948 Act would recognise this—we must alter it as a whole with a full appreciation of the whole bearings and consequences of what we are doing, when those bearings and consequences can be studied by the local authorities, by the public and by Parliament. For Parliament to act otherwise would be irresponsible and a negation of good legislation. I therefore ask the House to support the Amendment and reject the Bill.

Mr. Proctor

Can the Parliamentary Secretary tell us whether the pledge given by the Minister in December, 1954, will be kept? The right hon. Gentleman then said: I can however give an assurance that, as soon as the effects of the forthcoming revaluation can be fully measured the Government will review the position and will consider whether any changes are necessary."—[OFFICIAL REPORT, 6th December, 1954; Vol. 535, c. 22.] Will the businessmen and shopkeepers have to wait until the end of 1956 before anything is done to redeem that pledge?

Mr. Powell

That is part of the review to which I have just referred. Obviously, the future distribution of the rate burden will depend on the proposals and decisions which emerge from the review.

Mr. Proctor

Then the answer is, "Yes"?

3.31 p.m.

Mr. J. A. Sparks (Acton)

I have listened with great interest not merely to this debate, but to the debate on Second Reading, and those hon. Members who followed the proceedings in Standing Committee will be aware of our case as then put forward in the absence of any case advanced from the Government side.

We now come to the Third Reading debate on a Bill which has already been thoroughly discussed and I do not propose to repeat the main arguments that I advanced on Second Reading and in the Standing Committee. However, I should like to bring that case up to date by mentioning a few figures which have been referred to by the Minister and which help to prove my case.

On 29th March of this year in answer to a Question which I put to him the right hon. Gentleman admitted that in the year 1955–56 the loss of rate income by local authorities from industrial derating was £45 million. We have heard the Exchequer grants elevated into the realms of mystery and it has been said that no one knows how they will be affected. But the right hon. Gentleman was able to give me precise figures without any difficulties.

He said that in the year to which I have referred, as a result of the repeal of industrial derating, the equalisation grant would fall by £9 million. The fall in the education grant would be £4.8 million. There was no difficulty about giving those figures. That would leave a net loss of rate income to the local authorities of £31.2 million—[HON. MEMBERS: "Gain."]—No, a net loss to the rate income. It is the same thing. If the repeal takes place, it would be a net gain, but as it stands without a repeal, it is a net loss to the rate income.

If my Bill receives a Third Reading, and becomes an Act, local authorities throughout the country would have an increased rate income of approximately those figures. That would be distributed among all the other sections of ratepayers—shopkeepers, householders and others—because the rate poundage would go down and every ratepayer would benefit. To say that shopkeepers and others do not deserve this relief at this time, especially when we examine the assessments on the new rating and valuation lists, is unjustifiable and unreasonable.

In the same year, the rate fund expenditure of local authorities was more than £1,000 million. I do not want to take time to tell the House exactly what "rate fund expenditure" means, but it is the general expenditure incurred by local authorities on general services. In 1955–56, it was more than £1,000 million, and towards that sum derated industry would contribute £15 million, equal to 1½ per cent. of the total rate fund expenditure. If the Bill were passed, industry would contribute £60 million towards that rate fund expenditure, equivalent to 6 per cent. No one can argue that that would be an unreasonable amount for industry to contribute towards rate fund expenditure in return for the services which it uses.

It is very important to remember that because of the new valuation lists we cannot arrive yet at a correct assessment of the result of the repeal of industrial derating, but we know from the preliminary figures that the loss of rateable value to local authorities under the new valuation lists is £108 million. That compares with £40 million for 1954–55. So, from the local authorities' point of view, the loss of rateable value has gone up two-and-a-half times on the new lists. Therefore, local authorities will be losing by comparison a substantial amount more than the figures which I have already given to the House.

Now I will deal with a few of the arguments that have been advanced against the Bill. I can quite understand the Minister and supporters of the Government trying to make the best of a bad case, but there is really no sound case against the Bill. In many of the speeches I listened to from the Government benches there was the same trend passing through. They tried to imply that if the Bill were passed it would precipitate complete chaos in local government finance. Some hon. Members said that local authorities, despite all the work they had had to do in connection with the valuation lists, would have to revalue all the industries in the country again.

That is nonsense, because nothing of the kind would happen. In the rating book of every local authority in England and Wales—and the same I think applies to Scotland—we find, for every industry, its full rateable value. The figure is already there. When the local authority sends out its rating demand it asks industry for 25 per cent. of it.

Viscount Hinchingbrooke (Dorset, South)

No.

Mr. Sparks

The noble, Lord, says "No", but that is so.

Mr. Rippon

I am sure that the hon. Gentleman does not want to mislead the House. Would he not agree that if industry were fully rated the rental value of industrial premises would be decreased and, therefore, the occupier would be entitled to, and would, make a proposal for a reduction of his present gross rateable value?

Mr. Sparks

That is a complete fallacy, because any increase in rates which industry would have to bear as a result of this proposal would not fall wholly upon the industry. For every additional £ it would have to pay in rates, industry would find 11s. 6d. and the Exchequer would find 8s. 6d. But offset against that 8s. 6d. in the £ is the reduction in the equalisation grant and the education grant which would reduce the Exchequer burden to a very small figure indeed—probably 1s. 6d. or 2s. in the £.

As I say, local authorities have all this information in their rate books. They have it, and there is no administrative problem whatsoever. It is just a matter of sending out their rate demand notes for 100 per cent. of the net annual values already in their rate books instead of 25 per cent. [An HON. MEMBER: "Oh, no."] An hon. Member says, "Oh, no", but if any hon. Member cares to get in touch with the treasurer's office of his local authority, he will probably see all this information in the rate book.

There is no administrative difficulty whatsoever, because if derating was repealed the Exchequer equalisation grant and the education grant automatically adjust themselves. That formula upon which they are based provided for automatic adjustment. There would be no question of revising formulas or devising another basis of assessment—none whatever. The Minister could, of course, do that at any time without this Bill if he and the Government wanted to do so, but this Measure would not precipitate that change in the basis of the formula itself.

In fact, when the Minister says that he will take derating into consideration in conjunction with his review of local government finance, it is very kind of him to say so, but he cannot dodge it in any case. The only difference between himself and those supporting the Bill is that we want to help him but he desires to make his task much more difficult than it otherwise would be. He will find, sooner or later, that unless there is an equitable basis of assessing and raising the rates a satisfactory system of local government finance cannot be expected. This Bill attempts to provide that basis.

Many other arguments advanced by the Parliamentary Secretary are not substantial arguments at all. He tried to bring into the picture the question of the pooled payments of nationalised industries. Those pooled payments are automatically reviewed periodically, and the Minister can make a change when he desires to do so. In fact, changes are made from time to time. But to say that if this Bill were passed he would have to do something which he normally would not have to do is quite wrong. It is part of the normal administrative work of the local government machine to bring these pooled payments under review.

I think, Mr. Deputy-Speaker, that I have really said sufficient to answer the main arguments which have been brought forward by those who oppose the Bill. We have heard from other hon. Members that some local authorities do not want this Bill and agree with hon. Members opposite in their criticism that it would throw local government finance into a state of complete and absolute chaos. Yesterday, the Council of the Association of Municipal Corporations met at Caxton Hall, Westminster. Amongst other things, it considered the report of its General Purposes Committee which, for a long, long time, has been examining local government finances.

As a result of its examination the Association wrote to the right hon. Gentleman on 23rd March and conveyed to him its views. The closing paragraph of its letter says: The re-examination referred to has, therefore, fortified the Association in the view which it has previously expressed that a review of local authority finances is essential and urgent, and the Committee are anxious that this review should be commenced with the minimum delay so that the necessary legislation may be introduced and enacted during the financial year. What about the argument that if this Bill were passed and rerating were now effected, it would throw into a state of utmost confusion the review which the right hon. Gentleman is about to undertake? A paragraph which was not in the letter, but is part of the report of the General Purposes Committee, says this significant thing: As an interim measure, and because there is no single step by which additional revenue can more quickly and easily be found for local authorities, the Association desires once more to express its view that the derating pro- visions of the Local Government Act, 1929, particularly in so far as they concern industrial hereditaments, should be repealed. My Committee hope that the Chancellor of the Exchequer will see his way to deal with this problem in connection with the Finance Bill which will be introduced within the next few weeks. The Association reiterates that, if it is thought that as a matter of national policy special assistance should continue to be granted to industry—although in view of the present industrial prosperity it is difficult to see how such assistance can be justified—then such relief should not be an indirect one in the form of concealed subsidy at the expense of the local rates. This is the view of the Association of Municipal Corporations, which has to grapple with these problems day by day. That is its job. It does not forecast a state of chaos if industrial derating is immediately repealed. It asks the Government to do it in the Finance Bill. True, it is not asking the Government to do it in my Bill, although it is obvious that the Association has great sympathy with my Bill, because what it is asking the Government to do in the Finance Bill is the same as my Bill asks the Government to do.

I think that one can take the word of a responsible local authority association of this kind, which represents a very large proportion of the local authorities in the country and who know and understand the financial problems of local authorities. If such an organisation thinks this is possible as an interim measure, I think it would be reasonable to assume that it knows what it is talking about.

We have had a very useful debate on this Bill. We know that the fate of the Bill rests with the Government supporters. We know, too, that the Government have whipped up their supporters to defeat the Bill, which rather indicates that if this had been left to a free vote of the House the Bill would have received a Third Reading today. The fact remains that not only if this were left to a free vote should be have got the Third Reading, but the authorities outside, the ratepayers and everybody familiar with this problem, all want this Bill and hope that it will become an Act.

The Bill is simple and short, but it really does contain that part of the 1929 Act which specifically refers to industrial derating and freight transport derating. I know that this is a somewhat narrow Measure. I hope that as a result of the consideration that we have given to it, the way in which this matter has been argued and thrashed out and the support that it has received in the country, the House will give it a Third Reading. The Bill would help the right hon. Gentleman to resolve many problems that he will meet later on. As I have said before, if the right hon. Gentleman, instead of saying that he will give consideration to this matter in the local government review, would go a little further and say that he will do something about it and repeal industrial derating, I and my hon. Friends would be very happy to withdraw the Bill.

It seems quite clear despite what the right hon. Gentleman says and the Government say, that they are opposed to the repeal of industrial derating. Therefore, I hope that the House will make known to the right hon. Gentleman that it is its view and the view of local authorities, ratepayers' associations and chambers of trade—and I have had a mass of letters this morning sent to me from all kinds of traders who would welcome the Bill—that the country wants the Bill, and I hope that we shall get the Third Reading this afternoon.

Question put, That the word "now" stand part of the Question:

The House divided: Ayes 134, Noes 179.

Division No. 155.]	AYES	[3.51 p.m.
Albu, A. H.	Griffiths, David (Rother Valley)	Pargiter, G. A.
Allaun, Frank (Salford, E.)	Griffiths, Rt. Hon. James (Llanelly)	Parker, J.
Allen, Arthur (Bosworth)	Hale, Leslie	Parkin, B. T.
Allen, Scholefield (Crewe)	Hall, Rt. Hn. Glenvil (Colne Valley)	Paton, J.
Awbery, S. S.	Hamilton, W. W.	Peart, T. F.
Bellenger, Rt. Hon. F. J.	Hastings, S.	Plummer, Sir Leslie
Benson, G.	Hayman, F. H.	Price, J. T. (Westhoughton)
Beswick, F.	Healey, Denis	Proctor, W. T.
Blackburn, F.	Henderson, Rt. Hn. A. (Rwly Regis)	Randall, H. E.
Boardman, H.	Holmes, Horace	Redhead, E. C.
Bottomley, Rt. Hon. A. G.	Houghton, Douglas	Reeves, J.
Bowden, H. W. (Leicester, S.W.)	Howell, Charles (Perry Barr)	Roberts, Albert (Normanton)
Bowles, F. G.	Hughes, Emrys (S. Ayrshire)	Rogers, George (Kensington, N.)
Boyd, T. C.	Hughes, Hector (Aberdeen, N.)	Silverman, Julius (Aston)
Brown, Rt. Hon. George (Belper)	Hunter, A. E.	Simmons, C. J. (Brierley Hill)
Burton, Miss F. E.	Hynd, H. (Accrington)	Skeffington, A. M.
Butler, Herbert (Hackney, C.)	Isaacs, Rt. Hon. G. A.	Snow, J. W.
Butler, Mrs. Joyce (Wood Green)	Jay, Rt. Hon. D. P. T.	Sorensen, R. W.
Callaghan, L. J.	Jeger, Mrs. Lena (Holbn & St. Pncs, S.)	Stewart, Michael (Fulham)
Champion, A. J.	Jenkins, Roy (Stechford)	Stones, W. (Consett)
Chapman, W. D.	Johnson, James (Rugby)	Strauss, Rt. Hon. George (Vauxhall)
Chetwynd, G. R.	Jones, Rt. Hn. A. Creech (Wakefield)	Swingler, S. T.
Coldrick, W.	Jones, J. Idwal (Wrexham)	Sylvester, G. O.
Collick, P. H. (Birkenhead)	Jones, T. W. (Merioneth)	Taylor, Bernard (Mansfield)
Collins, V. J. (Shoreditch & Finsbury)	Key, Rt. Hon. C. W.	Thomas, George (Cardiff)
Corbet, Mrs. Freda	King, Dr. H. M.	Thornton, E.
Craddock, George (Bradford, S.)	Lee, Miss Jennie (Cannock)	Turner-Samuels, M.
Darling, George (Hillsborough)	Lewis, Arthur	Ungoed-Thomas, Sir Lynn
Davies, Rt. Hon. Clement (Montgomery)	Lindgren, G. S.	Warbey, W. N.
Davies, Ernest (Enfield, E.)	Lipton, Lt.-Col. M.	Wells, Percy (Faversham)
Davies, Harold (Leek)	McKay, John (Wallsend)	Wells, William (Walsall, N.)
Deer, G.	McLeavy, Frank	West, D. G.
Dodds, N. N.	MacPherson, Malcolm (Stirling)	Wheeldon, W. E.
Dugdale, Rt. Hn. John (W. Brmwch)	Mahon, Simon	White, Mrs. Eirene (E. Flint)
Dye, S.	Mallalieu, J. P. W. (Huddersfd, E.)	White, Henry (Derbyshire, N.E.)
Edwards, Robert (Bilston)	Marquand, Rt. Hon. H. A.	Williams, David (Neath)
Edwards, W. J. (Stepney)	Mellish, R. J.	Williams, W. T. (Barons Court)
Evans, Albert (Islington, S.W.)	Mitchison, G. R.	Willis, Eustace (Edinburgh, E.)
Evans, Edward (Lowestoft)	Moyle, A.	Wilson, Rt. Hon. Harold (Huyton)
Fernyhough, E.	Mulley, F. W.	Woof, R. E.
Fienburgh, W.	O'Brien, Sir Thomas	Yates, V. (Ladywood)
Finch, H. J.	Oliver, G. H.	Zilliacus, K.
Fletcher, Eric	Oram, A. E.
Gaitskell, Rt. Hon. H. T. N.	Owen, W. J.	TELLERS FOR THE AYES:
Gibson, C. W.	Paling, Rt. Hon. W. (Dearne Valley)	Mr. Sparks and Mr. Royle.
Gordon Walker, Rt. Hon. P. C.	Palmer, A. M. F.
NOES
Agnew, Cmdr. P. G.	Armstrong, C. W.	Baxter, Sir Beverley
Aitken, W. T.	Ashton, H.	Beamish, Maj. Tufton
Allan, R. A. (Paddington, S.)	Atkins, H. E.	Bell, Philip (Bolton, E.)
Alport, C. J. M.	Baldock, Lt.-Cmdr. J. M.	Bennett, F. M. (Torquay)
Amory, Rt. Hn. Heathcoat (Tiverton)	Baldwin, A. E.	Bennett, Dr. Reginald
Arbuthnot, John	Barter, John	Bidgood, J. C.
Biggs-Davison, J. A.	Hinchingbrooke, Viscount	Orr-Ewing, Sir Ian (Weston-S-Mare)
Bishop, F. P.	Hirst, Geoffrey	Page, R. G.
Body, R. F.	Holland-Martin, C. J.	Peyton, J. W. W.
Boothby, Sir Robert	Hornsby-Smith, Miss M. P.	Pickthorn, K. W. M.
Bossom, Sir A. C.	Horobin, Sir Ian	Pilkington, Capt. R. A.
Boyle, Sir Edward	Howard, Hon. Greville (St. Ives)	Pott, H. P.
Braithwaite, Sir Albert (Harrow, W.)	Hudson, Sir Austin (Lewisham, N.)	Powell, J. Enoch
Brooke, Rt. Hon. Henry	Hughes Hallett, Vice-Admiral J.	Price, Henry (Lewisham, W.)
Browne, J. Nixon (Craigton)	Hughes-Young, M. H. C.	Raikes, Sir Victor
Bryan, P.	Hulbert, Sir Norman	Redmayne, M.
Buchan-Hepburn, Rt. Hon. P. G. T.	Hutchison, Sir Ian Clark (E'b'gh, W.)	Rees-Davies, W. R.
Bullus, Wing Commander E. E.	Hyde, Montgomery	Renton, D. L. M.
Burden, F. F. A.	Hylton-Foster, Sir H. B. H.	Ridsdale, J. E.
Butler, Rt. Hn. R. A. (Saffron Walden)	Iremonger, T. L.	Rippon, A. G. F.
Campbell, Sir David	Irvine, Bryant Godman (Rye)	Roberts, Sir Peter (Heeley)
Channon, H.	Jones, Rt. Hon. Aubrey (Hall Green)	Robinson, Sir Roland (Blackpool, S.)
Clarke, Brig. Terence (Portsmth, W.)	Joseph, Sir Keith	Rodgers, John (Sevenoaks)
Conant, Maj. Sir Roger	Joynson-Hicks, Hon. Sir Lancelot	Russell, R. S.
Cooper, Sqn. Ldr. Albert	Keegan, D.	Sandys, Rt. Hon. D.
Cordeaux, Lt.-Col. J. K.	Kerby, Capt. H. B.	Schofield, Lt.-Col. W.
Crowder, Sir John (Finchley)	Kershaw, J. A.	Scott-Miller, Cmdr. R.
Cunningham, Knox	Kimball, M.	Sharples, R. G.
Currie, G. B. H.	Kirk, P. M.	Shepherd, William
Dance, J. C. G.	Langford-Holt, J. A.	Simon, J. E. S. (Middlesbrough, W.)
D'Avigdor-Goldsmid, Sir Henry	Leavey, J. A.	Smithers, Peter (Winchester)
Deedes, W. F.	Legge-Bourke, Maj. E. A. H.	Spearman, A. C. M.
Doughty, C. J. A.	Legh, Hon. Peter (Petersfield)	Speir, R. M.
Drayson, G. B.	Lennox-Boyd, Rt. Hon. A. T.	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Errington, Sir Eric	Linstead, Sir H. N.	Stanley, Capt. Hon. Richard
Farey-Jones, F. W.	Longden, Gilbert	Stevens, Geoffrey
Fell, A.	Lucas, Sir Jocelyn (Portsmouth, S.)	Steward, Harold (Stockport, S.)
Finlay, Graeme	Lucas, P. B. (Brentford & Chiswick)	Steward, Sir William (Woolwich, W.)
Fisher, Nigel	Lucas-Tooth, Sir Hugh	Studholme, H. G.
Fletcher-Cooke, C.	Mackeson, Brig. Sir Harry	Taylor, Sir Charles (Eastbourne)
Freeth, D. K.	Maclean, Fitzroy (Lancaster)	Teeling, W.
Galbraith, Hon. T. G. D.	Macleod, Rt. Hn. Iain (Enfield, W.)	Thomas, Leslie (Canterbury)
Gammans, Sir David	Macpherson, Niall (Dumfries)	Thomas, P. J. M. (Conway)
Garner-Evans, E. H.	Maddan, Martin	Thompson, Lt.-Cdr. R. (Croydon, S.)
George, J. C. (Pollok)	Maitland, Hon. Patrick (Lanark)	Thornton-Kemsley, C. N.
Godber, J. B.	Manningham-Buller, Rt. Hn. Sir R.	Touche, Sir Gordon
Graham, Sir Fergus	Marlowe, A. A. H.	Turton, Rt. Hon. R. H.
Grant, W. (Woodside)	Marples, A. E.	Wakefield, Edward (Derbyshire, W.)
Green, A.	Mathew, R.	Wakefield, Sir Wavell (St. M'lebone)
Gresham Cooke, R.	Mawby, R. L.	Walker-Smith, D. C.
Grimston, Sir Robert (Westbury)	Medlicott, Sir Frank	Wall, Major Patrick
Grosvenor, Lt.-Col. R. G.	Molson, A. H. E.	Ward, Hon. George (Worcester)
Gurden, Harold	Moore, Sir Thomas	Waterhouse, Capt. Rt. Hon. C.
Hall, John (Wycombe)	Mott-Radclyffe, C. E.	Watkinson, Rt. Hon. Harold
Harris, Reader (Heston)	Nabarro, G. D. N.	Whitelaw, W.S.I. (Penrith & Border)
Harrison, A. B. C. (Maldon)	Nairn, D. L. S.	Williams, Gerald (Tonbridge)
Harrison, Col. J. H. (Eye)	Neave, Alrey	Wills, G. (Bridgwater)
Harvey, John (Walthamstow, E.)	Nicholls, Harmar
Heald, Rt. Hon. Sir Lionel	Nield, Basil (Chester)	TELLERS FOR THE NOES:
Heath, Rt. Hon. E. R. G.	Nugent, G. R. H.	Mr. Kenneth Thompson and
Hill, John (S. Norfolk)	Ormsby-Gore, Hon. W. D.	Mr. McAdden.

Question put and agreed to.

Proposed words there added.

Third Reading put off for six months.