LOCAL GOVERNMENT AND MISCELLANEOUS FINANCIAL PROVISIONS (SCOTLAND) BILL

HC Deb 17 December 1957 vol 580 cc219-336

Order for Second Reading read.

4.5 p.m.

The Secretary of State for Scotland (Mr. John Maclay)

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

The main object of this Bill, of course, is to give effect to the proposals contained in the White Paper on Scottish Local Government Finance, which was debated in the House last July. For many years there has been a lot of talk about the declining powers of local authorities. The usual analysis, I believe, has been that while their duties are heavy their powers of local decision have progressively been taken from them, largely because of the high proportion of their revenue which comes from the central Government for specific purposes and, therefore, with specific controls attached.

I believe there is general agreement that this process has not been in the best interests of local government. The underlying purpose of this Bill is to give local authorities more independence and, as a very important consequence, to encourage local electors to take a greater interest in local government affairs. The principal measures proposed towards this end are the replacement of a number of specific grants by a single general grant and the rerating of industry to 50 per cent.

Before examining these measures in detail it is worth looking at the position as it is today. At present, roughly two-thirds of the total amount of Government assistance is given in the form of percentage grants. On the one hand, the local authority spends the money knowing that it will not have to foot the whole bill; a fixed percentage of whatever it spends on the most important services will automatically be paid by the Exchequer. On the other hand, the Government, on the taxpayers' behalf, has to keep a vigilant check on local authorities' spending; this in itself can lead to frustration, if not to friction. Each specific grant carries with it its own purse string. There are now too many of these, and there is real danger of their strangling the life out of local government.

A further difficulty with which local treasurers and chamberlains are faced is that there is at present no logical justification for the way in which specific grants are now available. The grants came into being from time to time because of particular needs, but they do not apply to all services. For example, a local authority may be faced with heavy expense on a much needed service which attracts no direct grant. Water supplies in many areas are an example. If, however, it were considering spending money on another project which may be less essential, but which at present attracts a large percentage grant, there is a grave temptation to give priority to that project.

Particular services may look more attractive to some local authorities not for their intrinsic merit, but because they rank for a high rate of Exchequer grant. In short, it cannot be healthy when the percentage of grant determines whether a particular project is to proceed. Excessive reliance on ad hoc grants clearly has what I think one can call a corrosive influence on local authorities' power of decision.

Nowadays, I feel that members of town and county councils have too little say in spending their own revenues. In some cases they feel that they are merely agents for the central Departments and this does not encourage people to take a full and proper interest in local government affairs. This is not mere guesswork; the numbers voting at local elections in Scotland, as every hon. Member knows, have shown a continuous decline since the war, and there is no sign that this decline has as yet been arrested. Faced with this situation—which must cause anxiety to any Government—there are only two possible solutions.

The first is to do away with the whole paraphernalia of local government and run all services through the central Departments, or at least to treat local authorities merely as the agents of the central Government. The Government are not prepared to contemplate such a solution. The alternative is to give local government some form of blood transfusion in the hope that an added sense of purpose and responsibility will encourage local councillors and local electors alike to tackle local affairs with even greater vigour than at present.

With these objectives in mind, the Government propose, in the first place, that industry should be rerated to 50 per cent., and that local authorities should thus be enabled to raise a bigger proportion of their revenue from local sources. I appreciate that this proposal has met with two kinds of criticism; on the one hand, from those who consider that industry is already bearing its fair share of the rates; and, on the other, from those who consider that industry should no longer have any preferential treatment. We agree that the percentage of derating introduced in 1929, at the time of a severe economic depression, is inappropriate in the entirely different economic circumstances of today. We feel, however, that the complete abolition of derating would cause too large an increase in industry's overheads at a time when they are faced with such severe competition in overseas markets.

Mr. William Hamilton (Fife, West)

Would the right hon. Gentleman substantiate that by giving us specific figures? We had the same difficulty with the Minister of Housing and Local Government. He was unable to give us figures, but perhaps the right hon. Gentleman can go one better?

Mr. Maclay

I have not got the figures with me, but the hon. Gentleman will know that they are not difficult to work out. I do not think that the hon. Gentleman could quarrel with my statement that industry is faced with extremely severe competition throughout the world today. Our conclusion is that the best solution at the present time is to rerate to 50 per cent., and this is the proposal contained in the Bill. On 1956–57 figures, it will make an additional rate revenue of about £2.3 million available to local authorities in Scotland.

To come now to the grants system—

Dr. J. Dickson Mabon (Greenock)

Before the Minister leaves that point, if it is true, as I would accept, that industry is facing a difficult time with international competition, why are we rerating at all? Is it not simply a matter of degree in assessment, and is it not true, as we were told previously, that it amounts to less than ½ per cent. of the cost of industry?

Mr. Maclay

I have not got the figure the hon. Gentleman mentions, but it is a question of judgment and degree, and this is our judgment as to what is right at the moment. That is the answer.

Several Hon. Members rose—

Mr. Speaker

Order, order. I hope that as far as possible these matters will be put in consecutive speeches at the end of the Minister's speech. They are pure argument. If we do not delay speeches by endless interventions, there ought to be time for every hon. Member who wishes to speak to get a hearing.

Mr. William Ross (Kilmarnock)

On facts and figures, Sir, the right hon. Gentleman said that this would give local authorities an additional £2.3 million. Is that true? Is that the net figure?

Mr. Maclay

If the hon. Gentleman will wait for me to continue my speech, he will find that the point is fully dealt with later.

I said that this was an additional rate revenue of £2.3 million as distinct from revenue from general grant. This point is picked up later in my speech to explain the actual figure received by local authorities. The net gain is £750,000. My point is correct as I stated it—this is an additional rate revenue as distinct from general grant.

To come now to the grants system. The keystone of the structure of Exchequer aid will, in future, be a single general grant, although percentage grants will be retained where it is clear that they cannot, for good reasons—technical or otherwise—be replaced by the general grant. The general grant will replace the grants in aid of the expenditure set out in the First Schedule to the Bill; they were also summarised in paragraph 5 of the White Paper, and the most important of these is, of course, education. The distribution to individual local authorities will not be based on local expenditure; it will be calculated by reference to objective factors outside the control of the individual local authority but related to the needs of the area.

Perhaps it would be helpful if I gave an example of what I mean by "objective factors". In Table 1 in the Second Schedule we have a column of figures related to numbers of pupils per mile of road. The effect of this is that in sparsely populated counties, where there are long miles of road over which pupils have to travel to school, an addition is made to the weighted population for purposes of the distribution of the grant. This addition may be as much as 50 per cent. In this way the distribution of the grant will reflect the additional cost in which the education authority is inevitably involved in sparsely populated areas. This distribution of the grant will also have the incidental merit of helping areas which will receive little or no direct advantage from the rerating of industry. The low rating resources of such areas are, of course, also made up through the equalisation grant.

The total general grant will be fixed in advance for periods of not less than two years at a time, but the grant will not necessarily be the same for each year of a period. The amounts for 1959–60 and 1960–61, for example, will be determined in the late autumn of 1958. The amounts will be prescribed in an Order which will be laid before Parliament.

The local authority associations must be consulted before the grant for each period is fixed. Its amount will be determined by reference to the latest information regarding the rate of expenditure on the relevant services, the level of prices, costs and remuneration, any probable change in the demand for the services which is common to the country as a whole, the need for development of the services and, at the same time, the general state of the economy as determining the amount of improvement which can properly be secured during the period. This will provide an orderly way of assessing the progress of local authority services and the help being given to those services from the Exchequer.

Paragraph 7 of the White Paper said that the Government would have regard to these considerations when fixing the grant, and we are required to do so by Clause 2 of the Bill. There seems, however, to be some impression that the Government propose to use the general grant to reduce the local authorities' income. This may perhaps have been caused by misreading paragraphs 17 and 18 of the White Paper, but the reduction there referred to is that which is compensated for by the additional revenue which, as I have already described, local authorities will get from the rerating of industry out of which they show a profit. In fact, it is estimated that the proposals as a whole—it is very important that this should be appreciated everywhere—will give Scottish local authorities, on 1956–57 figures, a net gain of £750,000 a year.

This will be their share of the additional revenue from rates on industry. Here I come to the point raised by the hon. Member for Kilmarnock (Mr. Ross), and I will go over it again to prevent misunderstanding. As already explained the gross addition is approximately £2.3 million. Against this, however, must be set the loss in tax revenue which amounts to about one-half and which must be made good to the Treasury. Of the other half of the additional net revenue, two-thirds will be retained by the ratepayers, that is, £750,000, and one-third by the taxpayers. The House will recall that in deciding to allow local authorities to gain an additional £750,000 a year the Government have had particularly in mind that there are difficulties inherent in changing from specific grants to a general grant. The grant for the first period will also include a refund to the local authorities of the minor grants which will be discontinued—they are in Clause 4—and an addition to offset any changes that the proposals may cause to the level of the Exchequer equalisation grant. The amount of grant so arrived at for the first period will be the starting point for the settling of the grants for all subsequent periods.

I should like to deal now with the two main criticisms of these proposals which appear to have been made so far. First, it is alleged that local authorities are being asked to pay too high a price for their freedom and that the general grant, fixed for a number of years in advance, will, in times of inflation, leave them worse off than they are now. This criticism, however, takes no account of the procedure laid down in Clauses 1 and 2 of the Bill for fixing the totals at the beginning of the grant period having regard to the various factors which are explicitly set out in Clause 2. No clearer undertaking could have been given.

We have also made provision for the exceptional case where there is a sudden rise in costs of such magnitude that local authorities cannot be expected to bear it in full until the next general grant order is laid. In that case there will be an interim review. In short, Clause 2 is a straightforward statement of the Government's intention and should serve to allay any fears which were expressed before the publication of the Bill.

The second main criticism, which has come mainly from those concerned with education, has been that in future local authorities will be able to develop a particular service, such as education, only at the expense of other services, that there will be competition between services, and that education will suffer. The suggestion that certain services are bound to be unjustly treated under the general grant system is really a vote of no confidence in local government.

To suggest that local authorities are not able to allocate their expenditure in accordance with local needs is to suggest that in their present form they should be brought to an end. That is not our view. We have given assurances on more than one occasion that we regard education as an expanding service and we will ensure that the new financial independence given to local authorities will not be exercised in such a way as to undermine essential educational provision or to prevent the proper development of education services. In this connection, I should mention the powers contained in Clause 3, which enable the Secretary of State to fix standards and to withhold the grant where these standards are not achieved.

As for education in particular, the Secretary of State's ultimate power to require an education authority to fulfil its duties under the Education Acts will remain as at present in the power given by Section 66 of the Education (Scotland) Act, 1946. Under that Section an education authority may be required to discharge any duty. If it does not do so the Secretary of State may discharge the duty himself and recover the expenses, or the court may be asked to order specific performance.

These powers have never been used in the past—they have always existed—and there is no reason to think that they will have to be used in the future under the general grant.

Mr. J. Grimond (Orkney and Shetland)

In my constituency, we are troubled no: only by many miles of roads but by many miles of sea which add considerably to our expenses. Would the Minister say—not now but at some point—whether any provisions are made for this, because it is a point which is worrying local authorities.

Mr. Maclay

I am aware of the amount of sea surrounding the hon. Member's constituency.

I will finish dealing with the point about powers which, if necessary, can be used for the maintenance of educational standards. I repeat that it has not been necessary to use them in the past and I do not think that it will be necessary to use them in the future, because I have complete confidence in local authorities doing their work in the best possible way.

I turn now to the Bill itself, which consists of four parts and five Schedules. Part I deals with the introduction of the general grant; Part II with the rerating of industry; Part III with miscellaneous financial provisions, which have been discussed with the local authority associations; and Part IV contains a number of supplementary and general provisions.

Clause 1 provides that from 16th May, 1959, county and town councils will receive a general grant in place of the specific grants for education, health services, fire, child care and certain other services described in the First Schedule. These were all mentioned in paragraph 5 of the White Paper. The annual aggregate of the grant for Scotland, which is to be fixed for a period of two or more years, will be distributed in accordance with the formula set out in the Second Schedule. This is not the same formula as is proposed for England and Wales. I have already given one example of how it will work. As I said during the debate on the White Paper: The formula which we propose to use in Scotland was worked out by a joint committee of officials of the local authorities appointed by the local authority associations, and officers of my Department: and I am satisfied that it is the best which can be devised in Scottish circumstances."—[OFFICIAT RFPORT, 30th July, 1957 Vol. 574, c. 1079–80.] I should add that the valuable contribution which the local authority officials made to the Working Party's deliberations in no way committed the local authorities. I am, of course, aware of the attitude of the associations to the Bill. We are confident, however, that the formula in the Second Schedule will stand up to scrutiny.

Clause 1 (3) and the Third Schedule provide for adjustments of the general grant to give effect to the pooling of expenditure on certain items in some of the services covered by the general grant. Clause 2, which I have already described, sets out the considerations to be taken into account in fixing the general grant for any period and allows for an interim review in exceptional circumstances. Clause 3 empowers the Secretary of State to prescribe standards of administration for the relevant services and provides a sanction—on the lines of that already in existence for the purposes of Exchequer equalisation grant—enabling him, subject to the approval of this House, to reduce the general grant where there has been a failure to maintain reasonable standards.

Clause 4 provides for the discontinuance of certain minor grants. As they are not very likely to be mentioned again. I should perhaps record that they are those for salaries of highway engineers and surveyors, portable wheel weighers, rodent control and compensation for loss of fees for the licensing of hackney carriages. As I have said, allowance for these will be made in the general grant. Clause 5 provides for the abolition of the Education (Scotland) Fund. This is a corollary to the introduction of the general grant. The Fund is used at present to hold the education grant for Scotland, which is, broadly speaking, 11/80ths of that for England and Wales. These arrangements will be superseded by the general grant and the Fund will no longer be required. Certain other payments now made out of the Fund, such as grants to central institutions and for the training of teachers, will be met from 1959–60 out of voted moneys.

I should like to dwell for a moment on the effect of the Bill on the Goschen formula. The present application of Goschen to the English education grant will, of course, be reflected in the first aggregate total of the general grant. This aggregate will be used as a foundation on which to calculate the general grant in future years. Once the general grant is in operation, however, there will be no identifiable English grant in aid of education to which the Goschen fraction could be applied. It is also very important to note that if we were to calculate the whole of the Scottish general gram on the basis of the Goschen fraction, the result, so far as I have been able to estimate—it is a fairly complicated operation—would be to make Scotland worse off to the extent of just over £1m. a year.

Clause 6 and the Fourth Schedule provide for statutory amendments consequential on the introduction of the general grant and on the changes affecting the equalisation grant system proposed in the Local Government Bill for England and Wales. What follows is rather technical—I apologise to the House for this—but I feel that it is necessary to have it on the record.

The present arrangements for the calculation of the total amount of the Exchequer equalisation grant payable to local authorities in Scotland are set out in the Sixth Schedule to the Valuation and Rating (Scotland) Act, 1956. This Schedule is designed to provide an equalisation grant which would leave Scotland with the same rate burden per head of actual population as would have to be carried in England and Wales outside London if the expenditure per head of weighted population were also the same.

Part I of the English Bill, however, contains certain amendments to the English equalisation grant system which are not being extended to Scotland at present. As there has been Scottish legislation on this subject in both 1954 and 1956, it is proposed that the Scottish arrangements for distributing the equalisation grant should be altered as little as possible in advance of revaluation in 1961. The problem therefore is to secure that Scotland continues to receive comparable treatment, in spite of the amendments contained in the English Bill, until there is a further opportunity to review the equalisation grant arrangements in Scotland. This is secured by the amendments of the Acts of 1954 and 1956 contained in Part II of the Fourth Schedule.

These provisions are, however, of a temporary nature. There must in terms of the Act of 1956 be further legislation to deal with the equalisation grant arrangements in Scotland before 1963, and the intention is to review them comprehensively as soon as the outcome of revaluation in 1961 is known,

Clause 7 rerates industry from 25 to 50 per cent. of net annual value. Since rateable values in general are frozen under the Valuation and Rating (Scotland) Act, 1956, it also provides that there should be no appeal against the altered value in the valuation roll. The other points of detail in this Clause are more appropriate for the Committee stage, as are two minor changes in the 1956 Act proposed in Clauses 8 and 9.

It might be convenient at this stage to mention the transitional arrangements. Since the changes proposed cannot take place without causing some gains and losses to individual authorities. Clause 15 is designed to spread their effect over a period of not more than six years. Any increase in the rate burden of a local authority directly caused by the new grant system will be made up in full in the first year, up to 90 per cent. in the second, and on a diminishing scale thereafter from the gains of other authorities.

Most of the changes proposed in Part III of the Bill lime been discussed with, or asked for, by the local authorities.

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

Does that include the proposal to make permanent legislation requiring the Government to give consent to local government capital expenditure?

Mr. Maclay

"Discussed with". I would not go further than that. It was certainly not asked for. Consultation is a very important matter in all our researches.

Clause 10 raises to the product of a rate of 1s. in the £ of rateable value or standard rateable value, whichever is the higher, the limit of expenditure by town councils on the provision of halls and certain other buildings. The existing 3d. rate limit, which was in force as far back as 1892, is now clearly out of date.

Clause 11—I will come to this now—makes permanent the Secretary of State's control over borrowing by Scottish local authorities for capital purposes. The present control was introduced in 1939 by the Defence Regulations and has been continued by Section 4 of the Local Government (Scotland) Act, 1951, and by successive Expiring Laws Continuance Acts, the most recent of which has recently been considered by this House. The Government have no doubt that under modern economic conditions control must remain for an indefinite period and should not continue to rest on temporary legislation.

Mr. James McInnes (Glasgow, Central)

Do the Government still hold that view in respect of new expenditure which is not grant-aided?

Mr. Maclay

It is in force at present.

Clause 12 increases the maximum period for which local authorities may borrow for certain purposes. Clause 13, which corresponds to Clause 50 in the English Bill, extends the range of local authority securities which are trustee investments. Clause 14 gives the Secretary of State power to increase by regulation fees payable to the Registrar-General and to local authorities for searches and certificates under the Marriage and Registration Acts. The present fees are long out-of-date. I think that hon. Members will agree that a number of these small matters that I have mentioned are welcome to local authorities. The remaining clauses are formal and the House may agree that they need not he considered in detail at this stage.

I return now to my original theme. We propose, by the Bill, to increase the independence of local authorities. [HON. MEMBERS: "Oh."] I have listened to myself very carefully and the whole principle of what is being done is to increase the freedom of local authorities in deciding how to spend their money.

Mr. Willis

I am grateful to the right hon. Gentleman for giving way. He said exactly the same thing in July. He said then that he had set up a committee to see how best this could be done. It would be more reassuring to us, after five months, if he could tell us the ways by which it can be done.

Mr. Maclay

That committee is still working. It has a very wide range of things to cover on how to get relaxation of controls. Hon. Members know a lot about putting controls on and we are doing our best to take some off. I was coming to the particular point which the hon. Gentleman raised. We have undertaken to carry out a fresh review of the relationships between the central Departments and the local authorities.

The purpose of this review, which is now proceeding, is to ascertain whether existing procedures can be further simplified to give all local authorities more discretion in the use of their resources. I say "all", because it does not apply just to particular grants changed over from an ad hoc to a general grant. The Committee has a big job to cope with. I assure the House that there is nothing sinister in this Bill. If the intention had been to reduce local authorities' income it could easily have been achieved by scaling down the ad hoc grants, and there would have been no need to introduce a general grant and a distribution formula.

In our view, the action taken by an individual local authority in deciding how to use the general grant is just as important to the area it serves as the action taken by the central Government in fixing the global sum. In future, we envisage that local authorities, when debating the programmes put forward by their various committees, will know in advance how much is available by way of Exchequer aid. It will, therefore, rest with them to decide which projects are most worth while and will bring most good to their areas. We are giving local authorities more discretion to use their own revenues as they think best, whether from the rates or from the general grant. We are convinced that this must result in more effective local administration and revival of interest in all the work of local authorities. This is the end which, I believe, all responsible persons desire, and it is with confidence that I commend the Bill to the House.

4.37 p.m.

Mr. Douglas Johnston (Paisley)

There are two views about this Bill—that of the Government and that of all local authorities, all associations interested in education and all independent local authorities. That, of course, does not necessarily mean that the Governments' view on the Bill, or that the Bill itself, is wrong. It does, however, cast a shade of doubt upon the protestations of the right hon. Gentleman the Secretary of State that this is a Bill to increase the independence of local authorities, that it is a Bill which will revive interest in local elections and make persons more interested in the work of local authorities generally.

If the Bill had been, as the right hon. Gentleman seems to think it is, such a great liberating Measure, a Measure that would strike off the shackles which have so long bound local authorities, I should have expected a hosanna of praise from every local authority in the country. He has not got that. He has got no praise whatsoever. Every independent local authority has criticised him.

Sir Ian Clark Hutchison (Edinburgh, West)

Edinburgh supports him.

Mr. Johnston

The hon. Member missed my qualifying adjective, "independent" local authority. I have always regarded the Edinburgh Corporation as having very much the same status as the National Liberal Party—a wholly-owned subsidiary of the Government.

Sir James Henderson-Stewart (Fife, East)

The hon. and learned Member is talking about something of which he knows nothing. He is talking nonsense.

Mr. Johnston

I confess that for the moment I have forgotten that the hon. Member for Fife, East (Sir J. Henderson-Stewart) was a member of that Party. From his conduct in the House he displayed the characteristic of a typical Tory to such an extent that I thought that he must be a member of that party. If I offend him by suggesting that he has the characteristics of a typical Tory. I withdraw my remark.

I agree with the object of the Bill, as put forward so eloquently by the Secretary of State. What I disagree with is his method. It will not attain the object. We are all conscious of the fact that for very many years we have not had local government in Scotland; we have had local administration. Local authorities have been concerned with the application and local administration of plans which have been settled by Government and Parliament, not only in broad outline but in detail. For example, in the matter of education no local authority has any decision as to the standard of schooling, how many years a child shall remain at school, and what amount shall be paid to teachers. It has no say in education or in any other local service. It is all laid down in the most meticulous detail either by Parliament or by way of regulations made by the Secretary of State.

This distinction between local administration of Government Measures and local government proper is bad. We should do much better to have either proper local government or Government Measures administered not by local authorities but by the Government. Of those two alternatives, I prefer the first. Accordingly, I accept the right hon. Gentleman's thesis that it is advisable to put back some interest into local government.

Certain requirements are necessary for that. First, we must give back certain powers to local government. But there is only one minor provision in the Bill which gives local government any power, and that is Clause 10, which allows a local authority to spend 1s. instead of 3d. on town halls. That is the only extension of local authority powers. The Bill does away with none of the obligations which local authorities have—and they have very many. It does away with none of the powers which the Secretary of State has to impose his will upon local authorities if they fail to measure up to the standard which he demands. Indeed, as he has so pointedly made clear to the House. Clause 3 gives him further powers.

So long as Parliament insists upon giving detailed orders to local authorities, and so long as the default powers of the Secretary of State are so extensive, we cannot possibly have proper local government. When I use the phrase "local government" I am distinguishing it from the mere local administration of Governmental duties. Although this may not be the appropriate moment to go into details, it is appropriate to say that we should think again about local government in its entirety.

There are other requirements. It is not only necessary to remove some duties from local government and to give it more powers; it is also necessary for local government to have some finance. Its dependence upon an outmoded method of financing itself is wrong. It was more than thirty years ago that a committee presided over by the first Lord Dunedin drew pointed attention to the inequalities and the inequity of the method of raising local finance by rates. The Sorn Committee drew pointed attention to the fact that local government financed by rates was breaking down, and said that that system of local government finance was becoming overloaded. Since the present Government came into office increased burdens have been laid upon local authorities—some imposed by Statute and others by general Government policy.

I wonder whether the right hon. Gentleman noticed two very pertinent articles in the Scotsman published yesterday and today. The first concerned the difficulties which local authorities were having in raising capital sums—particularly the difficulties which the larger ones had in having to join the queue on the money market and the difficulties which the smaller ones had in finding money either from the market or from the Public Works Loan Board—and the second referred to the enormous burden which the very high interest rates now exigible were placing upon local authorities. We are now placing an intolerable burden upon ratepayers. It is intolerable, because the demand for rates depends entirely upon the assessed value of a house or industrial premises, and the variation in that assessed value does not compare to the variation of incomes as between one section of the community and another.

I believe that it was the Dunedin Committee which said, in broad terms, that it recognised that those in receipt of more than a very small level of income paid, by way of rates, a disproportionately small amount in support of local projects. We know that that is so from our own experience. I would say that the major block of dwelling-houses in Scotland is rated at between £20 and £45. That major block may be inhabited by persons with widely diverging incomes, but if they live in houses of the same value they will have to pay the same rates. If we are to have proper local government, as distinct from local administration, we must reconsider our system of local finance.

I am aware that the White Paper says that this has been done, and that a satisfactory way has not been found of raising local revenue other than by way of rates. I do not know what inquiry was made by the Departmental Committee, but I know that within the last few years an inquiry was undertaken on the Continent of Europe to ascertain the methods of local finance which operated there, and that that inquiry showed that numerous ways of raising local finance existed in various countries. I am also aware that the Dunedin Committee said, in the most emphatic terms, that the Board of Inland Revenue should be told to work out a system of local Income Tax. It should not be asked what are the objections to it. Lord Dunedin said that the Board must be told to work it out and that the objections would, or would not, prove themselves.

As I said, the Bill in no way deals with the powers of the local authorities, other than to restrict them in certain particulars with which I will deal in a moment. It in no way increases the financial basis of local authorities. The Bill increases, or will tend to increase, the burden placed upon local ratepayers, and in this way. There will be a block grant. It is true that the block grant distribution depends largely on objective facts and figures, but the fixing of the total of the block grant does not appear, so far as I can see, to depend upon objective features at all. It appears from Clause 2 to depend entirely upon what the Secretary of State thinks is the right figure. Having got the right figure, it may be broken down according to certain objective features.

Let us take it that the block grant will be fixed for two or three years ahead. It will be distributed according to the formula to local authorities and they will then, according to the Secretary of State, have the power to take independent decision about how to spend that block grant. Is that true? Does any hon. Member really think that it is true? If he does, he has neglected to look at the Statute imposing duties on local authorities. For example, local authorities must provide a certain standard of education. They must provide a certain standard of fire protection, and this, that and the other thing. These are statutory obligations imposed upon all local authorities and to which they must devote the funds they have.

The scope of local authority "neglect"—if I may use that word—or the scope of local authority ambition, is determined entirely by the funds in their possession and by the over-riding power of the Secretary of State. These services must be provided by local authorities because the Statute says that they must. What moneys local authorities possess must be devoted to these services. If not, the Secretary of State will step in and may ultimately bring to bear the sanction of Clause 3 of this Bill, or the provisions in various other mandatory Sections of other Acts.

I am unable to understand how it can possibly be said that any local authority has any power or any choice in the spending of the cash in its possession either under the block grant or under its general revenue; except that some local authorities may desire to do a little more or a little better than others. In that case, they may rate beyond the block grant. If they desire to do that, the limitation on their power is the rating capacity and the ability of the ratepayers to pay. If they desire to do less, they must face the anger of the Secretary of State and the sanction provided in Clause 3. The room for manoeuvre possessed by any local authority is very small indeed. To suggest that this is a great new concession is unworthy of the Secretary of State.

Mr. Maclay

The hon. and learned Gentleman is developing my case. It is clear that under these proposals the room for manoeuvre is considerably greater than it has ever been since ad hoc grants have developed to the extent to which they have developed.

Mr. Johnston

I should like the right hon. Gentleman to develop that and to tell us in what way there would be room for manoeuvre. For example, he stated during the debate on the White Paper on which this Bill was prepared that it would increase the scope of the power of local authorities. He said: The principal freedom to be given to local authorities is a range of choice within the general grant subjects."—[OFFICIAL REPORT, 30th July, 1957 Vol. 574, c. 1089.] If that be true, I should have thought that today the Secretary of State would have given us a catalogue of this range of choice. What is this range of choice? Can the right hon. Gentleman give me a dozen items? May I take it from the right hon. Gentleman's refusal to answer that there are not a dozen items in this range of choice? Can the right hon. Gentleman give me half-a-dozen?

Mr. Maclay

The hon. and learned Gentleman has only to look at the Bill. I am not going through it again. It explains that greater responsibility which comes from having a general grant plus the product of their own rerating, instead of a series of ad hoc grants tied to particular purposes with the restriction which that inevitably imposes. There is a whole range of local authority operations to be examined when considering how to make the best use of the total resources.

Mr. Johnston

The right hon. Gentleman knows quite well that he has not answered my question. He says that we should look at the Bill. I have read the Bill on numerous occasions, and today I listened with close attention to what the right hon. Gentleman had to say. I have no reason to believe that a local authority is given a range of choice within the general grant subjects.

Would it be proper, for example, for a local authority to spend money on fire services which otherwise it would spend on education? Of course it would not. It would be proper to do so only if the local authority was already providing a standard of education satisfactory to the Secretary of State. Is not that so? Of course it is. Only if the local authority is doing something more than the minimum can it cut down and transfer money, for example, from the education service to the fire service. Inevitably, that would mean that the standard of education would fall and the standard of the fire service would rise. But there is no real catalogue of range of choice within the general grant subjects given by this Bill.

I appreciate that the Secretary of State may know nothing about it, but I ask that between now and the end of the debate we be given a catalogue of, let us say, a dozen items in which a local authority is given a range of choice within the general grant subjects.

Mr. Maclay

The hon. and learned Gentleman knows that he is making a purely debating point which is not worthy of him. One could range over the whole of the operations in which local authorities engage, and if asked to pick out individual points, one could go on for ever. The whole substance of my argument is that if a local authority is tied to specific grants it enjoys less freedom in the spending of its money. That is self-evident. I am not pretending that the Bill does all that one would wish to do for local government, but I do suggest that it provides more freedom than exists at present.

Mr. Johnston

I can only repeat that I quite fail to understand it. I am by no means satisfied that there is this range of choice within the grant subjects. I am not alone in that; I have yet to meet anyone engaged in local government who thinks that there is this range of choice.

I take an entirely different view of the Bill from that which is taken by the right hon. Gentleman. The purpose of the Bill is to transfer from central taxation to local taxation the substantial increases which are bound to come in the next few years. I am disappointed in the Bill, not so much because of its contents, which are what I expected, but at the fact that the Government should have thought so lightly of the Opposition and of the country that they could not have wrapped it up a little more, could not have tried to deceive us a little better. It is not flattering to our intelligence that the Government should not have tried to put these proposals over a little better than they have.

Let me continue for only a moment or two more. The bait, if I may so call it, which is held out to local authorities is of approximately £750,000 more per year. How much of that will ever find its way to the local authorities is another matter, and what value it will have by the time the Bill comes into operation I do not know. I am not only suspicious of the initial sum, but of what the Secretary of State prized so highly, the fixing of the annual aggregate amount of general grant from time to time. He suggested that if there were any increases in costs the local authority would get an increased grant, but Clause 2 does not say that at all. All that it says is that the Secretary of State shall take certain factors into account, including increased costs. It in no way obliges him to make a payment if there are increased costs.

The Bill is a grave disappointment to those who had thought rather better of the Secretary of State than this, who thought that he would stand up for the interests of Scotland rather better than he has done, and who hoped, perhaps rather faintly, that the Bill might mark a new advance in administration in local government in Scotland. The Bill consists really of the first five Clauses, and then there are these other odd Clauses. I can only advise my right hon. and hon. Friends that this is a Bill which we must certainly vote against.

5.3 p.m.

Lady Tweedsmuir (Aberdeen South)

I found the arguments of the hon. and learned Member for Paisley (Mr. D. Johnston) somewhat different from what I had expected. The general criticism of the Bill inside and outside the House has been that education would suffer, but at the start of his speech the hon. and learned Gentleman seemed to regret the extra powers given to the Secretary of State under Clause 3, by which he can alter the grant if, in his opinion, a local authority is not providing the efficient education service which should be given.

It is a strange argument that because we allow local authorities to take more responsibility for the allocation of money to their services, the administration will cease to be efficient. In the administration of all money, whether it be in relation to one's household or to larger units, it can very rarely be said that the money could not have been more efficiently administered. That is why I support the principle of the Bill to give to the locally-elected body more direct responsibility. I would remind the hon. and learned Gentleman that George Bernard Shaw, who was neither a Tory nor a National Liberal, said that … freedom means responsibility and that is why most men dread it. The merit of direct responsibility is an opinion we have held on this side of the House all our political life and on which we were elected. As far as possible we shall give local authorities discretion over their own affairs.

I am not worried about that. Local electors will see that local authorities discharge their functions properly. I am worried because I suspect that, Aberdeen, the third largest local authority in Scotland, will not get enough money under the Bill. [HON. MEMBERS: "Ah."] The interjections from hon. Members are based on the misunderstanding of what I mean. I have no fear that local councils Cannot spend their money economically but I want to ensure that Aberdeen will get enough of it. That is the purpose of my intervention this afternoon.

Mr. John Rankin (Glasgow, Govan)

Glasgow has exactly the same fear as the noble Lady.

Lady Tweedsmuir

No doubt the hon. Member will have an opportunity of raising that point if he is fortunate enough to catch your eye, Mr. Deputy-Speaker. It is estimated in the White Paper that the general grant for Aberdeen, had it been in force for the period 1956–57, would have been £1,276,342. With specific grants the city has to find about 30 per cent. of the expense. It is true that another £750,000 is to be made available to local authorities, but I suspect that Aberdeen will suffer a loss, for the simple reason that it has an advanced educational system which is due to much work over the years, even by Socialist-controlled councils—

Mr. Thomas Fraser (Hamilton)

Does the noble Lady realise that the £750,000 additional money applies to the year 1959–60, is an increase of 2 per cent. over a period of three years, and is not likely to take account of the fall in the value of money in that time? I think the local authorities will get much less.

Lady Tweedsmuir

I am always grateful for small mercies. I do not expect that the rise in the cost of living will continue, because this admirable Government will deal with that problem. Aberdeen is a delectable place for teachers and it happens that in our schools we have a high proportion of teachers to pupils and an extraordinary lack of capital costs in the form of buildings compared with the cost of remuneration and matters of that kind. While it is true that there is less need for Aberdeen Education Committee to spend in the future, because it has considerably advanced during the past years, it is hard that work done with the approval of the Government should apparently now be penalised. I hope that what my right hon. Friend called certain objective factors regarding education will be generously taken into account.

For instance, I appreciate the transitional arrangements whereby no local authority will bear any loss during the first year of this scheme. I also appreciate that it will bear only 10 per cent. of any loss during the second year and that it is estimated that the scheme will take five to six years to come into effect. I want to find out what it to be the total sum allocated to Aberdeen, and I notice that there are to be discussions with local authorities towards the end of next year about the totals of the general grant for the years 1959–60 and 1960–61.

Aberdeen and other local authorities likely to suffer a loss—this would be my reaction—are likely to make a larger estimate of expenditure, whether they need it or not, and that must be taken into account if we wish to encourage saving, economy and thrift. I suspect, indeed, I prophesy, that Aberdeen will win for itself a higher proportion of the general grant than is laid down in the White Paper.

I appreciate what is to be done about revaluation and it may be that many of the considerations now before us will have to be revised. I place the bulk of my hopes in this matter on Clause 2 (2) which says: If … any unforeseen change has taken place in the level of prices, costs or remuneration"— that is very important— and that its effect on the cost of providing the services giving rise to relevant expenditure is of such magnitude that it ought not to fall entirely on local authorities, the Secretary of State may by order … vary the aggregate amount of the general grants … I suggest that the Secretary of State will find that local authorities who may suffer heavy losses will take full advantage of the provisions of Clause 2 (2).

Mr. Ross

The hon. Lady has just told us that prices will not go up. What is she talking about?

Lady Tweedsmuir

With their usual foresight, the Government are writing into the Bill, much of which will come into operation in future years, provisions against any possibility—I admit a remote one—of the return of a Socialist Government.

What is of importance in Clause 2 is the word "remuneration," because, as I have often said, I should prefer to see more spent on good sound salary structure than on buildings. Further education is very important and the provisions of Clause 2 (1, c) will apply in that case.

I do not wish to detain the House any longer except finally to say that I trust, in justice to a combination of circumstances, due largely to the amount of progressive work done for education in the City of Aberdeen and in many cases to circumstances which are outwith its control, that the Secretary of State will use the powers given to him in the Bill both wisely and generously.

5.17 p.m.

Mr. Malcolm MacPherson (Stirling and Falkirk Burghs)

I can assure the noble Lady the Member for Aberdeen, South (Lady Tweedsmuir) that I am sorry for Aberdeen, just as I am sorry for a number of other local authorities which will find themselves in positions less fortunate than they had hoped. I was struck by the fact that during her speech the noble Lady touched on one of the key points in the whole situation. She talked about what Aberdeen had done for education under the existing régime, the régime of percentage grants. That is the best argument against the Bill. We are opposing the Bill because the percentage grant system has worked and because we are very doubtful about how the new system will work.

The percentage grant system has produced a partnership between local and central authorities which has led to a great deal of harmonious co-operation, as instanced by the progress in education in the City of Aberdeen. That is the position which we are now disturbing—disturbing on pleas which are wide, general and specious.

The right hon. Gentleman the Secretary of State produced most of those pleas. The logic of his argument was often just a little difficult to follow. When discussing the existing situation, the percentage grant situation, in two, I think, consecutive sentences the right hon. Gentleman produced two arguments running completely counter to each other. The first was that it is possible in the present situation for local authorities automatically to get grants for what they want. The second was that Her Majesty's Government have to keep a vigilant eye on local authority spending.

I do not know on which argument he is basing himself, but I do know that in the past the considerations which he stated so briefly, so briefly that he did not express them fully or correctly, have merged together to produce a co-operative system. Local authorities do not get grants automatically. They get them for approved schemes and projects. In other words, it is not simply a matter of agreement about the amount of money which changes hands. It is a matter of agreement about the nature of the project on which the money is to be spent. That is one of the crucial points of the argument about the Bill.

The Bill talks a great deal about money and on that basis the right hon. Gentleman produced a number of fine-sounding generalisations about independence and freedom and that kind of thing. In fact, the money is raised only because of the projects on which it is to be spent. The essential thing in local government is not money, but policy, and the question is not whether local authorities ought to be free to spend the money they have, but whether they ought to be free to develop policies of their own.

In the major subject with which the Bill deals, education, the biggest change which has taken place over the last generation is that policy has become much more a national matter and fewer decisions are now left in local hands. It is not simply a matter of fixing teachers' salaries and so on, but also a matter of major lines of development. It is a matter of national interest to people everywhere, in Aberdeen and in every other local authority, that children should stay on longer at school. It is also a matter of national interest that every education authority in the country should develop technical and scientific education more than it is doing at the present time.

No one is going to leave the decisions on these matters in local hands. These are matters of national interest, as are most of the major matters in educational policy, and it seems to me quite a false idea to talk about the local authorities having increased freedom in matters like education when, in fact, we know perfectly well that the major advance is to be along nationally determined lines.

I think that the right hon. Gentleman was probably wrong in making the point with which he started—that because of this greater independence in decisions about spending, there would be greater interest on the part of the voters in the affairs of the local authority. He gave us no sort of reason at all why the change he proposes should have that effect on people voting in local government elections. He said that as a result of the Government making this change we should get more people voting in those elections and more interest in what the local authority was doing. I do not think any greater interest on the part of the voters will arise because of this slight change towards what he calls independence, though it is not independence actually. There is no great freedom, but just a slight change in the way in which a local authority can handle its money. The right hon. Gentleman gave no reason at all for that suggestion.

When he reflects more fully upon the matter, and perhaps he has done already, the right hon. Gentleman will probably find that the reason there is less controversy about local matters than there used to be—as expressed in the numbers of people voting—is just that the main content of a local authority's work is now far more determined by national policy than before. There is far less controversial policy about which to clash than there used to be.

One of the arguments put forward in this connection in favour of a change has been that the proportion of grant to rates, which form the income of each local authority, has been too high. I noticed that the right hon. Gentleman did not lay any great stress on that, and I do not wonder. The proportion, as given by his colleague in the debate on the English Bill, was six to five—six grant and five rates. The proportion in terms of policy decisions is, of course, immensely greater than that. In matters with which a local authority can deal, the ratio of central decision on policy to local decision must be not six to five, but twenty to one, or something of that sort. It does not seem to me at all unreasonable that the amount of income from grant should be greater than the amount of income from rates. There is nothing in the nature of the work done to make it necessary for the rates to be higher than the grant. It is a quite irrelevant consideration.

The whole business of the relationship between local authorities and the central Government, not on finance but on policy, seems to me to be a very important matter, and I think that in this Bill the Government are treating it too lightly. Under the present system which is about to be swept away a local authority receives for an approved project a certain amount of grant, more, in most cases of educational expenditure, for instance, than it is to spend itself out of the rates. That proportion, as between the local authority and the central Government, is a matter of policy to be decided by the Government of the country as a whole.

It seems to me that, apart from administration, it is the function of a local authority to act as the local eyes and ears of Government as a whole—the eyes and ears from the observations of which new lines of policy will be determined. The local authorities can push ahead here and there and try out schemes, this project and that, without necessarily committing the whole of the economy to a particular kind of thing; but if it is well considered, then they can get co-operation and friendly assistance from the central authorities.

Under the percentage grant arrangements, this has been done with mutual co-operation and trust between the central Government on the one side and the local authorities on the other. The local authorities can receive this co-operation, and can receive a grant in order to try out any properly considered and reasonable schemes. That seems to me to be the proper sort of relationship between the central Government and local government, and this is the kind of relationship which the present grant arrangements foster. It is the kind of relationship which the new grant arrangements will only endanger, if they do not in fact sweep it away.

I should like to make one other comment. I do not intend to speak for very long; since this is the kind of debate in which a great many Members will want to speak, I shall try to confine my remarks to about fifteen minutes, instead of the usual twenty. I should like to comment on the modifications or qualifications which have been put into Clause 2 (1), on which the Government have relied a great deal for their defence against the accusation that these changes in finance will lead to a failure to develop services properly.

Clause 2 (1), in spite of what Government spokesmen have been saying, seems to be an essentially weak safeguard. There is not nearly enough in it. It is not in fact any proper safeguard at all. Clause 2 (1) (c) deals with the need for developing those services and the extent to which, having regard to general economic conditions, it is reasonable to develop those services. One of my hon. Friends, in the debate on the Bill dealing with England and Wales, asked who would decide what was reasonable. Obviously it will be the Government. Who will decide whether there is a need? Again, the Government. Who will decide about general economic conditions? Again, the Government. What the paragraph means is simply "When the Government think fit"; nothing more or less than that, and there is no safeguard in it at all.

The same is true about the two earlier paragraphs (a) and (b), though it is paragraph (c) which is important for developing services like education, because there is a great deal of fear on this side of the House that because of the tremendous developments which are needed in education in the next few years, the central Government, if it remains in its present hands, will try to get out of its financial responsibilities and pass the buck as far as possible to the local authorities.

There are two points I should like to make about Clause 3. One is about default. The Secretary of State touched on this matter, and I should like to have from the right hon. Gentleman or from his hon. Friend who is to conclude the debate an assurance on one rather serious point concerning the nature of the provisions regarding an authority which does make a serious default. The Clause states that the grant can be refused, and, of course, the right hon. Gentleman says that supplementary provisions for that are in the existing Acts. In the debate on the English and Welsh Bill, there was one rather horrifying moment when the Minister of Education, replying to a point made by an hon. Member from Birmingham, said that if Birmingham was short of a large number of teachers, it would still get its full grant. It would have a financial bonus because it had not appointed as many teachers as it should have done.

I hope the right hon. Gentleman will assure us that nothing of that sort will happen in Scotland, but that if there is a great shortfall in the number of teachers, the authority will be given help, but will not be given an uncovenanted financial benefit simply because it has not spent, or has not managed to arrange properly to spend, the money which should have been spent on teachers, or on something else equally important.

I should like to have seen in Clause 3, or in another Clause, some provision comparable to those concerning default but providing an incentive. I should like to see some arrangement which would encourage local authorities to strengthen their teaching staffs so that they could decrease the size of classes and raise the level of their service. There does not seem to be any incentive in the Bill to do that. Under the present arrangements there is a fairly considerable incentive, as the noble Lady showed. I do not think there would be any difficulty in making provision for proper incentives on at least a number of the more important matters in which there might be development.

5.31 p.m.

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

There were two points made by the hon. Member for Stirling and Falkirk Burghs (Mr. M. MacPherson) with which I agreed. I thought that during the English and Welsh debate, and, perhaps, during our own talk on this subject previously, the idea was created that in these days local authorities could simply think up a scheme and get a 60 per cent. grant. Of course, that is not so; we know there has been keen and very helpful scrutiny in Edinburgh all through.

The second point raised by the hon. Member was with regard to the remark of the Minister of Education about the shortage of teachers in one area. It was felt that the area would be penalised thereby but the Minister said, "No, the calculation is made on the average staffing required." That gave the impression right away that there was a way of saving money, to cut down spending on education by employing fewer teachers. I hope my right hon. Friend does not agree with the Minister of Education in that respect.

Hon. Members must recognise that this is a Bill without friends outside the House. The local authorities are against it, the teaching profession is against it, and industry is against it so far as it effects rerating. We must realise that those bodies of opinion are not frivolous but are responsible bodies, and give due weight to the quality of opinion that is arising against the introduction of this Bill. When I read what they send to me and hear what they say to me when I meet them, I wonder whether it is possible that those responsible people can be wholly wrong and the Government completely right. It is not some slight amendment for which they are asking; they are against the Bill almost completely.

It is up to us, perhaps more than usual because of that consensus of opinion against the Bill, to prove our case. I believe that case can be proven, but we must abundantly prove it. Arguments against the Bill which I have had brought to me and which I have heard in this House and outside are, first, against the claim we make for the underlying purpose of the Bill as described in the White Paper, that it will give greater responsibility, greater independence to local authorities and create greater freedom. That is looked upon as dubious and as something which will not amount to much in practice.

The second argument is that this is a sinister scheme to cut the cost of education nationally and raise the cost locally. I must admit that in this Bill we are erecting the apparatus to do that. The third argument is that the teaching profession, even though we operate this machinery properly, has no confidence in local authorities to apply the necessary funds to meet the expansion which we all know will be necessary in education in the years ahead. Some say that the re-rating provisions do not go far enough, and industry says they go too far. Those, roughly, are the headings under which the main complaints about the Bill have come to me.

On the local authority question, we should listen to what the teaching profession has said. It has not much respect for the local authorities' position in Scotland today. It says that local authorities are jaded, ailing and sick, that they have lost prestige and lost the appeal to young people to take part in local government; it is unrepresentative; and there are too many non-elected members.

That makes nonsense of one claim made by my hon. Friend the Member for Aberdeen, South (Lady Tweedsmuir) that local electors will check on these people who have to come back every three years for election. That is not so, and I will give figures to show that it is not so. A member of the E.I.S. said that he thought local elections were becoming a farce. As we say that we believe local government is the lifeblood of liberty and liberty is the lifeblood of local government, we should look into this question and see if we can do more to bring in new life to local government.

I looked into the question of elections and found a rather alarming state of affairs. I found that in 1955, when all bodies had elections, 70 per cent. of the seats in Scotland were uncontested. That is not strong local government. If we take out the district councils, we find that 60 per cent. were uncontested and only 40 per cent. of the members were elected. In the counties of cities 14 per cent. were returned unopposed, in large burghs 23 per cent. were unopposed, and in small burghs 50 per cent. were unopposed. In the landward areas 75 per cent. were unopposed, and in the district councils, where elections are rapidly becoming a farce, 86.4 per cent. were unopposed.

Mr. Cyril Bence (Dunbartonshire, East)

I am pleased that the hon. Member is raising this matter, because three years ago when a Labour candidate contested a ward in Bearsden, at the count the Conservative had 2,000 votes and the Labour candidate 600 and the Conservative said, "I hope we shall not have any of this nonsense again."

Mr. George

I do not see the point of that intervention, but what emerges from an examination of these figures is that some form of injection is needed into local government.

Mr. James Stuart (Moray and Nairn)

This is a subject, which obviously is of very great importance. Does my hon. Friend think that there is anything in the view that in modern times, with present taxation and so on and the difficulties of people finding time to take part in local government, there is the reason for people not presenting themselves as candidates?

Mr. George

I intended to deal with that matter later in my speech. I share the views of my right hon. Friend the Member for Moray and Nairn (Mr. J. Stuart). I say these figures show that some injection is needed into local authority life to restore confidence to the public in that institution. In my time I have seen interest decline, and I fear that that is due to the increase in the amount of grants.

I do not share the view of the hon. and learned Member for Paisley (Mr. D. Johnston) who opened for the Opposition in this debate. I think this Bill will do something to help interest in local government and local activities. I think the part of the Bill dealing with rerating will also help, because a great gap was created when industry was derated and no longer had a stake in local affairs. Experienced businessmen did not come forward as candidates at council elections as they did before derating. I think the Bill will do something to restore prestige and increase responsibility, because it will increase independence of local government.

I can see in local councils far more active committees and far more elert finance committees—finance committees were rapidly becoming rubber stamps for the others. Much more time will be needed for finance committees if they are to harmonise the conflicting views of the various services. I would stress that: much more time will have to be given to finance committees if they are to do that.

I turn to the point raised by my right hon. Friend the Member for Moray and Nairn about attractions for candidates. We have to look at this matter in a practical way. I think it is true that the amount of time consumed on local council work is more than many can spare nowadays; but we can offer some inducements. A higher share of Her Majesty's honours should go to people in local government. I know of excellent men who have served the public for thirty years—county conveners, provosts and the like—who have received no national recognition whatever. We should not under-rate the tremendous appeal that these honours have to men in local government, and if this work were better recognised nationally it would play some part in bringing people back. The office of convener of counties has not the status it should have. The holder should also be a lord lieutenant.

Then there is the cost of candidature. We know that this is growing. It can be more than ordinary people can bear, and we should think of paying, at least, for election postage. Who would ever have dreamt that we would have seen the day when payment would be made to those sitting in another place? I think that ultimately we shall have to consider paying councillors, especially those in counties of cities and in the scattered landward areas. We have to do something to bring suitable people forward as candidates.

I have spoken of candidates; now let us look at the results of elections. They give great cause' for alarm. Here are the figures for 1952, when all bodies had elections. We should always remember that many people are not given the chance to vote because there are no contesting candidates, and that many people stay away because they have no desire to vote and have no interest in the issue. In 1952, of the people who were entitled to vote in Aberdeen, only 40 per cent. did so. Other figures are: Dundee, 52 per cent.; Glasgow, 45 per cent.; Edinburgh, 35 per cent. That was not a very good showing, but what has happened since? In 1952, 40 per cent. of the Aberdeen electorate voted. Last year, the figure was 9 per cent. Dundee dropped from 52 per cent. in 1952 to 36 per cent. last year; Glasgow, from 45 per cent. to 28 per cent., while Edinburgh showed a slight increase from 30.5 per cent. to 32 per cent.

Those are alarming figures and point to the fact that some campaign, some real effort, some change is needed to alter the outlook, first, towards candidature, and secondly, towards exercising the vote. This Bill will do something, but do not let us over-rate what it will do. It will not create vast changes. I am sure that more will be done for local government by the fact that tenants are now required to pay all the rates. That will bring at least a sort of angry interest into local government next year and in succeeding years. Some councils help themselves by opening their doors to the Press, but too many of them do their work in committee behind closed doors. In turn, the local Press could do much to create interest in local government affairs by better-quality reporting.

I should not like the impression to get about that the figures I have quoted present the true picture. That the position is not so bad as they indicate is largely due to the fact that in Scotland we have a hard core of high-quality members who go on year after year doing first-class work for the country and are backed up by most able and conscientious officials. That hard core, aided by those officials, has made striking advances in local government work in recent years, but I see some grounds for the teachers' doubts about local authorities, and this and succeeding Governments should find out why this decline of interest has taken place.

I favour rerating of industry. When we last discussed this subject, the hon. Member for Fife, West (Mr. Hamilton) took me to task for not declaring an interest. That was one of many wild statements that he then made. I do not know whether I should declare an interest. I have read the whole of the English and Welsh debate, and no one declared an interest there. I certainly have an interest in firms that will be affected by rerating.

As I say, I favour rerating—

Mr. Willis

One hundred per cent. rerating?

Mr. George

Industry should pay its full share of local government costs—and it should send its full share of representatives into the councils. My right hon. Friend's speech gave me the impression that he thought that as industry was derated in depression it should be rerated in prosperity. That seemed to put forward the idea that industry is still enjoying derating. Such is not the case. Had there been no derating, taxation on industry would have been less.

The Chancellor of the Exchequer certainly did not say year to year that there was a proportion of industry's income that was sacrosanct because of rating. Not a bit of it. The Chancellor of the Exchequer has long since consumed the benefit of derating. Industry has been taxed, and overtaxed, and I deplore the light-hearted approach to the taxation of industry which is made by some hon Members opposite. [Interruption.] I think that hon. Members opposite have, with unanimous voice, said that industry is not yet rated nearly highly enough. The Secretary of State tried to strike a balance of what he thought industry could bear.

Rerating should be carried out, and should be carried out up to 100 per cent., but it should be a combined operation between the Chancellor of the Exchequer and my right hon. Friend in order to see that industry is no worse off after it is rerated than it is now. But this is a new imposition put on industry, not justified at all by the fact that it has been derated. Rerating at 100 per cent. should be in this Bill, and should be introduced by ten steps of 5 per cent. each and paid back to the local authorities in full. At the same time, the Chancellor should see that industry is not penalised by this move.

I come to the general block grant, about which I have had many deputations, and have met some senior officials of the E.I.S. The teachers think that this is a sinister scheme to effect economy nationally, and to add to the local burden. This Bill certainly creates the apparatus to do just that, and there must be a sincere approach by Governments, of whatever party, towards education. If not, we are putting into the hands of Government the tools necessary to cut education as they think fit.

Local authorities undoubtedly prefer a percentage grant. It is quite a cosy little feeling to know that that money is always coming in and that if one can once get Edinburgh's approval of schemes those schemes will go through and there will be no restrictions on the amount. The teachers fear reaction on the part of local authorities in future. They fear that the local authorities might misuse the block grant. That grant seems to me to represent the introduction of budgetary control into local government affairs. By this system they have to work within a fixed budget, and I believe that that will excite a great deal of interest, and highlight possible savings in local authority work. If this leads to economies, what is wrong with that? If economies can be made by closer attention to the way the work is done, then let economies be made. I cannot believe that this great industry of education, spending so many hundreds of millions, is nearly 100 per cent. efficient. No businessman would ever claim that his industry is efficient to anything like that degree.

Mr. Rankin

The hon. Gentleman is indicating that economies might be made or may be made. Is he leaving us to infer that, since economies may be made, extravagance exists?

Mr. George

The hon. Gentleman must not put words into my mouth. I am saying that there is not one industrialist in this House or outside who would say that his industry could not effect economies. I am quite certain that within the £500 million there is room for economies, and I am quite certain also that, working within the framework of the block grant, authorities will pay more attention to costs and economies will result. That is certain as a matter of business. "Economy", in the view of hon Gentlemen opposite is a nasty word, but in mine it is not.

The argument has been put forward that what is proposed will penalise the progressive authorities and help those which are not progressive. The housewife who spends most is not necessarily the best housekeeper. I cannot see why we should assume that high spending means that a better education is being provided. High spending could also mean bad management. Low spending could mean an inferior education, but it also could mean good management. Why should it be suggested that high spending means progress and low spending means reaction?

Let us look at what may fairly be taken as a yardstick, namely, what authorities are spending per pupil per annum. That is a fair yardstick of education now, and, from a study of it, we may see whether there is any real fear for the future. Taking the counties of cities, I find that Aberdeen this year estimates an expenditure of £31 per head per pupil per annum. Dundee will spend £23.7. There is a difference of 28 per cent.

Mr. Ross

City or county?

Mr. George

City. These are all counties of cities that I am taking at the moment. Aberdeen estimates that it will spend £31 this year, and Dundee estimates £23.7. There is a difference of 28 per cent. Is the one authority progressive and the other reactionary in the eyes of hon. Gentlemen opposite?

Mr. T. Fraser

Over and over again, Ministers have told us from that Box that Aberdeen has built new schools since the end of the war and, unfortunately, Dundee has not. That accounts for the difference.

Mr. George

No; it goes further than that. I am taking four counties of cities. Glasgow will spend £26.1 per pupil this year, and the figure for Edinburgh is £25.4. There is a great difference between Aberdeen and Dundee, and they are both Socialist-controlled. I leave hon. Gentlemen to make up their minds whether one authority is reactionary and the other is progressive. The average of them all is £26.2, so there is no great difference between any of them and the average in the counties of cities.

Looking at the counties, which embrace all the large and small burghs, I do not take the highest figure, which comes from a Highland county—£51.4 in Sutherland—but I find that Ayr is the lowest, with a figure of £20.5 per pupil. That also is Socialist-controlled. It is the lowest spender, yet I know that it is not a reactionary authority. Having lived and worked there, I know that Ayr is progressive in education and that its spending is good. The average for all the counties is only £23.4, so that Ayr, though the lowest, is not much below the average.

From these figures, I believe that all authorities are doing their best, at the moment, continuously to discharge their duty to their children, and I do not fear that they will suddenly change their outlook towards education after the Bill is passed.

There are many more points I should like to deal with, but I do not wish to detain the House. I will deal quickly with the question of the grant. I believe that authorities are trying honestly today, but the grant will be operated according to a formula, and the charge is made that we intend to cut education. I think that that charge has been ably answered already by my right hon. Friend. The other charge is that the grant will not take account of inflation. As to that, I share the view of my noble friend the hon. Member for Aberdeen, South that the Government will halt inflation. I believe that we are in for a period of stability in prices.

Mr. D. Johnston

Has the hon. Gentleman noticed this morning's returns showing a rise of 1 point in this last month?

Mr. George

I saw that there has been a rise of 0.7, to be quite exact. I believe that our policy is working, and I believe that it will succeed. It is my view that we shall succeed in halting inflation and that we are in for a period of stability.

Even though we did not halt inflation, the formula, if properly and honestly applied—I admit that it can be misused—will take account of all the facts, including the existing costs, need for expansion, trends of prices, and salaries and so on. It also makes allowance for any exceptional happening which a local authority is unable to deal with in the ordinary way. Of course, all must be considered within the ability of the economy to carry the expansion and the cost. What is wrong with that? In any event, I believe that if any depression did strike the country, education would, under this Government, be the last to suffer.

Turning to my last point, the fear of teachers that local authorities will fail to discharge their duty, I consider that the evidence I have given of past and present performance shows that the local authorities are indeed trying today to provide a good national standard of education. I cannot imagine any local authority rushing off to expand other services covered by grants at the expense of education, and I do not think that any local authority would be so reaction-minded as to neglect education in order to reduce the call upon the rates. I am confident that local authorities will play the game by the educational system and will provide for the expansion which we all know is needed.

Other countries have recognised the absolutely vital place which education must have in the years ahead. We have seen the majestic advance of Russia, and we realise the need for technical education among our own people. We must educate our children better. We must at some time raise the school-leaving age and do better with further education. There is a great task to be accomplished, and, for my part, I should never support any Government which neglected education or allowed anyone else to neglect it. The Bill is an advance, and I am happy with the position of local authorities under it. I believe that the Bill will help them and the country, and I support it.

5.57 p.m.

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

There is one point on which I agree with the hon. Member for Glasgow, Pollok (Mr. George). Nobody wants the Bill, particularly in Scotland. I might agree with him on one or two other points in his speech, but I am rather hesitant to do so, because we have been accustomed to the hon. Gentleman making speeches in the House and in the country and then, when it comes to doing something about them with Ministers, running away from the problem. If he is really sincere about industrial rerating, we will give him a chance of voting against the Financial Resolution tonight.

Mr. George

I said that 100 per cent. rerating should be a combined-operation, the Chancellor reducing the burden on industry as local authorities acid to it.

Mr. Willis

We cannot get even that done within the present Bill unless the hon. Gentleman votes against the Financial Resolution. We must make a start. I am afraid that my experience of the hon. Gentleman leads me to think that we are not likely to have his support for any of these measures, and that his speech was concerned more with catching the Press in his constituency than with dealing with realities in the House.

Mr. George

There is no Press in my constituency.

Mr. George Thomas (Cardiff, West)

The hon. Member for Glasgow, Pollok (Mr. George) is a very lucky man.

Mr. Willis

I wish to return now to what I, like my hon. and learned Friend the Member for Paisley (Mr. D. Johnston), regard as the real problem. I should have thought that one of the reasons, if not the important reason, why anybody with any knowledge or association with local government activities in Scotland was against the Bill was that it failed to deal with a problem which everyone has said in the past is the real problem of local authorities.

I do not know of one single person who has spoken about local authority administration during the past six or seven years who has not pointed out that the real problem is the ever-increasing rate poundage and the urgent necessity of finding means of supplementing existing local government revenue. That has been the view of practically every body, association or organisation which has considered the matter, including the Sorn Committee. I have a whole volume of quotations, but I do not want to weary the House by going through them.

The trouble with the exceedingly narrow basis of taxation from which we get our local revenue is that it is unjust and that every time the rates go up, so the injustice is aggravated. When we consider that local rates have increased by about 300 per cent. since before the war, the injustice which was seen to exist pre-war has become increasingly obvious to almost everybody, except, apparently, the Government. That is the crux of local government finance, and the Bill does nothing to alter it.

When the Committee to inquire into local government finance was set up, it was some time before we could even discover from the Secretary of State that there was a Committee in Scotland inquiring into the matter. A considerable amount of probing was needed from this side of the House before we could discover that. Everybody expected that the problems of local government finance would be examined. We are told that they have been examined, but we have not been given a report by any Committee which examined any other system or form of adding to local government income.

We have been told that other methods were considered impracticable, but we have never been told why. It is not the way to treat the House of Commons, or to treat Members who have to deal with local government finance and to legislate for it, simply to say that somebody—we do not even know who—has considered the matter and has discarded any alternative suggestion. We know neither who were the people nor what their reasons were. That is not good enough.

The Government suggest that they will do some little thing about it and that they will rerate industry to the extent of 25 per cent. I found it difficult to understand the reasons for this partial rerating of industry. As I read the White Paper for England and Wales, it seemed to me that the argument of the Government was that the national contribution to the income of local authorities had increased to the point at which the ratio was now 6 to 5 when compared with the sum raised locally, and that something had to be done to adjust that balance.

Where do these figures of 6 to 5 come in in relation to Scotland? I understood from the reply given to my hon. Friend that the Government contribution in Scotland is something like 40 per cent.

Mr. McInnes

It is 38 per cent.

Mr. Willis

I was giving the Government the benefit of the doubt. I looked up the figures for Edinburgh, and I find that its total rating revenue is £9.3 million, of which Government grants account for only £3.1 million, or one-third. Where, then, does the ratio of 6 to 5 come in for the large densely populated local government areas? We ought to have some explanation.

The Government argue that they ought to do something about it on the basis of the 6 to 5 ratio and, therefore, they say that they will rerate industry another 25 per cent. to try to level up the balance as between local revenue and Government grant. If that is a sound argument, why should industry not be rated 100 per cent.? On that basis, I should have thought the two should be levelled up even more and that the Government should make it possible for the local authority to increase its rateable value by £6.9 million instead of £2.3 million. The aim of the Government seems to be to increase the rateable value and to increase the income of local authorities from their own resources, to give them greater power. If that argument is true, industry should be rated 100 per cent. and not 50 per cent. Instead, however, it is rerated to 50 per cent.

In Edinburgh, the ratepayers will continue to subsidise industrialists to the tune of a 4d. or 5d. rate. I thought that the Government did not believe in subsidising people who did not need subsidies. That is what they always tell us. In Musselburgh, a small burgh in my constituency—where, incidentally, we can manage to secure a poll of almost 70 per cent. at municipal elections, and where there is a very live local body—the ratepayers will continue to subsidise industry to the tune of a 1s. 3d. rate. That is a heavy rate poundage by which to subsidise people who, judging by the condition of their accounts as I read them in the reports in the Press, could quite well afford to pay their rate burden.

What is the burden that industry has to bear through the rates? The right hon. Gentleman dodged this question, but many years ago the Balfour Commission pointed out that it was 0.55 per cent. of costs. Everyone knows that because other costs have gone up far greater than the rates, the percentage burden of rates upon industry is now considerably below that level. I should have thought that the Secretary of State might have had some figures to give us about that. It cannot, therefore, be said that this is an immense burden to industry, but it would mean a very great deal to the local ratepayers and to the local councils. It would, of course, be in accordance with the traditions of Government policy, as professed, in not wanting to subsidise people who do not need a subsidy.

There is another point about this argument which is used in the White Paper for England and Wales concerning the distribution of income as between Government grant and local revenue. I did not agree with my hon. Friend the Member for Stirling and Falkirk Burghs (Mr. Malcolm MacPherson) when he said that it did not matter where the money came from. By and large, there is the feeling that money which comes through the Government is money that is collected more fairly.

Mr. Malcolm MacPherson

I do not recall the remarks to which my hon. Friend is referring. I do not think they were used in any context connected with his present argument. I certainly consider it extremely important where the money comes from, especially the money that may come from either of the two sources of taxation or rates.

Mr. Willis

I think my hon. Friend will find that that was what he said, although I agree that the context was different. He was dealing with a wider argument. The point I wanted to make was that people feel that money obtained through Government grant is at least collected in a much fairer manner than money obtained through the rating system.

I suggest that the Government have made no effort whatever to find any alternative means of supporting the local revenue of the local authorities. They have done nothing about the large number of suggestions which have been made by a large number of people, some of which have been reported upon very favourably. If it is the object of the Government to enable local authorities to increase their own basis of revenue rather than to obtain money from the Government—which, they argue, ties the local authority and destroys its freedom—they ought at least to have given more favourable consideration to the proposal that the local authority might itself collect some of the revenue at present collected by the Exchequer. I should have thought that that proposal itself would have strengthened the Government's arguments. That would even achieve what the Government are telling us they want to do.

Nobody could argue that the Bill contributes to the financial strength of the local authorities, and so the only arguments about the Bill are about the degree of freedom it confers upon local authorities. As I said when we discussed the White Paper in July, I cannot see how the local authorities obtain greater freedom. The hon. Gentleman the Member for Pollok pointed out the great needs there are for an expansion of our education services. Who is deciding that? The Government. Who is seeing that the needs are met, and the policy implemented? The Government. As has been pointed out on this side of the House already, these things are being decided and implemented nationally. That limits the degree of responsibility which any local authority has.

Let us look at the services for the expenditure on which the local authorities are to get grant. It will not take very long to do that. There are the fire services. We cannot reduce the fire services. We are compelled to provide certain fire services. Indeed, there is a stipulation about that, and no local authority has any choice in the matter. Then there are the traffic patrols. We cannot cut those down. They are increasing. Then there is the registration of electors, and we cannot cut that.

There are health services under the 1947 Act. Of course, local authorities already have a certain amount of freedom now in their work upon them. A local authority can decide whether it will build an institution under the 1947 Act or whether it will build an institution under the National Assistance Act, 1948. The local authority makes a choice, but even then it has to go to the Secretary of State for approval. However, in so far as a choice is permitted to the local authorities, they have that choice today. They cannot, however, choose to proceed with a scheme until it has been approved. The difference to be made by the Bill will be very small.

Mr. Bence

I hope my hon. Friend appreciates that, although the local authorities have freedom within the limits of the grant, by Clause 14 the Secretary of State will make regulations to force them to increase the cost of dying, of being born, and of being married.

Mr. Willis

The freedom of the local authorities is limited by the extent of the grant, and the Secretary of State himself told us that he thought it was necessary that we should continue to control local authorities, especially their capital expenditure, and the Bill makes permanent the control by the Secretary of State over borrowing by local authorities for capital purposes, even when a local authority does not get a grant for a service.

That is a funny way to set the local authorities free or to widen their freedom. The Government say that even when the burden is borne wholly by the ratepayers and not the taxpayers, when it is entirely the burden of the local authority, the local authority must get his permission to proceed, and that this requirement is to be made permanent. That is not freedom. I cannot see where the right hon. Gentleman gets his idea that there is any freedom about this.

I asked him how far he had proceeded with his review of the Report of the Committee on the way in which freedom could be given to the local authorities. He said that he had not got very far. It is five months since he told us the Committee was set up. The proposals in this Bill were announced at the beginning of the year. Surely by this time we ought to have been given some indication of what the Government have in mind, but we have still not the foggiest idea what the Government intend to do. They have given no indication at all. All they have said is, "We shall look at this."

This is a bad Bill for two reasons. It is a bad Bill because it does not deal with the financial problem, and it is a bad Bill because it does not even do what the Government say it does—give freedom to local authorities. I am reminded of the comments of the previous Lord Provost of Edinburgh. I would quote him because Edinburgh was mentioned while my hon. and learned Friend the Member for Paisley was speaking, and because Edinburgh is a great friend of the Government and never passes a resolution condemning them, but is always very favourably disposed towards them. Sir John Banks, addressing the Convention of Royal Burghs immediately after the publication of the Government's proposals, said: I am doubtful if the changes which will take place in the financial system and resources of local government as a result of the present review will go far enough effectively to solve the problem of local government finance and give a full measure of independence to local authorities. In other words, the Bill would achieve neither of those two things. I think Sir John spoke very mildly about it. I certainly do not think the Bill does those things, and for those reasons I think the Bill should be opposed.

6.16 p.m.

Mr. Michael Clark Hutchison (Edinburgh, South)

Unlike hon. Members opposite, I applaud the Government for presenting this Bill because one of its aims is to strengthen the influence of local government. We all know that today local government suffers from a lack of candidates and a lack of interest. Any Bill which tends to restore interest in local government and so to attract more candidates into local government, and which strengthens the hands of local government, ought to be welcome, I should have thought. If we are to have lively and efficient local government we must give it responsibility and control over its own affairs. I should have thought that that was self-evident.

As I understand, what causes most dispute is the substitution of the block grant for the percentage grant. I personally think that it is an excellent idea. I favour it. My reasons are as follow. With the percentage grant there are various votes, and there is much delay in getting sanctions, and an enormous amount of paper work; there is also irksome supervision; and there is extra work thrown upon accountants and auditors. The cry on all sides today is for the Government to cut red tape and act more quickly. Any Measure which will simplify administration must be welcome. I am reliably informed that by this substitution the amount of time and number of man-hours which will be saved will be enormous.

Mr. Rankin

Would the hon. Member give us the source of his information?

Mr. Clark Hutchison

Yes. It came from the local authority in Edinburgh.

Mr. Rankin

Only that one?

Mr. Clark Hutchison

It is the only one I asked.

I had, however, experience of this matter when I served as a civil servant overseas. I was in an area which received a grant from United Kingdom funds. That grant was divided into various sections, into different votes under different heads, and out there we were not allowed to change from one to another without the approval of higher authority. To get such approval took a long time and much correspondence and sometimes loss of temper. I learnt from practical experience that the system was a bad one. I believe that if money is to be paid to local authorities they should be given a lump sum and they should be trusted to use it to the best of their ability.

Mr. Ross

The hon. Gentleman will appreciate that once that has been allocated by local authorities it will not give the civil servants and the local government the right to change.

Mr. Clark Hutchison

I am referring to the work involved of checking the amounts by auditors and accountants. My authority is the Edinburgh local authority.

Mr. Ross

That is quite wrong.

Mr. Clark Hutchison

As has been revealed, I have the honour to represent one of the Edinburgh constituencies. All will agree that Edinburgh has an excellent record in local government and a very progressive outlook. I think that it is the best governed city in Britain. Edinburgh has clearly said that it favours the Bill and welcomes it. It will be of benefit to Edinburgh. Indeed, the proposals are very similar to proposals put forward by Mr. Bell, who was Treasurer in Edinburgh for many years and was known as an expert in local finance. Edinburgh has no objection to the formula for calculating the sums to be given. The formula was devised after considerable thought and work by the working party that eventually produced it. No local authority and, indeed, no person has produced a better formula.

There are, however, two points I should like my hon. Friend to touch upon when he winds up the debate. They are covered by Clauses 1 and 2 of the Bill. First, I should like him to say quite definitely that local authorities will not be burdened with extra expenditure for any unexpected thing that they have to take over. They do not want an unexpected burden laid on their shoulders and then to be asked to pay for it. Secondly, the amount of the grant should be calculated annually or perhaps every second year, and it should be fixed to cover a period not more than two or three years ahead.

Like other hon. Members, I have received a good deal of literature about the Bill. It has come from two sources—teachers and certain local government authorities. The teachers feel that in some way education will suffer as a result of the Bill. I think that they are prejudging the issue.

Mr. William Hannan (Glasgow, Maryhill)

Out of experience.

Mr. Clark Hutchison

That is not my view. I believe that by giving greater responsibility to local authorities eventually competition may be started up. In any event, in Scotland education has always held a high place in our hearts and I do not see that because of the Bill the interest in education will suddenly melt away. If local authorities are not up to the mark and are not running our schools properly, the teachers and parents can get together and remove the town councillors or others at the local elections.

Mr. Bence

Where will the money come from?

Mr. Clark Hutchison

The other section of the community which does not appear to like the Bill is local authorities which are controlled by Socialist majorities.

Mr. McInnes

We cannot allow a statement of that kind to pass, because the hon. Member must be aware that the bulk of local authorities in Scotland are Conservative-dominated, and every local authority in Scotland, through the appropriate associations, has protested vigorously against the Bill, with the exception of Edinburgh.

Mr. Clark Hutchison

I was thinking primarily of the cities, such as Dundee, Aberdeen and Glasgow, which are Socialist-controlled.

I can understand that, because they like central control and orders from the top. If they have this new system they will have to think for themselves and not merely do as they are told from the central organisation. This idea of centralisation and orders from the top going down the line is the pernicious doctrine which hon. Members opposite favour. I do not subscribe to it, and I believe that we shall have more efficiency if we give local authorities more power to run their own affairs. The Bill does that to a certain extent.

Mr. D. Johnston

Is it the hon. Gentleman's thesis that local authorities are opposing the Bill because they fear freedom?

Mr. Clark Hutchison

No. As I understand, the local authorities which are dominated by a Socialist majority do not like it because it conflicts with their philosophy.

6.27 p.m.

Mr. James McInnes (Glasgow, Central)

I have endeavoured to follow the speech of the hon. Member for Edinburgh, South (Mr. M. Clark Hutchison) as far as I could, but I confess that he rather surprised me by some of his statements, particularly the statement about Socialist-controlled local authorities being opposed to the Bill. When challenged about local authorities he diverted attention to the cities. When he mentioned the cities he said that they are opposed to the Bill because they like central control.

The hon. Gentleman does not understand the set-up of Scottish local government when he asserts that the cities particularly like central control. Since I became associated with local government almost thirty years ago, the fight has been against central control. My hon. Friend the Member for Govan (Mr. Rankin) once said that we might get rid of the idea that local authorities are merely the stamping machine of the central government. That has been the battle all along and it is the battle in the Bill. It still exists.

I want to deal with one or two other points that the hon. Gentleman made. I listened with rapt attention to the Secretary of State. The entire theme of his contribution could be crystallised by saying that it dealt with freedom and liberty, greater responsibility, greater this and greater something else. It was nothing but a series of platitudes. The right hon. Gentleman went on to say quite categorically that it was not the intention, by means of the Bill, to cut down grants to local authorities, or in any way to cut or bring about a reduction of the services which local authorities provide. I cannot appreciate that point of view, nor do I accept it yet.

The position is set out very clearly in paragraph 17 of the White Paper on Local Government Finance in Scotland, which says: The Government's view is that this opportunity should be taken to make some reduction in the level of Exchequer grants. The reasons for this proposal, as explained in paragraphs 26 to 29 of the English White Paper, are briefly that local authorities now receive more from Government grants than from rates. It adds that since before the last war incomes, on an average, have trebled and rates have doubled.

I emphasise that the very first sentence is: … this opportunity should be taken to make some reduction in the level of Exchequer grants. The right hon. Gentleman said that that sentence referred to the question of re-rating, When did derating or rerating ever become an Exchequer grant? Government spokesmen are trying to cloud the situation. They regret the inclusion of that sentence. It gives the whole game away. They assert that the sentence refers to rerating, but rerating and derating were never a matter of Exchequer grant. It seems to me, therefore, that absolute nonsense is made of the Secretary of State's assertion that it was not the intention to cut down grants or to reduce the services provided by a local authority.

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

What does the hon. Member think the words "this opportunity" mean? "This opportunity" in relation to what?

Mr. McInnes

"This opportunity" in relation to the question of the financial arrangements between the Government and local authorities. The heading of the paragraph in the White Paper is, "Reduction in Grants." Have the Government ever made a grant to local authorities in respect of derating? Will the hon. Gentleman answer that question?

It is perfectly clear that this proposal involves a reduction in Exchequer grants and that the block grant system is the instrument to be employed in achieving that reduction or that economy. If hon. Members opposite still assert that there is to be no reduction in Exchequer grant, the change-over from percentage grants to the system of general grant make sense only if it becomes the means of markedly reducing the Exchequer aid and thereby compelling local authorities to raise funds from their own resources. Only in circumstances of that kind does the change make any sense at all.

If no economies are intended, why did the Government specifically exclude from the Bill police grant and the Civil Defence grant? If the block grant system is an improvement, as the hon. Member for Edinburgh, South indicated, on the system of percentage grants, why not include the police and Civil Defence services so that they may have the advantage of this improvement?

Is not the position simply that it is perfectly clear that the Bill will compel local authorities to cut and carve and scamp services like education, health, road safety and the fire service, but that in respect of the police and Civil Defence the Government say, "Do not touch those because we have not included them in the block grant. You will continue to receive a percentage grant in respect of those services"? I am satisfied that there is no shadow of doubt that the introduction of the block grant is part of the Government's battle against inflation. The whole purpose of the Bill is to transfer the burden from the taxpayer to the ratepayer, as my hon. Friend the Member for Edinburgh, East (Mr. Willis) has pointed out.

Paragraph 17 of the White Paper indicates that local authorities now receive more from Government grants than from rates. I ask whoever is to reply to the debate on behalf of the Government to what extent that is really true. Would it not be more correct to say that a few local authorities receive more from Government grants than from rates? For example, the counties of Zetland, Orkney, Sutherland, Caithness and Inverness have received Government grants probably to the extent of 80 per cent. of their total expenditure. Indeed, in some cases the extent of Government grants to these county councils works out at £16 7s. 5d. per head of population.

When I take the reply which the hon. Gentleman himself gave to me in respect of Exchequer equalisation grants, I find that in 1953–57 Government grants represented only 38 per cent. of local authority expenditure. In 1955–56 the figure was also 38 per cent., so, in effect, local authorities had to find for themselves 62 per cent. of their total expenditure. Like my hon. Friend the Member for Edinburgh, East, I fail to appreciate a figure of 65 per cent. for rates.

I want now to speak of the position of the city which I represent, to show the trend that has taken place in the last eight or nine years. In 1948, in Glasgow, Government grants represented 34 per cent. of the expenditure of local authorities, and local rates 49 per cent. In 1956–57, last year, Government grants represented 36 per cent. and local rates 48 per cent. So there has been little or no significant change in respect of the ratio during the past eight or nine years.

Now I will deal again with paragraph 17 of the White Paper, the third sentence of which says that … while rates have doubled since before the last war, incomes … have on average nearly trebled. Reference was made to that in the speech of the hon. Gentleman the Member for Pollok (Mr. George). That is an extraordinary statement to appear in the White Paper. It simply reveals how slavishly we follow the phrases used in the English Bill, without giving any consideration to the question whether or not they apply to Scotland. In reply to the statement that rates have doubled and incomes has trebled, I say categorically that the rates also have trebled. I could name dozens of local authorities in Scotland where rates have trebled.

For instance, Aberdeen's rates in 1939 were 8s. 7d.; they are now 24s. 4d. I am sorry that the noble Lady the Member for Aberdeen, South (Lady Tweedsmuir) is not in her place. Taking a county council, Stirling, the rates pre-war were 9s. 1d. and they are now 27s. 1d. Taking a large burgh, Forfar, they were 8s. and they are now 23s.

Again, let me quote the figures provided to me by the Secretary of State in reply to a Question. I asked what was the extent of rates collected in Scotland. The information provided by the right hon. Gentleman was as follows: in 1939, £22 million; in 1950, £30 million; and, in 1956, £63 million. So, again, the amount of rates collected has trebled, and I suggest that when the figures for the recent financial year are available a few more million pounds will be added to these figures.

I do not want to confine my criticism merely to the Government's financial programme. There is a much broader background. There is the background of greater freedom, greater independence and a greater sense of responsibility being given to local authorities. The Secretary of State dealt with that almost exclusively, and I want to know how the Bill gives greater freedom, greater liberty and a greater sense of responsibility to local authorities.

We talk of freedom and liberty being provided by the Bill but how can we, in the light of what has happened in recent years, suggest that we are extending to local authorities this freedom, this liberty, this greater sense of responsibility? How can we suggest that, when in Bill after Bill we have restricted considerably the functions of local authorities in Scotland? I am thinking particularly of the Housing (Repairs and Rents) (Scotland) Bill, the Rating and Valuation Bill, the Rent Bill and also the Housing and Town Development (Scotland) Bill.

For example, in this very Bill the Secretary of State is making permanent what at one time was temporary legislation. In Clause 11 he is now permanently restricting the powers of local authorities to borrow money. How, therefore, can this Government talk of freedom and liberty when the Secretary of State took unto himself default powers in the Housing and Town Development (Scotland) Act? What is the use of talking about a greater sense of responsibility when, under the Rating and Valuation Bill, we denuded the local authorities of many of their functions and took away from them valuation appeals committees?

What do we mean by freedom and liberty? If I take the first three Clauses of this Bill, what do I find? That on eight different occasions in three Clauses the Secretary of State takes unto himself the power to do this, that and the other thing. There is to be no consultation with the local authorities, no consultation of any kind. The Secretary of State invests himself with all the power necessary to give effect to the Bill. It is nonsense and humbug for the Government to talk about freedom and liberty.

I will put a final question to the Minister. When replying to the debate tonight, will he tell the House of one statutory provision which the Government intend to relinquish in order to give local authorities that freedom and liberty? Will he tell the House of a single statutory provision that will enable the Government to justify their claims about freedom and liberty?

The Scottish local authorities, excluding Edinburgh—and I exclude Edinburgh with the maximum pride—are united in their opposition to this Bill as never before. Indeed, the three local authority associations were invited by the Minister of State to attend a meeting in Edinburgh to discuss with him the proposals contained in the Bill. They all turned up at the meeting in Edinburgh and the Minister of State opened the discussion. However, the representatives of the local authority associations said that they refused to discuss the Bill and were disgusted with it. They then left the meeting with the Minister of State shouting after them, as they went through the door, that they were an irresponsible bunch of local authority representatives. How reprehensible we would find the conduct of the Minister of State in matters of that kind if we went into his background!

I regard the Bill as a powerful piece of plunder, unworthy of any Government, and I shall have the greatest pleasure in voting against it tonight.

6.51 p.m.

Mr. W. S. Duthie (Banff)

I am very grateful for having caught your eye, Mr. Speaker, on this occasion, because I want to make some comments on the Bill as a representative of an area which contains large sparsely populated tracts. I have had considerable discussion about the Bill both in my constituency of Banff and here in London. I have given evidence to those in high places about the very grave concern with which Banffshire views the proposals in this Measure. I hope that the House will forgive me if I pass from the general to the particular and deal with the Bill in some detail as it affects an area like Banffshire.

Had the new proposals been effective in 1956–57, Banffshire would have been enduring a loss of grant of £54,752 in the first year. The grants to be discontinued amount to £423,505 and the total block grant, as per page 10 of the White Paper, is £368,753, a loss to us of £54,752 with a population of about 50,000. There has been considerable and somewhat optimistic talk about the gain of £750,000 on the overall picture. I estimate—and I want the Joint Under-Secretary to confirm it—that Banffshire will be the hardest hit of all Scottish counties as a result of the Bill.

In addition to that loss, there is another extremely disturbing factor. It is that there is no concrete plan for meeting, other than through the rates, any increased expenditure arising when the new school building programme is fully under way. My county does not go in for frills and non-essentials in its building and the provision of the amenities for which it is responsible. In 1962–63, when our school building programme is fully under way, and if the present formula is applicable, we will have a further annual deficit of £32,298 on loan charges, which means that from two items alone, the decrease in the grant and the increased loan charges, assuming that the formula then obtains, will be £87,680 a year and that is not taking account of the natural increase of expenditure which must come along with the development of our education plans.

Despite the short-term transitional arrangements, I cannot find an assurance in the Bill that a staggering annual deficit can be avoided without a lowering of the standards for which our county council stands and for which the county has rightly earned a national and, indeed, an international reputation.

The Bill refers to recoupment—and my right hon. Friend spoke about it this afternoon—which will come from the rerating of industry. However, my right hon. Friend appears to have forgotten that the Banffshire coast is the very centre of the Buckie—Peterhead fiasco, when all kinds of promises were given about industry being established. It is not the fault of those who own the factory concerned that the factory which we hoped would employ 200 people now, in fact, employs only about 20. That was unfortunate, it was just one of those things, but those are considerations which should be taken into account when the case of these sparsely populated areas is being considered when devising the formula.

We have been extremely successful with our shipbuilding industry, but largely on account of Government contracts for building Government vessels, inshore mine sweepers and the like, and a certain number of grant and loan fishing craft. That sort of business is tailing off and we cannot look for recoupment from rerating the shipbuilding industry. Our woollen mills in Keith are splendid organisations, but they cannot stand any more being added to their standing charges, because they have to face the tremendous disadvantage of transport costs which, all along the line, are much higher than those of the mills on the Border and further south. We do not have the industrial wherewithal for making up the deficit.

I want to refer to the formula for the distribution of the grant. Why did the Government resort to this device and why is there not a long-term safeguard against losses such as my county will indubitably suffer? A safeguard could have been written into the Bill. I cannot find such a safeguard. The whole cause of the trouble is the Second Schedule and I insist that I have an assurance from the Government during the debate that the Schedule will be re-examined by 1961 when all the facts are known. That is absolutely essential.

I want to examine the formula in terms of a county like Banffshire. We have seven small burghs in Banffshire which could be included in the landward population. As recently as 12th December, the Department of Health in Scotland wrote to the Clerk of the County Council: I refer to your letter of 6th December, 1957, and confirm that all the burghs in Banffshire with the exception of Banff, Buckie, Keith and Macduff are regarded as predominantly rural and, accordingly, eligible for grant under the Rural Water Supplies and Sewerage Acts, 1944 to 1955. Why could not those burghs have been regarded as rural areas when the formula in the Bill was devised? If that had been done, Banffshire would have come into the 60 per cent. rural population class and conditions would have been much better. That is a consideration which must be weighed in any revision of the formula.

I have many friends among the Banffshire teachers and I know full well that they are deeply concerned about this matter. Their concern does not originate in the feeling that the members of the county council who may not be university graduates are not qualified to deal with matters of education. They are concerned because it has been borne in upon them that Banffshire's education wings will be severely clipped if this formula is allowed to operate for any undue length of time.

Our teachers appreciate that in an area such as this, which is, naturally, devoid of industrial activity, education is the only door open to young people to make their way in the world if they are to realise their ambitions. They deplore any lessening of the educational standards, which is inevitable if the Government persist in this formula.

Decentralisation is a good thing, and no one could pay greater tribute than myself to the good that can come from decentralisation; but decentralisation must not be achieved at the expense of the range or quality of our education as we know it in Banffshire.

On the question of inducements for people to enter into local government with more enthusiasm, I think that it is not a very great inducement to the Banffshire County Council to realise that it has, perhaps, to do more work with less funds; more to do and less to do it with. The Minister must remove all these misgivings which we feel, and rightly feel. I sincerely trust there will be assurances from him concerning the Second Schedule which will enable me to support the Bill. If I cannot have those assurances, then I must take the other course.

7.2 p.m.

Mr. William Hamilton (Fife, West)

I do not think that the Government can be particularly happy with the reception that the Bill has had from their own side tonight. The hon. Member for Banff (Mr. Duthie) has more or less repeated, in rather stronger terms, what the hon. Lady the Member for Aberdeen, South (Lady Tweedsmuir) said earlier.

I want to refer in some detail to the case of Aberdeen, to show just what are its difficulties. Specific cases have been given concerning Banffshire, and I will give them for Aberdeen. If the Government have a case as strong on their side and they will give the specific figures, it would help us a great deal to see the picture in perspective. What we are lacking at the moment is a definition. No authority knows exactly where it stands on this question. I listened very carefully to the opening speech of the Secretary of State. He is the high priest of humbug. He talked about giving local authorities freedom, but later, as my hon. Friend the Member for Stirling and Falkirk Burghs (Mr. Malcolm MacPherson) said, he contradicted that by saying that if a local authority falls down on its job, then suitable provision is made in Clause 3. Presumably he does not trust local authorities. He does not allow them the freedom to do what he says the Bill allows them to do.

I shall confine my remarks to the Bill's effect on education. There is, I think, an amazing unanimity on this issue in the education world. Indeed, it is a remarkable achievement by the Government to get unanimity in the most unheard of places. I remember during the Suez debate when America and Russia actually came together against the British Government. This is a comparable achievement in the educational field, there being a coming together in opposing a Tory Government.

The Bill is a financial measure. Its title makes that clear. It makes Scotland wholly dependant on decisions which are made in England and Wales. Three times on page 2 of the Bill there is the expression that the Secretary of State will do this, that or the other thing: … with the consent of the Treasury. That is bad enough with a strong Secretary of State, but with a weak one, as the Scotsman said some while ago: It is just too bad that so often there is a little evidence of a strong Scottish influence in the Cabinet or in any other Department in Whitehall. That is a typical masterpiece of understatement in which the Scotsman indulges.

Precisely because it is a financial Bill, the whole purpose of the exercise has to be seen in the context of the other financial measures which the Government have taken in recent months. It obviously involves a radical reduction in Treasury responsibility for education. I recall that when we had a Labour Government, the then Opposition made extravagant claims about what they would do to reduce Government expenditure when they got into power, and a lot of misguided people in the country believed it, and voted for them. When the Conservatives got into power, they found that they could make significant savings only by radical changes of policy, and this is one of those radical changes. If it does not mean decreased Treasury responsibility, then it runs counter to all the other financial measures which the Government have taken in recent months. If it does mean reduced Exchequer payments—my hon. Friend the Member for Glasgow, Central (Mr. McInnes) quoted paragraph 17 of the White Paper which makes it clear that that is the object of the exercise—then three choices are open to local education authorities.

First, they can continue development as before and finance the increased expenses involved exclusively from the rates; secondly, they can cut their service; thirdly, they can have a combination of the two. Clearly, the service most affected by the proposal is education and that, as has been said many times, is a developing service. We ought to have a statement from the Government that they are as determined as I hope this side of the House is to contribute a bigger proportion of the national income to education than has been done hitherto.

I have previously quoted these figures, and I repeat them. When we recall that in Britain as a whole we spend about £550 million on education and £1,800 million on drink and tobacco—those were the figures last year—I think that we have our priorities hopelessly wrong. Local authorities want more money, if only to pay the increased loan charges. In 1952–53, the interest paid by local authorities for capital purposes was £683,000. In 1956–57, the estimated figure is £1,903,000, which is very nearly a threefold increase in interest charges alone.

There are one or two specific points arising from the Bill with which I should like to deal. The first is that no authority can calculate accurately how much it will get. This is especially true in the counties. In the county burghs, more precision is possible. That is why I will quote Aberdeen. The figures were worked out by Aberdeen and some of them were quoted by the hon. Lady the Member for Aberdeen, South who has not been seen in the Chamber since. She said that last year under this proposal, if a block grant had been in operation. Aberdeen would have received £1,265,534. In fact, last year Aberdeen received £1,677,050 in respect of education alone, and in all, about £2 million from the Treasury.

Therefore, on the Government's own figures Aberdeen would have been £750,000 down. This year, Aberdeen's estimated expenditure upon education is up by £326,000, to a figure just over £3 million. The Government's estimated contribution to that is just under £2 million. Therefore, if Aberdeen is to continue to make the progress that it has been making, the net share of the additional cost chargeable to the rates must be £87,000.

Aberdeen will receive from the Exchequer Equalisation Fund the sum of £69,000—I understand that this is the first time that the city has participated—and a rate increase of 1s. has, therefore, been imposed. That increase would have been much bigger if the percentage grant had not been available. In fact, the more that Aberdeen expands its education service—this argument applies to all other authorities which are progressive in education—the greater will be the gap between the block grant and the expenditure, and, accordingly, the greater will be the rate burden. In fact, the laggards or wooden-tops will be rewarded and the progressive authorites penalised.

As the right hon. Gentleman will admit, Aberdeen has been one of the pacemakers in education. Its expenditure on education has been rising at an average rate of 10–15 per cent. per year. I hope that the right hon. Gentleman will not deplore that fact; indeed, one of the arguments of the Government is that education has been making considerable progress under the existing system. If we compare the figures for Aberdeen with those for Edinburgh we find that in 1956–57 the expenditure on education per 1,000 of the population in Labour-controlled Aberdeen was about 40 per cent. higher than it was in Tory-controlled Edinburgh, it being £5,030 per 1,000 in Aberdeen as against £3,665 in Edinburgh.

I am asking whether Aberdeen or Banffshire is an exceptional case. If so, the Government should bring forward their own specific case to show the positive advantage to be derived from the operation of the Bill. The basis of the right hon. Gentleman's argument is that this is another version of the slogan, "Set the people free." That is indeed, the gist of the general argument advanced in support of the Bill.

Local authorities seem strangely reluctant to accept the freedom offered to them. My hon. Friend the Member for Glasgow, Central asked why we should not extend that freedom to the other services; police, housing, roads—the lot. Why do not the Government provide complete freedom in regard to those services? Or is this a transitional process? Shall we eventually reach the position when complete freedom will be given in respect of such services as the police and Civil Defence?

I say that, whether we like it or not, we do not have an informed democracy. Many people on local authorities are not fitted to control the education service, which I regard as being sufficiently important to be recognised as a national service. The central Government should provide increased finance and exercise increased control of the service.

The right hon. Gentleman's charge that we do not trust local authorities, and that he is giving them freedom, has no strength. The education service should be recognised as a national service and financed, upon an increasing scale, as such. I wonder how much control of expenditure on education Russian local authorities have. I am not saying that we want a comparable system, but we want comparable results if we can get them. The Bill goes the wrong way about getting them.

Mr. J. Stuart

Does the hon. Member suggest that local people are completely uninterested in education?

Mr. Hamilton

I am saying that the subject of education engenders very little political enthusiasm, and that there are people on local authorities who just want to see this type of green light in order to take the opportunity of cutting back expenditure or retarding progress. If they are satisfied that the Government are giving them encouragement to that end, that is all they need. Anything which brings about that situation will be a national tragedy. That is why I hope that the Bill will be rejected.

7.16 p.m.

Sir James Henderson-Stewart (Fife, East)

The hon. Member for Fife, West (Mr. Hamilton) referred to two points which were mentioned earlier by one of his hon. Friends. He asked why the police and road services should not be included in this freedom. On reflection, I think he would agree that these are somewhat different problems. The police and the Civil Defence services, for example, cover a wide field, and it would be very difficult to find a common factor which could be applied in respect of grants. That question might well be taken up in Committee, but from what little experience I have had I feel sure that these would be difficult matters to divide up, as is done in the case of education and certain other services.

The subject that we are debating tonight is one of the most important that has come before us for a very long time. It raises a problem which affects the general life of Scotland and its government, and it is therefore one that we should examine with the greatest care. I do not regret the animated debate that we have had, and I do not suppose that my right hon. Friend objects to the criticisms which have been made, because they show that the House recognises the extreme importance of the matter.

In Scotland, we are concerned only with the finance of local authorities. England has the broader problem of the constitution of the authorities themselves. That issue does not arise in Scotland, and to that extent our problem is fortunately more limited. With us the issue is confined, broadly, to the question of the kind of change that we should make in financing local services.

It is no use belittling the anxiety which exists throughout Scotland about the growing burden of the cost of these local services. They have been expanding year by year, and have done so since the war at a terrific and unprecedented rate. As we have heard, the burden of rates has doubled and trebled. The weight of the local public debt has grown to such a degree as to give responsible people cause for real anxiety.

When we add to all this the great increase in central Government taxation, particularly indirect taxation, we realise that it is a problem affecting every citizen in the country and may be regarded as one of the greatest problems of our time. The burden of taxation is so great as to be an encumbrance on industry which we cannot much longer sustain, and when we talk of the burden of rates and taxes we are discussing a matter of very great importance.

Naturally the question arises—it was put by the hon. and learned Member for Paisley (Mr. D. Johnston)—whether the resources of the local authorities are the right ones. The hon. and learned Member expressed what I suppose can be only a personal opinion when he said that he thought the present method of financing local authorities was outmoded and would have to be replaced by something else. Apparently the hon. and learned Member had in mind a local income tax. We must not take the hon. and learned Member's suggestion too seriously, because clearly it does not represent the considered view of his party. Speaking officially from the Opposition Front Bench in a debate last week the hon. Member for Wellingborough (Mr. Lindgren) was emphatic about this. He said: I agree at once with the Minister that the additional forms of income which have been examined—entertainment tax, hotel tax, shopping tax and the rest—do not fill the Bill. Each would assist the authorities which already have fairly substantial resources but would not help those with few resources. As the Minister said, we must stick to rates and grants."—[OFFICIAL REPORT, 9th December, 1957; Vol. 579, c. 1018.] I take that to be the official policy of the Opposition, and if that is so hon. Members opposite must accept the general financial principles underlying this Bill; so upon that we apparently are agreed.

Dr. Dickson Mabon

Would the hon. Baronet agree that that was said in a particular context, and applies to England and Wales? Regarding Scotland, we had the opportunity as did the Government supported by the hon. Baronet in the prescription of the terms of reference of the Sorn Committee to ask for a wider inquiry. Had we taken evidence on a wider scale and gone into the matter more thoroughly, we might not now be discussing the question of rates, but some other matter allied to the raising of money.

Sir J. Henderson-Stewart

That may be, and it is, a fascinating problem. I am stating now that, as I understand it, hon. Members opposite do not oppose the general principle of the Government, but stand by the present arrangement of rates and grants as the main source of income for local authorities. I take it that that is agreed.

Mr. Ross

The hon. Baronet used the words, "The underlying principle of this Bill." But that is not the underlying principle of this Bill, and if the hon. Baronet will read the White Paper, he will see that it is not.

Sir J. Henderson-Stewart

I do not propose to be put off by quibbles of that kind.

I am concerned about the point raised by the hon. and learned Member for Paisley, whether local authority services should be financed by a local income tax or something of that kind, and I am saying that that is not the official Opposition policy. The official policy of the Opposition, and of the Government, is that the main sources of income for local authorities shall continue to be rates and central Government grants. That is all I am saying, and I stand by it.

The question really is, how do we determine the balance of grants and the rates between these two sources of income? I have been a Member of this House for quite a long time and I recollect a number of occasions—particularly during the time of Mr. Tom Johnston—when we considered that if there are two bodies, two sources, providing the finances of an undertaking—the central Government and a local authority—it is a good principle to throw as much responsibility for payment as possible on the body which actually spends the money. I do not think that anybody objects to that principle.

Mr. T. Fraser

I do.

Sir J. Henderson-Stewart

It did not use to be so.

Dr. Dickson Mabon

Times have changed.

Sir J. Henderson-Stewart

It is an old principle of this House, and I think a good one, that where we have a body which spends the money, as heavy a responsibility as is reasonably possible should be put upon that body.

Mr. Rankin rose—

Sir J. Henderson-Stewart

I do not wish to give way. I shall not be speaking for much longer, and I am trying not to be controversial.

Mr. Rankin

Is not the hon. Baronet making a distinction between a body which spends money and a body which is directed to spend the money?

Sir J. Henderson-Stewart

I will come to that.

I was trying to carry the House with me on the general principal that we should aim at making the body which spends the money carry a fairly heavy responsibility.

Mr. T. Fraser

The hon. Baronet has not succeeded.

Sir J. Henderson-Stewart

I think that the services with which we are here mainly concerned are services where that principle should apply. Education, which is the chief service, as we are all agreed, works on the principle that the local authority provides 40 per cent. and the central Government 60 per cent. of the expenditure and, of course, other services have other percentages of expenditure. We have all had experience, either as Members of the central Government or as members of a local authority, and I do not think that any of us would deny that if it is only 40 per cent. with which the local authority is concerned, the authority feels more free in proposing considerable expenditure than would be the case were it, for example, responsible for 60 per cent. So the principle of bearing a heavy responsibility for payment is important.

Mr. A. Woodburn (Clackmannan and East Stirlingshire) rose—

Sir J. Henderson-Stewart

If the right hon. Gentleman will allow me to continue, I think I can carry him with me.

The Bill does not alter these percentages; it deals with the matter in a different way.

Mr. T. Fraser

But it does alter the percentages.

Sir J. Henderson-Stewart

If the hon. Member will be so kind as to allow me to continue my speech I would say that it does not alter the percentages. What it does is—

Mr. Fraser

Yes, it does.

Sir J. Henderson-Stewart

—to introduce a new way—

Mr. Fraser

No.

Sir J. Henderson-Stewart

—of making the local authorities more responsible than they were.

Mr. Fraser

It abolishes the percentages.

Sir J. Henderson-Stewart

I will develop that argument, but before doing so I wish for a moment to examine the question of the actual amount of grant which will flow to the local authorities under the provisions of the Bill.

One of the main criticisms before the Bill was published was that the amounts to be provided by the central Government were to be cut down or frozen. I suggest that our debate so far has disproved that. When one examines Clause 2 with care it becomes plain that, in arriving at the grant to be given to Scottish authorities in bulk, the considerations which have to be taken into account are such that the grant cannot possibly be less than it is now; and there is every likelihood, as I read the Clause, that it will be greater and will meet the needs of expanding services such as education—

Mr. Ross

If that is so, will the hon. Baronet—

Hon. Members

Sit down.

Mr. Speaker

Order.

Sir J. Henderson-Stewart

If the hon. Member will allow me to make my speech, it will be quite short and, I hope, quite uncontroversial; but I have a view to put. I am suggesting to the House and to the right hon. Member for East Stirlingshire (Mr. Woodburn), who has great experience in this matter, that if he had this Measure as an Act before him and it insisted upon taking account of Clause 2, he would not find it possible to do the things his hon. Friends are afraid might be done.

I invite the House to examine these matters with greater care. I will not take up further time on this particular point, but I contend that Clause 2 contains so many carefully worded provisions that there should be no fear of a reduction in the grant for education. On the contrary, there is every justification and assurance, quite apart from the speech of my right hon. Friend, that that great, necessary, expanding service will continue to be supported in an expanding way.

Mr. Woodburn

Even assuming for the moment the attitude of the hon. Member towards the division of the present grant, what has he to say about the future guarantee of the Goschen formula, for which he would fight fiercely if he were on these benches? What about the removal of the Goschen formula and injustice between Scotland and England on the question of education?

Sir J. Henderson-Stewart

I am surprised that the right hon. Member says that, because he knows as well as I do—and as was repeated by my right hon. Friend the Secretary of State—that we do very well in Scotland. We do better than the Goschen formula. I have always resisted limiting our claims to the Goschen formula. I speak, I hope, as a patriotic Scotsman and I say I am not a bit sorry that the formula is not incorporated in this Bill. I am sure that my right hon. Friend will see, as would the right hon. Member, that we get our full share, but that share should be arrived at by consideration of our needs and not by the consideration of a dead formula. How often have I heard the hon. Member for Hamilton (Mr. T. Fraser) talking about the road programme and saying that the consideration should be based on our needs. So it is with education and other services.

Mr. T. Fraser

The hon. Member has said that at present for education we are getting more than the Goschen formula. I think that is what he said.

Sir J. Henderson-Stewart

I said, "by and large".

Mr. Fraser

I am a little surprised, as it is not long since the hon. Member was in charge of the Education Department and he ought to know that we get exactly the same, not one penny more or less.

Sir J. Henderson-Stewart

The hon. Member is quite wrong—

Mr. Fraser

No.

Sir J. Henderson-Stewart

He is quite wrong and I invite him to look up the facts. By and large, and I include and specify education in my inclusion, we should be considerably worse off under the Goschen formula than now. I should like the hon. Member to check his facts, because what he said is quite wrong. It is clear, at least to my understanding of this matter, that the Government undertake in introducing this Bill that there shall be no freezing of Government grants for these services or any unwillingness to assist proper and well-considered developments in future. I do not think the run of the debate has challenged or overturned that view.

The main criticism in the debate has centred upon the twin issues of whether it is right and wise in the national interest to throw upon local authorities the full responsibility for spending all their income, and whether in so doing we will thereby increase the freedom and efficiency of local authority administration and in consequence stimulate and excite local interest in the work they now do.

In dealing with these matters we are dealing with human beings. The personal factor enters all the time into the composition of local authorities and the energy they apply. We all know that there are very different authorities throughout Scotland. Some are progressive, enlightened and responsible and some are not to the same extent. It is quite clear that as the Bill takes shape and action follows upon it there will be variations in the activities and successes of local authorities. Similarly, as in Aberdeen, the financial situation at first may appear different in one district compared with another. These are the growing pains of a new system, but I feel fairly sure from what little experience I have had that in future, as at present, we will see generally a steady rising of the standards of local authority administration as a result of this Measure.

What about the problem of freedom? Freedom goes with responsibility. To examine that I take the case of education, mentioned by the hon. Member for Fife, West, who is an educational expert and who, with respect, I congratulate on his knowledge of this matter. He knows as well as I do, although I do not think the hon. and learned Member for Paisley who opened the debate understands, that education and the education service in the County of Fife or anywhere else does not perform a single routine job. The service of education is an infinite variety of services, as everyone must know.

I will list two or three of the different things which are the concern of the director of education for the County of Fife. He is concerned with school building, school repairs, curriculum, methods of teaching, further education, classes—a hundred and one different things which all come under the broad umbrella of "education". For years past the Secretary of State has had his code laying down the standards under which the administration is carried out in the schools. That code will continue, but with the general grant at the beginning of a one-year or two-year period, rather than a series of percentage grants after the work has been done, it seems to me that opportunity will arise for the expression in various local authorities of preferences for individual developments which at present they are not able to undertake.

I have a little knowledge of that and I ask the House seriously to consider it. I assure hon. Members that, so far as I understand the situation, if this scheme were in operation and a county council had the assurance at the beginning of the period of one year or two years that a certain amount of money was available to the county authority, the education committee would be able to undertake many tasks which it is not able to do now and, maybe, to hold back others. It would take a broader view. For example, inflation is a matter of supreme concern to county council convenors. Every convenor will be considering priorities. In Fife we have decided that that should be so, and Fife is not a Tory county council.

The Fife convenor had said that it is the duty of the county council to reconsider its priorities. Is not that right? Might it not be, therefore, that with this block grant the authority will, for the first time, consider its services as one great undertaking and not as a series of separate, individual undertakings—education, health, whatever it may be? I see the finance committee of the county council—indeed, the whole county council—for the first time getting this broad picture of its responsibility, and saying to itself: "What is the prime need of our county at this time?" If that prime need is hampered, manacled as it were by percentage grants, the judgment of the authority is bound to be warped: but if the authority has this general grant—£500,000, £1 million, £2 million, whatever the sum may be—and knows that it can spend it as it thinks right in its wisdom, it must be good for local government, and must stimulate interest.

I am sure that there will be tremendous discussion between one county council committee and another, but we should not be afraid of that. We should welcome it. If it were so now in Fife, the whole county would be much more interested in the work of the authority than it is today. It is because things so often go through county councils with so little interest or discussion—tied as they all are to the present grants—that there is so much apathy among electors. I believe that if they are given a chance to operate this scheme, those local authorities that are now so reluctant to see its advantages will thank heaven that they are being given the chance to undertake it. It may well be in fact that my right hon. Friend may go down in history as one of the great Scottish Secretaries for this work that he has done.

7.42 p.m.

Dr. J. Dickson Mabon (Greenock)

I believe that the hon. Baronet the Member for Fife, East (Sir J. Henderson-Stewart) will, as long as he is alive, always epitomise the spirit of George Orwell. That is my impression after listening to his latest speech. I want to be respectful to him, but the amount of double talk there has been is confusing. If we take his point, not the one about the present Secretary of State being one of the great ones—I would not be discourteous enough to discuss that at present—but the one about priorities, he has tried to argue that these services, because of the block grants, will have committee against committee and that this is a good way of getting local authorities to determine the priority of the services.

I should like to ask the hon. Baronet, as someone so much interested in education, whether he really believes that local government, with all its various interests, will find a proper place for education in almost every instance?

Sir J. Henderson-Stewart

I do.

Dr. Mabon

The hon. Baronet says that he does. In education in Scotland we have seen a substantial variation in practice between authorities, some advancing reasonable programmes and others very unreasonable ones.

I do not want to argue the generalities of this. I want to concentrate on a specific issue that the hon. Baronet and I know very well. If other hon. Members do not know about it, I am sure that they receive enough letters about it, and will, therefore, be able to follow my argument on this isolated point. I want to speak about student grants. I argue not whether the grants are good or bad, not their general level, but simply the practice in the award of student grants.

Under the present system in Scotland it is possible for two boys, coming from families with similar incomes and with similar family commitments, sitting in the same class in the same university, with precisely the same educational qualifications, to get different grants. One can get half as much again as the other, and the only reason is that they happen to live in different counties.

The present Regulations lay it down that, in awarding a grant to a student, a committee shall be guided by certain principles; and that within the seven categories of assessment, three are precise minimum categories laid down by the Secretary of State, and the four others are categories where the discretion of the committee can be exercised. The hon. Baronet knows this very well, because on many occasions he has answered Questions that I have put to him, and, indeed, when Joint Under-Secretary of State, he was kind enough to write me a very long letter in which he made it perfectly clear that the practice of education committees varied substantially, and, while one might hold one's own opinions of the awards that were made by committees, there was no doubt that certain students were getting a tiny grant, and certainly not getting the justice that many of their confreres from other counties were receiving.

How will that be affected by this Bill? Will it mean that the members of the committees will be encouraged to make awards higher than the present ones? In other words, will there be a move towards justice? There might be, in the sense of an equality of misery, as committees seek to cut down the amount of money given. For example, when the committees sit to discuss the, various grants, and there is a discriminatory point, and they have to save money, clearly they will use that point to save money.

At one juncture I brought up with the hon. Baronet the question of certain textbooks, and he was kind enough to look into the matter of supplying textbooks for various students. The fact is that there are some authorities—I think that he would agree with me in supporting those authorities—which award the cost of certain prescribed textbooks to certain students. Some authorities do not, because the minimum Regulations do not necessarily prescribe in exact terms the awards that can be given in this regard. I think that, clearly, this is an educational matter that will be substantially affected by the Bill.

The Secretary of State tried to argue, in his opening remarks, that these minimum standards would be preserved by Clause 3. To a certain extent, that is true. It also means that the Secretary of State cannot do without Clause 3 because he recognises that certain authorities would not obey the minimum standards. Why should it be that local authorities have to have such a sanction Clause as that put against them? The answer is clear. It is because there are some local authorities—shame on them!—which would not observe the minimum standards. Therefore, there has to be this sanction upon them. Surely he will be willing to admit the argument that follows from that, that since the minimum is not necessarily the only desirable scheme it follows that we are anxious to see that all authorities shall provide the desirable, where possible, and not just the minimum.

Perhaps the hon. Baronet believes, as he said, that there would be no difference here in the moneys given to local authorities, that this situation may not arise, but for one, cannot believe that local authorities will be taken out of the wood financially by the passage of this Bill. I believe that in the oncoming years we have to face a margin of rising costs. As long as we have full employment, it appears at present that we shall always have a tendency for the value of money to fall. Although it is certainly the duty of Governments to stabilise it, I do not think that they can always guarantee a plateau—the Prime Minister's ambition at one time—of money value. We shall have this tendency for the value of money to drop, which means an increasing embarrassment for local authorities, particularly in the light of what is, in effect, the strait-jacket of the block grant. Even if the grant is reviewed in two years, it can, nevertheless, be a serious embarrassment to local authorities. If it is an embarrassment to these authorities, it means that, instead of being compelled by the nation, by the Scottish people themselves, to observe certain standards with the enticement of the percentage grant system, they have the freedom to select their own priorities. Does the hon. Baronet believe that there are not authorities in Scotland which will neglect the interests of education?

I want to make a very important point about education that has been mentioned by my hon. Friend the Member for Stirling and Falkirk Burghs (Mr. Malcolm MacPherson) in relation to this debate. The Bill, which concerns itself so much with local authority services—and so much is affected in our system of education—comes at a time when the Prime Minister is unable to be in the House because he is discussing in Paris, with fifteen member-Governments of the N.A.T.O. alliance, the question of technical advance and technical skill in the Atlantic Community. The Bill is a "pre-Sputnik" Bill, a Bill designed to face a situation which existed before the Russian technological advance made itself so demonstrably plain to us all ten weeks ago.

Instead of education being just one matter among the others in local government service, and the people in local government themselves being able to decide whatever priority they like to apply to it, education has suddenly become a matter of the greatest priority for the nation. It is now the greatest challenge which this or any other Government will have to face. I remember very well the debate on the White Paper on Technical Education, and I am willing to accept that hon. Members on all sides believed what they said then, that the country has a tremendous challenge to face. Even the Chancellor of the Exchequer, in his recent economy measures, did not touch the technical education programme; even he hesitated to cut down that programme, which we know is in many ways, even in Scotland, inadequate to our needs. The Bill now before us could, in Scotland, be very damaging to the number of students we have and, certainly, to the quality of education they receive.

In order to square its police account or its fire service deficit—whatever it may me—a local authority might well consider manoeuvring itself into a position where it received the full grant but did not have the requisite number of teachers or the number of obligations for certain other services within education. That might happen. There is no reason why the functioning of education could not proceed thus. It is reasonable to argue that the Bill transfers the control of education primarily from the nation and the education committee to the gentlemen of the county finance committee, and we know what niggardly little men some of those county finance committee men may be. We have only to look at some of the counties in Scotland to see that.

Reasonable arguments may be put forward, perhaps, for places like Ross and Cromarty, or Banff, as the hon. Member for Banff (Mr. Duthie) himself mentioned; they have their own peculiar difficulties. But there are powerful authorities in the central belt of Scotland which have a poor record in education. The hon. Member for Fife, East knows that as well as I do, and he knows in his heart that he could name them. It is not because they do not have the money, but because they do not have the will. We see this kind of discrepancy in grants all over the country, in many other ways, which I am sure educationalists could cite.

Mr. T. Fraser

In the constituency of the Secretary of State, for instance?

Dr. Dickson Mabon

I, like the hon. Member for Fife, East, do not wish to become contentious or controversial at this juncture—if I may adopt the "double-talk" of the hon. Baronet the Member for Fife, East.

The hon. Member for Fife, East, in argument with my hon. Friend the Member for Hamilton (Mr. T. Fraser), said that the percentage grants were not being abolished. Surely, he means that they are not, in effect, being abolished. Clause 1—

Sir J. Henderson-Stewart

The percentage grants are being abolished.

Dr. Dickson Mallon

Yes, but the hon. Gentleman maintained that, in effect, they were not.

Sir J. Henderson-Stewart indicated dissent.

Dr. Dickson Mabon

Yes, I listened to the exchange in argument. If the hon. Member for Fife, East examines the OFFICIAL REPORT, he will find that he has badly misrepresented himself at this point. He said that the percentage grants would not—I am interpolating the words "in effect"—be abolished. Yet Clause 1 points out that the general grant takes the place of the various grants referred to in the First Schedule.

Mr. Ross

The hon. Gentleman said that it does not alter the percentage.

Dr. Dickson Mabon

Yes. That comment, from which I am glad to find that the hon. Member for Fife, East, if he did make it, now retreats, follows the same line of argument which he put forward about the Goschen formula. It is entertaining to hear all these pronouncements and then watch the retreats which follow them, but it does not do justice to the argument which is advanced at the particular time.

It seems to me a very great tragedy that a Bill like this should be before the House at this time, a tragedy not only from the educational standpoint but also in that the Bill will go to a Scottish Standing Committee which may well not include all the Scottish Members of the House. Whatever our views may be on this matter, there is no doubt that what is proposed in the Bill radically affects every Member of Parliament representing a Scottish constituency. I believe that there is not a single hon. Member who could not make a speech on this matter showing how it affects his own community and how, in the long run, it will upset the balance of good local government. I cannot understand how it can be thought at all advisable for this matter to go to a truncated Committee which cannot represent the interests of all hon. Members who have these important matters to discuss.

Is it not unfair to claim that we have a crisis in local government finance which calls for a remedy of this kind when, in truth, the crisis has, to a large extent, been caused by Government policy? The hon. Member for Glasgow, Central (Mr. McInnes) talked about the rates being trebled since 1938, and the hon. Member for Fife, East spoke about the great alarm felt throughout industry and the community at the rising burden of taxation and rating. The fact is, however, that about £35 million have been added in the payment of interest on debts incurred by local authorities to the Government since 1951 as a simple consequence of the high interest rate policy pursued by the Government.

No matter how many Bills of this kind are introduced to try to solve the problems of local government finance in Scotland, we come back each time to the fact that the Government's economic policy dominates the scene, and in this, as in every other context, distorts the pattern of our democratic life.

7.56 p.m.

Mr. C. N. Thornton-Kemsley (North Angus and Mearns)

The hon. Member for Greenock (Dr. Dickson Mabon), like other hon. Members—indeed, like almost every hon. Member opposite—has expressed his belief that local authorities in Scotland are both unable and unwilling to help education as education ought to be helped.

Dr. Dickson Mabon rose—

Mr. Thornton-Kemsley

The hon. Gentleman has already made his speech.

Dr. Dickson Mabon

But the hon. Gentleman has misrepresented me on the point. I am not trying to suggest that of all local authorities, but I said it of some local authorities, making a specific point of repeating that.

Mr. Thornton-Kemsley

Let us accept that straight away, that the hon. Member for Greenock and other hon. Members who spoke from the benches opposite this evening have taken the line that some local authorities are both unable and unwilling to help education in the way that it ought to be helped. It has been rather striking that every hon. Member opposite who spoke has taken a line quite different—I do not blame them—from the line taken by the official spokesman speaking from the Front Bench opposite this afternoon.

The hon. and learned Member for Paisley (Mr. D. Johnston) said that not for years has there been proper local government in Scotland; that it has been only local administration. He deplored this, saying that it was a bad thing and that we ought to think again about local government, giving back some powers to local authorities. This from the spokesman of the party of centralisers. This from the spokesman of the party which took away the powers of local authorities in electricity and gas undertakings and all sorts of other ways. This from the party which has consistently maintained that the gentlemen in Whitehall know best.

Hon. Members

Nonsense.

Mr. Thornton-Kemsley

Undoubtedly, there has in Scotland, as there has throughout the United Kingdom, been a decline in the power of local authorities since the war and a decline in the interest taken in local government. There is not one of us in this House who does not know that it is becoming more and more difficult to get the right men and women to offer themselves to stand for local government bodies. It is a great pity. It is not only to do with the functions exercised by local authorities but is to do, to some extent, with economic pressures and difficulties of a private nature, and so on, but it is a fact. I was impressed by the statement of my hon. Friend the Member for Pollok (Mr. George) that in Scotland recently 60 per cent. of the local government returns were unopposed. That is not a good thing.

One remedy for the lack of interest in local affairs, for the lack of candidates and for the low polls at local elections, would be to grant to local authorities the kind of powers that might have had to be exercised by regions during the war had there been a complete break-up of the central Government administration owing to invasion or intense bombing, against which we made plans.

If we were forced into a system of regionalisation, it would undoubtedly stimulate great interest in local government, because it would indeed be government which was local, and it would be the only kind of government known to the citizens of that part of Great Britain. None of us, however, wants to go as far as that, and for two reasons. Broadly, we want uniformity of service and we want the safeguards to progress which can only be ensured by Government oversight of the strategy of policy. An alternative would be to take the first step towards a substantial move over to treating local authorities as grown-up beings. That is what the Government are doing in the Bill.

I was very impressed by my right hon. Friend's revelations in his opening speech this afternoon that two-thirds of all the help given to local authorities in Scotland is in the form of percentage grants.

Mr. Willis

Not in Edinburgh.

Mr. Thornton-Kemsley

The figures differ, of course, between counties of cities and the counties. They differ very much between the counties themselves.

The figures were given in a Written Answer to a Question which is printed in the OFFICIAL REPORT of 25th November this year, from which it will be seen that of 31 counties in Scotland, no less than 13 had over 60 per cent. of their expenditure met by Government grants. In the case of three of them, the percentage of expenditure received in grants from the Government exceeds 75 per cent.

Mr. Ross

We are all aware of that. It is only fair that the hon. Member should name those counties so that the House should realise how exceptional they are.

Mr. Thornton-Kemsley

The three counties are Zetland, Ross and Cromarty, and Sutherland. There is nothing extraordinary about that. These counties all happen to have between 75 and 79 per cent. of their expenditure met, or had it met in the last year for which figures are available, by Government grants.

In these circumstances, human nature being what it is, there is on all local authorities, and particularly on those which receive a high percentage of their expenditure in the form of Government grants, a temptation to spend lavishly so as to have the satisfaction of being thought to be progressive and enlightened. That was illustrated not many minutes ago, when the hon. Member for Fife, West (Mr. Hamilton) spoke about some local authorities being progressive and enlightened and the others being wooden-heads and laggards. The kind of test that the hon. Member would apply is, I have no doubt, the extent to which they spend other people's money in the service of the population whom they represent.

I would be against a system in which there is a general grant based on existing expenditure. In fact, what the Government propose is not that it should be based on existing expenditure, but that it should be based, first, on the needs of the area. These are set out clearly in Clause 2 of the Bill, of the contents of which we cannot too frequently remind ourselves.

First, the Government have to take into consideration the latest information available about the rate of expenditure in the local authority area and the current level of prices, costs and remuneration, together with any future variation in the level which can be foreseen. Secondly, in assessing what the total of the general grant should be, they have to take into account any probable fluctuation in the demand for the services; and, thirdly, the need for developing these services.

These factors are particularly relevant to the expenditure upon education, it has already been said today that it is no good blinking the fact that organised education throughout Scotland is against the proposals in the Bill. That is unfortunate and it is, I think, largely because insufficient weight has been given to the provisions of Clause 2. For example, in assessing the general grant, the Government have to take into account the present expenditure on education and the possible fluctuations in needs so that the "bulge"—the raising of the school population—is taken account of, together with the need for developing the service. We all know—the Government have emphasised it time and time again—how important it is that education should develop progressively, particularly nowadays, as more than one hon. Member has said this afternoon, in its technical aspects.

I should like to ask these questions. Do educationists really think that education can be run better from St. Andrew's House than from the council chamber? The hon. Member for Greenock quite clearly believes that education is run better from St. Andrew's House. That is, again, the mentality of "the gentlemen in Whitehall know best". Secondly, is it the belief of educationists that locally elected representatives of the people are not capable of running the schools properly? If so, if they really believe that, they are condemning themselves for a failure to educate the people in the importance of education.

Are educationists afraid that in circumstances where local authorities will have the most animated discussions in the council chamber concerning the relative needs of education, housing, health, and so on, education will inevitably suffer? The majority of electors are parents. Do educationists really believe that they will put up with a council which neglects the needs of education for their children?

Mr. Hamilton

They do.

Mr. Thornton-Kemsley

I have not that mistrust of local government which educationists are displaying at present. I want to give the local authorities more scope to decide how the proceeds of the rates and of the general grant should be spent. I want them to explain and to defend their proposals not only in open council reported fully, but to the electors who send them back to the council chamber. I believe that in that way local government will be government and will attract a lively interest in local affairs.

It has been fashionable tonight on both sides of the House, I am sorry to say, to criticise the Government for presenting this Bill. I do not do that, and I am sorry that so many of my hon. Friends have taken the occasion of this debate to make their criticism—though, of course, it is right if they feel that way. For my part, I think that the Government have shown great courage and sound sense in going ahead with what they believe to be right in spite of opposition in influential quarters. If one has made up one's mind to do what the national interests require it is right to stand up to sectional interests however respectable those sectional interests may be. So I welcome the Bill and I congratulate the Government upon their courage and wisdom in presenting it.

8.12 p.m.

Mr. William Ross (Kilmarnock)

It is surprising that the hon. Member for North Angus (Mr. Thornton-Kemsley) welcomes controversy about education in council chambers, but seems to deplore it when it comes from his hon. Friends in this Chamber. He made a fascinating speech, containing all the usual phrases about freedom and greater scope for this and that, but I began to wonder what it had to do with the Bill. I do not want to do the hon. Gentleman an injustice, for he is one of the few hon. Members opposite who read Bills, but I began to wonder whether he had read this one.

The hon. Member said that we on this side of the House are the party of centralisation, and he repeatedly posed the question whether education is better run from St. Andrew's House than from a local council chamber. Can it be? What does the Bill say? It says that the Government are going out of their way to amend Section 1 of the Education (Scotland) Act, 1946. The Fourth Schedule says that the head man at St. Andrew's House, the Secretary of State. may make regulations prescribing the standards to which every education authority shall conform in exercising their functions under this section.

Sir J. Henderson-Stewart

There is nothing new in that.

Mr. Ross

Whether the hon. Member for Fife, East (Sir J. Henderson-Stewart) believes it or not, this is something new to be put into the 1946 Act, for the Fourth Schedule writes those words into the 1946 Act as a new subsection in Section 1.

That Schedule also proposes to write into the Act of 1946 default powers, so that if the Secretary of State does not think a local authority has done the right thing he at St. Andrew's House, the great centraliser, can require the local authority to do it. Does the right hon. Gentleman realise that a local authority can at present, if it likes, contribute to the expenditure of a university? But not after this Bill passes. After this Bill passes, with this and other amendments which the Bill makes to the present law, the Secretary of State will decide whether and when and how much a local authority will contribute to a university. The great centraliser will do that.

There is one thing about which I do agree with the hon. Member for Fife, East, and that is that this is one of the most important Scottish Bills we have had in recent years; and we have had one or two important ones in the last Session or two. It will affect every person in Scotland, the ratepayers, the taxpayers, parents and children. It will affect even births, marriages and deaths.

I counsel my hon. Friends that this Bill will be considered by a Committee in which back bench Members will be denied their right to speak for their constituents. I am hoping to find a great wave of self-denial amongst some of my hon. Friends in opting out of serving on the Committee on this Bill; but we shall see about that.

I do not think that there has been an adequate analysis of the problems of local government, certainly not by the Secretary of State. We are told that one of the reasons for the Bill is that The total of grants has in recent post-war years for the first time overtaken the total of rates, and become the major element in local government finance. … It is most important to reduce this dependence of local government on Exchequer grants if it can possibly be done. The hon. Gentleman was right when he posed the question about the Exchequer grant and the rates, but he did not go nearly far enough.

How has the matter arisen? Local authorities existed before a properly established central authority. The local authorities carried on and developed their traditional rights as almost independent governments within their localities. The growth of central Government has been such that the Government have had to find agencies to carry out work for national needs. The agencies they found were the local authorities. So the local authorities have had two functions. One is to carry on their old, traditional, independent local government, many of the functions of which have grown into national functions. For instance, the care of the sick has ceased to be a local responsibility and has become a national responsibility. Thus the local authorities act as agents for the Government, the second of their two functions.

There are two aspects of the freedom of local authorities about which there is so much talk. There is the freedom from statutory control. It is no good the Government's passing Bills about education unless they take statutory powers to ensure that what they want done will be carried out throughout the country. If they take that very far they have to pay their share of the cost of it.

The same thing is true of the other services listed for Exchequer grant—health services, fire services. There was no statutory obligation relating to fire services before the war. Will anyone say that it is not necessary? Let him come to South Ayrshire and to the town of Girvan. A few years ago there was not a town hall or a railway station because there was not a fire brigade. They did not believe in providing money for a fire brigade. Other services are for road safety, school crossing patrols, physical training—but they are only some of them. The question arises how these are to be paid for.

Old, independent local authorities' revenues are not as they were. Once upon a time the wealth of a man determined the value of the property he occupied. The wealthier a man was the bigger was his house, and the local authority levied a rate accordingly. That is not so today. We have had this change in population, in the wealth of the country and in the revenue of the country. What has caused it? The tendency nowadays is not for the wealthy man to live in the biggest house because of the change in social environments. He lives in a house that can be managed. Directors of companies are living in much smaller houses than foremen.

There are parts of Scotland where people living in council houses are paying higher rates than the people who employ them. The point has been made that rates have only doubled and that national taxation, including indirect taxation, has gone up much more. That is because national taxation is based on national income and the national income has risen much more than the rateable values.

When we examine this matter what do we find? In one investigation it was found that 88 per cent. of local revenue gained through rates comes from households where, after taxation, the income was £500. In other words, generally speaking the poorer people are paying the greater share of local taxation. The people who can afford to pay Income Tax and Surtax are not paying the most.

Contrary to what the hon. Member for North Angus has said, we have loaded the local authorities with tremendous powers and responsibilities, to such an extent that they are complaining about it and cannot possibly finance it out of an outmoded system of raising revenue and taxation. I think that my right hon. and learned Friend the Member for Paisley (Mr. D. Johnston) was right to deal with this point at the start, because it is fundamental. We accept that it has to be dealt with by rates and taxation. We do not say that the ratepayer should pay a higher share than at present. Everything goes to prove that national revenue should pay a higher share in respect of national services than ever before. This is the parting of the ways. If the burden is shifted, and legislation is passed which will enable the burden to be shifted, it means that local revenues will be raised in many cases for national purposes. Education is a national purpose.

My hon. Friend the Member for Greenock (Dr. Dickson Mabon), in a thoughtful speech, quoted the case of technical education, an expanding service. It is a national service and it is unfair to pass legislation which will enable that to be put on the shoulders of local ratepayers to the benefit of those who should bear the greater responsibility.

I expected this from the Secretary of State. There never has been a confidence trickster who proclaimed his confidence trick to the people he proposed to dupe. There have always been high-sounding phrases concealing the true purpose and this Bill is, to my mind, a cowardly confidence trick.

We are told that the Bill seeks to provide for the freedom of the local authority and for a greater measure of control. Two things determine that freedom—the financing and the statutory powers. One can tinker as much as one likes with the finance and shift the burden from one side to the other, but the statutory powers remain and have been reinforced by the Bill. If the Kilmarnock or Ayr County Council decides to build five new schools they will still have to go to St. Andrew's House and to the Minister, the great centraliser. He will still either authorise it or not. If we want to develop something new and something that has not been allowed before, would they be allowed to do it under this Measure?

Sir J. Henderson-Stewart

I do not see why they should not be allowed to do it. It will be within the general grant.

Mr. Ross

But it is not brought into the calculation when the general grant is fixed. The hon. Member will find from Clause 2 that any expenditure for which a grant was not paid before 1959 will not enter into the calculations when the grant is made.

Mr. Niall Macpherson

Perhaps the hon. Gentleman will read Clause 2.

Mr. Ross

Clause 2 reads: In fixing the aggregate amount of the general grants for any year the Secretary of State shall take into consideration— (a) the latest information available to him of the rate of relevant expenditure (excluding, unless the Secretary of State with the consent of the Treasury otherwise determines, any expenditure of a description in respect of which no grant has been paid for any year ending before the sixteenth day of May, nineteen hundred and fifty-nine) … That is exactly what I said.

Mr. Macpherson

That is not quite accurate. There are the very important words in parentheses: unless the Secretary of State … otherwise determines.

Mr. Ross

Once again, the Minister is the great centraliser. In this case, the local authorities have no power at all. They are down on their knees crawling before the Secretary of State, the Huey Long of Gourock. He still approves and authorises and still gives and withholds his consent, and the frown of the Secretary of State still counts for everything in this matter.

Dr. Dickson Mabon

The hon. Member has done a very great injustice to Gourock. The Secretary of State comes from Kilmacolm.

Mr. Ross

I think that he represents Gourock. My hon. Friend forgets the great speech made by the Secretary of State for Scotland, who envisaged that one day there would not be my kindly right hon. Friend the Member for East Stirlingshire (Mr. Woodburn) in charge, but someone like Huey Long. When we examine the historical relationship in the matter of paying for these services we find that the block grant is nothing new. It has been proposed and introduced before. But it has always been proposed in order to save money; and that has been said. The May Committee, the Geddes Committee, and the rest have declared that the purpose was to save money.

When the White Paper on Local Government Finance in Scotland was introduced, I think it was The Times, in a leading article, which said that the White Paper meant sense only if the Government were determined to save money. Anyone who reads the White Paper and learns about all this manoeuvring as to what paragraph 17 says will appreciate that what is intended is to save money. This is a limited liability Bill for the Government, limiting their liability and not being concerned at all with what happens to local authorities.

As far as I can see, the only thing that can be saved to anyone by means of the Bill is the saving of a certain amount of checking up that is done in relation to the percentage grant, but we should not forget that in the calculation of the general grant there will be ever so much more checking up of details. The situation will be worse. All the fortune tellers in the country will be needed. A start will have to be made long beforehand on the calculations for the following year, but the grant determined by those calculations is to last at least two years and account must be taken of running costs.

How can those costs be calculated two years ahead? Those responsible will only know the cost for the previous year, and the cost for the following year will be based upon that. There will be a set of crystal-gazers in St. Andrew's House. I do not know how expensive they will be, but they certainly will be expensive for the ratepayers.

The Government, however, say that they have powers to make an interim payment. So they have. We shall see about that when we come to the Committee stage of the Bill. The Government had better ask the farmers who have to haggle over and over again when the February Price Review comes round. Now we are to have a local authorities' price review, and how often have the farmers been able to persuade the Government that prices have gone up so much that they should have more assistance?

This is a really fantastic situation. It conceals the true intention to cut percentage grants, because this new scheme will limit the Government's liabilities. Why has the percentage grant always been favoured by the local authorities, and why have efforts to wipe it out been resisted even by Conservative Governments in the past? It is because percentage grants are grants for priorities. In an expanding service the only way of ensuring that a desired scheme is carried out is to give a percentage grant and to grade percentages according to priorities.

If we are really interested in education we must be concerned about this. We are dealing with £36 million of grants for Scotland, of which £33 million are due to education. Now all the facets of education are determined and controlled by the great centraliser and the high authority who used to be concerned with that kind of duty in another sphere. He is now back on this duty in St. Andrew's House.

Let us face the fact that money can be saved under the general grant system, but the only people who can save money are those who are doing more than the great centraliser lays down. And they can save money only by reducing standards. This proposal is a reward for people who reduce standards and a penalty for those who raise them. But the great centraliser himself will not be concerned with anything other than the minimum. He will be concerned purely and simply with saving money; and this at a time when education and its expansion is of such importance to the nation in increasing its preparedness and fitness for the new technical age.

Here we have a Government deciding in this sinister and underhand way to limit their liabilities and hand over to local authorities, saying to them, "You carry on with it. You increase your payments in relation to education", knowing quite well that, with the revenue-raising structure which the Government have left to them, those authorities just cannot do it.

One of the reasons for the frustration in local government at present is the fact that local authorities cannot now finance the burdens which they carry. Hon. Members opposite cannot have it both ways. They cannot say, "We are giving freedom to the local authorities; we can trust them", and at the same time, say to them, "You spend such and such an amount, knowing that someone else is paying two-thirds of it." The present situation is such that they cannot afford to increase their rates with the one-third which they will have to pay from the general rate.

This Bill is a confidence trick. It is a shabby confidence trick. I hope sincerely that those hon. Gentlemen opposite who have the well-being of Scotland at heart will unite with us tonight to determine that we shall have fair play for the local authorities of Scotland in the work they are doing in respect of education and all the other things that will be jeopardised by the Bill.

8.35 p.m.

Mr. John Rankin (Glasgow, Govan)

I have had the privilege of hearing every speech delivered in the House today, and I must confess that never in all my twelve and a half years' membership of this House have I heard a Bill so manhandled by both sides. On the Government side only two speeches have been made in unqualified support of the Bill, and if the Secretary of State were to give the least consideration to the attitude of the House and to the opinions which have been expressed on both sides, if he were to behave in a democratic fashion, only one course would be open to him, and that would be to rise when I finish and say that he proposes to withdraw this piece of legislation.

Earlier in the day—and it seems more than a day; it feels more like a week—I heard the hon. Lady the Member for Aberdeen, South (Lady Tweedsmuir) saying that she would put the point of view of Aberdeen before the House and that it was one which, without qualification, was; hostile to the Government. I want to give the House also, so far as I have ascertained it, the point of view of my own local authority. It is imperative that hon. Members should take note of the views of their local authorities and give expression to them here.

My own local authority submitted the consideration of this Bill to a subcommittee, which came strongly to the opinion that these proposals are completely unacceptable, in that they will greatly increase the financial difficulties already facing local authorities, and will operate to the serious detriment of the development of social and other services in the city. The sub-committee, therefore, called upon the Government not to proceed with legislation concerning the proposals.

In reaching that decision the special sub-committee was guided and helped by four local authority officials of distinction which I think is not excelled in the whole of the United Kingdom. The subcommittee had the views of the City Assessor, the City Chamberlain, the Director of Education and, perhaps chief of all, the Town Clerk. The views of those four distinguished officials were clear. They felt that the Bill would be detrimental in every aspect to the interests of the City of Glasgow. Those are views which this House cannot afford to ignore.

In the course of the debate a great deal of play has been made with the statement of the Secretary of State that the underlying purpose of the Bill is to give local authorities more independence. I take it that means more independence from the operations of the Secretary of State. I have taken the trouble to look through one or two other Bills in addition to this one. If one does it, even casually, it will be found that, in relation to the local authorities, the Secretary of State has power to direct them, to instruct them, to determine their course of action, to require of them what they shall do. He has power to decide what shall he done in certain circumstances. He has power to estimate and certify. He has power to make regulations and he has power to fix. My goodness! He is fairly fixing the local authorities now.

Mr. Willis

And he has default powers.

Mr. Rankin

Earlier today my hon. Friend the Member for Maryhill (Mr. Hannan) inadvertently referred to Mr. Speaker as Mr. Scotland. Mr. Scotland, with a tremendous array of powers, sits opposite in the guise of the Secretary of State. He can do anything he likes with any local authority in Scotland at the moment and he does not propose to divest himself of one of those powers and pass it to any local authority. Most of the arguments which he and other hon. Members opposite made about greater independence for local authorities were sheer humbug.

One of the fears which has been expressed by Glasgow is that the block grant will hinder the development of education. As my hon. Friend the Member for Kilmarnock (Mr. Ross) said, we are afraid of that because of our experience, because it has happened before. My hon. Friend mentioned the May Committee, and the Geddes Committee, but there was a third, the Ray Committee. Each of those used the block grant as a means of cutting expenditure.

As a result of the Report of the Geddes Committee, teachers in Scotland—indeed, all over the United Kingdom—suffered a 10 per cent. reduction in their salaries. That general cut was applied in Glasgow, which was then under a Tory majority which carried it a step further and imposed a further 3¾ per cent. cut. As a result of the application of the block grant in previous years, teachers' salaries and educational services were cut to a very serious extent.

That is one of the reasons why experience compels us to oppose this proposal. It is worth briefly enumerating some of the services which Glasgow educationists fear may be affected. I am now dealing not merely with the schools, but with the great services which are carried on outside ordinary school hours, the holiday camps, the residential schools, the junior clubs, the play centres, the further education centres, the adult education centres, the community clubs, the youth clubs, and services of that nature.

They are all absolutely essential in a modern community and yet they have been described by Glasgow Tories as mere fripperies. Those are the things which are absolutely essential to the growing and developing child. Those are the services which may be cut back by the introduction of the block grant. I ask the Joint Under-Secretary to say whether the milk and meals services will suffer any interference; whether the milk service will continue to receive a 100 per cent. grant.

I should like to explore the position of nursery schools a little further, because the Joint Under-Secretary and I have been in communication on this matter. I want to say that he was quite helpful. These schools play a tremendously important part in the most formative years of a child's life. Viscount Falkland, a former governor of Wandsworth Prison, said that in his twenty years' experience of that great gaol he had come to the conclusion that the first six years of a person's life were far more important than the next sixty. He said that criminals were made in the cradle.

This is the service which we are now starving in our schools, because the City of Glasgow has 52,000 children between the ages of two and five and it has only forty-one schools to deal with them while their mothers are at work—forty-one schools that have 1,600 of these children on the roll. There are 52,000 of them and if Glasgow had to deal with even half of that large number, it would need immediately 420 schools, assuming that the other 26,000 little tots could be properly cared for by other means. That is a service for which in the Report on Education, which we discussed recently, the Government could only say that last year one new nursery school was built. I do not want to go much further on that point, but it is an important fundamental service, and one that we ought to be thinking of expanding from its present inadequate state. Instead of that, it looks as if it is to contract it further.

I should like to deal briefly with another problem which has been mentioned tonight. That is the problem of technological education. I ask the Secretary of State again: what is to be the position of technical education in these new proposals? The first intention was altogether to exclude grants for technical education from the new arrangement. It had to be treated separately because even the Secretary of State realised the danger that lay in placing technical education within the block grant system. Therefore, the first intention was to take it out, but I understand that the latest proposal is that expenditure on daytime courses of further education in each area will be pooled and spread equitably over the areas which benefit from it.

To take the position in Glasgow, how big is the area to be? There are people who come to Glasgow's schools in the evening, the technical colleges and so on, from all over the west of Scotland. Is the money which Glasgow gets to be spread over the whole of the west of Scotland? I hope that the Secretary of State will make clear the position of technical education within the block grant, because the latest proposal will not ensure that the appropriate and necessary assistance which should be forthcoming will go to the areas where developments are actually taking place.

I pose the problem because at this moment Glasgow is planning an immense programme for the expansion of day-release colleges. We have been asking for these for years. Glasgow is now proposing to build three district and two central colleges which will deal with 2,000 students each per week. The whole scheme will cost million. Can Glasgow be assured by the Secretary of State tonight that that scheme—which will take some years to complete—will not suffer financially under this new arrangement for educational grants? I know that the day-release college is not necessarily a major contribution to the bigger problem which faces us on the technological side. Nevertheless, it is a beginning, at a lower level, and from that beginning we can expand.

The urgency of the problem is shown by these figures. The number of first degrees awarded in engineering in Great Britain in 1955 was 2,313; in the United States of America it was 22,589, and in the Union of Soviet Socialist Republics 53,000. In pure science, 4,999 degrees were awarded here; 23,600 were awarded in America, and 12,000 in Russia. We can also see the concentration in Russia upon the engineering side. Last year the number of engineering graduates put out by Russia from higher technological institutes was 71,000, and 35,000 of those were women. In America, the figure was about 50,000. In Great Britain it was 7,000—and that figure included engineering graduates of all kinds; first degrees and higher degrees. If we had been merely keeping our place it should have been double that figure at the very least.

By 1960, Russia proposes to increase that 71,000 to 96,000. Has the Secretary of State any comparable plans for Scotland along those lines? I am not thinking in terms of Sputniks. To some people these may be important, but to my mind the really important fact and the fact that should be of major significance to everyone, is that the lack of technicians capable of improving British living standards may become a very serious matter if we go on cramping education as is proposed under the Bill.

Mr. George indicated dissent.

Mr. Rankin

The hon. Member for Pollok (Mr. George) shakes his head. He was not in the Chamber when I began speaking. He did not hear the reason I gave. Hon. Members on this side of the House, as well as some hon. Members opposite, have given figures to show how it will be restricted. We are pursuing this cramping policy at a time when we ought to be expanding in every department, not merely in the academic sphere, where I want to see expansion, but also in science and technology, where we are facing tremendous competition, and where I am afraid that we are falling very far behind.

I do not see anything in the attitude of the Government which gives hope that they have a policy to meet the situation in which we are now living. Their policy can be described only as a "phutnik", and I hope that hon. Members opposite who have expressed views not dissimilar to those of my hon. Friends will come into the Lobby with us tonight and vote against the Second Reading.

8.55 p.m.

Mr. Walter Elliot (Glasgow, Kelvingrove)

Although occasionally it was straggling, our debate today has certainly covered a field of great interest to us all. Undoubtedly, it has pivoted round the block grant. The hon. Member for Govan (Mr. Rankin) said that fears were expressed about the block grant because of previous experience. The hon. Gentleman chose a singularly unfortunate example—

Mr. Rankin

No, I did not.

Mr. Elliot

Well, I will prove it.

The hon. Gentleman referred to the Geddes Committee. I do not think that he can have remembered the precise circumstances of that time. They were that the cut of 10 per cent. on teachers' salaries was not imposed as the of the block grant or, indeed by the Geddes Committee. It was imposed by the great Socialist Chancellor, Philip Snowden, who had been panic-stricken by the danger of inflation which was then so serious in the country that he and his Prime Minister broke up the Government because of it.

The cut then was certainly not part of any kind of attack on education. It was part of a general proposal designed for the purpose of arresting inflation. Therefore, I think that the hon. Gentleman chose a bad example when he selected that one. The fall of the Labour Government and the bringing in of a Budget under which these cuts were imposed was the work of a Labour Chancellor of the Exchequer, Philip Snowden, who, as I said, had by that time begun to fear most terribly the danger of inflation. The danger before us today is not one of that kind at all.

I have many friends who are teachers. I remember well the arguments addressed to me on many occasions by my friends in the teaching profession. One always hears such arguments in every controversy. I remember when the education service was placed under the control of the local authorities. I remember this House being bombarded by resolutions and demonstrations against it of all kinds. At that time, education was under the control of the special education authority, which had been brought into existence in Scotland and to which education had been entrusted.

An eloquent plea was made today by the hon. and learned Member for Paisley (Mr. D. Johnston); but the logical consequence of his speech was that education should be removed altogether from the control of the local authorities. That is the logical consequence of many of the arguments which have been advanced in this debate. One can always bring out a good case for something being done by a central instead of a local authority. Anything is better done by a central authority than by a local authority—except everything. If we destroy all the purposes of local authority, what is left for it to do?

Local authority has already lost much—electricity, gas, the health services. It was, I think, a great severance when the health service was taken from the local authority by a central authority, run entirely from central funds and administered by nominated committees instead of elected representatives. Strong arguments were advanced in favour of it, but I think that even right hon. and hon. Gentlemen opposite would not all uphold that solution with such vehemence today. But nobody is consistent in these matters.

The responsibility for looking after those out of work and on outdoor relief has been transferred to the local offices of the National Assistance Board. I remember that transference well. I was responsible for a good deal of it. At the time I was denounced in the most unmeasured terms by right hon. and hon. Gentlemen opposite for transferring this responsibility, and making it a centrally financed taxpayers' burden instead of a rate burden. I am afraid that views on these matters vary a great deal according to which side of the House the hon. Member who expresses them is sitting.

I am not saying that this Bill is a perfect solution. I am not saying that it is the end of the story, but I do say that this is one of the last chances for local authorities. If local authorities cannot be trusted to administer education, what is it that they can be trusted to administer? The argument which has been advanced all evening is that local authorities are saying that they are not to be trusted with this responsibility, "Do not give us authority over this money, retain the control centrally". If that is so, what claim have local authorities to be entrusted with anything except simply administering the funds found by central administration?

Many of the arguments have been about raising funds. The hon. and learned Member for Paisley brought forward arguments which also took way from the suggestion of local raising of funds to central raising of funds. He referred to the question of a local income tax for which Inland Revenue machinery would have to be used, for administration of local revenue, and would have to be taken over by local authorities. I am not saying that under modern conditions it is possible for local authorities to survive, but I think that we should do our best to give them a chance. We should do our best to try.

This is a great voluntary service which, traditionally, has been associated with the locality aid administered and financed by the locality. It is a dangerous course to embark upon to say that to entrust authority over the finances of this service to local authorities is a retrograde step, a step which should not be taken in the interests of education but that it should be kept here and that here we can be trusted, but not in the Town Council of Glasgow, in the Town Council of Aberdeen, or of Edinburgh.

That is a very strange argument indeed. The hon. Member for Govan addressed to us an eloquent plea for education. Why does he think that his speech should be so much less effective if it is addressed to the Town Council of Glasgow, where there is a great majority of the Left, than if it is addressed here, where there is a majority of the Right?

I do not think that the hon. Member is consistent in the arguments he brings forward. These are ad hoc arguments which, perhaps, stem from the genuine fear that in some way or other education is to be cut and a diminuation is to be made.

Mr. Woodburn indicated assent.

Mr. Elliot

The right hon. Member for East Stirlingshire (Mr. Woodburn), who formerly had great responsibility as Secretary of State for Scotland, affirms that fear. How can he, in face of the record of this Government? Whereas the best figure for school places in a year that he could produce was 20,000, we have produced 36,000. How can he claim that the people who produced 36,000 places are cutting down education? It does not seem to make sense.

Mr. Woodburn

The children had not grown up then.

Mr. Elliot

New facilities had to be found by us. It was part of the claim of hon. Members opposite that we would not provide facilities for the children who were growing up. At any rate, a valiant effort, a successful effort, was made to cope with the situation. The situation was coped with.

I am much more afraid of the figures which were given by the hon. Member for Govan, which we have very much in our minds. It is quite true that the figures relating to technical education in Russia are far more than those in this country, even proportionately; so are the figures in the United States. The danger does not arise in the early years, but in the fact, as has been repeated again and again, that two-thirds of those who go into our secondary schools escape from them at the earliest possible moment when not prevented by the policeman.

That is the accusation that we should deal with. And I can give the hon. Gentleman the answer—or, at least, the answer given in Soviet Russia. The answer is—incentives. The incentive to someone who goes through the toil, the drudgery and the discipline of higher education is five, ten, fifteen, twenty times as high as in this country. Let the hon. Gentleman compare the wages of the manual worker with those of the teacher, the engineer, or the professor in this country, and then compare the wages of the manual labourer with those of the professor, a skilled engineer—or even a ballet dancer—in Soviet Russia. The multiple is many, many times. And there is, in addition, every kind of advantage given, advantages against which there would be the utmost outcry if they were launched in this country. The Soviet Union has gone all out for incentives—it may be right or it may be wrong in that, but it is producing results.

As I know that the hon. Member for Hamilton (Mr. T. Fraser) wishes to have time to speak, I will not speak at length on this now, but I really do speak with some experience of these matters. Many and many a time, when I was in the Administration, all kinds of people with whom I was working have said, "For goodness' sake, give us a little money and let us go away. We will use it far better than if every penny we spend is checked and counter-checked, accounted for, scrutinised, audited and summed up by the auditors in your Department."

I remember Lord Boyd-Orr, when running the Rowett Research Institute at Bucksburn, which we all know very well, saying, "I will take half the money if I can have it in a box, and not have to bother with all the checks and counterchecks that I have to go through with the Department of Agriculture." There is something to be said for that point of view.

I am not saying that this Bill is the ideal solution, but it is a solution that carries with it very important implications for the future of local government, and for the future of education. The House should think twice, and three times, before rejecting it, as I ask it not to do tonight.

9.7 p.m.

Mr. Thomas Fraser (Hamilton)

I hope that the right hon. Gentleman the Member for Kelvingrove (Mr. Walter Elliot) will pardon me if I do not continue the discussion on the salaries of ballet dancers or professors—or even the humble labourers—in the Soviet Union, but rather address myself to the Bill before the House. Until the right hon. Gentleman spoke, not one Conservative Member had given unqualified support to the Measure, and the right hon. Gentleman himself did not make it very obvious to any of us that he was, in fact, addressing his remarks to the Bill.

The Bill had unqualified support only from the National Liberals. There is complete unanimity amongst them that it is a good Bill. That is terribly important. We have the National Liberals saying, with one voice, "This is a good Bill." The Tories, however, until the right hon. Gentleman spoke, have, for the most part, been opposed to it.

The hon. Baronet the Member for Fife, East (Sir J. Henderson-Stewart) was so full of praise of his right hon. Friend that I am sure the Secretary of State must have been somewhat embarrassed. The hon. Member for Fife, East said that he would not be at all surprised if the present holder of the office went down in history as the greatest Secretary of State there had ever been, because he had introduced this Bill.

What is the purpose of the Bill? I think it not a bad idea to look at that. The purpose is to continue the process of transferring a financial burden from the taxpayers to the ratepayers. That is what it does. This process has been going on for some years now, and is continued by this Measure. If that is not its purpose, it is, at least, the effect. It transfers the burden from the taxpayers, as I have said, easing the burden on those taxed according to the more equitable system and increasing the burden on those who con- tribute under the less equitable system of taxation.

There is no hon. Member present when the percentage grants were introduced, not even the right hon. Gentleman the Member for Kelvingrove, who did not feel obliged to provide them to enable local authorities to maintain their service, and who did not always boast of the size of the percentage grant because it would be of such great advantage to local authorities and to the country as a whole—always because national taxation is a more equitable system of taxation than local taxation. That has been the justification for the movement over the years towards a greater contribution to local services from central government, coupled with the fact, as my hon. and learned Friend the Member for Paisley (Mr. D. Johnston) said, that local government has more and more ceased to be local government and has become local administration. Because we here have been determining policies, we have not been leaving it to local authorities to decide what they would spend their money on but have decided what they should spend their money on, encouraging them so to spend it by giving them percentage grants. No one can deny that that is exactly what has happened.

Another of the purposes of the Bill—we ought not to be mealy-mouthed, and there is no reason why the Secretary of State should not be quite honest about it—is to steal back to the Exchequer the advantages local authorities would otherwise derive from the rerating of industry. Is that not so? The rerating of industry, to the extent provided for in the Bill, would yield to the local authorities of Scotland, so says the Secretary of State, an additional income of £2.3 million a year. It is necessary, then, for the Secretary of State to claw back some of the money which would go to the local authorities. How could he do it? In one of two ways. He could reduce the percentage grants payable for the existing services, or abolish the lot and introduce a general grant.

Will the Secretary of State deny that, if he had not abolished percentage grants and had still insisted on clawing back to the Exchequer two-thirds of the advantages which would otherwise have gone to the local authorities by the rerating of industry to the extent provided for, he could have done it otherwise than try reducing the percentage grants? The Government did not have the courage to reduce the percentage grants in respect of these many services, and they have, in fact, pretended that the Bill is giving additional money to local authorities.

The fact is that the Bill most definitely takes money from the local authorities. It gives nothing to them but takes something away. It is a shabby way of taking it back. The Government aught to have been more straightforward about it and said, "We intend to reduce the various grants". But not at all do they do that. 'They abolish the lot and steal back from the local authorities the money which the hon. Member for Glasgow, Pollok (Mr. George) says that the local authorities ought to have from the industrialists in their areas. Industrialists will pay a little more in rates under the present. Bill, but the central Government will claw back 2d. from every 3d. extra that the industrialists pay to local authorities. This is a shabby way to treat those in local government who had been led to believe that the rerating of industry would be of some advantage to them.

The Secretary of State repeated this afternoon that the underlying purpose of the Bill, so he says, is to give local authorities more power over their own affairs. This surely is hypocrisy. No additional power over their own affairs is given to local authorities by the Bill, and there are many examples, which have been cited by my hon. Friends today, of local authorities, under the Bill, having less power over their own affairs and less control than they have at the present time.

I have listened to the most utter nonsense being talked by the hon. Baronet the Member for Fife, East about the independence and the great new powers that are to be given to local authorities. "We on this side", was his theme, "trust the local authorities"—

Sir J. Henderson-Stewart indicated dissent.

Mr. Fraser

The hon. Baronet has forgotten almost everything he has said in his speech. He must read it tomorrow.

Mr. Ross

He wants to forget it.

Mr. Fraser

I would want to forget it, too, if I had made it.

In Clause 11 the Government are providing in permanent enactment that a local authority cannot even spend its own money on building projects for which it is a statutory authority. At least, when the borrowing of money is involved to carry out the capital projects, it must go cap in hand to the central Government and say. "Please may I do this?"

As I said when discussing this same issue on the Expiring Laws Continuance Bill in Committee, my own local authority found that it was now committing an offence under the Rivers (Prevention of Pollution) (Scotland) Act, 1951, by putting sludge into the river. To save itself from committing this offence, it asked about a grant under the Distribution of Industry Act to erect the necessary works. It was informed by the Scottish Office not only that it could not get a grant to carry out the necessary works, but that it would not get borrowing powers to carry them out. The Joint Under-Secretary has since written to me saying that if my local authority applies again, it might get a better answer next time.

Why should the Secretary of State, who says that he wants to give more power to the local authorities, take from them the power, which they enjoyed until the war, of deciding by a two-thirds majority to borrow money for a capital project, whether it was the building of a library, a museum, public parks or a purification works? Why should the local authority not have the power to do that? It is not the wicked Socialists who are taking away this power. It is the National Liberals.

What the Socialist Government did was to provide, in Section 4 of the 1951 Act, that this power, which had been taken by the central Government at the beginning of the war under Defence Regulations, should be continued temporarily at that time when the Defence Regulation was expiring. We had always been honest with the local authorities, and we said, "At this time, when building controls are operating all round and there are certain shortages, and when we have to exercise controls and impose restrictions on others, we must be able to put restrictions on local authorities also." We therefore put, it into the Bill for a temporary period. But it is the hon. Baronet's party which has been continuing it year after year in the Expiring Laws Continuance Bill, and it is his Government who are now writing it into permanent statute.

Sir. J. Henderson-Stewart

Following the Socialist example.

Mr. Fraser

The hon. Baronet says that the Government are following our example. If he has no greater understanding than that, I had better leave him alone.

The Secretary of State, who said that the purpose of the Bill was to give the local authorities more powers, has also written into the Bill Clause 3 (1), which gives him power to reduce the general grant when a service is not being carried through. Therefore, if he is not satisfied with the number of schools, with the public health service that is provided by the local authority, with the fire service equipment or the fire stations which have been provided, if he is not satisfied with what the local authority is doing in the matter of child care, school crossings or anything else, under Clause 3 (1), he can say "I shall withdraw part of the grant." What a great help that will be to the local people! What a great help it will be to take the grant from them! In subsection (2), however, the Secretary of State goes on to provide that he will specify the standards to which those local services have to be maintained.

Have not hon. Members opposite, including the right hon. Gentleman the Member for Glasgow, Kelvingrove who said that these local authorities were about to be liberated, seen that the local authorities will be worse hamstrung than ever after the Bill has gone through? We have become accustomed to the Secretary of State saying one thing and doing another, but we expect some hon. Members opposite to make a study of the Bill. Even though the Secretary of State said its purpose is to give more powers, if hon. Members opposite can see written in pretty plain English in the Bill that its effect will be completely the opposite, why on earth do they not say so? They did not have to read the Bill to see that. They had only to read some of the memoranda sent to them by their constituents, who identified for them those parts of the Bill by which new restrictions are to be put upon the local authorities.

The Bill provides for the introduction of the new system by the year 1959 to 1960. Hon. Members opposite have been rather proud of the fact that by then the local authorities will get £750,000 more money. This was made most clear by the Secretary of State. The services dealt with in the Bill, and listed more clearly in the White Paper, together accounted in the year 1956 to 1957 for £36.6 million in grant, and 90 per cent. of the total was taken by education. Quite apart from the change in the value of money, would there not have been by 1959 to 1960, three years hence, an extension of services that would have increased the total cost of the services by more than 2 per cent.? We cannot be certain that there will be no further fall in the value of money. It has fallen this month compared with last month. But would not the total cost of the services have increased by more than 2 per cent.?

What about the provisions for technical education of which we have heard so much? The new technical schools are included among the schools provided by the education authorities and listed in the Bill. Surely, the grant to be provided by the central Government in the next three years towards the cost of additional education services alone would have increased by more than this sum of £750,000. That is all that is being left of the £2.3 million additional money the local authorities get from industrial ratepayers.

This is surely a bit of sharp practice. It is not an increase. It is most definitely a decrease. We shall find, three years from now, despite the £750,000 more which the local authorities are getting this year, that the Exchequer contribution will be a lower percentage than it is now of their costs met out of Exchequer funds. Of course, that is the purpose of the Bill. Why do not the Government tell us the truth? Why do not Ministers say that is the purpose of the Bill? Why will they say one thing and do something quite different?

The hon. Lady the Member for Aberdeen, South (Lady Tweedsmuir) wanted to praise the Government, but said she would also have to speak on behalf of her constituency. Her constituency comes out of this very badly, because Aberdeen City has probably made more progress in education than any other education authority in Scotland since the end of the war.

It was the first education authority to get ahead with the building of new schools. It has provided more school places per 1,000 of the population than any other education authority in Scotland, and it has recruited staff. All that has cost money, of course, but the authority has received grants from Exchequer funds of about 60 per cent. of the total expenditure. At present, on a basis of per head of population, Aberdeen gets more money for education than any other city or urban authority in the country.

Aberdeen incurred this additional expenditure by building new schools, by recruiting staff, and making educational provision in fulfilment of the Education Act, 1946, on the understanding that there was a contractual arrangement by which the central Government would meet a little more than 60 per cent. of the cost. This contract has now been torn up by the Government, and not after discussion and negotiation. The reward that the Government propose to give to Aberdeen for the great advances which the city has made in education since the war is to reduce the amount of grant.

Renfrewshire, on the other hand, has done very badly in the provision of new schools since the end of the war. Renfrewshire receives at present less per head of the population than many other authorities in Scotland. The county has depended far too much on Glasgow to provide education, and particularly secondary education, for Renfrewshire youngsters. How do the Government punish Renfrewshire for failing to fulfil its obligations under the 1946 Act? Renfrewshire is to have increased assistance.

I asked, in a Parliamentary Question, whether the Secretary of State could give me a list of local authorities which would suffer decreases or receive increases of grant under the Bill, but he was unable to provide me with a list. He must prepare a list, of course, before he gives effect to the Bill, because provision is made for calculations. He could not prepare one for me, because it would have meant that he would have had to show that the financial benefit of the Bill goes to those education authorities which have not done their job since the end of the war and that those who will lose under the Bill are those who have done a good job since the end of the war.

I am not saying that Edinburgh is not a good local education authority, but the education authority there has a great deal of its education services made available or its needs fulfilled by public benefactors. Notwithstanding all that, we have said that Edinburgh, like any other city, should be reimbursed for 50 per cent. of the cost incurred by the education authority. But now the Secretary of State proposes that he should count heads in Edinburgh and give it a grant to cover services, including education, by reference to population. Therefore, Edinburgh is bound to receive advantage under the Bill.

If Edinburgh had to make all its provisions for education itself, as we do in the County of Lanark, and if the city had fulfilled all its obligations it would not gain by these new proposals, but public benefactors have met a substantial part of Edinburgh's education needs and the city will now receive not 60 per cent. of its education expenditure but very substantially more. That is the effect of these proposals. That is why this provision in the Bill is so very wrong.

We have heard a good deal about technical education. The right hon. Gentleman the Member for Kelvingrove, called attention to the great advances made in the Soviet Union and the United States of America. Did they make those advances by leaving the provision of education to the local authorities, to be met out of local rates? Of course not, Does anybody think that the provision of technical education should be left to the education authorities without any drive from this end? Of course not.

I wish that the Secretary of State would be honest about this. None of us trusts the local authorities in this matter. We decided to raise the school-leaving age to 15. We did not leave it to be decided by local authorities. It is we who decide that there shall be secondary educational advantages for our children. It is we who will say that some day, in the not very distant future I hope, the school-leaving age will be raised. It is we who, in the very near future, will decide that there will be part-time technical education for all children who leave school at 15 years of age. We shall not leave that to local authorities.

Mr. Walter Elliot

Does the hon. Gentleman think that education in the United States is a federal responsibility?

Mr. Fraser

No. It is not a local responsibility either. It is a State responsibility. The right hon. Gentleman will know that many of the States in the United States are very much larger geographically and have very much larger populations than Scotland.

Mr. Godfrey Lagden (Hornchurch)

They are very much less educated.

Mr. Fraser

I do not know how much the hon. Gentleman knows about Scotland. He says that they are very much less educated, but the right hon. Gentleman the Member for Kelvingrove informed us that they were so much better educated.

Mr. Lagden

I was referring to parts of the United States whose education does not compare with this country.

Mr. Fraser

I want to make way for the Under-Secretary of State who will reply to the debate.

It is our responsibility in this House to ensure that technical educational facilities are provided for the young people. I would dare anyone to say that he is willing to leave that to the local authorities. It is for us to do that. It is because we have recognised hitherto that there should be a partnership between central Government and local government in the provision of education and all those other services for which percentage grants have been given that we have had percentage grants.

We have recognised, up to now, that there has been a partnership. By and large, policy has been laid down in this House. Even in the administration of the policy there has had to be a partnership between central Government and local government. The paying of percentage grants was a recognition of that partnership. It is seen clearly now that the purpose of the abolition of percentage grant is to reduce the assistance given by the central Government to local authorities. This is a breaking up of the partnership. All that has been said by hon. Members on both sides about the need to increase and encourage a better educational provision for the young people indicates that this is not the appropriate time to introduce this Measure.

Let hon. Members bear this in mind. At the moment if an education authority is considering whether it will build a technical school that will cost, say, £2 million it will do so knowing that more than half the annual burden will be met from central funds. If it has to decide the same issue after the passage of this Bill, it will know that 100 per cent. of the additional financial burden being taken on by the provision of the school will be borne by the local authority. This Bill is a piece of sharp practice. It is dishonest. I call on those Conservatives representing Scotland who have criticised the Bill for once to follow their arguments with their votes into the Division Lobby.

9.36 p.m.

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

My right hon. Friend the Secretary of State for Scotland has asked me to wind up this debate because of the predominating interest of education in the services proposed to be covered.

In the course of our debate today we have had an advantage in that we have been discussing only the block grant and its effects. At the same time, if there is one thing that has emerged from the discussion it is the general feeling which started with the speech of the hon. and learned Member for Paisley (Mr. D. Johnston) that all was not really well with local government. I would be the first to admit that there has been no agreement about the cure to be applied.

The hon. Gentleman the Member for Hamilton (Mr. T. Fraser) could have understood this Bill better. He could have gone into it more closely and understood what it seeks to do before he made the allegations he did. For example, he seems to be labouring under the misapprehension that the block grant is to be built up in the first place from the 1956–57 expenditure, no matter what inflation has happened since. If the hon. Gentleman will look at Clause 2 he will see that this is not the case. The duty is laid upon my right hon. Friend to take into account the latest information available before fixing that grant.

Then the hon. Gentleman said that if a school is built in the future the cost must come out of the rates. Clause 2 (1, c) states clearly that my right hon. Friend must take into account the need for developing the services, so that is taken into account on a national basis. However, schools will have to be built all over the country—I should think in every single local authority area—so it cannot be said that under this system any local authority which has to build a new school will have to find 100 per cent. of the money out of the rates.

Then the hon. Gentleman uttered certain generalisations about the position of local authorities and how the advanced and less advanced ones would be affected. Those generalisations are not justified. This formula was arrived at in a purely objective manner. It is inevitable that some local authorities will lose a bit and some will gain a bit. This happens when a formula is fixed on an objective level, but the object of doing so is to obtain a common measure of assistance for the maintenance of national standards in the services to which the grant relates.

The hon. Gentleman the Member for Kilmarnock (Mr. Ross) drew attention to the expansion of social services. Over the last twenty-five years or so we have had a steady growth of social legislation, much of which has laid duties on local authorities and has encouraged them to perform their functions by offering percentage grant of various amounts which have no logical relationship one to another. I suggest that there comes a time in the development of separate local authority functions when, instead of each being subject to a separate financial control by a separate Department of Government, it is opportune and appropriate to give them each a sum of money with which to carry out the whole group of functions. That is the philosophy of the Bill and I believe that it is right.

My hon. Friend the Member for Glasgow, Pollok (Mr. George), in a most admirable speech, suggested that the Bill would result in a budgetary system being introduced into local government and he thought that that would be a good thing. I agree, but of course, such a system already exists. I believe that the Bill will strengthen it. I disagree with my hon. Friend when he said that the Bill had no friends outside the House. I admit that the local government associations in Scotland have expressed disapproval. It is wile that the E.I.S. has expressed disapproval, but many individuals in local government, even among those whose local authorities say that they are opposed to the Measure, have already indicated that they have appreciated the purpose of the Measure and will support it.

Mr. D. Johnston

The hon. Member has just made an assertion of fact. Will he back that assertion by giving names?

Mr. Macpherson

Certainly. They have indicated that to my right hon. Friend, to myself and to my hon. Friends. We are in constant touch about this.

The question really is what the purpose of the Bill is and that is something about which there has been considerable discussion. Many critics have started from a preconceived idea of what a block grant is. Sonic still think that it is a sum to be fixed immediately by the Chancellor of the Exchequer for years ahead, limiting the liability of the Exchequer and throwing on the ratepayer the burden of expanding services and increasing costs. They conjure up the ghost of Geddes, complete with axe, and whisper knowingly "Geddes walks again." I say to the Opposition what was said in the case of a different ghost: There are more things in heaven and earth, Horatio, Than are dreamed of in your philosophy. It is true that the purpose of the block grant introduced in 1922 was economy. Indeed, the Geddes Committee which recommended it was set up specifically to effect forthwith all possible reductions in the national expenditure. That Committee pointed out that the Board of Education Vote had grown from £19 million to £50 million over a period of three years. The avowed object of that Committee's recommendations was to check expansion and reduce expenditure and the critics have accordingly inferred that the real purpose of this Measure is the same. It is not. There has been no Geddes Committee.

One thing is quite clear and that is that we know better than the critics what our real purpose is. It is stated clearly and unambiguously in the White Paper which I shall repeat: A main aim of the proposed changes has been to increase the independence of local authorities in the raising and spending of their money so far as it is practicable to do so. We are not ashamed of our belief that an effect of strengthening of the financial responsibility of local authorities will be to encourage them to greater economy. There is always room for economy, even with education. We believe that this reform will make for more efficient administration and more value for money. What we are doing is to give an opportunity for greater responsibility in determining the division of expenditure without having the distracting pull of a percentage grant.

How is that to be achieved? It is to be achieved by the block grant. Member after Member has risen to say that that is all very well, but that more powers are being given to the Secretary of State. I say to the House what has been said by my right hon. Friends in earlier debates, that in the Working Party we are now considering how to relax controls and what controls should be relaxed. The first stage was for the Working Party to reach a basis for the formula and to get the legislative background of the Bill in shape. The next stage is to see what the effects will be on the actual functions of local government.

The hon. Member for Glasgow, Central (Mr. McInnes) talked about the intention to cut the grant. The general trend of his argument, which was also advanced by the hon. Member for Kilmarnock and others, was that there was to be a bigger burden on ratepayers and that the rates would bear more heavily than taxes on people with low incomes.

I think that was the general basis of their argument; but really this cannot be right because the net effect of the changes is to give the ratepayers in Scotland a benefit of something like £750,000. It is all very well for the hon. Member for Hamilton to talk about stealing back industrial rates. Industrial ratepayers will certainly pay more; indeed two-thirds is being used to reduce the block grant. That is the answer to the hon. Member for Glasgow, Central and that is where the reduction in grant takes place and nowhere else. But the general effect on the local authorities as a whole, because they get the extra £750,000, is that they will be better off at the end of the exercise.

Mr. McInnes

Would the hon. Gentleman make it perfectly clear to the House what Exchequer subsidies were given to local authorities in respect of derating?

Mr. Macpherson

In 1929, when de-rating took place, the amount of derating was made up to the local authorities and a little more as well. On this point, the hon. Gentleman said that 38 per cent. of expenditure was met from grants in 1955–56 and he asked from where the remaining 62 per cent. came. Of that 62 per cent., one-half came from rates and the rest from other sources of revenue, rents, bus fares, miscellaneous fees and so on. The figure given for England and Wales was six to five in the relationship between Exchequer grants and rates, and in Scotland the figure was five to four. That is the answer to the hon. Gentleman.

I was asked why the police were not included if this was such a good thing. The answer is perfectly simple. It is because my right hon. Friend has a special duty as regards the maintenance of law and order.

I was also asked why roads were not included. The answer is because the responsibility for roads is one which is shared between my right hon. Friend and the local authorities in different degrees. It would be virtually impossible to include that in the grant. I was asked, why choose this moment to add additional control, to rivet on local authorities the control of borrowing as a permanency. The answer is, quite frankly, this. For the foreseeable future we see no prospect that the prospective excess of demand for capital investment will be equalled by the capacity of our resources to meet it. In fact the demand will be greater and therefore we have to exercise control.

I would say this to hon. Members opposite. Of all people they should be the last to bring this charge. They want to exercise control over all other forms of investment. Do they really want us to believe that local authority investment, out of all the rest, would be the one source of investment that they would leave alone?

The hon. and learned Gentleman the Member for Paisley, said that local government had no say over education or any other service at all. The fact is that powers are conferred as well as duties. It is not just the actual national policy that local authorities have to interpret; there is an infinite variety of ways in which they carry that out.

He would have liked to find sources of local income tax. My hon. Friend the Member for Fife, East (Sir J. Henderson-Stewart) dealt with that point. The hon. Member was at variance with his hon. Friend the Member for Wellingborough (Mr. Lindgren), and also with the Sorn Report in that respect. I would also point out that his argument would fall down even if there were new sources of finance or a new system of rating, because these duties would remain. We should not restore any more independence to local government even if we had a different system of raising finance.

I should have liked to deal with a great many more points, but I think that I should sum up the situation now, since time is rather short. The attitude of the Opposition can best be characterised as one of undue scepticism. They are sceptical about the amount of the general grant and the sums payable to each local authority; about the Secretary of State's power to maintain standards, and about the sense of responsibility of local authorities.

First as regards the total amount of the general grant. The Secretary of State referred to the explicit duty imposed upon him by Clause 2, as to the factors which he is bound to take into consideration—the rate of expenditure on the services in question, together with any foreseeable variation in the cost and in the demand for those services. I say once again to the hon. Member for Hamilton that there is no fixity in this matter. My right hon. Friend must also have regard to the need for developing those services, together with the extent to which it is reasonable to proceed with development taking into account the economic conditions at the time.

The rate of progress must be related to the capacity of the nation to sustain it. In the face of such a clear and unambiguous statutory obligation, local authorities have no real cause for alarm as to the method of arriving at the total grant. In a very admirable speech the hon. Member for Stirling and Falkirk Burghs (Mr. Malcolm MacPherson) said that he thought that the powers provided by Clause 2 (1) were too weak. Hon. Members have implied that the Secretary of State is not bound to do more than take these matters into consideration and that, laving done that, he can do what he likes. But he cannot do what he likes. Under Clause 1 the total amount of Government assistance towards the local services in question has to be set out in a general grant Order, which has to be approved by both Houses. The Government will have to satisfy both Houses that the total amount is neither too little nor too much. The fact is that under the present system of percentage grants Parliament has tended to lose control of expenditure. The present proposals will not only increase the financial responsibility of local authorities; they will restore to Parliament its historic, broad control of expenditure in the field of the Exchequer contribution to local government finance.

For 1959–60 and thereafter the total amount will be set out for Parliament to approve or disapprove, and for all to see, in the general grant Order. That Order will cover two or more years. One of my hon. Friends expressed the hope that it would not be for more than three years. The money, however, will have to be voted year by year, just as the university quinquennial grant is voted annually now. There will be ample opportunity for Parliament to debate the amount both on the Order and the Estimates.

Mr. Rankin

And to increase it.

Mr. Macpherson

It will be open to Parliament to say, "Here are factors which we think will justify an increase." The hon. Member for Hamilton knows his Parliamentary procedure, and he knows how these things happen. He has the choice of what will be debated in the Estimates.

Mr. Ross

Shall we have the power to amend the Order to which the hon. Member is referring?

Mr. Macpherson

No, it is not intended that there shall be power to amend them.

I was asked about local grants by my hon. Friend the Member for Banff (Mr. Duthie), and that raises the important question of those authorities which may be described as advanced. I say both to my hon. Friend and to the noble Lady the Member for Aberdeen, South (Lady Tweedsmuir) that it is true that the general grant to Aberdeen and to Banff will initially be less than the specific grants which it replaces. But in making his calculations my hon. Friend took no account of the effect of the proposals on the equalisation grant or of rerating or of the considerations relating to revaluation in 1961, all of which are relevant. Therefore, I give my hon. Friend the assurance he seeks. By law we are bound to look at this matter before 1963 and that will certainly be done.

Because Aberdeen has reached a more advanced stage regarding educational provisions than other areas, it will have less need to spend money on development, whereas it will receive the general grant for a long time to come including a proportion of the total amount provided for development which will not be limited by this expenditure; so that the initial loss to the city should become less marked as greater uniformity is achieved among authorities in the standard and cost of education and other services covered by the general grant.

Hon. Members opposite have cast doubts on the maintenance of standards under this system, particularly with regard to education. They have also cast doubt on it with regard to technical education. Had they read Part II of the Third Schedule to the Bill they would have seen exactly what will happen, and so far as relates to education we shall be making regulations

under this Bill which will cover that point entirely.

My right hon. Friend referred to the important safeguards provided in Clause 3 and to the powers contained there. Some critics have overlooked paragraph 6 of the Fourth Schedule where it is stated The Secretary of State may make regulations prescribing the standards to which every education authority shall conform in exercising their functions under this section. by that I mean Section 1 of the Education (Scotland) Act.

Is it really suggested that local authorities will wilfully contravene such regulations, that they will break the law of the land to save money and cut down on standards? Surely such fears imply a strange lack of confidence in local authorities. This Bill is inspired by the policy on which we have fought and won two General Elections and on which we shall go on winning; that is a policy of a free democracy, in which responsibility shall be spread and not centralised and in which, accordingly, local government shall be as local as possible.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 301, Noes 245.

Division No. 22.]	AYES	[9.58 p.m.
Agnew, Sir Peter	Brooke, Rt. Hon. Henry	Eccles, Rt. Hon. Sir David
Aitken, W. T.	Browne, J. Nixon (Craigton)	Elliot, Rt. Hon. W. E. (Kelvingrove)
Allan, R. A. (Paddington, S.)	Bullus, Wing Commander E. E.	Emmet, Hon. Mrs. Evelyn
Alport, C. J. M.	Burden, F. F. A.	Errington, Sir Eric
Amery, Julian (Preston, N.)	Butcher, Sir Herbert	Erroll, F. J.
Anstruther-Gray, Major Sir William	Butler, Rt.Hn.R.A. (Saffron Walden)	Farey-Jones, F. W.
Arbuthnot, John	Carr, Robert	Fell, A.
Ashton, H.	Cary, Sir Robert	Finlay, Graeme
Astor, Hon. J. J.	Channon, Sir Henry	Fisher, Nigel
Atkins, H. E.	Chichester-Clark, R.	Fletcher-Cooke, C.
Baldock, Lt.-Cmdr. J. M.	Churchill, Rt. Hon. Sir Winston	Forrest, G.
Baldwin, A. E.	Clarke, Brig. Terence (Portsmth, W.)	Fort, R.
Balniel, Lord	Cole, Norman	Foster, John
Barber, Anthony	Conant, Maj. Sir Roger	Fraser, Hon. Hugh (Stone)
Barlow, Sir John	Cooke, Robert	Fraser, Sir Ian (M'cmbe & Lonsdale)
Barter, John	Cooper, A. E.	Freeth, Denzil
Baxter, Sir Beverley	Cooper-Key, E. M.	Gammans, Lady
Beamish, Maj. Tufton	Cordeaux, Lt.-Col. J. K.	Garner-Evans, E. H.
Bell, Philip (Bolton, E.)	Corfield, Capt. F. V.	George, J. C. (Pollok)
Bell, Ronald (Bucks, S.)	Craddock, Beresford (Spelthorne)	Gibson-Watt, D.
Bennett, F. M. (Torquay)	Crosthwaite-Eyre, Col. O. E.	Glover, D.
Bennett, Dr. Reginald	Crowder, Petre (Ruislip—Northwood)	Glyn, Col. Richard H.
Bevins, J. R. (Toxteth)	Cunningham, Knox	Godber, J. B.
Bidgood, J. C.	Currie, G. B. H.	Goodhart, Philip
Biggs-Davison, J. A.	Dance, J. C. G.	Gough, C. F. H.
Bingham, R. M.	Davidson, Viscountess	Gower, H. R.
Birch, Rt. Hon. Nigel	D'Avigdor-Goldsmid, Sir Henry	Graham, Sir Fergus
Bishop, F. P.	Deedes, W. F.	Grant, W. (Woodside)
Black, C. W.	Digby, Simon Wingfield	Grant-Ferris, Wg Cdr. R. (Nantwich)
Body, R. F.	Dodds-Parker, A. D.	Green, A.
Boothby, Sir Robert	Donaldson, Cmdr. C. E. McA.	Gresham Cooke, R.
Bossom, Sir Alfred	Doughty, C. J. A.	Grimston, Hon. John (St. Albans)
Boyd-Carpenter, Rt. Hon. J. A.	Drayson, G. B.	Grimston, Sir Robert (Westbury)
Boyle, Sir Edward	du Cann, E. D. L.	Grosvenor, Lt.-Col. R. G.
Braine, B. R.	Duncan, Sir James	Gurden, Harold
Bromley-Davenport, Lt.-Col. W. H.	Duthie, W. S.	Hall, John (Wycombe)
Hare, Rt. Hon. J. H.	Lindsay, Martin (Solihull)	Prior-Palmer, Brig. O. L.
Harris, Frederic (Croydon, N.W.)	Linstead, Sir H. N.	Profumo, J. D.
Harris, Reader (Heston)	Llewellyn, D. T.	Rawlinson, Peter
Harrison, A. B. C. (Maldon)	Lloyd, Rt. Hon. G. (Sutton Coldfield)	Redmayne, M.
Harrison, Col. J. H. (Eye)	Lloyd, Maj. Sir Guy (Renfrew, E.)	Rees-Davies, W. R.
Harvey, Sir Arthur Vere (Macclesf'd)	Low, Rt. Hon. Sir Toby	Remnant, Hon. P.
Harvey, Ian (Harrow, E.)	Lucas, Sir Jocelyn (Portsmouth, S.)	Renton, D. L. M.
Harvey, John (Walthamstow, E.)	Lucas, P.B. (Brentford & Chiswick)	Ridsdale, J. E.
Harvie-Watt, Sir George	Lucas-Tooth, Sir Hugh	Rippon, A. G. F.
Head, Rt. Hon. A. H.	McAdden, S. J.	Roberts, Sir Peter (Heeley)
Heald, Rt. Hon. Sir Lionel	Macdonald, Sir Peter	Robertson, Sir David
Heath, Rt. Hon. E. R. G.	Mackeson, Brig. Sir Harry	Robson Brown, Sir William
Henderson, John (Cathcart)	McKibbin, Alan	Roper, Sir Harold
Henderson-Stewart, Sir James	Mackie, J. H. (Galloway)	Ropner, Col. Sir Leonard
Hesketh, R. F.	McLaughlin, Mrs. P.	Scott-Miller, Cmdr. R.
Hicks-Beach, Maj. W. W.	Maclay, Rt Hon. John	Sharples, R. C.
Hill, Rt. Hon. Charles (Luton)	Maclean, Sir Fitzroy (Lancaster)	Shepherd, William
Hill, Mrs. E. (Wythenshawe)	McLean, Neil (Inverness)	Simon, J. E. S. (Middlesbrough, W.)
Hill, John (S. Norfolk)	Macleod, Rt. Hn. Iain (Enfield, W.)	Smyth, Brig. Sir John (Norwood)
Hirst, Geoffrey	MacLeod John (Ross & Cromarty)	Soames, Christopher
Hobson,John (Warwick & Leam'gt'n)	Macmillan, Maurice (Hallfax)	Spearman, Sir Alexander
Holland-Martin, C. J.	Macpherson, Niall (Dumfries)	Speir, R. M.
Hope, Lord John	Maddan, Martin	Spence, H. R. (Aberdeen, W.)
Hornby, R. P.	Maitland, Cdr. J. F. W. (Horncastle)	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Hornsby-Smith, Miss M. P.	Maitland Hon. Patrick (Lanark)	Stanley, Capt. Hon. Richard
Horobin, Sir Ian	Manningham-Buller, Rt. Hn. Sir R.	Stevens, Geoffrey
Horsbrugh, Rt. Hon. Dame Florence	Markham, Major Sir Frank	Steward, Harold (Stockport, S.)
Howard, Hon. Greville (St. Ives)	Marlowe, A. A. H.	Steward, Sir William (Woolwich, W.)
Hughes Hallett, Vice-Admiral J.	Marples, Rt. Hon. A. E.	Storey, S.
Hughes-Young, M. H. C.	Marshall, Douglas	Studholme, Sir Henry
Hulbert, Sir Norman	Mathew, R.	Summers, Sir Spencer
Hurd, A. R.	Maude, Angus	Sumner, W. D. M. (Orpington)
Hutchison, Sir Ian Clark (E'b'gh, W.)	Maudling, Rt. Hon. R.	Taylor, Sir Charles (Eastbourne)
Hutchison, Sir James (Scotstoun)	Mawby, R. L.	Taylor, William (Bradford, N.)
Hutchison, Michael Clark (Ed'b'gh, S.)	Maydon, Lt.-Comdr, S. L. C.	Teeling, W.
Hyde, Montgomery	Milligan, Rt. Hon. W. R.	Temple, John M.
Hylton-Foster, Rt. Hon. Sir Harry	Molson, Rt. Hon. Hugh	Thomas, Leslie (Canterbury)
Iremonger, T. L.	Moore, Sir Thomas	Thomas, P. J. M. (Conway)
Irvine, Bryant Godman (Rye)	Morrison, John (Salisbury)	Thompson, Kenneth (Walton)
Jenkins, Robert (Dulwich)	Mott-Radclyffe, Sir Charles	Thompson, Lt.-Cmdr.R. (Croydon,S.)
Jennings, Sir Roland (Hallam)	Nabarro, G. D. N.	Thornton-Kemsley, C. N.
Johnson, Dr. Donald (Carlisle)	Neave, Airey	Tiley, A. (Bradford, W.)
Johnson, Eric (Blackley)	Nicholls, Harmar	Tilney, John (Wavertree)
Johnson, Howard (Kemptown)	Nicholson, Godfrey (Farnham)	Turton, Rt. Hon. R. H.
Jones, Rt. Hon. Aubrey (Hall Green)	Nicolson, N. (B'n'm'th, E. & Chr'ch)	Tweedsmuir, Lady
Joseph, Sir Keith	Nugent, G. R. H.	Vane, W. M. F.
Joynson-Hicks, Hon. Sir Lancelot	Oakshott, H. D.	Vaughan-Morgan, J. K.
Kaberry, D.	O'Neill, Hn. Phelim (Co. Antrim,N.)	Vickers, Miss Joan
Keegan, D.	Ormsby-Core, Rt. Hon. W. D.	Wakefield, Sir Wavell (St. M'lebone)
Kerby, Capt. H. B.	Orr, Capt. L. P. S.	Walker-Smith, Rt. Hon. Derek
Kerr, Sir Hamilton	Orr-Ewing, Sir Ian (Weston-S.-Mare)	Wall, Major Patrick
Kershaw, J. A.	Osborne, C.	Ward, Rt. Hon. G. R. (Worcester)
Kirk, P. M.	Page, R. G.	Ward, Dame Irene (Tynemouth)
Lagden, G. W.	Pannell, N. A. (Kirkdale)	Watkinson, Rt. Hon. Harold
Lambert, Hon. G.	Partridge, E.	Webbe, Sir H.
Lambton, Viscount	Peel, W. J.	Whitelaw, W. S. I.
Lancaster, Col. C. G.	Peyton, J. W. W.	Williams, Paul (Sunderland, S.)
Langford-Holt, J. A.	Pickthorn, K. W. M.	Williams, R. Dudley (Exeter)
Leather, E. H. C.	Pilkington, Capt. R. A.	Wills, G. (Bridgwater)
Leavey, J. A.	Pitman, I. J.	Wood, Hon. R.
Leburn, W. G.	Pitt, Miss E. M.	Woollam, John Victor
Legge-Bourke, Maj. E. A. H.	Pott, H. P.	Yates, William (The Wrekin)
Legh, Hon. Peter (Petersfield)	Powell, J. Enoch
Lennox-Boyd, Rt. Hon. A. T.	Price, David (Eastleigh)	TELLERS FOR THE AYES:
Lindsay, Hon. James (Devon, N.)	Price, Henry (Lewisham, W.)	Mr. Brooman-White and Mr. Bryan
NOES
Ainsley, J. W.	Blenkinsop, A.	Castle, Mrs. B. A.
Albu, A. H.	Blyton, W. R.	Champion, A. J.
Allaun, Frank (Salford, E.)	Boardman, H.	Chapman, W. D.
Allen, Arthur (Bosworth)	Bottomley, Rt. Hon. A. G.	Chetwynd, G. R.
Allen, Scholefield (Crewe)	Bowden, H. W. (Leicester, S.W)	Clunie, J.
Awbery, S. S.	Bowles, F. G.	Coldrick, W.
Baird, J.	Boyd, T. C.	Collick, P. H. (Birkenhead)
Balfour, A.	Braddock, Mrs. Elizabeth	Collins, V.J. (Shoreditch & Finsbury)
Bellenger, Rt. Hon. F. J.	Brown, Rt. Hon. George (Belper)	Corbet, Mrs. Freda
Bence, C. R. (Dunbartonshire, E.)	Brown, Thomas (Ince)	Cove, W. G.
Benn, Hn. Wedgwood (Bristol, S.E.)	Burke, W. A.	Craddock, George (Bradford, S.)
Benson, G.	Burton, Miss F. E.	Cronin, J. D.
Beswick, Frank	Butler, Herbert (Hackney, C.)	Crossman, R. H. S.
Bevan, Rt. Hon. A. (Ebbw Vale)	Butler, Mrs. Joyce (Wood Green)	Cullen, Mrs. A.
Blackburn, F.	Callaghan, L. J.	Dalton, Rt. Hon. H.

Darling, George (Hillsborough)	Jones, David (The Hartlepools)	Rankin, John
Davies,Rt.Hn.Clement(Montgomery)	Jones, T. W. (Merioneth)	Redhead, E. C.
Davies, Ernest (Enfield, E.)	Kenyon, C.	Reeves, J.
Davies, Harold (Leek)	Key, Rt. Hon. C. W.	Reid, William
Davies, Stephen (Merthyr)	King, Dr. H. M.	Robens, Rt. Hon. A.
Deer, G.	Lawson, G. M.	Roberts, Albert (Normanton)
Delargy, H. J.	Ledger, R. J.	Roberts, Goronwy (Caernarvon)
Diamond, John	Lee, Frederick (Newton)	Robinson, Kenneth (St. Pancras, N.)
Dodds, N. N.	Lever, Harold (Cheetham)	Ross, William
Donnelly, D. L.	Lewis, Arthur	Royle, C.
Dugdale, Rt. Hn. John (W. Brmweh)	Lindgren, G. S.	Shinwell, Rt. Hon. E.
Dye, S.	Logan, D. G.	Short, E. W.
Ede, Rt. Hon. J. C.	Mabon, Dr. J. Dickson	Silverman, Julius (Aston)
Edelman, M.	MacColl, J. E.	Simmons, C. J. (Brierley Hill)
Edwards, Rt. Hon. John (Brighouse)	MacDermot, Niall	Skeffington, A. M.
Edwards, Rt. Hon. Ness (Caerphilly)	McGhee, H. G.	Slater, Mrs. H. (Stoke, N.)
Edwards, Robert (Bilston)	McInnes, J.	Slater, J. (Sedgefield)
Edwards, W. J. (Stepney)	McKay, John (Wallsend)	Smith, Ellis (Stoke, S.)
Evans, Albert (Islington, S.W.)	McLeavy, Frank	Snow, J. W.
Evans, Edward (Lowestoft)	MacMillan, M. K. (Western Isles)	Sorensen, R. W.
Fernyhough, E.	MacPherson Malcolm (Stirling)	Soskice, Rt. Hon. Sir Frank
Fienburgh, W.	Mahon, Simon	Sparks, J. A.
Finch, H. J.	Mallalieu, E. L. (Brigg)	Steele, T.
Fletcher, Eric	Mallalieu, J. P. W. (Huddersfd, E.)	Stewart, Michael (Fulham)
Foot, D. M.	Mann, Mrs. Jean	Stonehouse, John
Fraser, Thomas (Hamilton)	Marquand, Rt. Hon. H. A.	Stones, W. (Consett)
George, Lady Megan Lloyd (Car'then)	Mason, Roy	Strauss, Rt. Hon. George (Vauxhall)
Gibson, C. W.	Mayhew, C. P.	Stross.Dr.Barnett(Stoke-on-Trent,C.)
Gooch, E. G.	Mellish, R. J.	Summerskill, Rt. Hon. E.
Crenfell, Rt. Hon. D. R.	Messer, Sir F.	Swingler, S. T.
Grey, C. F.	Mikardo, Ian	Sylvester, G. O.
Griffiths, David (Rother Valley)	Mitchison, G. R.	Taylor, Bernard (Mansfield)
Griffiths, Rt. Hon. James (Llanelly)	Monslow, W.	Thomas, George (Cardiff)
Griffihs, William (Exchange)	Moody, A. S.	Thomas, Iorwerth (Rhondda, W.)
Grimond, J.	Morris, Percy (Swansea, W.)	Thornton, E.
Hale, Leslie	Morrison, Rt.Hn.Herbert(Lewis'm,S.)	Tomney, F.
Hall, Rt. Hn. Glenvil (Colne Valley)	Mort, D. L.	Ungoed-Thomas, Sir Lynn
Hamilton, W. W.	Moss, R.	Usborne, H. C.
Hannan, W.	Moyle, A.	Viant, S. P.
Harrison, J. (Nottingham, N.)	Mulley, F. W.	Wade, D. W.
Hastings, S.	Neal, Harold (Bolsover)	warbey, W. N.
Hayman, F. H.	Noel-Baker, Francis (Swindon)	Watkins, T. E.
Healey, Denis	Noel-Baker, Rt. Hon. P. (Derby, S.)	Weitzman, D.
Henderson, Rt. Hn. A. (Rwly Regis)	O'Brien, Sir Thomas	Wells, Percy (Faversham)
Herbison, Miss M.	Oliver, G. H.	Wells, William (Walsall, N.)
Hewitson, Capt. M.	Oram, A. E.	West, D. G.
Hobson, C. R. (Keighley)	Orbach, M.	Wheeldon, W. E.
Holman, P.	Owen, W. J.	White, Mrs. Eirene (E. Flint)
Holmes, Horace	Padley, W. E.	White, Henry (Derbyshire, N.E.)
Holt, A. F.	Paget, R. T.	Wigg, George
Howell, Charles (Perry Barr)	Paling, Rt. Hon. W. (Dearne Valley)	Wilcock, Croup Capt. C. A. B.
Howell, Denis (All Saints)	Paling, Will T. (Dewsbury)	Willey, Frederick
Hoy, J. H.	Palmer, A. M. F.	Williams, Rev. Llywelyn (Ab'tillery)
Hughes, Cledwyn (Anglesey)	Pannell, Charles (Leeds, W.)	Williams, Ronald (Wigan)
Hughes, Emrys (S. Ayrshire)	Pargiter, G. A.	Williams, Rt. Hon. T. (Don Valley)
Hunter, A. E.	Parker, J.	Williams, W. R. (Openshaw)
Hynd, H. (Accrington)	Parkin, B. T.	Willis, Eustace (Edinburgh, E.)
Hynd, J. B. (Attercliffe)	Paton, John	Wilson, Rt. Hon. Harold (Huyton)
Irvine, A. J. (Edge Hill)	Peart, T. F.	Winterbottom, Richard
Irving, Sydney (Dartford)	Pentland, N.	Woodburn, Rt. Hon. A.
Isaacs, Rt. Hon. G. A.	Plummer, Sir Leslie	Woof, R. E.
Jay, Rt. Hon. D. P. T.	Popplewell, E.	Yates, V. (Ladywood)
Jeger, George (Goole)	Prentice, R. E.	Younger, Rt. Hon. K.
Jeger, Mrs. Lena (Holbn & St.Pncs,S.)	Price, J. T. (Westhoughton)	Zilliacus, K.
Jenkins, Roy (Stechford)	Probert, A. R.
Johnson, James (Rugby)	Proctor, W. T.	TELLERS FOR THE NOES:
Johnston, Douglas (Paisley)	Pursey, Cmdr. H.	Mr. Pearson and Mr. John Taylor.
Jones, Rt. Hon. A. Creech (Wakefield)	Randall, H. E.

Bill accordingly read a Second time.

Bill committed to a Standing Commit tee pursuant to Standing Order No. 38 (Committal of Bills).