HC Deb 15 May 1958 vol 588 cc645-68
Mr. T. Fraser

I beg to move, in page 16, line 23, to leave out from the beginning to the end of line 33 on page 18.

I think it would be for the convenience of the Committee if I were to take with this Amendment the proposed Schedule standing in my name, "Apportionment of General Grants".

The Amendment takes out the existing Second Schedule and the proposed Schedule is in substitution of it. I hope that the Secretary of State will accept our proposal and will say "Thank you" to the Opposition for taking him out of a very embarrassing position. The right hon. Gentleman has discontinued the specific grants payable up to now, against the wishes of the local authorities. The right hon. Gentleman set up a working party of officials who had the unenviable job of producing a formula under which the new general grant might be distributed.

The hon. Lady the Member for Aberdeen, South (Lady Tweedsmuir) said yesterday that we had better accept the advice of the working party. Perhaps I should tell her that the members of the working party themselves were put in a most unenviable position. They did not wish to do the job. They believed that they were given an impossible job to do. They realised that there were no principles to guide them in the production of a formula for the distribution of this money. I understand that they looked at 12, 15 or even 20 different formulæ.

They all had a shot at working out a formula for the apportionment of grant that would look to be reasonably fair to all the local authorities of Scotland. It was an exceedingly difficult job because, as I say, they were relying completely on expediency. They were not guided by any principle, so, even with the best will in the world, they have produced a formula which will result in some local authorities in Scotland suffering considerable loss. Aberdeen is one local authority which will do so.

The Secretary of State wanted the general grant to get rid of all the administrative inconvenience of paying specific grants in all cases. It was all this to-ing and fro-ing between the town hail, the county hall and St. Andrew's House which they wanted to get rid of. I thought that he made too much of that. I did not think that it was the great inconvenience which the Secretary of State made it out to be.

5.15 p.m.

Having got this far with the Bill, let us accept for the moment that the specific grants have to be discontinued and that a general grant has been created which would be in round figures broadly equal to the amount of money that the local authority would have got anyway in specific grant. Whether it is £1½ million less or £750,000 more does not matter for the time being; it is a sum of money made available to the local authorities similar to what the specific grants, if they had been retained, would have amounted to.

The new system for the apportionment of the total amount of money according to our proposed Schedule is that each local authority shall, in the first year, get the same share of the total amount as it would have had of the total amount of specific grants had there been no change. That seems to be equitable. There is no need to have a close link between the local authority and the Secretary of State's Department to measure the amount of expenditure on each service.

It will be realised that from year to year the increase in expenditure of all the local authorities in Scotland will not be even. It is inevitable that it will be uneven. We have today discussed the provision of schools for spastics and other handicapped children; some authorities provide this service and others do not. It would be the wish of all of us to do our utmost to secure that local authorities achieving a very high standard should get a higher grant in consequence of the additional service they provide for their people.

Consequently, in our proposed schedule we seek to provide that in determining the grants for future years—not the first year—the Secretary of State shall take into account the expenditure incurred in providing expenditure for the relevant services in the year just finished, or the last year for which accounts are available, and calculate what proportion that is of the total amount of general grant. That will show the proportion of the general grant which should be given to the local authority for the ensuing year.

There is some principle behind our proposed formula. There is no principle whatsover behind the formula which we seek to delete, because it is pure expediency. I can tell the Joint Under-Secretary that the members of the working party have told me that it was pure expediency and that it could be nothing else, and they are not very proud of their work. Some of them told me that they had an impossible task. Those with whom I have discussed our alternative scheme have said that the proposed Schedule is at least based on some principle. It seeks to give each authority in Scotland a sum in general grant which corresponds to what it has done in providing services the expenditure on which counts as relevant under the First Schedule.

I will not labour the matter any more, for the time is short, and we have scrapped a great many Amendments to the First Schedule to enable us to proceed with some of the matters which are to be raised when we reach the Report stage.

What we have proposed is fair. If the Secretary of State rejects it, he will be insisting upon a formula which is manifestly unfair. Hon. Members whose constituencies will suffer have pointed out that it is unfair and have asked that some means shall be found of overcoming the disadvantage which their authorities will suffer.

For the purpose of this discussion we have accepted the general grant. We now assume the general grant. The only question now is how the general grant shall be distributed. I honestly believe that under our formula a great deal less calculation will be needed than would be necessary under the formula in the existing Second Schedule. The existing formula is so difficult that the Secretary of State, in making the calculations which he sent to us to give us some idea how it would work out, had to tell us that no reliance could be put on the figures. It is so complicated that town clerks and county clerks have said that it is beyond them to make a calculation on the basis of the Second Schedule formula. They will not be in any such difficulty if our proposed Schedule is accepted. I trust that it will be accepted by the Secretary of State without too long a discussion.

Mr. J. Grimond (Orkney and Shetland)

I hope that the formula, from my point of view, will be improved by the next Amendment which we shall discuss. However, as the hon. Member for Hamilton (Mr. T. Fraser) has said, it remains profoundly unsatisfactory and very alarming to certain Scottish local authorities.

I do not intend to argue again the whole principle of the general grant. However, as far as can be seen, if the Bill had been in operation last year Shetland would have lost about £32,000. When I wrote to the Joint Under-Secretary a long time ago about the effect of the Bill, he kindly pointed out that the position may be altered in the next two or three years and that the exact future effect of the equalisation grant is rather difficult to calculate. However, I do not think it is denied that for a year or two, at any rate some counties—including my own, some in the North-East and some in the South—and some burghs will suffer very badly under the Bill.

My contention is that these authorities will be suffering almost entirely by chance, that there is no rhyme, reason or logic about it. If the Government had said that Shetland, Banff, or Aberdeen were getting too much, and that there was a case for reducing the grant, we should have listened to it. I do not say that we should have agreed with it, but it would have been a point of view. However, it seems to be entirely a lottery, and some counties and burghs have come off badly and some have come off well. The unfortunate thing is that I do not think anyone could maintain that the ones which will be worse off under the Bill are the ones which deserve to be worse off or can afford to be worse off. The authorities in my counties have a very small rateable value, and a small reduction in the grant will mean a very heavy extra financial burden for them. They and others all over Scotland which will be hit by the new system are among those which need help in special ways more than the average.

We cannot argue again the whole principle of the Second Schedule and the formula, but I would ask the Secretary of State to consider whether it is sensible to bring in a formula which, it is admitted, works out in unexpected ways, in ways which he himself does not desire, and to the detriment of some of the poorer counties which need help. I do not know whether the suggested new method is ideal, but it seems at any rate a little more logical, defensible and fair than the one proposed by the Government, and I ask the right hon. Gentleman to give it serious consideration.

Mr. W. S. Duthie (Banff)

I find myself in agreement with the hon. Members for Hamilton (Mr. T. Fraser) and Orkney and Shetland (Mr. Grimond). I sincerely trust that my right hon. Friend will accept the Amendment, for I intend to support it.

Since the Second Reading debate last December, I have been seeking some light upon the Second Schedule, but I have failed. I was speaking during the Committee stage when the Guillotine operated. I will not reiterate the arguments that I was using, but I would point out that I have had no explanation of the Schedule from my right hon. Friend the Secretary of State or my hon. Friends the Joint Under-Secretaries, despite numerous approaches.

I wanted an explanation for the fact that my county fared so badly in the guiding figures with which we were provided. If no credence is to be given to the figures, why were they issued? We must accept them as being something in the nature of a guide. According to those figures, Banffshire will come off very badly. All kinds of conflicting statements have been made by the Joint Under-Secretaries. One said that there would be no loss to any local authority because of the distribution of the £750,000.

Yesterday, my hon. Friend the Member for Dumfries (Mr. N. Macpherson), another of the Joint Under-Secretaries, contemplated with equanimity the fact that some local authorities might be impoverished for some time, stating that when their impoverishment became evident there might be a revision of the Schedule. I cannot accept that. The figures of the weighted populations and the results of the application of the formula shown in the document which was distributed to us indicate to me, as a businessman, that the Second Schedule is utter nonsense and cannot be accepted.

If the present Second Schedule comes into operation, my county will suffer a very severe loss in the second year, and it is wrong to say that that will not be translated into a lowering of education standards and standards in the other services which are provided. A method of allocation of this nature must not only be fair but be obviously so; and the Schedule is anything but that.

It is implicit in the proposed new Schedule that local authorities would produce a budget which would be scrutinised, presumably, at St. Andrew's House and an allocation of funds made in terms of the gross amount available for distribution. That seems to me to be a businesslike way to proceed. I am sure that the method implicit in the present Second Schedule would outrage the business ethics of the Secretary of State and the members of his family, for there is nothing businesslike about it, and I cannot accept it as a basis of allocation. It is argued that it is the best that could be devised. All I can say is that it is a very poor best and one that I cannot accept.

I will not reiterate the arguments which were previously used. I merely say that I support the proposal of the hon. Member for Hamilton, and that if we go into the Lobbies I shall vote for it.

5.30 p.m.

Dr. J. Dickson Mabon (Greenock)

No doubt the document issued by the Secretary of State showing how he thought we should all suffer or benefit under the proposed arrangements was well based in that it employed the ancient principle of "divide and rule" to a large extent. However, many people have had second thoughts about it. The almost metaphysical nature of the formula is such that those who appear to gain may now lose if one weighs up different factors. My own burgh council has looked into the matter again. It is inclined to think—not that it wants to be too suspicious of the Secretary of State—that instead of being, as it is supposed to be, a gaining authority under this formula, it may, in fact, lose.

I ask the Secretary of State to be good enough to turn his mind to this question tonight. Will he be good enough to try to justify the formula as it stands at present? If it is not, as my hon. Friend the Member for Hamilton (Mr. T. Fraser) says, a formula designed solely on the basis of expediency, or, as the hon. Member for Orkney and Shetland (Mr. Grimond) said, a formula which turns out, in effect, to be a lottery, will the right hon. Gentleman tell us what is the basis of principle upon which it is founded?

Very few of us can quite understand it, and few of those who work in local government and have done so for a very long time can appreciate what it is. The formula reminds me very much of the definition we had in the Valuation and Rating (Scotland) Act, 1956, which no valuation expert, so I understand, could fully appreciate. Perhaps this is something out of the same stable. If it is not, I hope that the right hon. Gentleman will tell us what are the main pillars of principle which support the formula.

Mr. J. N. Browne

I do not want to be involved in an argument with the hon. Member for Hamilton (Mr. T. Fraser) about what his Amendment actually means, because he did explain what he means by it. I can assure him, nevertheless, that his Amendment would not be a workable proposition if it were passed into law.

Mr. Willis

It would double the amount. It is a very good one.

Mr. T. Fraser

Since we discussed the matter in Committee, I have discussed it with local government officials who tell me that they understand my schedule but not the one which is in the Bill.

Mr. Browne

Then I think that the best thing is to leave it for the hon. Gentleman's friends, who are officials, to discuss it with my right hon. Friend's officials.

The Amendment ignores, as I am sure the Committee knows, several very important considerations. First of all, it reverts to payment by results. It maintains the principle of grant distributed according to relevant expenditure——

Mr. Willis

What is wrong with that?

Mr. Browne

—instead of distributing according to physical and objective factors, not metaphysical factors, as the hon. Member for Greenock (Dr. Dickson Mabon) suggested.

Mr. Willis

But surely the hon. Gentleman——

Mr. Browne

I really must not give way.

Mr. Willis

What a local authority spends is not metaphysical.

Mr. Browne

I really must not give way to the hon. Gentleman the Member for Edinburgh, East (Mr. Willis). On looking at the report of my speech yesterday evening, I was astonished at the number of times he had interjected.

I have been asked to explain the principle on which the formula was based. Population is the main factor. The main subsidiary factor is pupils and roads—number of pupils per mile of road. The aim is to attempt to provide a uniform set of tools to do the job, having regard to all conditions in each locality. We believe that these objective factors will become accepted in time. I agree with the hon. Member for Orkney and Shetland (Mr. Grimond) that the local authorities, especially those who, on the hypothetical calculations look like being losers, are quite naturally alarmed. If anyone produces a set of figures to indicate that any local authority will show a loss, of course people are alarmed.

We shall have practical experience of this formula, especially in the second year, before it starts to hurt anybody, and we must have new legislation before 1963 for the equalisation grant. I do not believe that because we have not yet been able to devise a formula which has pleased everybody we cannot devise a formula, perhaps with some alterations in it, which will give a greater measure of justice and also a greater measure of encouragement to those local authorities which are at present lagging behind. To all those who worry about the formula, I say that now is not the time to worry. [HON. MEMBERS: "Oh."] No, it is not. Now is not the time to worry. The first thing is to get the general principle at work. The next thing is to make a token payment on gains and losses and see what actually does happen before it hurts too much. After that, we can look at the formula and say. "Wherein is the formula wrong?"

My hon. Friend the Member for Banff (Mr. Duthie) said that I had said there would be no loss. If he looks it up, he will see that I said, quite truly, there would be no loss to any authority in the first year but that there would be a gain of £750,000. Although he said that he has received no explanations, I think that he will do me the courtesy of admitting that he and I, and my officials, have had two or more talks lasting either side of three-quarters of an hour in which we have given him all the information and explanations for which he asked. It is not right to say that he has been denied any information or explanation.

Mr. Duthie

I have asked for an explanation of why Banffshire comes out so badly. I have had no explanation of why Banffshire fares so badly in relation to the two adjacent counties.

Mr. Browne

The explanation was that that was the way the formula worked.

Dr. Dickson Mabon

There must be some reason.

Mr. Browne

Another weakness of the proposed Amendment is that it will not give to local authorities any freedom at all to spend any general grant on other than relevant expenditure. If, according to the proposal of the hon. Member for Hamilton, the more one spends on relevant expenditure the more grant one receives, there will be no encouragement to local authorities to use any fraction of general grant on other than relevant expenditure, because it will not qualify in the next year for grant.

Mr. Fraser

But surely, the local authorities are not going to look at their budgets in future years and say that this or that comes from general rate fund and this or that comes from general grant, and that they will do A, B and C out of rate fund and D, E and F out of general grant. They will go on providing the services, not deciding how much of the services will come out of general grant or out of general rate. The hon. Gentleman is imagining a situation which never does exist in local government.

Mr. Browne

I took down what the hon. Member for Hamilton said in relation to future years. He said that they will take into account the expenditure incurred in providing relevant services——

Mr. Fraser


Mr. Browne

—and, therefore, they will not take into account expenditure incurred in providing other than relevant services.

Mr. Fraser


Mr. Browne

Yes, because the general grant is based on objective factors, and if they want to spend a proportion of their share of the general grant on other than relevant expenditure, that does not affect the issue at all.

Another weakness is that there will be competition between all local authorities to outspend each other on all services in order to get a larger share of the cake.

Mr. Fraser


Mr. Browne

These are serious considerations.

Mr. Fraser

Is the hon. Gentleman suggesting that local authorities will go out of their way to spend money quite unnecessarily, putting up the local rates, because they know that by so doing they will get more money from central funds? This is the craziest idea I have ever heard expressed.

Mr. Browne

When the local authorities are competing against each other for a slice of the hon. Gentleman's cake, I submit that they will tend to do that.

Mr. James McInnes (Glasgow, Central)

Is the hon. Gentleman suggesting that Glasgow will be moved to spend money on something simply because Edinburgh has done it, or conversely? As my hon. Friend the Member for Hamilton indicated, the first consideration of a local authority is to provide the essential services within its own area.

Mr. Browne

But, under our proposals, Glasgow and Edinburgh will each have a bag of gold of a certain size, whereas, on the hon. Gentleman's proposal, if Glasgow sees Edinburgh spending a great deal of money on something, it will say, "If we do not spend a great deal of money on relevant expenditure, Edinburgh will get relatively more than we."

Another weakness of the suggestion made is that a local authority qualifying for its share of general grant by basing it on its relevant expenditure for the previous year would tend, I submit, to spend its money in the last year of the two or three year grant period in order that that expenditure should qualify for a maximum grant. The result of all this necessity for qualification would, I believe, tend to make planning more difficult, in that a local authority would never know what share of the grant to expect.

The Government's view is that it is essential to base the grant on objective factors and not on current expenditure. Under the Bill, there are objective factors throughout. Stage one, down to a county, is on weighting. Stage two, to burghs, is on rateable or standard rateable value, which is an accepted yardstick and an accurate measure of resources. The whole proposal in the Amendment is contrary to the conception of general grant, and we cannot accept it.

Mr. McInnes

I am amazed at the suggestion which the hon. Gentleman has just made. In response to an invitation by my hon. Friend the Member for Greenock (Dr. Dickson Mahon) he went on to state the nature and the make-up of the formula. He said that the broad outline of the formula was designed to deal with sparsity of population, the road mileage, the number of children under 15 years of age attending school, and so on.

That was the formula which was introduced in 1929 under the block grant arrangements of that year. It is the formula which is in operation in respect of the equalisation grant. Does the hon. Gentleman seriously contend for one moment that the distribution of the equalisation grant is on an equitable basis? He knows that even the very city which he himself represents has not had a single penny since the introduction of the equalisation grant. Yet he commends the formula to us as being fair, equitable, and doing justice to local authorities.

The Joint Parliamentary Secretary has a "smart Aleck" method, if I may say so, of trying to dispose of our Amendments—he has done it at least a dozen times—by saying that the Amendment cannot be accepted because he understands that it is not workable. The strange thing is that quite a number, if not most, of the Amendments which we have put down have been at the behest of people experienced in local government.

Mr. J. N. Browne

I know that the hon. Gentleman does not wish to misquote me. He will wish me to say that no one in a Government would say that an Amendment was not workable unless that was the advice of the Law Officers. We should never say that an Amendment was not workable in that context unless it was so.

Mr. McInnes

I hope that the hon. Gentleman, in claiming that credit for himself and for those in Government circles, will at least have the decency to extend the same attitude to those of us on this side who are frequently guided by local government officials who are dealing with these matters from day to day. At the first meeting of the Standing Committee, I think it was, I told the Secretary of State that I had put down an Amendment actually at the behest of a member of the working party which suggested the formula to the Government.

What astonished me most of all was the statement of the Joint Under-Secretary, in dealing with the proposal of my hon. Friend the Member for Hamilton (Mr. T. Fraser), that he was disturbed because the Amendment made no provision for expenditure other than relevant expenditure. He does not seem to realise that he has introduced a Bill which makes no provision for expenditure other than relevant expenditure. Indeed, he has been compelled to produce certain Amendments to the Bill to remove its application to relevant expenditure and make it apply to specific grants.

We had an illustration of that in respect of town and country planning matters. There are still one or two other illustrations in respect of the police and fire services. There is no use his trying to condemn the Amendment on the ground that it makes no provision for expenditure other than relevant expenditure. The Joint Under-Secretary is either not using effectively the ammunition provided for him by the Scottish Office or he does not understand it. It must be one or the other. I cannot imagine the officials in the Scottish Office giving him a brief on the lines of his recent contribution to the debate.

5.45 p.m.

Lady Tweedsmuir (Aberdeen, South)

I do not wish to go over all the arguments which have been put forward. I merely want to take this opportunity to do what is done in many Continental assemblies, to explain my vote or, rather, the lack of it.

Mr. Willis

Not again.

Lady Tweedsmuir

I have listened with the greatest attention to the debate, and have been considering very carefully whether or not I should support the Amendment.

As far as I can make out, neither formula will be very successful. I realise that the formula contained in the Bill as it stands will benefit some local authorities—although it will not benefit mine. I feel that if I were to vote against the whole Schedule I should be seeking to remove the kernel of the Bill, and supporting a substituted formula which is not so good as the existing one, bad though that one is. Therefore, I shall have to rely upon the assurance which has been given that all the calculations will be made again.

I was not very happy to hear the Joint Under-Secretary say that everything will be all right in the first year, and that the Government will wait to see how much the formula hurts before they do anything about it. I suggest that, as it has been shown quite plainly that the formula will hit some local authorities, the work should be started straight away, because this is a complicated matter; it takes a lot of time and study, and I should think that the intention of the Secretary of State not to hit local authorities who have done well should not have to wait until the second year before it operates. If he cannot get a proper formula devised in time, I suggest that something should be arranged in the transition period. I regret that I cannot support the formula as it stands.

Mr. Ross

We are now quite accustomed to seeing the noble Lady the Member for Aberdeen, South (Lady Tweedsmuir) dodging the issue. If she had followed up in Committee the speech that she made in the Second Reading debate we should have been given some evidence of her concern about the matter, but during the eight sittings we had in our discussion of it the noble Lady said never a word. Such was her concern. Now that we come to the question of the actual Schedule she is faced with the fact, as shown by the evidence of her hon. Friend the Member for Banff (Mr. Duthie), that it is inexplicable and not workable. We have no evidence of what will happen under it, but we know that it will be manifestly unfair to local authorities on the basis of what they are doing.

She has heard the Joint Under-Secretary condemning our suggested Schedule—and why did he condemn it? He said, "This will be payment by results," which is exactly what she wants for Aberdeen. She wants Aberdeen to be rewarded for what it has done and is doing. How on earth can she object to that and say that when a decision is taken on this point she will sit in her seat and support her own Government?

Lady Tweedsmuir

As I believe the right hon. Member for East Stirlingshire (Mr. Woodburn) said earlier, the formula suggested by the hon. Member is too simple, and it does not answer the very difficult questions involved in applying a general grant.

Mr. Ross

That is just exactly what it does—and it does it so well that the only condemnation that we can get from the Joint Under-Secretary is that it does something that the hon. Lady herself is asking for.

Did the Joint Under-Secretary make any effort to explain his own formula? My hon. Friend said that it was very difficult to read. I would say that it is quite easy to read, but it is difficult to understand—and very much more difficult to justify. The Joint Under-Secretary said, "We want to replace metaphysical considerations by physical ones. We want to have an objective study of the matter and an objective formula." Let us examine the Government's delightfully objective formula. Local authority expenditure on services such as education has suddenly become metaphysical. That is typical of the slick phrase-making and the smiling way in which the Joint Under-Secretary hopes to get away with this kind of thing.

Paragraph 5 contains the best phrases. It says: the weighted population … shall be the sum of the following …"— then comes the real phrase— calculated by the Secretary of State … I hope that he will calculate this personally, because we shall then never see him back in the House.

Now let us examine the various objective considerations. First, there is the total population, then the number of children under fifteen years of age, and then there has to be a calculation of the proportion of the number of pupils to the miles of road—and the man who calculates the miles of road is once again the Secretary of State. He will be a busy man.

Having decided that proportion, we translate it into a percentage. No justification has been offered why a proportion of under 2.5 to 1 should be called 50 per cent. No one has attempted to tell us why that percentage has been decided upon, or whether it is right. That percentage has to be added to the other two matters, and then we have to consider the landward population as a proportion of the total population, and that proportion is again translated into a percentage. We therefore have the total population and the number of children under fifteen years of age, to which we add a percentage, and yet another percentage. The formula has missed out the number of mountains——

Mr. Gerald Nabarro (Kidderminster)

On a point of order. I beg to draw attention to the fact that less than 40 Members are present.

The Temporary Chairman

Standing Orders do not permit a count when a Business Resolution is operating.

Mr. Rankin

Further to that point of order. Is it not disgraceful that an hon. Member who has shown absolutely no interest in the proceedings of this Committee should simply walk in and draw attention to the number of Members in the Chamber?

Sir Peter Agnew (Worcestershire, South)

Is there any reason why a count is out of order?

The Temporary Chairman

No dilatory Motion is allowed when a Guillotine is operating.

Mr. Rankin

They do not know that; they are too ignorant.

Mr. Ross

The intervention of the hon. Member for Kidderminster (Mr. Nabarro) proves once again what has been proved before in other matters raised by him—that a little learning is a dangerous thing.

It would have been far better if the Joint Under-Secretary had attempted to justify this strangely objective formula. [Interruption.] It is rather strange that hon. Members who are anxious to raise points of order should so consistently be out of order themselves.

I was saying that the formula deals with the number of miles of roads, and all the rest, and I was wondering why mountains were not included. At least, if a later Amendment is accepted, it may be possible to consider the question of sea routes served by certain ferries and by public transport vessels. That would obviously be something to consider in certain areas. It only shows the difficulties of this complex and unjustifiable formula. It could be justified only if it worked, and we have already been given proof by the hon. Member for Banff that it does not work. Not only that; no explanation could be given to the hon. Member why it did not work. I am sure that if there had been a satisfactory explanation one would have been given, even by one of what I am now beginning to regard as the "Maclayzy Gang" opposite.

Another strange reason put forward for rejecting our formula was that since it provided payment by results it would lead to competition between local authorities in the spending of money. I should have thought that everybody knew that local authorities had limited resources, quite apart from the meagre grants that they will receive in future, and that they would have some concern for their ratepayers. Would the hon. Gentleman apply that same competition principle to his own formula? What would he think of me if I were to suggest that since it is obvious that the greater road mileage an authority has the more that authority will get under the formula, all the authorities will start building roads like mad?

There is another way of getting something out of his formula. A local authority can increase its population. Does he suggest that there will be competition among Scottish local authorities to stimulate an increase in their populations in order to get more under the formula? That is the kind of argument put forward by the hon. Gentleman. I suggest that no politician or statesman should be proud of saying to us, "Here we have a formula. Quite frankly, it does not work; we know it does not work. But do not worry about that. You are just Members of Parliament. Do not worry about the fact that it does not work." It is just like the Tory Government; it does not work. They say, "Just carry on; it will be all right. In the first year we shall make some changes and see what we can do after that."

6.0 p.m.

Is there any businessman on the benches opposite or anyone at all with any consideration of the practical aspects of financial accountancy who would be prepared to accept such an explanation? This is an insult to hon. Gentlemen on the Government back benches as well as to hon. Members on these benches. But the hon. Gentleman says—this is the best argument of all—"I have been assured by the Scottish Law Officers of the Crown that our formula will not work." We have had experience of the Scottish Law Officers before, and we have had reason to doubt their judgment and their pro-

nouncements regarding the law of Scotland. Here, we are dealing with a matter of very complex accountancy. Why throw the Law Officers at us? [HON. MEMBERS: "Where are they?"] Yes, where are they? I consider that the Law Officers are the last people who should be brought into an argument of this kind.

I understand that this Government formula was brought into being by a certain committee or working party. Did that body have the benefit of the attendance and the local authority and accountancy experience of the Law Officers? I am sure it did not. Here we are faced with the choice of two formulæ. The Government formula is incomprehensible; cannot be justified; does not work. Indeed, our intelligence is insulted by being told, "Don't worry about that. We might put that right in two or three years' time."

The alternative formula is put forward in this Amendment. It is one which can be understood, which is eminently fair to the local authorities in respect of what they are doing and what they have done, and it gives them a guarantee that they will get a share of the aggregate amount in accordance with their share of the amount of work done in relation to education and other relevant services. That is the choice before the Committee, and I sincerely hope that the hon. Member for Banff will not be the only hon. Member opposite who will join us in the Division Lobby.

Question put, That the words proposed to be left out to the end of line 35 on page 17 stand part of the chedule:—

The Committee divided: Ayes 194, Noes 152.

Division No. 127.] AYES [6.4 p.m.
Agnew, Sir Peter Boyle, Sir Edward Deedes, W. F.
Aitken, W. T. Braine, B. R. Digby, Simon Wingfield
Alport, C. J. M. Braithwaite, Sir Albert (Harrow, W.) Donaldson, Cmdr. C. E. McA.
Amory, Rt. Hn. Heathcoat (Tiverton) Brooman-White, R. C. Doughty, C. J. A.
Arbuthnot, John Browne, J. Nixon (Craigton) du Cann, E. D. L.
Armstrong, C. W. Burden, F. F. A. Dugdale, Rt. Hn. Sir T. (Richmond)
Ashton, H. Butler, Rt. Hn. R. A. (Saffron Walden) Duncan, Sir James
Atkins, H. E. Campbell, Sir David Eden, J. B. (Bournemouth, West)
Baldwin, A. E. Channon, Sir Henry Elliott, R. W. (Ne'castle upon Tyne, N.)
Barter, John Chichester-Clark, R. Errington, Sir Eric
Baxter, Sir Beverley Cooper, A. E. Farey-Jones, F. W.
Beamish, Col. Tufton Cooper-Key, E. M. Fisher, Nigel
Bell, Philip (Bolton, E.) Cordeaux, Lt.-Col. J. K. Fraser, Hon. Hugh (Stone)
Bell, Ronald (Bucks, S.) Craddock, Beresford (Spelthorne) Fraser, Sir Ian (M'cmbe & Lonsdale)
Bennett, F. M. (Torquay) Crosthwaite-Eyre, Col. O. E. Freeth, Denzil
Bingham, R. M. Crowder, Sir John (Finchley) Gammans, Lady
Birch, Rt. Hon. Nigel Currie, G. B. H. Garner-Evans, E. H.
Bishop, F. P. Dance, J. C. G. George, J. C. (Pollok)
Black, C. W. Davidson, Viscountess Gibson-Watt, D.
Bossom, Sir Alfred D'Avigdor-Goldsmid, Sir Henry Glover, D.
Glyn, Col. Richard H. Kershaw, J. A. Redmayne, M.
Godber, J. B. Langford-Holt, J. A. Remnant, Hon. P.
Gough, C. F. H. Leather, E. H. C. Renton, D. L. M.
Gower, H. R. Leavey, J. A. Ridsdale, J. E.
Graham, Sir Fergus Leburn, W. G. Robinson, Sir Roland (Blackpool, S.)
Grant, W. (Woodside) Legge-Bourke, Maj. E. A. H. Rodgers, John (Sevenoaks)
Grant-Ferris, Wg Cdr. R. (Nantwich) Legh, Hon. Peter (Petersfield) Roper, Sir Harold
Green, A. Linstead, Sir H. N. Ropner, Col. Sir Leonard
Gresham Cooke, R. Low, Rt. Hon. Sir Toby Russell, R. S.
Grimston, Hon. John (St. Albans) Lucas, Sir Jocelyn (Portsmouth, S.) Scott-Miller, Cmdr. R.
Grimston, Sir Robert (Westbury) Lucas-Tooth, Sir Hugh Sharples, R. C.
Hall, John (Wycombe) McAdden, S. J. Shepherd, William
Harris, Frederic (Croydon, N. W.) Macdonald, Sir Peter Smithers, Peter (Winchester)
Harris, Reader (Heston) Mackie, J. H. (Galloway) Smyth, Brig. Sir John (Norwood)
Harrison, Col. J. H. (Eye) Maclay, Rt. Hon. John Spearman, Sir Alexander
Harvey, John (Walthamstow, E.) McLean, Neil (Inverness) Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Head, Rt. Hon. A. H. Macmillan, Maurice (Halifax) Stevens, Geoffrey
Heald, Rt. Hon. Sir Lionel Macpherson, Niall (Dumfries) Steward, Sir William (Woolwich, W.)
Heath, Rt. Hon. E. R. G. Maddan, Martin Studholme, Sir Henry
Henderson-Stewart, Sir James Marlowe, A. A. H. Summers, Sir Spencer
Hicks-Beach, Maj. W. W. Marshall, Douglas Taylor, William (Bradford, N.)
Hill, Rt. Hon. Charles (Luton) Mathew, R. Teeling, W.
Hill, Mrs. E. (Wythenshawe) Mawby, R. L. Temple, John M.
Hinchingbrooke, Viscount Milligan, Rt. Hon. W. R. Thomas, Leslie (Canterbury)
Hirst, Geoffrey Moore, Sir Thomas Thomas, P. J. M. (Conway)
Hobson, John (Warwick & Leam'gt'n) Morrison, John (Salisbury) Thompson, Kenneth (Walton)
Holland-Martin, C. J. Mott-Radclyffe, Sir Charles Thomson, R. (Croydon, S.)
Hornby, R. P. Nabarro, G. D. N. Thorneycroft, Rt. Hon. P.
Horsbrugh, Rt. Hon. Dame Florence Nairn, D. L. S. Thornton-Kemsley, Sir Colin
Howard, Gerald (Cambridgeshire) Nicholson, N. (B'n'm'th, E. & Ch'ch) Turton, Rt. Hon. R. H.
Hughes-Young, M. H. C. Noble, Comdr. Rt. Hon. Allan Vane, W. M. F.
Hulbert, Sir Norman Nugent, G. R. H. Vickers, Miss Joan
Hurd, A. R. Ormsby-Gore, Rt. Hon. W. D. Wakefield, Edward (Derbyshire, W.)
Hutchison, Michael Clark (E'b'gh, S.) Orr, Capt. L. P. S. Ward, Rt. Hon. G. R. (Worcester)
Hutchison, Sir Ian Clark (E'b'gh, W.) Orr-Ewing, Charles Ian (Hendon, N.) Ward, Dame Irene (Tynemouth)
Hyde, Montgomery Osborne, C. Webbe, Sir H.
Irvine, Bryant Godman (Rye) Page, R. G. Whitelaw, W. S. I.
Jenkins, Robert (Dulwich) Pannell, N. A. (Kirkdale) Williams, Paul (Sunderland, S.)
Jennings, J. C. (Burton) Partridge, E. Wills, G. (Bridgwater)
Johnson, Dr. Donald (Carlisle) Peel, W. J. Wilson, Geoffrey (Truro)
Johnson, Eric (Blackley) Pickthorn, K. W. M. Woollam, John Victor
Jones, Rt. Hon. Aubrey (Hall Green) Pitt, Miss E. M. Yates, William (The Wrekin)
Joseph, Sir Keith Powell, J. Enoch
Keegan, D. Price, Henry (Lewisham, W.) TELLERS FOR THE AYES:
Kerby, Capt. H. B. Ramsden, J. E. Mr. Finlay and Mr. Bryan.
Kerr, Sir Hamilton Rawlinson, Peter
Allen, Arthur (Bosworth) Ede, Rt. Hon. J. C. Hunter, A. E.
Allen, Scholefield (Crewe) Edwards, W. J. (Stepney) Hynd, H. (Accrington)
Balfour, A. Evans, Albert (Islington, S. W.) Hynd, J. B. (Attercliffe)
Bellenger, Rt. Hon. F. J. Evans, Edward (Lowestoft) Irvine, A. J. (Edge Hill)
Bence, C. R. (Dunbartonshire, E.) Fletcher, Eric Irving, Sydney (Dartford)
Benson, Sir George Foot, D. M. Janner, B.
Bevan, Rt. Hon. A. (Ebbw Vale) Fraser, Thomas (Hamilton) Jay, Rt. Hon. D. P. T.
Blackburn, F. Gaitskell, Rt. Hon. H. T. N. Jones, Rt. Hn. A. Creech (Wakefield)
Bonham Carter, Mark George, Lady Megan Lloyd (Car'then) Jones, Elwyn (W. Ham, S.)
Bottomley, Rt. Hon. A. G. Gibson, C. W. Jones, J. Idwal (Wrexham)
Bowden, H. W. (Leicester, S. W.) Gordon Walker, Rt. Hon. P. C. Jones, T. W. (Merioneth)
Boyd, T. C. Greenwood, Anthony Key, Rt. Hon. C. W.
Brockway, A. F. Griffiths, David (Rother Valley) King, Dr. H. M.
Broughton, Dr. A. D. D. Griffiths, Rt. Hon. James (Llanelly) Lawson, G. M.
Brown, Rt. Hon. George (Belper) Grimond, J. Ledger, R. J.
Burton, Miss F. E. Hale, Leslie Lee, Miss Jennie (Cannock)
Butler, Herbert (Hackney, C.) Hall, Rt. Hn. Glenvil (Colne Valley) Lipton, Marcus
Butler, Mrs. Joyce (Wood Green) Hamilton, W. W. Mabon, Dr. J. Dickson
Champion, A. J. Hannan, W. MacDermot, Niall
Chetwynd, G. R. Hastings, S. McInnes, J.
Clunie, J. Hayman, F. H. McKay, John (Wallsend)
Collick, P. H. (Birkenhead) Healey, Denis McLeavy, Frank
Collins, V. J. (Shoreditch & Finsbury) Henderson, Rt. Hn. A. (Rwly Regis) MacMillan, M. K. (Western Isles)
Cove, W. G. Herbison, Miss M. MacPherson, Malcolm (Stirling)
Crossman, R. H. S. Hewitson, Capt. M. Mallalieu, E. L. (Brigg)
Dalton, Rt. Hon. H. Hobson, C. R. (Keighley) Mallalieu, J. P. W. (Huddersfd, E.)
Darling, George (Hillsborough) Holman, P. Mann, Mrs. Jean
Davies, Rt. Hon. Clement (Montgomery) Holmes, Horace Mellish, R. J.
Davies, Ernest (Enfield, E.) Holt, A. F. Messer, Sir F.
Delargy, H. J. Houghton, Douglas Mitchison, G. R.
Diamond, John Hoy, J. H. Monslow, W.
Dodds, N. N. Hubbard, T. F. Moody, A. S.
Dugdale, Rt. Hn. John (W. Brmwch) Hughes, Cledwyn (Anglesey) Moyle, A.
Duthie, W, S. Hughes, Emrys (S. Ayrshire) Mulley, F. W.
Dye, S. Hughes, Hector (Aberdeen, N.) Oliver, G. H.
Oram, A. E. Silverman, Julius (Aston) Wheeldon, W. E.
Orbach, M. Silverman, Sydney (Nelson) White, Mrs. Eirene (E. Flint)
Oswald, T. Simmons, C. J. (Brierley Hill) Wigg, George
Owen, W. J. Sorensen, R. W. Wilkins, W. A.
Pannell, Charles (Leeds, W.) Soskice, Rt. Hon. Sir Frank Willey, Frederick
Paton, John Sparks, J. A. Williams, Rev. Llywelyn (Ab'tillery)
Pearson, A. Stewart, Michael (Fulham) Williams, Rt. Hon. T. (Don Valley)
Proctor, W. T. Stones, W. (Consett) Williams, W. T. (Barons Court)
Rankin, John Stross, Dr. Barnett (Stoke-on-Trent, C.) Willis, Eustace (Edinburgh, E.)
Redhead, E. C. Swingler, S. T. Wilson, Rt. Hon. Harold (Huyton)
Reeves, J. Sylvester, G. O. Winterbottom, Richard
Reid, William Thomson, George (Dundee, E.) Woof, R. E.
Robens, Rt. Hon. A. Thornton, E. Zilliacus, K.
Roberts, Goronwy (Caernarvon) Ungoed-Thomas, Sir Lynn
Robinson, Kenneth (St. Pancras, N.) Viant, S. P. TELLERS FOR THE NOES:
Ross, William Wade, D. W. Mr. J. T. Taylor and Mr. Deer.
Shinwell, Rt. Hon. E. Weitzman, D.

6.15 p.m.

Mr. N. Macpherson

I beg to move, in page 17, line 35, at the end to insert: (3) The Secretary of State may, if he thinks fit, determine that any sea route between two places in a county, being a sea route served by a ferry or by public transport vessels and specified in the determination, shall be treated for the purposes of this paragraph as if it were a road in the county; and in any calculation under this paragraph any such determination shall be taken into account. The Amendment gives effect to an undertaking that I gave in Committee on behalf of my right hon. Friend in response to an Amendment moved by the hon. Member for the Western Isles (Mr. Malcolm MacMillan) and another Amendment bearing the name of the hon. Member for Orkney and Shetland (Mr. Grimond).

The question of special treatment for counties containing or consisting of islands was considered at the time the formula was being devised, but it was thought that the weighting given for remoteness and sparsity of population was adequate. Indeed, there was only one loser among the counties concerned, which were Argyll, Inverness, Orkney, Shetland and Ross and Cromarty, and that was Shetland. This case was considered at the time but it was felt that the formula should be kept as simple as it could possibly be made, and should not be disturbed without good reason.

The Amendments that were tabled in Standing Committee were not put down when there was very much time for us to give them the full consideration they needed. When I undertook to reconsider the matter I warned the Committee that we might not be able to reach a decision by Report. We have been able to reconsider the matter, and we have come to the conclusion that it would not be unreasonable that an additional weighting should be added for sea routes and ferries. Where communications within a county consist largely of sea routes we agree that it is not unreasonable to take the mileage of these routes into consideration in allowing a weighting for sparsity of population, based on the principle of pupils to miles of communicating roads. Inclusion of mileage by sea will enable us to take account of the additional cost of transporting children by sea to school or where they are transported only at the beginning and end of the period, of putting them up in hostels or lodgings during term.

The Committee will observe that the new sub-paragraph gives the Secretary of State discretion to decide which sea-routes should be treated as if they were roads, and limits his discretion to these joining places within the county. Under the Local Government Act, 1948, the roads to be taken into consideration are roads for which the local authority or the Secretary of State for Scotland are responsible.

I would add a word about the effect. So far as we can estimate, it will give these counties an extra £60,000 among them. This would be offset by a reduction of the Exchequer Equalisation Grant, which would amount to about half. All the other counties except Shetland are already gainers and they will be slightly more the gainers as the result of the passing of this Amendment. The hon. Member for Orkney and Shetland might well wish to know the effect on Shetland. So far as we can see, it will give Shetland an extra £2,800, the equivalent of a rate of 9d., when the Bill is in full operation.

Mr. Grimond

I am grateful to the Joint Under-Secretary of State for bringing forward this Amendment. I always hoped that he and his colleagues underestimated their ingenuity when they said originally that they could see no way to offset the hardships which have been done by leaving out the sea routes between islands. To give discretion to the Secretary of State for Scotland seems a fair way of doing it. I suggested that myself in the Amendment I had down in Committee. He is given discretion to treat certain sea routes as roads.

It will be very satisfactory to everybody to know that at last there is some disposition on the part of the Government to acknowledge that sea routes are roads or the equivalent of roads between some parts of our island counties. In regard to the discretionary power, I take it that there is no question about the Secretary of State using his discretion. He is presumably going to include all Shetland sea routes, as he has given the figures for Shetland which seems to take into account all the sea routes. The other special problems from which Shetland suffers is its high percentage of old people and the predominance of the town of Lerwick, with its affect under the present formula.

I understand that there will be at least 130 miles of sea route taken into account in Shetland. The weighting under the first part of Table I will go up from 30 to 37½ per cent. and the gain to the county will be about £2,800 as the Joint Under-Secretary has said. I take it that that is after taking into account the equalisation grant.

I also assume that there is no great significance in the words: by a ferry or by public transport". This means that the route from any island in the county, which is not a private island owned by one family, and from which there is some vessel which can carry general passengers, will be included. Children from all these islands may come to hostels even if they do not come to school daily across the sea and, therefore, I assume that they will be included.

I welcome this Amendment as giving effect to something which is obviously fair and just. It will afford some small amelioration to a hard-hit county.

Mr. Malcolm MacMillan (Western Isles)

I would join with the hon. Member for Orkney and Shetland (Mr. Grimond) in expressing my gratitude to the Secretary of State for the consideration which he gave to the Amendment in the name of myself and the hon. Member for Orkney and Shetland in Standing Committee.

This argument about sea routes is very old; it goes back for many years. My predecessor in my constituency, and no doubt the predecessor of the hon. Member for Orkney and Shetland, wanted this reform. The matter was raised when we annually discussed the MacBrayne contract and Western Isles transport over the years that have passed.

Always we have been arguing that sea routes should be regarded as the equivalent of main trunk roads on the mainland. We now have a compromise recognition, or a partial recognition, of the principle, which will be extremely important in the years to come although it may seem small in this context. It is a welcome recognition of a problem which has so far been avoided.

I can express my gratitude best of all by finishing my speech in a few words. I am extremely grateful to the Secretary of State for taking the trouble to put this Amendment down in this form. I have always said that he has done his homework with blood, toil and sweat in Committee. We can at least say that his name, like that of the poet Keats, will be remembered because his epitaph will be written in water.

The Amendment is very much appreciated. Now that the Government has recognised the principle, I hope that they will apply it a little more widely when we discuss the Western Isles in the future.

Amendment agreed to.

Schedule as amended agreed to.

Third Schedule agreed to.

Bill reported with Amendments; as amended (in the Standing Committee and on recommittal), considered.