Clause 42.—(PROVISIONS AS TO INQUIRIES, NOTICES AND REGULATIONS.) (Hansard, 23 March 1959)

§ Mr. Mitchison
I beg to move, in page 55, line 18, at the beginning to insert: Subject to the provisions of subsection (7) of section (Increase of certain Exchequer grants) of this Act". I propose to move this Amendment quite shortly, but we attach considerable importance to it. The Amendment is brought in at this stage because part of the proposed new Clause involves money provisions which would be subject to approval by this House but not by another place. I move the Amendment formally. The Committee will find the proposed new Clause later in the Notice Paper.
The local authorities are spending, we are told, about £24 million a year in compensation. They will have to pay about another £8 million as a result of the Bill. That is to say, their costs will go up about one third of their total expenditure of this kind. That is a really serious matter. They have had their financial facilities cut very badly by Government policy. They have had to suffer difficulties in borrowing money and to pay high rates of interest on it. Even now, the rates are very high. They have been deprived of certain subsidies which they had before and they are finding the 1036 general grant no more than enough to make things even, in the limited classes of service to which it applies.
Broadly speaking, local authorities are considerably worse off than they were some years ago. In some places, rates are rising and in others they are falling. If, by any unfortunate chance, this or a similar Government were to remain in office for a couple of years and practise a similar policy, there is no doubt that rates would have to go up sharply. Whatever is said about the general grant this year, it is more than doubtful whether it will be sufficient in the second year, after the General Election.
Be that as it may, the general question is: ought the Government to contribute something to the cost of what they are putting upon local authorities? The proposed new Clause says that it should be taken into account for the purposes of the general grant and further that there should be an exceptional contribution towards the increases in rates. Very often those increases will be in services which are already attracting grant, and to the extent that they attract grant the additional expenditure will attract grant too. Beyond the grant the expenditure will have to be carried by the local authorities.
The proposal here is that the prescribed percentage, which is not to be less than half and may be the whole of the additional expenditure involved should be carried by the Government. This is, of course, within the terms of the Money Resolution. There is an express provision for other grants. No doubt the right hon. Gentleman expected that, when faced with this additional expenditure for reasons which are not their concern but are matters of Government policy, local authorities would wish to have some contribution. They have had so many financial knocks from the Government that they probably would not expect it, but we would like to see a substantial contribution of that character in respect of this additional expenditure.
Accordingly, in moving this Amendment, which leads up to the new Clause, I hope that the right hon. Gentleman will be able briefly to explain the position and that he can concede what we ask for in the Amendment.

§ Mr. Bevins
I certainly accept the hon. and learned Gentleman's invitation 1037 to speak briefly but I cannot accept his Amendment. I appreciate that although he has spoken very concisely he and his hon. Friends attach importance to this proposal which is designed, of course, to make the Government pay a larger share of the cost of land acquisition than they pay under the existing law. I do not propose to comment in detail on the proposals embodied in the proposed new Clause but it might be useful to the Committee if I were to recapitulate the position under the present law.
10.15 p.m.
First of all, there are certainly land acquisitions which are related to grant-aided services. For example, there is the cost of acquiring land for the comprehensive redevelopment of an area of extensive war damage. There grants are payable under the 1947 Town and Country Planning Act. If one takes the example of land acquired for police purposes where there is a specific grant payable by the Home Office in the case of future acquisitions for the police, the normal 50 per cent. grant would apply.
The hon. and learned Member said something which I thought a little cryptic as to the application of the general grant in this context. I should like to make quite clear to the Committee that in fixing the general grant for the first two-year period, 1959–61, consideration was given to the full amount estimated as the extra burden to be added to the estimates of spending submitted by local authorities to cover the increased cost in the form of higher loan charges due to the Bill under this first two years of the grant. That has been done. As future general grant orders are laid regard will be had to the expenditure of local authorities.
The Committee would do well to remember that rate deficiency grants are paid to local authorities whose rate resources are below the national average and the grants are to some extent governed by local expenditure. To that extent the greater the expenditure incurred on land acquisitions the greater will be the amount payable by way of rate deficiency grants. In short, poorer local authorities, which get rate deficiency grants, will be helped for the reasons I have given.

§ Mr. Sparks
Could the hon. Gentleman say whether, in view of what he has said, that local authorities will be left with 50 per cent. of the additional burden?

§ Mr. Bevins
That is what I am coming to. The question is what is likely to be involved by the change in the basis of compensation; how is it in practice likely to affect local government finance? As the hon. and learned Member for Kettering (Mr. Mitchison) rightly said the Financial Memorandum to the Bill quoted a figure of £8 million a year as the increased capital cost to local authorities. The additional amount was put at £1 million a year capital grant towards classified roads expenditure and £150,000 in the first year —rising annually—for other grants—general grant, rate deficiency grant and the remaining specific grants. The probable increase in capital costs to local authorities is about £8 million a year.
Most of that additional capital will he raised by local authorities on a 60-year basis. If one assumes the current Public Works Loan Board rate interest, the loan charges would come to about £475,000 a year. The annual equivalent of grants by the Ministry of Transport is about £60,000, which, with the estimated £150,000 on other grants, gives a total additional Exchequer contribution of £210,000. At the end of the first year, the probability is that local government in general will have to find loan charges of an additional £475,000 a year, but set off against that there should be additional Exchequer contributions to the tune of about £210,000. I entirely agree with the hon. Member for Acton (Mr. Sparks) that that is rather less than 50 per cent., but he will appreciate that housing does not rank for specific grants.
The hon. and learned Member for Kettering rather implied that this would be a heavy burden on local authorities. With great respect, that is not so. Even after a period of ten years' increased commitments, because of the new code of compensation, it is unlikely that the total increase in rate poundage throughout the country will exceed ld. in the £. I suggest that if we try to keep this in perspective we find that the financial incidence on local government throughout the country is likely to be very small, indeed.

§ Mr. Mitchison
Noting the Government's reluctance to make even a small contribution towards the financial difficulties of local authorities, we propose to divide the Committee.

Morrison, John (Salisbury)	Prior-Palmer, Brig. O. L.	Temple, John M.
Nabarro, G. D. N.	Rawlinson, Peter	Thompson, Kenneth (Walton)
Nairn, D. L. S.	Redmayne, M.	Thompson, R. (Croydon, S.)
Neave, Airey	Rees-Davies, W. R.	Thornton-Kemsley, Sir Colin
Nicholls, Harmer	Ridsdale, J. E.	Vosper, Rt. Hon. D. F.
Nicolson, N. (B'n'm'th, E. & Chr'ch)	Roper, Sir Harold	Wade, D. W.
Noble, Michael (Argyll)	Ropner, Col. Sir Leonard	Wakefield, Edward (Derbyshire, w.)
Oakshott, H. D.	Shepherd, William	Wakefield, Sir Wavell (St. M'lebone)
Orr-Ewing, C. Ian (Henclon, N.)	Smithers, Peter (Winchester)	Wall, Pattiok
Osborne, C.	Spens, Rt. Hn. Sir P. (Kens'gt'n, s.)	Ward, Rt. Hon. G. R. (Woroester)
Page, R. G.	Stevens, Geoffrey	Webster, David
Pannell, N. A. (Kirkdale)	Steward, Harold (Stookport, S.)	Whitelaw, W. S. I.
Partridge, E.	Steward, Sir William (Woolwioh.W.)	Williams, R. Dudley (Exeter)
Peel, W. J,	Stoddart-Scott, Col. Sir Malcolm	Wills, Sir Gerald (Bridgwater)
Peyton, J. W. W.	Stuart, Rt. Hon. James (Moray)	Wolrige-Gordon, Patrick
Pickthorn, Sir Kenneth	Studholme, Sir Henry	Yates, William (The Wrekin)
Pilkington, Capt. R. A.	Summers, Sir Spencer
Pitt, Miss E. M.	Sumner, W. D. M. (Orpington)	TELLERS FOR THE NOES
Powell, J. Enoch	Taylor, William (Bradford, N.)	Colonel J. H. Harrison and
		Mr. Brooman-White.