LOCAL AUTHORITY RATE BURDEN

HC Deb 25 February 1960 vol 618 cc590-651

4.3 p.m.

Mr. James MacColl (Widnes)

I beg to move, That this House, recognising the need for expansion of services administered by local authorities, but noting with concern the increasing burden falling on local rates, as a result of the financial and fiscal policies of the Government, calls upon Her Majesty's Government to give immediate help to local authorities by means of lower interest rates and the full rating of industrial hereditaments; and further calls for a fresh inquiry into the financial relationship between central and local government. This is a short debate, but its shortness does not mean that it is not of great importance, not only to local authorities in this country but to the people and the ratepayers in the areas of those local authorities. I will come immediately to the point of the Motion and confine myself to going through each aspect of the Motion and developing the argument in connection with it.

The first point is one about which I should have thought there would have been no argument, that the House recognises the need for an expansion of the services under the control of local authorities. That has not seriously been challenged, either during or since the election. If we do not allow our local authorities to expand their social services during what we are told is a period of high prosperity, they will not be able to expand them during a period when productivity is lower and the country is not so prosperous. If we do not expand our social services now, when will we do it?

The burden of our complaint is not that local authorities have been asked to spend more, or want to spend more, but that most of the large increases that there have been have been in connection either with expenditure over which the local authority has no discretion at all, or on services which it has been under continual pressure from the Government to develop and to increase its expenditure on them. Because of the policies of the Government an increasing burden has fallen on many of these authorities. It has now become so crippling that we are in danger of seeing the whole system of local government—and I do not think that this is an exaggeration—being profoundly shaken. Let us consider education. We had the White Paper, "Secondary Education for All—A New Drive." Those are fine, brave words. Local authorities are urged to get a move on. Following that, we find that the London County Council, after having had its programme cut by the central Government, is still spending an additional £.4½ million on education. That kind of increase in expenditure is to be found among many other education authorities. The Government presumably accept that as being a reasonable and fair increase of expenditure that ought to be incurred.

Let us consider, next, mental health, which is a comparatively new service. Only a few months ago we had the Ministry of Health Circular No. 28/59 directing—not driving, or urging, or persuading, but directing—local authorities that by 1st April next they must submit their proposals for the prevention of mental disorders and the care of persons suffering from them. That is a new service. The Minister has told local authorities to expand, and they have been directed to submit their proposals.

May I pause for a moment to ask the Minister a specific question. Is it intended during the course of the next financial year to introduce a further general grant Order to allow increased grants to local authorities for this now service which is to be developed under that circular. I would remind the Minister that this was precisely the kind of point that was made during the discussion on the general grant. We say that one of the great weaknesses of the general grant is that a now service will not be reflected in it. There will be no percentage grant attached to it, so either it will be squeezed out altogether or it will take its place at the expense of other well established services which have been taken into account in fixing the figure. Because of that circular, we ought to know what policy the Government will adopt in respect of its effect on the expenditure ranking for general grant.

There are other services which have also expanded. I suppose that the biggest increase has taken place in teachers' salaries. We have had a general grant increase for teachers' salaries, yet, oddly enough, the Financial Times, on Saturday, giving a survey of local government expenditure, said: Easily the most important factor contributing to the widespread rise in rates is increased expenditure on education as a result of the new Burnham scale for teachers' salaries, which came into force last October. If that is correct, and presumably the correspondent of the Financial Times contacted local authorities and has not said that without due consideration, something has gone wrong. Either the extra grant is going to the wrong local authorities, or the effects of the increases have not been accurately measured, because teachers' salaries is a service over which the local authority has no control. The size of the staffing ratio, and the size of the classes, are fixed by the Minister. The amount of money to be paid in salaries is fixed by the Burnham Committee. The local authority has no possibility of effecting economies in that service. It seems extraordinary that because of changes of that sort, which are outside the control of the local authority, the Government should not bear their full share of the cost.

What other services are likely to show increased expenditure? The other suggestions put forward by the Financial Times are the prospect of higher police pay—which is a percentage grant—the higher cost of borrowing, following the increase in the Bank Rate, and the steadily growing demands of the roads. Those are matters which are either wholly outside the control of the local authorities or, as in the case of roads, the subject of considerable pressure from the central Government upon local authorities to incur extra expenditure.

The first point made in the Motion is clear. We welcome and accept the need for increased expenditure for the expansion of local authority services. But that puts an increasing burden on the rates, and we ask the House to consider whether the Government are paying their fair share of the cost of that increased expansion. I know that on the estimates of expenditure submitted by local authorities, and by the amount of grant, the percentage paid by the Government has not greatly altered, taking the overall position. The trouble is that in dealing with local government we are not dealing with global figures.

As in the case of housing, so, in this case, the great weakness of the right hon. Gentleman is that he becomes so obsessed with the ecstatic contemplation of the general that he altogether forgets to look at the poignant realities of the particular. It is the particular situation that faces the finance committees of local authorities and the ratepayers. The global or overall figures are not what affects them.

I want to examine some of the increases in rate poundage which have already been announced. Birmingham and Manchester have both announced an increase of 1s. 6d.

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

Two shillings and sixpence.

Mr. MacColl

I have a figure of 1s. 6d.

Mr. Wheeldon

For Birmingham it is 2s. 6d.

Mr. MacColl

My authority—the Financial Times—must have slipped on that.

The Lancashire County Council has announced an increase of 1s. 6d. in the precept. The Isle of Wight—which I would not have thought was likely to be carried away by emotional and wild Left-wing moves towards extravagance—has had to announce an increase of 2s. 8d. in its poundage, and in respect of the Middlesex County Council and the Surrey County Council there are increases of 8d. and 6d. respectively. The important point about all those increases is that they are increases in the rate poundage, although there has been such a substantial increase in rateable values, due to increased valuation. If we compare these figures with those of past years, especially the years before the new valuation, we must remember that they are based upon a bigger rateable value and a bigger assessment.

I want to consider two of these local authority increases in a little more detail. I will take Brighton and Lancashire, one a county borough on the South Coast, the other a large county—mixed industrial and rural—in the North. My authority for speaking of Brighton is the Evening Argus of 20th February. Brighton is faced with an increase of 10d. in its rates, even though it has drawn money from its reserves and cut down its estimates. The total increase in the grant which Brighton has received is £55,000. The product of a 1d. rate is about £15,000, which means that in comparison with an increased burden of 10d. upon the ratepayer the increased contribution by the Government amounts to only 3½d.

I now go to the other end of the country and look at Lancashire. This, of course, is only the precept. The increase in total expenditure is 2s. 4d. Of that, education accounts for 2s. 1d. There is no question of wild extravagance or bad administration, because the major increase is in the service where the control of the central Government is firmest. That increase of 2s. 4d. in total expenditure is met by 10d. out of the grant and 1s. 6d. by way of an increase on the precept. The same thing is happening with two different types of authority in different parts of the country. The main burden of the increase in expansion, due to the Government's policy—which we welcome—is falling upon the ratepayer and not upon the grant.

Whether this is because the formula is working badly and the wrong authorities are getting more, or the estimates of expenditure submitted by local authorities are too low, I do not know, and it does not concern my argument. I am concerned to point out to the House the situation which is inherent in relying exclusively upon a general grant.

In 1958, before the introduction of the general grant, grants for the Lancashire County Council, taking both the block grant and the percentage grant together, contributed a rate poundage of 31s. 9d. For next year they contributed 26s. 8d., which is 5s. 1d. less. In other words, in Lancashire the contribution made by the central Government is not even remaining steady, but is falling. It has fallen by 5s. in terms of the 1d. rate, again taking no account of the fact that the product of the 1d. rate has been rising. The contribution of the ratepayer has risen.

I now turn to the question of the cause. We say that this is due to the financial and fiscal policies of the Government. I want to mention two of them. There are more, but I want to save time. The first is the rate of interest. I do not want to go into the calculations with which we are all so familiar, but increases in the rate of interest have an enormous effect upon local authority expenditure. People talk in terms of cutting a subsidy here or putting on a subsidy there, but changes in subsidy have much less effect than the changes which take place, quite arbitrarily and without any control on the part of local authorities, in the rate of interest.

The rate of interest has again recently risen, so that local authorities are faced with further increases which are not taken into account in respect of the general grant; that grant is fixed according to a different rate of interest, and increases are not reflected in the general grant until a new calculation is made for the next triennial period.

We can see the folly of the position if we compare two services. Let us suppose that in the same area a modern hospital and a new school are to be built. The regional hospital board has to get a major proposal for capital expenditure on new hospital buildings approved by the Ministry of Health, and it may have rather a scrap to get it approved, but once it has succeeded its battle is over, and the whole cost falls on Government funds. The rate of interest does not affect it.

A school may be built next door and is just as much a part of the Government's social policy on which they cash in at election times as an illustration of how progressive they are. The school is built by the local authority, which has to get the same sort of approval from the Minister and show that its proposals are within the limits of the cost per place and that its programme can be carried out within the area.

There are very strict controls, and I do not know of any lightening of those controls as a result of the provision of the general grant. The local authority must find the money on the open market, where fluctuations may increase the loan charges that must be paid by the taxpayer and the ratepayer. If it is sensible to carry the cost of a major hospital on Government finances, it is equally sensible to carry the cost of a school.

Then there is the cost of land. Again, this is something which is due to the policy of the Government. I am not saying whether that policy is right or wrong. But as a result of the Town and Country Planning Act last year local authorities have to pay full market value for land; not just the existing use value which would sound reasonable and fair, but the development value, taking into account all future development which is very often carried out by the same local authority that buys the land. If a school is built on a new estate where commercial, residential and industrial development by the council and the provision of transport and drainage services lead to higher land values, the council has to pay the increased site cost due to its own energies.

This becomes part of the burden falling on the ratepayer through no fault of the local authority, but because of the policy of the central Government.

Let me quote again, not from fervent "Speaker's Notes", drafted by someone in Transport House, but the rather gloomy background created by the estates correspondent of The Times in its property market review of 1959. The headline is: Rise of up to 10 per cent. in price of houses. Strong competition for building land. The correspondent writes: One of the most interesting factors in the market was the high prices paid for building land close, and sometimes not so close, to the centres of large cities. Any area of reasonable size zoned for residential development offered at auction during the year produced energetic bidding to figures rising perhaps to £7,000 or £8,000 an acre or even higher in exceptional cases. These figures reflect a scarcity of building land which in some areas is described as being 'at starvation level'. That is all part of the Government's policy of a free property market, of increasing the value of land and making local authorities pay the full market price for the full development value. If it is argued that it is a good policy, I say that the cost of carrying out services which the Government require should fall on central Government funds and not on the rates. The fiendish pincer grip in which a local authority is held is illustrated by the fact that, on the one hand, its costs are pushed up by the change in the price of land and, on the other, there is an increase of the rate of interest paid on the capital necessary in order to pay the increased price of the land. Against that background local authorities have been trying to grapple with their problems and to get some kind of balance in their financial situation.

What is to be done about it? We say that there is need for immediate help. One most important thing which could be done quickly would be to give local authorities—particularly where they are developing work as part of a Government programme—the advantage of Government finance and lower interest rates. Secondly, there is the rating of industrial hereditaments. It is absurd to keep derating industrial hereditaments. If, as we are told, our industries are reaching unparallel heights of prospertity, it is fatuous to subsidise them at the expense of the ratepayer.

We ask that there should be an inquiry into the financial relations between central and local government. Had we won the last General Election, that is something which would already have been initiated. The Government have had what they called an inquiry, but it consisted, in fact, of a working party of chief officers with the understanding that they were not committed to a policy. There was no consideration of policy; it was purely a technical body. Apart from that, there was a haggle between the Ministry and the local authority associations. There has not been any attempt to hold an objective inquiry into the problem of local government finance.

We do not approach this in any doctrinaire spirit. We are not being dogmatic. But we say these problems should be examined calmly, and that the full measure of Government resources and research, and their knowledge of the situation, should be behind a high-powered inquiry. Only a Government inquiry can decide what should be done. The inquiry should look at a local income tax. I moved a new Clause to the Local Government Bill on that subject. I am not the sort of person to whom people write letters very often, but I was surprised at the "fan mail" which I received as a result of the Standing Committee discussion on a local income tax. I was surprised at the number of people who made the point that rates are reaching a breaking point and that we cannot go on piling more on to the rates with higher and higher rate poundages. We must find some alternative solution and a local income tax may offer such a solution.

Many of my hon. Friends and hon. Members opposite would not agree with this view and I do not press it. I say that this is a matter which should be inquired into. The Royal Institute of Public Administration had a high-powered unofficial inquiry which came down in favour of it. There is a case for looking again at the rating of site values. The last committee which considered the subject sat at a time when the Town and Country Planning Act, 1947, was still in operation. The inquiry took place against the background of development values being taken into public ownership. That was wrecked by the present Government and, therefore, there is a strong case for looking again for some way of mopping up the enormous increases in development values which was demonstrated in the quotation I made from The Times.

Another matter is the rating of empty property and the assimilation of the English system to the Scottish system. Parliament has approved the rating of empty properties for Scottish local government, but refused it for English local authorities. There are three examples and there may be many others. As I say, I am not concerned to be dogmatic or to lay down the law on the subject, or to say what is the answer. But I maintain that something must be done about the problem because of the heavy incidence of rates which is crippling local authorities. So long as independent policy expansion of local authority services have to take place through the rating system, local councils cannot be as energetic and have the interest in their work that they should have. It all comes back to the problem of how to increase local revenues. I sometimes suspect that the Government do not really want local authorities to have financial resources, because if they had they would be more independent.

That was the story of Waterloo Bridge. Parliament refused to allow Lord Morrison to borrow money for the London County Council to build a new bridge. At that time the product of the 1d. rate in London was about £¼ million and the council was able to do it out of general revenue. Then Parliament caved in. My hon. Friend the Member for Islington, North (Mr. Reynolds) has told me that precisely the same sort of thing happened in the Borough of Acton. The Government refused loan sanction for a transfer from gas to electric lighting for the highways. Acton said, "We shall pay out of our reserves and revenue." It did so, and, within a few months, the Government caved in and gave loan sanction for the operation.

That is the kind of independence which local authorities can have when they have reasonable reserves, but the average local authority, skimped and crimped by the rigid system of taxation, can only beg for grants because grants are the only source related to ability to pay. The grant comes out of the taxation account based on ability to pay and rates come out of a tax on rents, which is not based on ability to pay. If the Government are serious in wanting their policy of extending the social services to go forward, they have either to take more responsibility for meeting the cost themselves or to look at the whole relationship of central and local government and find a better and more flexible working system of giving local authorities adequate finance to run their affairs in their own way.

4.32 p.m.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Sir Keith Joseph)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: welcomes the substantial assistance given by Her Majesty's Government to local authorities and the expansion of local services over the past eight years which this assistance has made possible, approves the principle of giving most help to authorities in greatest need embodied in the system of rate deficiency grants, and endorses the change from percentage grants to a system of general grants which resulted from the recent review of the general relationship between central and local government". The hon. Member for Widnes (Mr. MacColl) moved his Motion in a very moderate speech. I would not for a moment attempt to minimise the serious burden of rates, but I hope that in what I am going to say I shall be able to explain and particularly to assert, what is the truth, that the proportion of national wealth, or personal income, taken by rates today and likely to be taken by rates in the foreseeable future is just about the same as it has been ever since the war. There is nothing perfect in that, but at least, despite the large expansion to which I shall refer we are not faced with any increase in the proportionate burden of the rates on the citizens.

Of course, I agree straight away with the hon. Member's comments on expansion. Both sides of the House are dedicated to expansion in the local authority social services, and my party takes pride in the expansion it has been able to achieve. I am not going to give a long list of items, but I may quote the great increase in the number of teachers, the numbers of health visitors, home helps and district nurses, and the vast increase in school places and in schools all of which have taken place in the nine years during which my party have been in power.

There has been a greatly increased volume of housing—on an average 30 per cent. above the Socialist record, and a great drive—[HON. MEMBERS: "No."]—yes, I am saying this in a noncontroversial sense—on average it is 30 per cent. above the Socialist record. There has been an enormous increase in the number of houses built for the elderly, and a huge campaign which already has rehoused 600,000 people from the slums. My point in quoting this is that these are extra services which have to be paid for. As they are or local benefit, surely it is absolutely right that part of the cost should fall on the local ratepayer. What I want to stress above all is that the splitting of the extra cost for these extra services between the taxpayer and the ratepayer is in exactly the same proportions as it has been since the war.

I am not going to reply to the individual cases mentioned by the hon. Member. The exact amount received by the local authority depends not only on general grant but on specific grant, its own expenditure on non-grant-aided services and a number of very technical details. We have had absolutely no complaint from local authorities so far, but if there is thought to be inequity, my right hon. Friend would be glad to hear from any local authority which feels it has a grievance and that the formula which was approved by Parliament has not been properly applied.

The Motion criticises the financial and fiscal policies of the Government, but what the hon. Member did not bring out is that those policies have helped to cure inflation while achieving expansion and that this expansion is of the greatest possible benefit to local authorities and their ratepayers. The result is that extra money spent by the ratepayer or the taxpayer on the services is of real value and is not devoted merely to keeping pace with inflation, as so often happened in the past.

The hon. Member raised three main criticisms, the general grant, interest rates and the cost of land. On the general grant, I can go fairly quickly over the history, because I think it is generally known that help to the ratepayers over the rates used to come through the Exchequer equalisation grant. That was in order to help poor authorities. Specific grants were paid by way of a percentage on expenditure, and this meant that the Exchequer was virtually signing a blank cheque, unless the expenditure was subject to control. Detailed control of local authorities was not a healthy thing for local democracy, and it discouraged the pursuit of economy and value for money. The Exchequer equalisation grant appeared to many to have an admirable object to help the local authority, but to be a clumsy weapon to achieve it.

The Government were not particularly happy about the two main methods of helping local authorities and they put in hand an inquiry, on which the hon. Member poured faint praise. As a result of that inquiry, we had the Local Government Act, 1958. That Act secured two major changes. First, the general grant was substituted for certain specific grants. As the House knows, the general grant commits the Exchequer for a period of two years or more to contribute an absolutely firm sum for payment to local authorities with no supervision, no controls, no encouragement to irresponsibility about the expenditure and the minimum of interference with local democracy.

The general grant was calculated entirely on the basis of local estimates, so was the supplementary grant which covered unforeseen increases in cost in the grant period. As the cost is split, as I tried to explain earlier, between the taxpayer and the ratepayer, it remains true that if there are unforeseen increases in the grant period, part of the cost falls on the ratepayer whilst part of the cost of all services remains on the taxpayer. That is why it is possible, as the hon. Member points out, for part of the cost of the increase of pay for teachers to fall on the ratepayer although the taxpayer is still bearing the major burden.

The general grant sum, fixed at the beginning of each period, takes into account the desired expansion of the services. It would be a very sad thing indeed if it did not. In answer to the question by the hon. Member for Widnes about the mental health service—a very proper question—I am able to assure the House that provision was made in the first general grant for the stepping-up of the expenditure of the mental health service. It was an increase in the expenditure of 2½ times beyond what had gone before, which is by no means what the total final cost will be; but at the beginning of the service one has to start fairly small.

I wish to assert that local authorities have received in general grant more than they would have done under the old specific grant, because the local authorities' estimates on which the general grant was based were drawn up in the summer of 1958 and they were higher than the estimates drawn up by the same local authorities nine months later for the calculation of their own rates. Specific grants would have meant a percentage of the lower figure as calculated by the local authorities when converted into actual expenditure, whereas the estimates on which the general grant were based were the higher estimates of nine months earlier.

If hon. Members feel that unforeseen increases are omitted in the comparison I have made, I would point out that unforeseen increases occurred in the general grant period and were taken into account and paid by the Government under the General Grant Increase Order, 1959, just as they would have been taken into account had there been a specific grant. So they cancel out. In fact, the Government accepted the local authority estimates in full and even improved on them. In addition, the local authorities have £10 million extra annually as their share of industrial re-rating. We have no complaints from the local authorities about their treatment under the general grant. If they have any disagreement about distribution, my right hon. Friend will be glad to hear from them.

The 1958 Act also substituted the rate deficiency grants for Exchequer equalisation grants. These achieved more precisely and effectively, subject to built-in safeguards against unusual expenditure, the aim of helping most those local authorities who most need help. So any increase in the rate burden cannot possibly be blamed on general grants. In fact, the search for value for money, encouraged by the 1958 Act, is making for increased use of modern management techniques, such as works study, O. and M., and unit costings. So local authorities, in the exercise of their increased responsibilities and independence, are rightly paying more attention to value for money.

The second main complaint is about interest rates. It appears that the Opposition do not like the use of interest rates, but we did not hear what is the alternative. It is common ground in a trading nation such as ours that there must be some central financial direction of the economy. Would the Opposition rely again, as they did in the past, on controls? If the Opposition denies this, it should tell us how it would work. If it denies this, then what kind of alternative is there to a package, which must include as one of its components a rise and fall in interest rates?

Mr. MacColl

The local authority expenditure to which I referred was all under the rigid control which we had from the Ministry. Therefore, we have both fiscal control through the Ministry and financial controls through the rate interest.

Sir K. Joseph

It remains true that about one-half of local government expenditure is not under rigid control. For this hon. Members opposite have to rely on direct controls, which is what the hon. Gentleman apparently means, or use the indirect weapon we use of interest rates. It is true that money borrowed for a lengthy period when the Bank Rate is relatively high will result, for instance, in houses built with that money being more expensive. But this does not affect only local authorities; it affects all people and all companies in this country borrowing at that time, and is intended to do so.

It is generally accepted that the aim of stability of money with expansion is a worth-while endeavour for the country.

If local authorities decide that, despite a temporary relatively high rate of interest, they must still raise more money, I should like to explain to the House that loan charges account for only 10 per cent. of total local authority expenditure and charges on loans raised in a single year account only, on average, for 10 per cent. of that. Thus, if there is an increase of 1 per cent. in interest rates, the result on the rate burden of the local authority would be only a very small fraction of 10 per cent. of 10 per cent. [HON. MEMBERS: "Oh."] That is a very small fraction. It would cause an increase of only a very small fraction of 1 per cent. Therefore, it has a trivial influence on the rates as a whole; but, of course, it can be extremely important in its effect on an individual house or group of houses.

Although there is no sense in protecting local authorities, rich and poor alike, from the influence of rising and falling interest rates, there is the very greatest sense in protecting the less-well-off tenants from a rise in the interest rates. Four hundred local authorities know how to do this already, and ever more are considering it—that is the adoption of differential rent schemes. That is the way to temper the wind of rising interest rates to the individual tenant who cannot afford to pay.

The hon. Gentleman's third complaint was about the cost of land. Here I find it extraordinary that he was able to attack the Government while reserving his decision whether the Government's policy was right or wrong. I know perfectly well that the hon. Member agrees with the policy of holding the Green Belt. He knows as well as I that we are an overcrowded island and that there is limited land in this country.

He objected to market price being paid for land compulsorily acquired. I do not know whether the Labour Party want to go on record as being opposed to market price being paid for the compulsory purchase of land. However that may be, I would point out to the House that the increase in the purchase price of land to the market value, as a result of the 1959 Act, was taken into account in assessing the first General Grant. Of course, the poorer local authorities have the benefit of the rate deficiency grant and, in addition, specific grants, particularly for housing, come to the help of all concerned.

As a result, therefore, of the Government's successful financial and fiscal policies, and of the level and form of Exchequer assistance which they are giving to authorities, the burden falling on local rates has increased no more rapidly than the increasing prosperity of the country. Despite the considerable expansion of their services during the last eight years, local authority rates in the United Kingdom have remained around 3 per cent. of the total personal and corporate income of the country, after deduction of direct taxes.

The same proportion of the amount of money which people have in their pockets to spend has continued to be collected in the form of rates. Measured by this test, which seems to me a realistic test, the burden falling on local rates has not increased. There is no good reason to believe that the proportion of net personal and corporate incomes, after deduction of direct taxes, to be spent on rates will increase.

The hon. Member mentioned industrial re-rating. We must remember that in 1956 the rates on industry were increased sharply on revaluation. Again, last year, re-rating was stepped up from 25 per cent. to 50 per cent. The whole subject of industrial rating will have to be considered before 1963.

What are the future prospects? Because of the combined effect of the original allowance made for the development of services between 1959–60 and 1960–61, and the pay awards to teachers, nurses and other staff, which led to the amending general grant order, the revised general grants for 1960–61 will exceed the original 1959–60 estimates, so that the share borne by the taxpayer of the increased cost flowing from the expanded services and from the higher pay will be maintained. It is likely therefore, as a corollary, that the ratepayers will have to meet their share, though a lesser share, of the extra cost. But each local authority is in a different position, depending upon its finances, its history, its efficiency, its balances and its expansion plans.

It is true that there are a number of recommendations and a few decisions about rates, mostly up and a few down, but I hope that I have shown conclusively that any rate poundage increases are not the result of increases in interest rates, except insignificantly, from which, as I have explained, the less-well-off tenants can be protected by differential rent schemes, nor are they the result of the change to general grant.

Mr. John McCann (Rochdale)

It is interesting to hear the hon. Member advocating differential rent schemes. Three times this week right hon. and hon. Members opposite who represent the Army, the Navy and the Air Force in the House have refused to put differential rents into operation in the houses owned by the Services. Why should the Minister argue the claims of a differential rent scheme when the Government refuse to apply it in their own establishments?

Sir K. Joseph

That sounds like an interesting question, which I should like to discuss. Local authority services have expanded, are expanding—[HON. MEMBERS: "Answer."] I was delighted to hear the hon. Member for Rochdale (Mr. McCann) speak in support of the general thesis of differential rent schemes for local authority houses. My responsibility in the House is limited to such housing.

The picture is, then, that local authority services have expanded, are expanding, and will expand. The taxpayers' share of the cost is, if anything, slightly higher than before the general grant was introduced. Rate deficiency grant is a more accurate and effective means of helping poorer local authorities than was the Exchequer Equalisation Grant. Rates are likely to take about the same share—3 per cent.—of personal and corporate income after direct taxes as they have taken for some years.

Finally, the level of rate poundage in an area is the responsibility of each local authority. The new procedure gives, if anything, more financial help, as much encouragement as ever to expand efficiently where expansion is needed, and much more independence and freedom from control. The use to which local authorities put the help from the taxpayer and their new freedom will be judged by their electorate.

4.53 p.m.

Mr. William Blyton (Houghton-le-Spring)

As I listened to the Parliamentary Secretary's speech I came to the conclusion that he lived in an entirely different world from that which I represent in Houghton-le-Spring. I received a letter this morning from the Houghton-le-Spring Urban District Council, which has sent the same letter to the Minister of Housing and Local Government, protesting very forcefully about the way in which it is cramped by the high interest rates which are being charged on the loans which it has received. I will deal with that later in my few remarks, although I do not intend to take up much time.

I rise to support the Motion so ably moved by my hon. Friend the Member for Widnes (Mr. MacColl) who, in a first-class speech on local authorities, drew an excellent picture of local affairs throughout the country.

From my investigations it appears that the average building tender for a council house has not altered very much since 1951. I will quote the figure given by the Chancellor. The average tender for a house in 1952 was £1,391 and in 1959 it was £1,500. When we consider the interest charges, however, we have a very different picture. If we assume a loan of 60 years at the relevant Public Works Loan Board rate of interest, we find that the interest to be paid on that loan was £3,856 in 1952 and £5,353 in 1959. As the Bank Rate rose again in 1960, this figure is now even higher. If the Press this morning is right, the Bank Rate is to go even higher in the next few months, and the subsequent burden on local authorities will be heavier than I have indicated.

This has meant that the rent which a local authority has had to charge on this house has increased from £1 4s. 8d. a week in 1951 to £1 14s. 3d. a week in 1959. The abolition of the general needs subsidy has also made it more difficult for local authorities to build, and the Minister should have told us that 262 councils have ceased building altogether, although the need for houses continues in their areas. The December figures show that there has been a serious fall in the building of houses by local authorities in the last two years. Local authorities cannot face the interest rates now being charged, and their progress, not only in council housing but in other things, is being retarded, particularly in Durham County.

According to the Ministry of Housing and Local Government, the cost of running local authority services in 1957–58 was 10 per cent. higher than in 1956–57. It rose to £1,438 million in 1957–58 from £1,315 million in 1956–57. Despite this, and because of the credit squeeze, capital expenditure fell by nearly £324 million, while the debt of the local authorities increased by 7.6 per cent. All these increases in costs are, in the main, due to the Government's policy of dear money. It is possible that 1958–59 will show a little easement of this situation, but we are coming back, I am sorry to say, to the previous position as the Bank Rate is increased. Another increase has been forecast.

It is in no way new to state in the House that local authorities are still finding it difficult to obtain money, particularly short-term loans, at reasonable rates of interest. On the one hand, the Government continually urge local authorities to press ahead with their services and, on the other hand, they force them to cut back expenditure when their schemes are submitted. I could give details, if the Minister wants to know what they are, but I would rather not bother the House with them.

Mr. McCann

School building is a good example.

Mr. Blyton

As a result of the dear money policy, council house rents have to be raised and the rates in respect of other services are raised to meet the increased interest on the loans which authorities have borrowed to carry out those very services. One gained the impression from the speech of the Parliamentary Secretary that we were living in an El Dorado. My council in Houghton-le-Spring has written to me about the high prevailing rates it has to pay, and it has protested to the Minister. So that the Minister may recognise that he has received this letter I propose to read it to the House. The letter, a copy of which was sent to the Minister, is addressed to the Chancellor of the Exchequer. It says: I am directed by the Council to register their strong protest against the generally high prevailing rates of interest on loans to local authorities and, in particular, against the recent increase in the Bank Rate which, in turn, is reflected in the increased rates of interest which will be chargeable to the Council in respect of sums which they require to borrow for capital schemes. The Council deeply deplore the step which H.M. Government have felt it necessary to take, and they instruct me to urge that arrangements should be made to safeguard the position of local authorities in cases where long term loans are advanced by the Public Works Loan Board at the present high interest rates. They hold the view that in such cases provision should be made for the reduction of the interest rate as soon as the position warrants such a course being taken, and they trust that this aspect of the matter may receive early and favourable consideration". The council is more optimistic than I am.

In my division rents have been increased on council houses, due entirely to the interest the council is charged on its loans. I hope that the Minister will realise that it is the ratepayer who has to carry the high profits which the banks are making.

I heard the Parliamentary Secretary mention the dangers of inflation. It is no use asking working men and women not to ask for higher wages when they see everything going up, like house rents and rates, due to the Government's dear money policy. The Government cannot expect trade union leaders to keep men quiet when they see high profits being made in industry and see the tremendous profits that the banks are making because of the dear money policy. In those circumstances the Government cannot expect men and women not to protest at their standard of life being reduced by higher rents and rates caused by the Government's high Bank Rate.

It is not exhortations we want from the Chancellor to working men about wage increases, but some attempt by him to help local authorities in their loan charges which will prevent them passing the burden on to council house tenants, and to all the people in the district, when the rates are increased to meet the demands of interest charges.

I hope that the protest of my council will have some influence on the Minister, though I am not optimistic, and that we shall have some easement of the burden which is being carried in my division.

5.4 p.m.

Mr. Mark Woodnutt (Isle of Wight)

Mr. Deputy-Speaker, I thank you for calling me so early in the debate, thus sparing me a long period of suspense whilst waiting to make my maiden speech. I ask for the customary indulgence of the House. When the hon. Member for Widnes (Mr. MacColl) opened the debate for the Opposition and mentioned the Isle of Wight and the increase of 2s. 8d. in the county rate, for one horrible moment I thought that the hon. Gentleman intended to make my speech for me. I thank him for not doing so.

I wish, first, to pay a tribute to my predecessor Sir Peter Macdonald, who represented the Isle of Wight in the House for thirty-six years. Sir Peter Macdonald, through his loyal service to the House, the country and my constituency has earned the very high respect of all. I should like to wish him a long, happy and well-deserved retirement.

Many maiden speakers have claimed that their constituencies are the most beautiful in the British Isles. I, without any shame and without any doubt whatsoever in my mind, claim the same distinction for the Isle of Wight. It is rightly known as "The Garden Isle", and the motto on our county coat of arms is: All this beauty is of God". Like other offshore islands in a far-off part of the world, the Isle of Wight frequently receives a bombardment from the mainland—not in the form of shells, but in the form of millions of letters from people on the mainland wishing to come to the island for their holidays.

It is worthy of note that many of my right hon. and hon. Friends and many right hon. and hon. Gentlemen opposite regularly spend their holidays on the island. There have been occasions in August when there have been sufficient members of Her Majesty's Government in my home village of Bembridge to form a Cabinet quorum. On one occasion, several years ago, when the party opposite was in power, it made a decision which had my wholehearted support, namely, to hold weekend Cabinet conferences in the very beautiful town of Shanklin. I say to any hon. Members on either side of the House who have not visited my constituency that a very warm welcome awaits them when they decide to do so.

I support the Government Amendment, but I confess that when the reorganisation of local government finance was first under discussion I had many misgivings concerning the effect of the general grant. I am satisfied that for the country as a whole the general grant system is preferable to the old system of percentage grants. It has the merit of enabling the Minister to budget for a fixed amount of expenditure, and it should stop any tendency on the part of local authorities to spend unwisely. Under the percentage grant system, when it was known that certain local expenditure automatically attracted a percentage grant, there was always the temptation in any case of doubt to decide on the expenditure.

I have been chairman of my county finance committee for five years. Last Wednesday, I had the unpleasant job of explaining the 2s. 8d. increase in the Isle of Wight County Council rate. In the old days of the percentage grant, whenever opinion was divided on whether the proposed expenditure was justified, one was always very tempted to decide in favour of spending, on the basis that the Government paid 60 per cent., or 50 per cent. in any event.

However, as the Minister told us, the proportion of expenditure borne by the Exchequer is still the same as it was under the old percentage grant. The total amount in aggregate, taking all authorities, is more than it previously was, but I have no doubt that certain authorities are adversely affected by the working of the new formula, and my authority is obviously one of them.

I suggest two adjustments to my right hon. Friend's general grant formula which are most necessary and which would not increase the total cost of the whole grant, but would vary the weighting as between different authorities. The first point I wish to make is with regard to all counties like my own, which have static or slightly declining populations. There is provision in the general grant order for calculating a supplementary grant in cases where there is a substantial variation in the population of a local authority. That is very fair and very reasonable, but there is no formula in this grant to enable allowances to be made for counties and boroughs with static or slightly declining populations.

That causes very great hardship because, as the total amount of the general grant is fixed and as the general trend of the national population is to increase, if a particular authority is remaining static it naturally follows that in each succeeding year that authority must draw a smaller proportion of the total amount of grant paid to all.

In the Isle of Wight that has had the effect of increasing our rate—though not entirely on that one point—by 2s. 8d. It means that where the national average percentage of grant to total expenditure is 55.7 per cent., the average in the Isle of Wight is 48.8 per cent., a difference of 7 per cent. That arises because of this static or slightly declining population, and it will get steadily worse from year to year. It appears to me that all authorities having this problem of static or declining population will have this same difficulty. I suggest to my right hon. Friend that it would be a perfectly reasonable adjustment to the formula to make some allowance for that fact.

My second point concerns local authorities, such as my own, where the percentage of retired people over 65 years of age is in excess of the national average. The percentage of such people in the Isle of Wight is, in fact, much more than double the national average. Hon. Members will be aware that there is a supplementary grant of £.45, that is, 9s., for every old person over 65 years of age and for every child under five years of age. It so happens that the cost of old people's welfare, which we all realise is yearly an increasing burden, works out on the Isle of Wight—I am quite certain that we on the island are not exceptional in this matter; it would be the average cost all over the country—at £3 10s. per year per head of population over 65 years of age.

The grant which all of us get is 9s. Therefore, it is costing just over £3 per head for old people over 65, which is borne by the ratepayers. If every local authority had the same average percentage of old people, it would not matter whether the grant were 9s., 18s., or 30s. because everyone would be bearing the same proportion. But for authorities like my own, which has more than twice the national average of people over 65 years of age, it means that for every single one of them over that age the ratepayer is bearing an extra £3 per head per annum. That, again, has a very big effect on the rate increase.

I suggest to my right hon. Friend the Minister that these are two matters in which he could very fairly consider making some adjustment to the formula to help authorities faced with these problems. He could do it without increasing the aggregate amount of grant paid to the country as a whole.

One final point concerning the rate burden generally. It is, as the hon. Gentleman opposite said, becoming an increasingly crippling burden for some people. I am thinking particularly of people on fixed incomes. Many of these people either pay no Income Tax at all, because their income is too low, or they get marginal relief on their small income. But whenever there is an increase in the rates they have to pay it. We have a mass of these people in my constituency. As I have said, we have double the national average of people over 65 years of age.

I am not so much concerned with council house tenants, in whose case it is possible to have a differential rent scheme. I am concerned with the people living in their own houses, who have no means of avoiding these rate increases. This rate increase of 2s. 8d. in the £ on the Isle of Wight will cost the owner of a modest house with a rateable value of £26 a year an extra 1s. 4d. a week. If an old lady or old gentleman or an old married couple have to find that extra 1s. 4d. a week for rates, then, obviously, they have to go without something else. We can expect the rates to increase indefinitely from year to year.

We have the Albemarle Report, the Crowther Report, the Roberts Report, the new responsibilities in the field of mental health—they have already been mentioned—and the steady expansion of the education service. This expansion is going on and must go on. No one would wish to stop it. But we must do something to relieve these people who, quite definitely, cannot bear this burden. There are several ways of doing it.

I suggest to my right hon. Friend that the best way would be to have a differential rate scheme. Of course, it would be a very complicated thing to work out, but it would be one way of doing it. Possibly, too, we could have some form of marginal relief. If something on these lines is not done, I am quite certain that at a later date we shall have to consider removing some of these services, which are national services, from the local charge to the charge of the central Exchequer. I hope that very soon we shall have an opportunity of discussing these matters, and I appeal to my right hon. Friend seriously to consider the two adjustments to the formula which I have mentioned. I thank the House for its very kind tolerance.

5.18 p.m.

Dr. Horace King (Southampton, Itchen)

It is a pleasure, which any other hon. or right hon. Member would also wish to have at the moment, to congratulate the hon. Member for the Isle of Wight (Mr. Woodnutt) on his maiden speech. It is appropriate in a debate on local government that he should have opened with an outburst of local patriotism and paid eloquent tribute to the beauty of the Isle of Wight. I say as a neighbour of his that he did not over-paint the glories of the island in his choicely phrased tribute and anything that the House of Commons can do to encourage people to go from the mainland to the Isle of Wight for holidays has not only his support but the support of anyone who loves the beauty of southern England.

The hon. Gentleman has shown us that he brings to the debate both wisdom and experience of local government which is of great value to us in this discussion, and I am quite sure that we all look forward to the pleasure of hearing the hon. Gentleman again and again in subsequent debates. It is a tradition that one should not refer adversely to anything that a maiden speaker has said, and so I will pay the hon. Gentleman the added compliment of saying that he showed the traditional loyalty of a Conservative to his leaders—which I sometimes wish my own party would possess—in that the theme of the main part of his speech was, "Though the Minister should slay the Isle of Wight fiscally, yet will I trust him."

The hon. Gentleman began by giving his support to the Government Amendment. Yet he went on to say how adverse the grant formula has been to the Isle of Wight and then proceeded to make part of the case which we wish to put to the Parliamentary Secretary. I wish that the Parliamentary Secretary had been a little less complacent, and had addressed himself mare seriously to the grave and reasoned arguments put by my hon. Friend the Member for Widnes (Mr. MacColl). I agree with the hon. Gentleman on one factual point. One of his main contentions was that if the rate burden had increased, that increase is proportional to the rate of increase of the national income.

If the rates rise just as the national income rises, so the Parliamentary Secretary argued, no one can complain very much. But part of the case—and the hon. Member for the Isle of Wight has just made it for us—is that while the national income is rising there are lots of people in the community who do not benefit by that rise. For the people on fixed income, rate increases year by year present a very serious burden, indeed.

The Minister suggested that we could solve some of the problems by differential rents. The hon. Member for the Isle of Wight suggested differential rates. Differential rates, however, would be a form of Income Tax, and I am one of those who have always thought that the Income Tax is a much fairer way of making the community pay for its social services than is the old-fashioned rate burden. I shall refer to that later.

Those of us who serve on local authorities are in the middle of a tremendous task. We have begun to carry out part of the 1944 Education Act. We have ended the old poor-house system, and are beginning to enlarge the scope of the welfare committees. There has been a revolution in the work of children's committees. The health services that are left to local authorities are by no means trivial. Indeed, the health work done by local authorities is quite as important in its way as that done by the regional part of the National Health Service. That is illustrated by the fact that in my own county the cost of the work of the health committee this year—we budgeted last Monday—will be £1 million.

Every local authority is trying to grapple with the task of providing a twentieth-century road system for twentieth-century traffic. The fire service that we administer has expanded beyond description compared with the service that we handed over to the central Government during the war. The smallholdings committees of county authorities are only waiting for the Minister of Agriculture to permit them to extend their work. The moment they get the all-clear they will extend that work.

If not every local authority has all the tasks I have mentioned, the county council has them all, the county boroughs have all of these plus housing, and the district councils, while not having some of them, have the important task of housing. If I may illustrate the magnitude of the problem from my own county I think that it will convey to the House just what I am seeking to show. As recently as 1953, the total expenditure of the Hampshire County Council was £6¾ million—seven years ago. Last Monday, we approved this year's Budget—£19 million. Education cost £3½ million seven years ago; this year the figure is over £11 million.

I know that Hampshire's figures are not exactly typical. Unlike the Isle of Wight, which has a static population, Hampshire's population is expanding, particularly the child population. It may be, therefore, that this threefold increase inside seven years is not the average for the country, but I am quite certain that every hon. Member who is also engaged in local authority work will accept that his own figures, if not quite so big, are nearly as great.

I admit, too, that with the colossally increased expenditure has come increased Government aid. Indeed, as the Parliamentary Secretary has said today, the amount of the general grant has been roughly that of the old percentage grant. In the annual haggle that goes on between the Minister and the various treasurers of local authorities what finally emerges is, roughly, the old percentage grant. Although expenditure has gone up tremendously, the Government grant itself has gone up somewhat at the same rate.

If some authorities are better off with the general grant, as is my own county council, while others, like the Isle of Wight, are worse off, it is only because the formulae—whatever formulae a Minister devises—must break down when it comes to true justice as between local authority and local authority. But, although the general grant has gone up, which was part of the Parliamentary Secretary's case, the rate share of the Hampshire County Council budget is £7½ million compared with a total expenditure—rate-borne and tax-borne—of £6½ million only seven years ago.

Further increases in local authority budgets are inevitable. If we take the pattern, as I have done, from 1952 to 1960—in our own case showing an average increase in expenditure of about £1½ million a year—the rate of increase shows no signs of slowing down. Indeed, I believe that the rate of increase can itself very well increase within the next few years. Let me try to show the House why I think so.

No local authority has as many teachers as it wants. Every local authority is rationed for teachers. Half the secondary school classes are over size—and that figure is the Ministry's. And although every local authority this year faces a much heavier bill than previously for teachers' salaries, it could be much heavier tomorrow if the Ministry was really coping with providing enough teachers and if teachers were getting what they would regard as an adequate professional salary. Sooner or later, both of those factors will have to be taken into consideration. They will add to the cost of education.

The fact is, however, that we are by no means carrying out the 1944 Education Act, and this great historic document, the Crowther Report—which I believe to be one of the two great educational documents of our century—is regarded as Utopian when it merely suggests that we should carry out the 1944 Act; that we should raise the school-leaving age to 16; that we should provide education in county colleges for children from 16 to 18 years of age, and that we should do all that within the next decade—before the end of the sixties—because the whole essence of the Report is that if we do not take the golden opportunity that is offered somewhere about 1967–68 we shall not get the chance again.

Every local authority in the country—most certainly London; most certainly Middlesex; most certainly most of the authorities with which I have come in contact—wants to build more schools this year than the Ministry will permit. Six per cent. of our children are still receiving secondary education in all-age schools. There is a backlog there, particularly in some urban areas. Indeed, the figure I have just had from the Minister shows the paradoxical position that the urban education authorities are now behind the rural education authorities in getting rid of the all-age school.

The Albemarle Report asks us to end our neglect of youth. At present, Britain spends 1d. out of every £1 spent on education in the service of youth—some authorities spend only ½d. Perhaps I may interpolate here to say that despite this sorry fact, despite the publicity given to the misbehaviour of a small number of juvenile delinquents, I believe our youth today to be as good as the youth of any previous period. But we have still neglected our responsibility towards the young people whom we are turning out of our schools at the age of 15. Indeed, the Minister has accepted a £3 million building programme as a first instalment, to call it that, of the Albemarle Report, and that building programme itself will, as a concomitant, require expanding provision in respect of youth service officers and the like.

Local authorities are at present feeling their way rather gingerly towards their responsibilities under the new Mental Health Act. Here, again, all the figures and plans of local authorities, to judge from my experience of those I know very well, are really exploratory at the moment, and no one can foresee just how far new financial burdens will be imposed on local authorities under the Mental Health Act.

Every local authority in the country, I imagine, like my own, wants to build more roads than the Government will permit. We have held our roads committee budget this year in Hampshire merely because the Minister will not let us build the roads we want. Most local authorities, if they can once have permission from the Ministry of Transport, are in a position dramatically to increase their expenditure through the roads committees.

Wage and salary claims are by no means ended. The immediate example which leaps to mind is that of the fire services. The fire services of the country are claiming that their present rate of pay has fallen quite out of line with what it was until recently, and we can expect local authorities to have to meet quite soon a claim uder that head.

For all these reasons, it is certain that the cost of local services which has to be met either by rates or taxes will continue to mount year by year, and if we do our full duty by the social services of the country, the rate of increase may be even greater than at present.

I am one who believes passionately in local government. I am sure I speak for the whole House in that. With all its imperfections, the town hall, like Whitehall, is a vital part of British democracy. Local government is older than Parliament and it is as essential in its own way as Parliament. Unless we shift some of the burdens which lie ahead from the shoulders of the ratepayers, either local government itself will be endangered or the resistance of ratepayers will become so strong as to jeopardise the progress of the social services.

I do not today debate the issue between general and percentage grants, but, at the time of the battle of the grants, many of us urged that what local authorities wanted was not the same Government aid, whether by percentage or general grant, but a greater measure of State financial help to local authorities. This Government, on the other hand, have by their policy added to the rate burden. Every local authority today is fleeced when it buys land for houses, for schools, for fire stations and all the rest.

I will give examples from my own authority. In February, 1958, we decided to buy a piece of land for a school in Aldershot—seven acres at £2,834. The vendor discovered that the Minister was passing a Bill through Parliament and refused to sell until it became an Act and was in force. We completed the purchase last Monday, and now we are paying £17,500. That is for a piece of land which was available at £2,834 in February, 1958. We are buying a piece of land in Basingstoke. In 1957, we were to have those six acres for £3,000. Again, the vendor coyly held his hand until the Town and Country Planning Act, 1959, was through, and that £3,000 has now become £6,000. We are buying 12 acres in Gosport for £21,000. We are buying l¾ acres in the village of Hordle for £2,200, which is rather a lot of money for land in a country village. We are buying five acres in the delightful village of Sway for £5,800.

For every school that we build now, we have to pay three, four or five times the value we should have had to pay for the land before the last Town and Country Planning Act. What is true of schools is, I am certain, true of houses. Land owners "never had it so good".

Hampshire County Council has this year to meet over £1 million in interest and service charges on loans, the equivalent of a 1s. 10d. rate. Despite what the Parliamentary Secretary has said, every 1 per cent. increase in the average amount which a local authority has to pay for the money which it borrows places a very heavy burden upon it. In my own authority, a 1 per cent. increase in the average rate of interest adds to 1the cost of servicing its huge loan a sum equivalent to a 4d. rate. This Government have steadily, during the last few years, pursued a policy of dear money. Dear money may be good for the moneylenders, but I believe that dear money, plus inflated prices for land, brings new burdens to local government, whatever benefit these measures may bring to other sections of the nation's economy.

Good local government and the steady development of the housing and school programmes are jeopardised by the fantastic price we have to pay for the land on which to build and for the money which we borrow for the purpose. I believe, also—I think that the Liberals ought to be with us in this—that the enhanced value of land represented by the price that we are now having to pay for it or, rather, the new real value of the land, has nothing to do with the skill, wisdom or virtue of the land owner but is due to the value which Britain herself has placed on the land by her increased prosperity and need to use the land.

Most of the major items of local government expenditure today are matters of national policy. The Burnham scale negotiated nationally—one of the chief items in local government expenditure—is something that no local authority dare break in the name of independence. I believe that some of the nationally negotiated expenditure on local government wages and salaries, expenditure over which local authorities have no real control, might very well be borne to an increased extent by the central Exchequer.

I speak tonight particularly to support that part of the Motion which asks the Government to set up a committee or some form of inquiry into the relation between central and local expenditure. Let us make no mistake about it: we cannot have the social services without paying for thorn. We cannot meet the challenge of the Soviet Union and America, both of which invest twice as much in education as we do, without sacrifices by the British people. But I believe that the kind of sacrifices which we call upon people to make in taxes bears a much closer relation to the income of the person who has to pay than does the rate burden.

The burden of rates falls heaviest on the old-age pensioner and on the man with a large family, and it has by no means anything to do with the capacity of the ratepayer to pay taxes. Indeed, some of the best off people within a community will pay far less proportionately in rates than the poorer ratepayers do. It is because of the crushing burden of rates on those with fixed incomes and those with large families, and because I believe that the ever-increasing burden of rates as compared with taxes is a discouragement to great but necessary social expenditure, that I ask the Government to think again about their Amendment and to give the Motion moved by my hon. Friend the Member for Widnes their support.

5.39 p.m.

Mr. Frederic Harris (Croydon, North-West)

From this side of the House, I wish to congratulate my hon. Friend the Member for the Isle of Wight (Mr. Woodnutt) on the very interesting and informative contribution that he gave us in his maiden speech this afternoon. He obviously spoke with much knowledge and ability as a local authority man. Those of us who are very interested in local government affairs, such as the hon. Member for Southampton, Itchen (Dr. King), with whose very great support for local government I wholeheartedly agree, look forward to many further contributions from my hon. Friend on such matters in the years to come.

Civil Estimates debates, both the one on Tuesday on the employment areas and this one today on the local authority rate burden, give hon. Members an opportunity to make specific reference, as has been done by the hon. Member for Itchen, to their own local constituency problems and worries. Although I think that the Opposition Motion is rather premature, I find myself in agreement with much of what the hon. Member for Widnes (Mr. MacColl) said in his very interesting speech. I, too, have graduated from local authority work, like many hon. Members, and, therefore, I am very keenly interested not only in local authority issues, but particularly in rating matters.

For many years now, I have strongly advocated the complete abolition of industrial derating, which, to my mind, is absolutely out-dated and out-moded under present-day conditions. As an industrial man, I feel that industry can well bear its full share of rates. This point was made by the hon. Member for Widnes. I think that the fact that industry does not now bear its full share of rates is not only unfair to local authorities themselves, but to householders who have to bear such a large proportion of the general rates.

I tried to do something about this by seconding a Private Member's Bill put forward by a former Socialist Member of this House, but, unfortunately, the Bill was not carried. Nevertheless, I was very glad that the Government reached the stage of adjusting the de-rating to 50 per cent., but I want to put on record that I feel that, in turn, this 50 per cent. should be abolished. I think that it is only a matter of time before any Government will have to face this fact.

The Government have certainly implemented their pledge to increase the Exchequer grant to assist in meeting abnormal increases in expenditure on former grant-aided services. However, it is true to say, certainly in Croydon, that any increase will not fully compensate for the loss of grant which would have been paid under the old system.

As an example, I should like to give the cost of Croydon's education service. At present, it is costing about £3,550,000. The Croydon Education Committee estimates that next year the increase will be in the region of a further 10 per cent.—about £330,000. Under the specific grant system, Croydon would have been entitled to 60 per cent. of this £330,000, namely, £198,000. The general grant which Croydon will receive in 1960–61 will be £2,112,000, whereas that originally proposed for 1960–61 was £1,947,000. In effect, under the new system Croydon will receive only £165,000 of the £330,000 estimated increased expenditure. This is expected to cover not merely the increased expenditure for education alone, but increases on other grant-aided services—for instance, health, children, fire brigades and many other services to which the hon. Member for Itchen has referred.

It may be true that over the country the general grant system is working well, but there are these specific cases to which reference must be made. I thought that my hon. Friend the Member for the Isle of Wight but a very sound point to the Minister on behalf of the Isle of Wight, to which I am sure consideration will have to be given. I appreciate that the Parliamentary Secretary laid himself open, on behalf of the Ministery, to considering the representations which must be made by certain authorities to the Ministry. On behalf of Croydon, I should like to say that I know that it will wish to make its own specific recommendations.

It seems to me that the ratio of Exchequer grant to rate-borne expenditure over the whole country, which, before the Local Government Act, 1958, was six to five, will tend to reduce. I feel that this was one of the objectives of the reorganisation. But, unfortunately, it means that educational development, in which I am keenly interested, and the cost of which is particularly heavy in a progressive borough like Croydon, which has a very proud educational record, together with the development of other social services, too, will, under the present system, fall increasingly heavily on the shoulders of the ratepayers and to a lesser extent, as the years go by, on the Exchequer.

Croydon is fortunate in that, due to the far-sighted policy of its town planners, it is still developing rapidly, with ever-increasing rateable value accruing, apart from the separate point of revaluation. As a town, we are developing and building at a fast rate, but it would be futile to pretend and would, indeed, be misleading Croydonians generally, that rates will not continue to increase year by year. This, to some extent, is a disturbing factor which has partly been influenced by the general grant system.

Naturally, where it means provision of more services, we are fully in accord with it and wish to see it proceed. The incidence of the effect of increased rates on individual householders, however, particularly those with small fixed incomes, like those to which my hon. Friend the Member for the Isle of Wight has referred, is something which concerns all of us and is very different from the incidence of Income Tax and other taxation.

That is why I contend that this is yet a further reason for easing the burden on ratepayers generally by abolishing derating altogether. I ask the Minister to keep this point constantly in mind. I am a strong advocate of local government and of local authorities handling their own local services to the maximum degree, because they have knowledge of local conditions which we at Westminster cannot possibly have and because they have locally elected representatives constantly coming before the public for re-election.

I therefore contend that this is a very wise policy and I doubt whether any hon. Member would not advocate that as much local administration as possible should be undertaken by local authorities. It is important that Parliament should not risk breaking the camel's back financially by continually adding unduly to the burden of local ratepayers. I am sure that everyone interested in this subject will feel that that is a real worry and a definite possibility and something which will have to be constantly kept under review.

It cannot be contended that ratepayers would necessarily receive increased services in proportion to the increased rates that they will have to pay. Therefore, in supporting the Government—[HON. MEMBERS: "Oh."] Yes, I support the Government. The criticism is premature at this stage, because the full effects of the present system cannot yet be measured. I am instancing my own problems, as did my hon Friend the Member for the Isle of Wight. I still think that the Motion is premature and that we must see this thing through for the next year of two. I am just pointing out the dangers which I foresee.

I ask my right hon. Friend the Minister to keep the situation under constant review. I feel that many of the problems which are being ventilated today in this debate will concern us all very much in the years ahead.

5.51 p.m.

Mr. James McInnes (Glasgow, Central)

It was a great pity that the hon. Member for Croydon, North-West (Mr. F. Harris) should destroy an otherwise good contribution to the debate by indicating that he nevertheless supported the Amendment. The hon. Member's experience is the same as that of most of us throughout the country.

I make no apology for speaking solely in respect of Scotland, because no Scottish Minister is present. Whether the Scottish Ministers are too scared to defend the situation, I do not know. I know that the Minister for Housing and Local Government and Minister for Welsh—not Scottish—Affairs will make no effort to defend the Government concerning Scotland.

For obvious reasons, a short debate of this character can throw only a mere shaft of light upon the financial problems that confront local government. In Scotland, never in the history of local government has the financing of capital and ordinary expenditure become such a grave and serious problem.

Today, local government in Scotland is faced with the situation that either it must provide the essential social services, and thereby face the necessity of imposing an intolerable rate burden, or, on the other hand, it must restrict or curtail, or even abandon, these vital services. If it does so, it will create untold hardship for its citizens by the failure to build houses, schools, libraries and things like that.

This dilemma in which local authorities find themselves is, I hope to show, simply the result of the financial policies pursued by the Government. I find, for example, that the net capital debt of Scottish local authorities has increased from £250 million in 1950 to £668 million in 1959, an increase of over 170 per cent.

I wish to deal with the ever-increasing rate burden which we have seen over the last seven or eight years in Scotland. The total rates collected by Scottish local authorities in 1945 was £25 million. In 1951, six years later, the total was £32 million. So that in the six years from 1945 to 1951, the total rates collected in Scotland increased by £7 million. Between 1951 and 1959, however, the total rates collected jumped from £32 million to £70 million, an increase in eight years of £38 million. Nobody in this House will attempt to deny that that increase is an intolerable burden on the people of Scotland.

It is significant that in 1951 the average rate in Scotland was 13s. 10d. in the £, but that in 1959, after eight years of suffering the policies of the Government, the average rate in Scotland was 23s. 9d. in the £. In other words, during those eight years under the present Government, the ratepayers of Scotland had to face an increase of 9s. 11d. in the £ in their rates.

Let us consider the impact of the rates on the four cities in Scotland. In Glasgow, between 1951 and 1959, the rates increased from 15s. 4d. to the fantastic figure of 27s. 7d.; in Dundee, from 14s. 11d. to 22s. 11d.; in Aberdeen, from 14s. 3d. to 25s., and in Edinburgh—Conservative Edinburgh—from 8s. to 18s. In fact, Conservative Edinburgh shows an increase of 110 per cent., a higher percentage increase than any other city in Scotland.

I should warn the suffering ratepayers of Scotland that next year they are in for the shock of their lives, because they will then feel the full impact of the Valuation and Rating (Scotland) Act, 1956. We all know what happened south of the Border when the review took place in 1955–56. The total rateable value in England and Wales was £362 million, but in 1956–57 it jumped to £629 million, an increase of 75 per cent. in the total rateable value. The Scottish ratepayers, therefore, can look forward with the maximum pleasure to the compassion shown by the Government next year, when they will be faced with a situation of that kind.

It is frequently asserted, not only by people in Scotland, but even by members of the Government, that these high rates that we tolerate in Scotland are to an extent indicative of the inability of the local authorities to charge what they regard as a fair and reasonable rent for local authority houses. The fact remains, however, that those local authorities which charge not only a fair rent, but, in some instances, what I regard as an excessive rent, are among the local authorities whose rates have gone up and up.

Edinburgh, for example, has the highest percentage increase of any of the four cities, and yet Edinburgh's rentals are almost twice those of the City of Glasgow. In any case, we cannot continue year after year to increase rents to cover up the weaknesses of the financial policy pursued by the Government.

I hope that the Joint Under-Secretary of State for Scotland, whom I am now glad to see in his place, will recognise that in the last three years at least 70 per cent. of the Scottish local authorities have increased their rents, indeed to the extent of almost £3 million, to meet the arguments and the policy which the present Government have adduced, and millions and millions more in rates That is the situation.

This, however, is not merely a matter of rentals. There is something more fundamental to this than increasing the rents of local authority houses. I want to quote from a Question which I put to the Secretary of State for Scotland on 30th July, 1959. I asked the Secretary of State: if … he will state the total annual charges debited to the housing revenue account of a local authority in respect of a four-apartment house built and provided with money borrowed from the Public Works Loan Board for 60 years as at December, 1951, and December, 1958."—[OFFICIAL REPORT, 30th July, 1959; Vol. 610, c. 173.] The reply revealed that in 1951 the total annual charge debited in respect of a four-apartment house was £54 19s. 2d. That is what it cost the local authority each year for sixty years to provide that four-apartment house, but that was the figure in 1951. It had gone up since then from £54 to £120 13s. 7d.

Let us examine that further and take it over the whole period of borrowing of sixty years. If the 1951 figure had remained throughout the sixty years, the house would have cost Glasgow Corporation or any other Scottish local authority £2,298, but under the present Government the cost works out at £7,241. The Government want local authorities to increase rents year after year in order to cover up a policy of that kind.

I shall confine my remarks to the question of high interest rates and leave other hon. Members to deal with other financial aspects of the Government's policy. High interest rates not only affect housing. They affect other essential social services such a schools, libraries, streets, bridges, health and welfare and cleansing. All these items of social services involve capital expenditure and involve the local authority in borrowing money at a very high cost of 6½ per cent. and even 7 per cent. interest. Is not that an intolerable burden to impose on local authorities?

The Minister and his hon. Friends have the audacity, if I may use that word, to put in the Amendment the words: That this House welcomes the substantial assistance given by Her Majesty's Government to local authorities. … Where is the substantial assistance they have given to the local authorities to build houses? The assistance they have given is to have cut the housing subsidy as well as increasing interest rates.

High interest rates are a remarkable feature of present Government policy. It seems that interest rates, be they the Bank Rate or the Public Works Loan Board rate, are a seasonable burden to be imposed. The Bank Rate has been altered fifteen times since the present Government came into office and the Public Works Loan Board rates nineteen times. I wonder how the right hon. Gentleman expects any local authority treasurer to be able to plan ahead in developing the social services when he acts as a Judas Iscariot one minute and the archangel of purity the next. Obviously, he cannot carry on doing this, and what a headache he must be giving these local authority treasurers.

High interest rates, however, are not the only feature in this matter of capital expenditure and borrowing. The Government even take the opportunity of compelling the large authorities in particular to seek their capital requirements in the open market. When they went into the open market, these large authorities found themselves competing with colonial Governments and with industry and commerce. It is no wonder that the experience of Scottish local authorities was such that they gave up any idea of doing it. Tory Edinburgh, for example, with its adherence to the Tory Party policy and the present Tory Government, went to the open market and had the experience of having 70 per cent. of its issue left in the hands of the underwriters. Glasgow and other local authorities had a similar experience.

I can well remember the hon. Member for Wolverhampton, South-West (Mr. Powell), when he was Financial Secretary to the Treasury, declaring that the transfer of the main problem of financing local government capital investment from the Public Works Loan Board to the open market had been a very important element in the measures which the Government took to counter inflation. I think that I have demonstrated with the figures I have given that the expenditure and the capital investment went on and that local authorities, rather than restrict, curtail or disband the essential social services, decided with some courage to go ahead and meet the consequences—and the consequences lie in the high rate burden which the ratepayers of Scotland have to bear.

I know from local government experience—and the hon. Member for Croydon, North-West will probably concede this to me—that local authorities distrust the Government and the Government distrust local authorities. In a situation of that kind, one cannot achieve very much. Therefore, I agree with my hon. Friend the Member for Widnes (Mr. MacColl) that there should be a full inquiry into the financial relationship between the central Government and the local authorities. On the one hand, my hon. Friend suggested the introduction of a local Income Tax system as recommended by the Royal Institute of Public Administrators, whilst, on the other hand, consideration might be given to the rating of site values.

Indeed, one might go further and say that such an inquiry might result in being able to formulate other sources of revenue for local government. Above all, what we want in the interval between now and the time when such an inquiry takes place, is courage on the part of the Government to bring down the high interest rates with which local authorities find themselves faced today. It is because of these things that I associate myself wholeheartedly with the Motion.

6.10 p.m.

Mr. John M. Temple (City of Chester)

I am pleased to follow the hon. Gentleman the Member for Glasgow, Central (Mr. McInnes), although, naturally, he will not expect me to follow him into the details of Scottish finance. However, I hope that I shall deal with his criticisms of high interest rates in the course of a few words. I believe that, having accepted the fact that there is an increase in the social services, and that there are to be improvements in them—which has been generally accepted throughout the country as well as in this House—we must necessarily find the means.

I will deal with the Opposition Motion in the reverse order from that in which it is placed on the Order Paper, because the hon. Gentleman ended by referring especially to the financial relationship existing between central and local government. Although that comes last in the Opposition Motion, it is the heart and centre of the problem. May I say here that when I refer to figures I shall refer to those embraced within the general grant Order and I will generalise by saying that today 60 per cent. of the expenditure under that Order is a subvention from the central Government, 40 per cent. is found by the local authorities, and of that 40 per cent. the bulk is found from rates.

If local government is to be an entity in itself, if it is to be local and if it is to be vital, it must have a source of local revenue. Would it not be unreasonable if that source of local revenue were a smaller percentage than 40 per cent.? Indeed, local government would only be a department of the central Government if it were raising only 20 per cent. of its revenue on its own account. Therefore, I shall seek to show that there are possible alternative sources of revenue, which I will examine, but I believe that, in the end, we shall reach the conclusion that rates, with all their inequalities, are possibly the best source of local revenue known at the present time.

The Opposition Motion refers to the burden falling on local authorities. I agree that there is an inequality of incidence as regards rates, but I was particularly interested to hear the hon. Gentleman the Member for Widnes (Mr. MacColl) refer to a local income tax. I heard a lot of "Hear, hears" from the back benches opposite, but did those hon. Gentlemen realise what local income tax would mean? I sat on the Standing Committee when the hon. Member for Widnes moved an ingenious Clause proposing a local income tax limited to 3d. in the £, to be levied on gross incomes down to £100, so that people with very small incomes indeed would be brought within its embrace.

Did the hon. Gentlemen who were saying "Hear, hear" to that suggestion today realise that it would mean a vast increase in the staffs of local authorities or of the Inland Revenue, because no one knows today which people have incomes as far down the scale as £100? Did those hon. Gentlemen realise that all the incomes of everybody in the country would become known to the local authorities? Further, did they realise the one great central difficulty of a local income tax, namely, would it be levied where a man works, or where he lives? That is a very real problem.

If hon. Gentlemen opposite who support the suggestion have faced those problems, then I would say, go ahead, but, if not, I believe that they will realise, when they think about what I have said, that a local income tax would present great administrative difficulties.

Mr. McInnes

I am aware of the difficulties, as are all local authorities, of operating a local income tax, as suggested by the Royal Institute. The obvious reason for an inquiry into the financial relationship would be to find out how best the procedure could be simplified, if at all, in the interests of local authorities.

Mr. Temple

I have already dealt with the relationship and I am pointing out the administrative difficulties which I have no doubt would be considered at an inquiry of that nature. The only other concrete suggestion for a local revenue tax is the taxation of land values. That has been tried frequently in the past. Lloyd George tried it in 1910, it was abolished in 1920, and the amount of revenue raised did not cover even the cost of valuation. So I believe that however attractive superficially it may seem, taxation of land values is administratively impractical.

I will make one suggestion to my right hon. Friend, because I know that in answer to a recent Question he said that he would introduce legislation concerning movable dwellings—

Mr. Arthur Holt (Bolton, West)

If that is all the hon. Member intends to say about the taxation of site values, would he not agree that it operates effectively in many parts of the world, including Denmark and Australia?

Mr. Temple

That may well be so, and if the hon. Member catches your eye, Mr. Speaker, no doubt he will deploy that argument. I am speaking against the clock and, therefore, I did not deploy all my arguments on the taxation of site values.

I was saying that my right hon. Friend has given an undertaking to introduce legislation concerning movable dwellings. I am concerned with the type of movable dwelling which does not move and of which there are many throughout the country, namely, residential caravans which it would be a big problem to get mobile. There may well be a case for rating those so-called movable hereditaments which never move, on the basis of an assessment of each caravan, since I believe they are different from itinerant caravans.

I will mention now another source of local revenue which, however, is more suitable to a country with a federal Parliament; in other words, a country with States within itself. A local sales tax would be a possibility and this has been tried in many parts of the world. To my way of thinking, however, if it were operated by local authorities its incidence might be uneven since local authorities within England and Wales, and indeed, Scotland as well, can be comparatively small in size. Therefore, I come back to the inescapable conclusion that, with all their drawbacks, rates are a fair way of raising local revenue.

I said to the hon. Member for Glasgow, Central that I would not run away from his main criticism of high interest rates. One must remember that 20 per cent. of the national capital expenditure is made by local authorities today. As I see it, there are only two ways to bring about lower interest rates. One is that if we accept that Britain can insulate itself from the effects of the world overseas which, of course, is a possibility. We could withdraw from our international markets, we could cease to be an international trading nation, but I believe that the assets which accrue to us because we are an international trading nation, because we are a great centre for terminal markets, because of our predominance in insurance—all those factors far outweigh the advantages of withdrawing within ourselves and insulating ourselves from the interest rates that operate overseas.

There is no other way of achieving artificially low interest rates for local authorities other than having a differential rate. I have great sympathy with the local authorities in their problem of high interest rates. They are certainly in a different position from most business and commercial concerns. The value of money largely depends upon the velocity of circulation, and there is not much of that about a sewage plant or a reservoir, so I have sympathy because most local authority investment is of a type where that velocity is almost at zero.

Having said that, I have certain other pet hobby horses. I would like to see lower interest rates for home ownership. Other hon. Members would like to see lower interest for nationalised industries. Therefore, one is forced back to the conclusion that if one accepts a differential in interest rates the only way in which that can be met is by subventions from the central Government, and where are these to come from? In the end, they come from British industry, because industry carries the whole of our economy. It is industry, directly and indirectly, which is providing the basis of taxation. So, attractive though it may seem to have a differential in interest rates, I believe the wisest course is to have the same level of interest rates all over the economy at one and the same time.

I have studied this other item mentioned in the Motion, the rerating of industry. Industry has just been rerated to the extent of 50 per cent.; its rate burden, relatively, has been doubled. The right time for this to come up for serious consideration is in 1963, when rateable values will be brought on to a basis of current values throughout the whole rating structure.

I am pleased to see my hon. Friend the Economic Secretary on the Front Bench, because the Motion mentions fiscal policies. There is one item of fiscal policy to which I should like to draw the attention of my right hon. Friend the Minister of Housing and Local Government, and I hope that he will draw the attention of the Chancellor of the Exchequer to this problem as well. I believe that we have largely accepted the fact that local authorities are in the same position as the central Government regarding the raising of loans and mortgages.

There is a strong case for putting the local authorities in the same position regarding the incidence of Stamp Duty. Today, all the loans of the central Government are transferable free of Stamp Duty, but the loans of the local authorities, those raised prior to 1953, bear a rate of Stamp Duty on transfer of 2 per cent., and those issued after 1953 on transfer bear a rate of Stamp Duty of 1 per cent.

The local authorities themselves pay this rate of Stamp Duty and the purchaser of the particular stocks does not pay it, but, nevertheless, it is a considerable burden on the local authorities. I feel that the local authorities, having achieved trustee status for all their stocks—however small those authorities may be, they are virtually in the same position as the central Government as regards borrowing—there must be a strong case for putting them in the same position when it comes to the incidence of Stamp Duty.

I know that in saying this I have the full backing of the Association of Municipal Corporations. The association did not suggest that I should make these remarks, but after I had thought this matter out I had consultations with the association and—as I think my hon. Friend the Economic Secretary will see if he turns up the files—the association made representations to the Chancellor of the Exchequer on this matter last June. This is a small point, but it is important and I hope that it will have consideration at the highest level.

I believe that the percentages comprised within the general grant—the percentage raised locally and the percentage which comes from the central Government subvention—are just about right, and I endorse the principle of the general grant, which puts the decision on spending where it should be—in local hands. All the evidence I have at my disposal—and I do go round the local authorities a good deal—is that great progress is being made by them in the social and educational services which they administer.

6.25 p.m.

Mr. Michael Stewart (Fulham)

We have had a brief but very vigorous debate and I am glad that it was long enough to include the speech of the hon. Member for the City of Chester (Mr. Temple), because that enabled the Government to have one—if only one—wholehearted supporter during these proceedings, as those who have heard the speeches of the hon. Member for Croydon, North-West (Mr. F. Harris) and the admirable maiden speech from the hon. Member for the Isle of Wight (Mr. Woodnutt) will agree. We are sorry that the debate has to be so brief because we gathered from what the hon. Member for Croydon, North-West said that if we were to prolong the debate for another two years he would be prepared to come with us into the Lobby at the end. I am sorry in some ways that we cannot do that.

The hon. Member for the Isle of Wight made a maiden speech which we all thoroughly admired, and said he felt some alarm when my hon. Friend the Member for Widnes (Mr. MacColl) referred to the Isle of Wight in case he might be going to make his speech for him. But when I heard the hon. Member for the Isle of Wight speak I had exactly the same anxiety, because he described the heaviness of the burden of the rates, the way in which it was exacerbated by some of the policies of the Government, the inequities of the block grant as applied to his constituency, and the need for further study of this problem. That is practically all we have been asking for. I will only briefly sum up what I think are the main issues.

The services administered by local authorities, financed partly from rates and partly from taxes, have got to expand. Nobody disputes that. This fact is imposing a serious and growing burden on the people who actually have to pay the rates. That is increased by the nature of certain Government policies, and, finally, we have to consider what action must be taken in this situation.

First, there is the fact of expansion. The Parliamentary Secretary gave us the usual Government recital about how many more schools have been built and how many more of this, that and the other. He is aware, of course, that the number of children has increased considerably in the last eight years and the Government have had no choice in this matter. Whatever Government were in power, there had to be a great expansion of these services. The question at issue is not whether the Government have given more assistance—they may well be doing so—but whether that assistance has been adequate to the nature of the problem, considering how much expansion was needed and the way in which local revenues are raised.

When we come to the size of the burden, the Parliamentary Secretary spoke as if the rate burden was not so much. I cannot think where he got that idea, and it is not shared by anyone else in the House, with the possible exception of the right hon. Gentleman the Minister for Housing and Local Government, as we may learn in a few moments. He suggested that rates did not amount to more than a greater proportion of the total national income now than they did fourteen years ago. I think that was roughly his comparison.

Let us consider what has been happening over the last seven years. Let us take the average ratepayer's position now and seven years ago. For every £5 that he had to fork out in rates seven years ago, he now has to fork out £9. That is the nature of the increase for the average ratepayer, an 80 per cent. increase in the money he pays. Allowing for the fall in the value of money, resulting from the policies of stability described by the Parliamentary Secretary, the increase is 45 per cent. Will anyone suggest that his real income has risen by 45 per cent., or that the national income has risen by that percentage in the last seven years? Those figures are a measure of the real increase in the rate burden.

Those figures come from the Institute of Municipal Treasurers and they refer to the English authorities. If anyone asks about the Scottish authorities, I can only refer him to the magnificent speech of my hon. Friend the Member for Glasgow, Central (Mr. McInnes). The Parliamentary Secretary was not here when that speech was made. Had he been, he would have fled. If he studies the English figures and my hon. Friend's analysis of the Scottish situation, the Parliamentary Secretary should emulate some of our more sturdy citizens and set off from John o' Groats to Land's End. He would be met by deputations of councillors and chairmen of finance committees on the way to explain to him the true nature of the rate burden.

A serious and sometimes tragic part of this lies in the fact that even if it were true that the percentage of the cost of services which falls on the rates grew no bigger, as the hon. Member for the City of Chester was arguing, the point is that, unlike the Government, local authorities have limited ways of raising revenue. Consequently, if the total cost of the service grows and the proportion which local authorities have to bear remains stationary, the unfairness of the way they have to raise money bears more and more heavily on the poorer ratepayers. That is not a problem which will be met by fiddling about with inquiring into the exact incomes of people who live in council flats. It is far too large a problem to be tackled in a manner like that, a fact which was strikingly brought out in the speech of the hon. Member for the Isle of Wight.

The burden not only arises from the services themselves, but, as our Motion implies, is aggravated by the fiscal and financial policies of the Government. Let us take the question of loan charges. Every hon. Member who has spoken has given one example after another of the serious burden of loan charges and high interest rates on local authorities. Let the Minister, the Parliamentary Secretary, or any other member of the Government go round to local authorities and ask about only one of those services, housing, the simple question, "Why is it that your authority is not building more houses than it is building?" I will warrant that the answer which he will get in an enormous number of cases will include an emphatic mention of high interest rates.

There are various ways in which one might try to measure the burden. A local authority gets an income from rates, an income from grants from the Government and some income from loans. Conversely, some of its expenditure is on building houses, some on building schools, and some on loan charges. Let us compare the position nine years ago with that of today. For every £5 which the local authority received as income by the process of borrowing nine years ago, it is now getting £7. That is a measure of the increasing reliance on borrowing. For every £5 which it was having to pay out in loan charges nine years ago, it is having to pay out £12 10s. today. That is a measure of the burden. So long as borrowings increase, total interest burdens must increase, but that increase is quite out of proportion to the amount of money borrowed.

Another matter is the cost of land. We have had plenty of examples of that. Not long ago, my right hon. and learned Friend the Member for Rowley Regis and Tipton (Mr. A. Henderson) gave an example of land the value of which, although the owner had done nothing to it but continue to be the owner, had increased sevenfold in the last few years—"consider the incomes from the field, how they grow; they toil not, neither do they spin. Solomon in all his glory was not as expensive to maintain as these."

We are not now arguing what is the best way for the community to prevent an unjust distribution of wealth. I hope that we shall be able to discuss that on another occasion. All we are saying now is that one facet of this is that it imposes on certain local authorities a shocking burden, and quite arbitrarily according to whether a local authority needs to buy land in certain places and at certain times. It makes a case for more sympathetic consideration by the Government of the need than it has yet received from the Parliamentary Secretary's treatment of the matter.

The other way in which the Government's fiscal policies have added to the burden is our old bone of contention, the block grant. In a debate which we had towards the end of last year, the Minister told me that I was one of a dwindling minority of people who opposed the block grant. I hope that he will pay attention to two speeches from his hon. Friends this afternoon. The hon. Member for the Isle of Wight thought that, in general, the block grant was a splendid thing, but that, unfortunately, it did not work out too well for the Isle of Wight and he would like it altered in this, that or the other respect. The hon. Member for Croydon, North-West had no objections to the block grant in general, but he thought that in its incidence on Croydon it was somewhat unfair and should be altered in another respect.

My hon. Friend the Member for East Ham, South (Mr. Oram) has been unable to speak in this debate, but he has drawn my attention to the fact that a borough like his, with a high standard of services and a declining population, suffers acutely from the operation of the grant. So the Parliamentary Secretary's general invitation to people who suffer from it to make their complaints known to him has already received two answers from his own back benchers and will shortly receive another from East Ham.

The Albemarle Committee—is that one of the dwindling minority?—was interested in the youth service. If one is interested in a service, whatever one's general views about the block grant, one always feels that it ought not to apply to the service in which one is interested oneself. That is what the Albemarle Committee thought.

Unkindest cut of all, the pamphlet on education, "Willingly to School" by the Bow Group, a product of the young Tories—and the Parliamentary Secretary is a member, although by now, perhaps, an ex-member of the Bow Group—shoots this arrow at the Minister, that the block grant is not satisfactory in such a rapidly expanding service", that is, education.

Against that background, we have asked for certain action to be taken, the type of action which we regard as what one might call emergency ambulance action. One is some kind of preferential treatment for local authorities with regard to interest rates. One need not go into the full theory of interest, and its effect on our external and internal economy, to provide certain immediate action to help local authorities. The Parliamentary Secretary asked if we wanted physical controls. My hon. Friend the Member for Widnes pointed out that certain local government services are already subjected to considerable control, and if the Government will say, merely as a first instalment of help, no more than this, that with regard to housing and education—two services over which the central Government exercise considerable control to prevent their getting out of hand and becoming too big a strain on the economy—they are prepared to grant preferential rates of interest to local authorities solely for those two services, we shall be grateful for that mercy to go on with. That does not raise the difficult theoretical questions with which the Parliamentary Secretary tried to surround this matter.

The other emergency ambulance action to be taken is the full rerating of industrial hereditaments. The only approach to a reason that we have had why that should not be done is merely that the rerating up to 50 per cent. is quite recent and that we ought to leave it alone for the time being. If only the Government had taken the advice of our good friend the former Member for Acton, Mr. Joseph Sparks, the whole operation of rerating would have been completed. There is not a single argument in logic left for not carrying through the full rerating of industrial hereditaments.

Our long-term proposal is that there is now a case for a full inquiry into how local authorities are to be enabled to meet what in any case will be a great and growing burden, and is now a burden made heavier by certain specific acts of policy by the Government.

Suggestions have been put forward with regard to local income tax, and special treatment with regard to Stamp Duty has been suggested by the hon. Member for the City of Chester. It has also been suggested that we should look at a local sales tax, and, finally, we have had an interesting, though rather complicated, proposal by the hon. Member for the Isle of Wight.

It is clear that well-informed people feel that it is time to look at this matter afresh. There are plenty of new ideas. The whole subject is too complicated for these new ideas to be dismissed quickly in the way that the hon. Member for the City of Chester tried to dismiss the rating of site values. It is that situation which creates the case for inquiry, which is the last part of the Motion that we recommend to the House.

6.43 p.m.

The Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke)

Those hon. Members now present in the Chamber who faded to hear the maiden speech of my hon. Friend the Member for the Isle of Wight (Mr. Woodnutt), missed a maiden speech of real distinction, as all those who heard it will agree. He not only spoke persuasively and concisely; he is clearly capable of bringing to our debates a most valuable firsthand knowledge of local government. I will certainly pay attention to the points that he raised.

I should like to assure my hon. Friend and other hon. Members who have criticised the formula for the distribution of the general grant that that formula will be under re-examination in the course of the next few months in consultation with the local authority associations before the general grant is fixed for the period beginning next year.

Fortunately, both sides of the House agree that it is desirable that there should be an expansion of local government services. If there is expansion, it is bound to involve increased cost to the rates, unless the hon. Member for Widnes (Mr. MacColl) desires that all increases should be met as to 100 per cent. by the Exchequer. That must be unsound.

The hon. Member for Southampton, Itchen (Dr. King), in an interesting speech, said that he believes passionately in local government. But there is no future for local government if all additional expenditure that a local authority votes can be reimbursed as to 100 per cent. by the Exchequer.

When I read the interesting account of the Labour Party's Conference on local government the other day, I half suspected that we might find a Motion like this on the Order Paper, because I realised that rates were going up in a number of local Labour controlled—[HON. MEMBERS: "And others."]—and other local authorities, and I felt sure that the Opposition would seek falsely to insinuate that that was due to the changes in the 1958 Act.

Mrs. Harriet Slater (Stoke-on-Trent, North)

rose—

Mr. Brooke

I am sorry I cannot give way now, time is short.

The financial and fiscal policies of the Government have nothing to do with these rate increases, where such are being announced, except this, that had the Government not pursued these policies inflation would not have been halted and rates would be increasing very much more rapidly than they are. To keep both central and local government expenditure under control, it is essential that the Government should pursue a wise economic policy to prevent inflation.

Any changes in interest rates consequent on the recent rise in the Bank Rate must be entirely marginal and, I would say, almost infinitesimal in relation to the estimates of rate expenditure for the coming year. As my hon. Friend the Parliamentary Secretary said, they can have no perceptible effect.

The hon. Member for Widnes also urged the full rating of industrial hereditaments. It is important that the House should appreciate the facts. As recently as 1955–56, industry was contributing 4 per cent. of the total rate revenue. At the present time, in the light of the 1958 Act and other developments, industry is contributing 11 per cent., nearly three times as much as it was four years ago. My hon. Friend the Member for Croydon, North-West (Mr. F. Harris) urged, as he was perfectly entitled to do, that industry should be re-rated to 100 per cent. I know that has been his view for a number of years, but I could not follow his argument when he said that the present situation was unfair to householders. Is he suggesting that industry should be re-rated to 100 per cent. while householders should still pay rates on the 1939 value of their property? Quite clearly that would not put matters on to an even basis of valuation and rating liability as between one class of property and another.

Some hon. Members have suggested the rating of site values. That has been examined by three Commissions or Committees in the present century and been turned down by them all. Hon. Members also suggested the rating of empty properties. That is not really of any material value to the purpose that they have in mind and again that has been rejected on more than one occasion by this House.

Suggestions were made for local income tax. My hon. Friend the Member for the City of Chester (Mr. Temple) pointed out the intolerable difficulties that would arise in deciding whether a person was to be taxed where he lived or where he worked. I take note of my hon. Friend's suggestions about stamp duty on transfers of municipal stocks and the rating of caravans. He may care to know that the rating of caravans is a matter that is being examined by the working party that I have at the present time considering various technical rating questions.

The hon. Member for Widnes spoke of the cost of land. The hon. Member for Southampton, Itchen said that local authorities were being fleeced. What do they mean? Do they mean that local authorities should have power to buy land compulsorily below market value? If so let us know because we are prepared to meet them on that ground. We carried through the 1959 Town and Country Planning Act with I thought the good will of virtually the whole country, and if the Opposition now say that local authorities are being unfairly charged because they are having to pay market value, let me tell them that they will not carry public opinion with them.

I can see no case for a fresh inquiry into the financial relationship between Central and local government. What I do note is that the Opposition Motion does not seek—as they said they were seeking, only a short time ago—the abandonment of the general grant. It would be valuable to the country to know just where the Opposition stand on that matter. If they were returned to power, would they abolish the general grant and go back to percentage grants? They certainly did not have the courage to say that in their election manifesto.

The Government Amendment, which I trust the House will accept, refers to and welcomes the expansion of local services over the past eight years. If the financial situation of local authorities were as black as it has been made out to be, this expansion would have been impracticable. Some of the figures in this connection are interesting. I should like to quote figures relating to loan sanctions given from year to year. In the last year of the Labour Government, 1950–51, loan sanctions for capital expenditure on highways amounted to £2,750,000; at present they are running at the rate of £14 million a year. In 1950–51, loan sanctions for water and sewerage purposes were running each at the rate of £12 million a year; now they are about £27 million for water and about £40 million for sewerage a year. This is an expansion which local authorities are carrying out, and they are not being rendered bankrupt in doing so.

The Government Amendment further endorses the change from percentage grants to a system of general grants. I believe that, whatever party is in power in years to come, we shall never go back to the dangerous system of percentage grants, which we largely got rid of in 1958. The general grant gives greater independence to local authorities, because they do not need to be so strictly controlled at every point in their spending, and it puts a higher degree of responsibility upon local councillors in determining how to allocate their available revenue to the different services.

I thought that my hon. Friend the Member for the Isle of Wight pointed out the danger of the old system very admirably when he mentioned the temptation which existed, in former days, to say, "Let us go ahead with the scheme, because somebody else will pay 60 per cent. of the cost." That cannot lead to efficient and economic administration. Under the general grant system, if the council can save money by increasing the efficiency of its administration the whole of any financial benefit accrues to its own ratepayers. The incentive to better administration is as strong as could be.

The hon. Member for Widnes said that suspected that the Government did not want local authorities to have greater financial resources. That remark is strangely out of keeping with what has been happening. In England and Wales, in the last year of the Labour Government the amount of Central Government grant was just about equal to the amount raised by local authorities in rates. Let us compare that with the situation today. In the current year Exchequer grants to local authorities are 11 per cent. higher than the rate revenue of the authorities, even though rateable capacity has been increased in the meantime through industrial re-rating to 50 per cent. I see no prospect of a trend the other way in 1960–61, but we need to watch these matters carefully.

The hon. Member for Glasgow, Central (Mr. McInnes) said that I would not know anything about Scotland, but I know that he was quoting only the increase in rates. He never mentioned that whereas in 1950–51 Exchequer grants were 24 per cent. higher than the rate revenues in Scotland, in the current year they are 40 per cent. higher. This does not seem to be a case of Central Government starving local services in England, Wales or Scotland.

In fact, as the Vote on Account which we were dealing with earlier shows, in respect of England and Wales this year we are voting a £79 million increase in Exchequer grants to local authorities. Whereas it has been insinuated that local authorities are sufferers through the 1958 Act, in fact that Act was framed so as to ensure that they would gain £10 million a year from its operation—and not just £10 million in the first year, but a continuing £10 million a year. So far as I can judge, the gain to local authorities in 1960–61, compared with what they would have had if the 1958 Act had not been passed is more likely to be £15 million than £10 million, yet it seems that the Opposition would not

mind throwing that gain away and putting local authorities back in their former position.

It was suggested that we were complacent and were not taking local feeling into account. The Municipal Journal is not a Central Government organ; it is written by local authority people for local authority people. In its issue of 19th February it said: Following up Mr. Henry Brooke's policy of giving more responsibility to councils it is reassuring to note that Government grants to local authorities are up by £60 million for the coming year. Some of the increase reflects the attempt to meet recent overall rises in education costs, but there remains a substantial improvement in transferable sums. For the present at least those who have been sceptical at the replacement of specific grants by one general grant should find some reassurance in the Civil Estimates. The Government Amendment says that the House should approve the principle of giving the most help to authorities in the greatest need. That is embodied in the system of rate deficiency grants. Under the former Measure, passed by the Labour Government, a poor district in a rich county got no assistance, whereas a rich district in a poor county did. We have altered that, and the rate deficiency grant now gives help where help is most needed.

The hon. Member for Widnes, in one of his more flowery passages, charged me with ecstatic contemplation of the general and overlooking the poignant realities of the particular. I suggest that, poignant or not, he should not have overlooked the realities in his own borough of Widnes, which has gained the equivalent of a 2s. 1d. rate through the 1958 Act. If I were he I should be more inclined to study the interests of my constituents than to follow too strictly the party line.

Question put, That the words proposed to be left out stand part of the Question:—

The House divided: Ayes 236, Noes 298.

Division No. 44.]	AYES	[6.59 p.m.
Abse, Leo	Beaney, Alan	Bowen, Roderic (Cardigan)
Ainsley, William	Bellenger, Rt. Hon. F. J.	Bowles, Frank
Albu, Austen	Bence, Cyril (Dunbartonshire, E.)	Braddock, Mrs. E. M.
Allaun, Frank (Salford, E.)	Benn, Hn. A. Wedgwood (Brist'l, S. E.)	Broughton, Dr. A. D. D.
Allen, Scholefield (Crewe)	Benson, Sir George	Brown, Alan (Tottenham)
Awbery, Stan	Blackburn, F.	Brown, Rt. Hon. George (Belper)
Bacon, Miss Alice	Blyton, William	Brown Thomas (Ince)
Baird, John	Boardman H.	Butler, Herbert (Hackney, C.)
Baxter, William (Stirlingshire, W.)	Bowden, Herbert W. (Leics. S. W.)	Callaghan, James
Carmichael, James	Irving, Sydney (Dartford)	Rankin, John
Castle, Mrs. Barbara	Janner, Barnett	Reid, William
Chapman, Donald	Jay, Rt. Hon. Douglas	Reynolds G. W.
Chetwynd, George	Jeger, George	Rhodes, H.
Cliffe, Michael	Jenkins, Roy (Stechford)	Robens, Rt. Hon. Alfred
Collick, Percy	Johnson, Carol (Lewisham, S.)	Roberts, Albert (Normanton)
Corbet, Mrs. Freda	Jones, Rt. Hn. A. Creech (Wakefield)	Roberts, Goronwy (Caernarvon)
Craddock, George (Bradford, S.)	Jones, Dan (Burnley)	Robinson, Kenneth (St. Pancras, N.)
Cronin, John	Jones, Elwyn (West Ham, S.)	Rogers, G. H. R. (Kensington, N.)
Crosland, Anthony	Jones, Jack (Rotherham)	Ross, William
Crossman, R. H. S.	Jones, J. Idwal (Wrexham)	Royle, Charles (Salford, West)
Cullen, Mrs. Alice	Jones, T. W. (Merioneth)	Shinwell, Rt. Hon. E.
Darling, George	Kenyon, Clifford	Short, Edward
Davies, Rt. Hn. Clement (Montgomery)	Key, Rt. Hon. C. W.	Silverman, Julius (Aston)
Davies, G. Elfed (Rhondda, E.)	King, Dr. Horace	Silverman, Sydney (Nelson)
Davies, Harold (Leek)	Lawson, George	Skeffington Arthur
Davies, Ifor (Gower)	Lee, Frederick (Newton)	Slater, Mrs. Harriet (Stoke, N.)
Davies, S. O. (Merthyr)	Lee, Miss Jennie (Cannock)	Slater, Joseph (Sedgefield)
Deer, George	Lever, Harold (Cheetham)	Small, William
de Freitas, Geoffrey	Lever, L. M. (Ardwick)	Smith, Ellis (Stoke, S.)
Delargy, Hugh	Lewis, Arthur (West Ham N.)	Snow, Julian
Dempsey, James	Lipton, Marcus	Sorensen, R. W.
Diamond, John	Loughlin, Charles	Soskice, Rt. Hon. Sir Frank
Dodds, Norman	Mabon, Dr. J. Dickson	Spriggs, Lesile
Donnelly, Desmond	McCann, John	Stewart, Michael (Fulham)
Driberg, Tom	MacColl, James	Stonehouse, John
Dugdale, Rt. Hon. John	McInnes, James	Stones, William
Ede, Rt. Hon. Chuter	McKay, John (Wallsend)	Strachey, Rt. Hon. John
Edelman, Maurice	McLeavy, Frank	Strauss, Rt. Hn. G. R. (Vauxhall)
Edwards, Rt. Hon. Ness (Caerphilly)	MacMillan, Malcolm (Western Isles)	Stross, Dr. Barnett (Stoke-on-Trent, C.)
Edwards, Robert (Bilston)	MacPherson, Malcolm (Stirling)	Swain, Thomas
Edwards, Walter (Stepney)	Mahon, Simon	Swingler, Stephen
Evans, Albert	Mallalieu, E. L. (Brigg)	Sylvester, George
Finch, Harold	Mallalieu, J. P. W. (Huddersfield, E.)	Taylor, Bernard (Mansfield)
Fitch, Alan	Manuel, A. C.	Thomas, George (Cardiff, W.)
Fletcher, Eric	Mapp, Charles	Thomas, Iorwerth (Rhondda, W.)
Foot, Dingle	Marquand, Rt. Hon. H. A.	Thompson, Dr. Alan (Dunfermline)
Forman, J. C.	Marsh, Richard	Thomson, G. M. (Dundee, E.)
Fraser, Thomas (Hamilton)	Mason, Roy	Thornton, Ernest
Gaitskell, Rt. Hon. Hugh	Mellish, R. J.	Timmons, John
George, Lady Megan Lloyd	Mendelson, J. J.	Tomney, Frank
Ginsburg, David	Millan, Bruce	Ungoed-Thomas, Sir Lynn
Gooch, E. G.	Mitchison, G. R.	Wade, Donald
Gordon Walker, Rt. Hon. P. C.	Monslow, Walter	Wainwright, Edwin
Gourlay, Harry	Moody, A. S.	Warbey, William
Greenwood, Anthony	Moyle, Arthur	Watkins, Tudor
Grey, Charles	Mulley, Frederick	Weitzman, David
Griffiths, David (Rother Valley)	Neal, Harold	Wells, Percy (Faversham)
Griffiths, Rt. Hon. James (Llanelly)	Noel-Baker, Francis (Swindon)	Wells, William (Walsall, N.)
Grimond, J.	Noel-Baker, Rt. Hn. Philip (Derby, S.)	Wheeldon W. E.
Gunter, Ray	Oliver, G. H.	White, Mrs. Eirene
Hale, Leslie (Oldham, W.)	Oram, A. E.	Whitlock, William
Hall, Rt. Hn. Glenvil (Colne Valley)	Oswald, Thomas	Wigg, George
Hamilton, William (West Fife)	Owen, Will	Wilcock, Group Capt. C. A. B.
Hart, Mrs. Judith	Padley, W. E.	Wilkins, W. A.
Hayman, F. H.	Pannell, Charles (Leeds, W.)	Willey, Frederick
Healey, Denis	Parker, John (Dagenham)	Williams, D. J. (Neath)
Henderson, Rt. Hn. Arthur (Rwly Regis)	Parkin, B. T. (Paddington, N.)	Williams, Rev. Ll. (Abertillery)
Herbison, Miss Margaret	Paton, John	Williams, W. R. (Openshaw)
Hilton, A. V.	Pavitt, Laurence	Willis, E. G. (Edinburgh, E.)
Holman, Percy	Pearson, Arthur (Pontypridd)	Wilson, Rt. Hon. Harold (Huyton)
Holt, Arthur	Peart, Frederick	Winterbottom, R. E.
Houghton, Douglas	Pentland, Norman	Woodburn, Rt. Hon. A.
Howell, Charles A.	Plummer, Sir Leslie	Woof, Robert
Hoy, James H.	Popplewell, Ernest	Wyatt, Woodrow
Hughes, Cledwyn (Anglesey)	Prentice, R. E.	Yates, Victor (Ladywood)
Hughes, Emrys (S. Ayrshire)	Price, J. T. (Westhoughton)	Zilliacus, K.
Hunter, A. E.	Probert, Arthur
Hynd, H. (Accrington)	Proctor, W. T.	TELLERS FOR THE AYES:
Hynd, John (Attercliffe)	Pursey, Cmdr. Harry	Mr. J. Taylor and Mr. Redhead.
Irvine, A. J. (Edge Hill)	Randall, Harry
NOES
Agnew, Sir Peter	Barlow, Sir John	Biggs-Davison, John
Aitken, W. T.	Barter, John	Birch, Rt. Hon. Nigel
Allan, Robert (Paddington, S.)	Batsford, Brian	Bishop, F. P.
Allason, James	Baxter, Sir Beverley (Southgate)	Black, Sir Cyril
Alport, C. J. M.	Beamish, Col. Tufton	Bossom, Clive
Amory, Rt. Hn. D. Heathcoat (Tiv'tn)	Bell, Philip (Bolton E.)	Bourne-Arton, A.
Arbuthnot, John	Bell, Ronald (S. Bucks.)	Box, Donald
Ashton, Sir Hubert	Bennett, F. M. (Torquay)	Boyd-Carpenter, Rt. Hon. John
Atkins, Humphrey	Bennett, Dr. Reginald (Gos & Fhm)	Boyle, Sir Edward
Balniel, Lord	Berkeley, Humphry	Braine, Bernard
Barber, Anthony	Bevins, Rt. Hon. Reginald (Toxteth)	Brewis, John

Brooke, Rt. Hon. Henry	Hinchingbrooke, Viscount	Orr, Capt. L. P. S.
Brooman-White, R.	Hobson, John	Orr-Ewing, C. Ian
Bryan, Paul	Hocking, Philip N.	Osborn, John (Hallam)
Bullard, Denys	Holland, Philip	Page, Graham
Bullus, Wing Commander Eric	Hope, Rt. Hon. Lord John	Pannell, Norman (Kirkdale)
Burden, F. A.	Hopkins, Alan	Partridge, E.
Butcher, Sir Herbert	Hornby, R. P.	Pearson, Frank (Clitheroe)
Butler, Rt. Hn. R. A. (Saffron Walden)	Hornsby-Smith, Rt. Hon. Patricia	Peel, John
Campbell, Sir David (Belfast, S.)	Howard, Gerald (Cambridgeshire)	Percival, Ian
Carr, Compton (Barons Court)	Howard, Hon. G. R. (St. Ives)	Peyton, John
Carr, Robert (Mitcham)	Howard, John (Southampton, Test)	Pickthorn, Sir Kenneth
Channon, H. P. G.	Hughes Hallett, Vice-Admiral John	Pike, Miss Mervyn
Chichester-Clark, R.	Hughes-Young, Michael	Pilkington, Capt. Richard
Clark, Henry (Antrim, N.)	Hulbert, Sir Norman	Pitman, I. J.
Clark, William (Nottingham S.)	Hurd, Sir Anthony	Pitt, Miss Edith
Clarke, Brig. Terence (Portsmth, W.)	Hutchison, Michael Clark	Pott, Percivall
Cleaver, Leonard	Iremonger, T. L.	Powell, J. Enoch
Cole, Norman	Irvine, Bryant Godman (Rye)	Price, David (Eastleigh)
Collard, Richard	Jackson, John	Prior-Palmer, Brig. Sir Otho
Cooke, Robert	James, David	Proudfoot, Wilfred
Cooper, A. E.	Jenkins, Robert (Dulwich)	Ramsden, James
Cordeaux, Lt.-Col. J. K.	Jennings, J. C.	Redmayne, Rt. Hon. Martin
Cordle, John	Johnson, Dr. Donald (Carlisle)	Rees, Hugh
Corfield, F. V.	Johnson, Eric (Blackley)	Ridley, Hon. Nicholas
Costain, A. P.	Johnson Smith, Geoffrey	Ridsdale, Julian
Coulson, J. M.	Jones, Rt. Hn. Aubrey (Hall Green)	Rippon, Geoffrey
Courtney, Cdr. Anthony	Joseph, Sir Keith	Robertson, Sir David
Craddook, Beresford (Spelthorne)	Kaberry, Sir Donald	Robson Brown, Sir William
Critchley, Julian	Kerans, Cdr. J. S.	Rodgers, John (Sevenoaks)
Crowder, F. P.	Kerby, Capt. Henry	Roots, William
Currie, G. B. H.	Kerr, Sir Hamilton	Ropner, Col. Sir Leonard
d'Avigdor-Goldsmid, Sir Henry	Kershaw, Anthony	Royle, Anthony (Richmond, Surrey)
Deedes, W. F.	Kirk, Peter	Russell, Ronald
de Ferranti, Basil	Kitson, Timothy	Sandys, Rt. Hon. Duncan
Digby, Simon Wingfield	Lambton, Viscount	Scott-Hopkins, James
Donaldson, Cmdr. C. E. M.	Lancaster, Col. C. G.	Seymour, Leslie
Doughty, Charles	Langford-Holt, J.	Sharples, Richard
Drayson, G. B.	Leavey, J. A.	Shepherd, William
Duncan, Sir James	Leburn, Gilmour	Simon, Sir Jocelyn
Eccles, Rt. Hon. Sir David	Legge-Bourke, Maj. H.	Skeet, T. H. H.
Eden, John	Lewis, Kenneth (Rutland)	Smith, Dudley (Br'ntf'd & Chiswick)
Elliott, R. W.	Lilley, F. J. P.	Smithers, Peter
Emery, Peter	Lindsay, Martin	Smyth, Brig. Sir John (Norwood)
Emmet, Hon. Mrs. Evelyn	Linstead, Sir Hugh	Soames, Rt. Hon. Christopher
Errington, Sir Eric	Litchfield, Capt. John	Spearman, Sir Alexander
Erroll, F. J.	Longden, Gilbert	Speir, Rupert
Farey-Jones, F. W.	Loveys, Walter H.	Stanley, Hon. Richard
Farr, John	Low, Rt. Hon. Sir Toby	Steward, Harold (Stockport, S.)
Finlay, Graeme	Lucas-Tooth, Sir Hugh	Stoddart-Scott, Col. Sir Malcolm
Fletcher-Cooke, Charles	McAdden, Stephen	Storey, Sir Samuel
Foster, John	MacArthur, Ian	Studholme, Sir Henry
Fraser, Hn. Hugh (Stafford & Stone)	McLaren, Martin	Sumner, Donald (Orpington)
Freeth, Denzil	McLaughlin, Mrs. Patricia	Talbot, John E.
Gammans Lady	Maclay, Rt. Hon. John	Tapsell, Peter
Gardner, Edward	Maclean, Sir Fitzroy (Bute & N. Ayrs.)	Taylor, Sir Charles (Eastbourne)
George, J. C. (Pollok)	McLean, Neil (Inverness)	Taylor, W. J. (Bradford, N.)
Gibson-Watt, David	Macleod, Rt. Hn. Iain (Enfield, W.)	Teeling, William
Glyn, Dr. Alan (Clapham)	MacLeod, John (Ross & Cromarty)	Temple, John M.
Glyn, Col. Richard H. (Dorset, N.)	McMaster, Stanley	Thatcher, Mrs. Margaret
Godber, J. B.	Macmillan, Rt. Hn. Harold (Bromley)	Thomas, Leslie (Canterbury)
Goodhart, Philip	Macmillan, Maurice (Halifax)	Thomas, Peter (Conway)
Goodhew, Victor	Macpherson, Niall (Dumfries)	Thompson, Richard (Croydon, S.)
Gower, Raymond	Madden, Martin	Thornton-Kemsley, Sir Colin
Grant, Rt. Hon. William (Woodside)	Maginnis, John E.	Tilney, John (Wavertree)
Grant-Ferris, Wg Cdr. R. (Nantwich)	Maitland, Cdr. J. W.	Turner, Colin
Green, Alan	Manningham-Buller, Rt. Hn. Sir R.	Turton, Rt. Hon. R. H.
Gresham Cooke, R.	Marlowe, Anthony	Tweedsmuir, Lady
Grosvenor, Lt.-Col. R. G.	Marples, Rt. Hon. Ernest	van Straubenzee, W. R.
Hall, John (Wycombe)	Marshall, Douglas	Vane, W. M. F.
Hamilton, Michael (Weillngborough)	Marten, Neil	Vaughan-Morgan, Sir John
Hare, Rt. Hon. John	Mathew, Robert (Honiton)	Vickers, Miss Joan
Harris, Frederic (Croydon, N. W.)	Matthews, Gordon (Meriden)	Vosper, Rt. Hon. Dennis
Harris, Reader (Heston)	Maudling, Rt. Hon. Reginald	Walker-Smith, Rt. Hon. Derek
Harrison, Brian (Maldon)	Mawby, Ray	Wall, Patrick
Harrison, Col. J. H. (Eye)	Maydon, Lt.-Cmdr. S. L. C.	Ward, Rt. Hon. George (Worcester)
Harvey, Sir Arthur Vere (Macclesf'd)	Milligan, Rt. Hon. W. R.	Ward, Dame Irene (Tynemouth)
Harvey, John (Walthamstow, E.)	Mills, Stratton	Watkinson, Rt. Hon. Harold
Harvie Anderson, Miss	Moore, Sir Thomas	Watts, James
Hay, John	Morgan, William	Webster, David
Heath, Rt. Hon. Edward	Morrison, John	Wells, John (Maidstone)
Henderson, John (Cathcart)	Mott-Radclyffe, Sir Charles	Whitelaw, William
Hendry, Forbes	Heave, Airey	Williams, Dudley (Exeter)
Hicks Beach, Maj. W.	Nicholson, Sir Godfrey	Williams, Paul (Sunderland, S.)
Hiley, Joseph	Noble, Michael	Wills, Sir Gerald (Bridgwater)
Hill, Dr. Rt. Hon. Charles (Luton)	Nugent, Sir Richard	Wilson, Geoffrey (Truro)
Hilt, J. E. B. (S. Norfolk)	Ormsby-Gore, Rt. Hon. D.	Wise, A. R.

Wolrige-Gordon, Patrick	Woodnutt, Mark	Yates, William (The Wrekin)
Wood, Rt. Hon. Richard	Woollam, John
Woodhouse, C. M.	Worsley, Marcus	TELLERS FOR THE NOES:
		Mr. Legh and Mr. E. Wakefield.

It being after Seven o'clock, and there being Private Business set down by direction of The CHAIRMAN OF WAYS AND MEANS under Standing Order No. 7 (Time for taking Private Business), further Proceeding stood postponed.