New Clause.—(EXCHEQUER GRANTS.) (Hansard, 24 April 1963)

§ Mr. Millan
I beg to move, That the Clause be read a Second time.
The Clause raises once again the question whether in comparison with England and Wales the total Exchequer equalisation grants going to Scotland are fair. One of the claims made by the Under-Secretary at various stages of the debate has been that the purpose of the Exchequer equalisation grant was to give to local authorities which had a lower-than-average rating capacity the kind of assistance which would mean that the rate burden per head of the population in their areas would approximate to the rate burden per head of the population in other parts of the country.
The same principle, so the Under-Secretary said, applies in calculating the total grant coming to Scotland or the English and Welsh total. But, as my hon. Friend the Member for Paisley (Mr. J. Robertson), has never tired of pointing out, the result of the present Exchequer equalisation grant in practice is still that the rate burden per head of the population in Scotland is higher than in England and Wales.
The position is even more striking if one considers not just the total rate burden in Scotland per head of the population but the domestic rate burden per head of the population, because that is what concerns the ordinary domestic ratepayer. It is extremely misleading to talk about the rate burden per head of the population by dividing the rates, including those paid by industrialists and on commercial property, by the total population, because equity demands that it is the domestic rate burden about which we are concerned. When we come to the domestic rate burden we find that the burden per head of the population is substantially higher in Scotland than in England and Wales. That arises partly because the burden per head of the population, even taking rates as a whole, is higher in Scotland, but it also arises because the proportion of domestic rates as a percentage of total rates in Scotland is very much higher than in England and Wales.
Up to 1960–61 no less than 59 per cent. of rates in Scotland were paid by domestic ratepayers compared with only 47 per cent. in England and Wales. 343 Because of the new valuation, the situation is now slightly better. In 1961–62 and 1962–63 it is 53 per cent. in Scotland and 47 per cent. in England and Wales. Next year the gap will have narrowed a little more. It will still be 53 per cent. in Scotland, but the new valuations in England and Wales will raise the proportion there to a little over 48 per cent. Even then, the burden borne by domestic ratepayers in Scotland will still be higher than in England and Wales. If we come back to 1961–62, which is the last year for which full figures are available, we see, for example, that the domestic rate burden per head of the population in Scotland was £9.1 whereas in England and Wales it was only £7.3. There is a very substantial difference.
The purpose of the new Clause is to introduce an element into the formula for calculating the total Scottish Exchequer equalisation grant which will take account of the higher burden borne by domestic ratepayers in Scotland and therefore make the formula approach nearer the principle that the Under-Secretary has so often laid down for us of making the rate burden in Scotland per head of population the same as it is in England and Wales.
This is a particularly appropriate time to introduce this kind of adjustment to the formula, because whereas industrial rerating is coming into effect in England and Wales in 1963–64 this has been put off in Scotland at least till 1966–67 and probably even later than that. The introduction of this kind of adjustment into the formula would give Scottish local authorities some compensation for the rateable value that they are losing because industrial rerating is not, as originally intended, being introduced in Scotland in 1963–64.
I calculate that, if the new Clause were accepted on the 1961–62 basis at least, a little more than £2 million extra would have come to Scotland under the formula. I cannot say what the amount will be in 1963–64 or subsequent years, because so much depends on what the figures turn out to be for England and Wales. There is this problem of the high rate burden being borne in Scotland by domestic ratepayers. The Clause is an attempt to ameliorate the position for them and for Scottish local authorities because they 344 have not the advantage of industrial re-rating. I very much hope that my hon. Friends will support me. I hope that the Under-Secretary will be persuaded either to accept the Clause or to say that something similar will be introduced at a later stage.

§ Mr. J. Robertson
It is an exercise in itself to begin to read the method of calculating the Exchequer equalisation grant that will come to Scotland in any year. One has to work through a whole series of notional figures. It all begins from the position of the English ratepayer and the amount of rate deficiency grant and the amount of rates paid per head of population in England and Wales. The new Clause is an attempt to rectify an anomaly which has existed for many years. My hon. Friend the Member for Glasgow, Craigton (Mr. Millan) and I have contended that the global sum of Exchequer equalisation grant coming to Scotland is not the correct sum. The method presently employed is supposed to equalise the rate burden per head of population, but it does not do even this.
I have said this on many occasions and given the figures. I do not want to repeat them. As everyone knows, rates do not fall on every head of population. They fall on only some heads—those of the householders, or at least the wage earners. One of the problems we must face is that the population is different in kind in Scotland from what it is in England. We have a larger proportion under the age of 20 than there is in England and Wales and a much smaller proportion of the wage-earning class. Thinking in terms of households, the birth rate in Scotland is higher. Therefore, the number in the family is higher.
The only reasonable way to consider this at present is the rate burden falling upon the household. I have the figures for 1960. The rate burden per household in England was £22.9. In Scotland, it was £27.7. That is a considerable difference—and it is after the payment of equalisation and rate deficiency grant. It means that to equalise that burden we need about £5 in addition per householder.
As my hon. Friend the Member for Craigton said, ratepayers in Scotland must do things that ratepayers in England are not asked to do. They must, for instance, bear the burden of 345 the extra subsidy that is given to industry through Berating. The derating given to agriculture is proportionately greater than that applying in England. This, too, falls on a limited number of ratepayers in Scotland. Consequently, the man with whom I am concerned is the ordinary wage earner who must meet this tremendous rate burden.
When dealing with an earlier Amendment I said that in considering the relationship of the rate deficiency grant and the equalisation grant one must bear in mind the effect of the method of distributing the former in England and Wales and how that distribution operates. I also pointed out that most of it was concentrated in what are known as the depressed areas—the North-East, the North-West, certain parts of Wales, Lincolnshire, and so on. I do not wish to bore hon. Members with statistics, but to illustrate this more clearly it might be worthwhile to consider this matter in more detail.
In Committee upstairs I dealt, for example, with the relationship between Barnsley and Motherwell. The rate deficiency grant applied to Motherwell is equivalent to 3.08 per cent. of the total rate revenue, plus equalisation grant. In Barnsley, which, I suggest, is a more prosperous town even than Motherwell, the value of the rate deficiency grant is 35.75 per cent. In Barrow-in-Furness, it is 26.62 per cent.; Birkenhead, 26.22 per cent.; Blackburn, 34 per cent.; Bradford, 30 per cent.; Burnley, 34 per cent.; Bury, 29 per cent.; and in Dewsbury it is 38.9 per cent.

§ Mr. Brewis
The hon. Member's figures are not always so much in favour of England. For example, if we take Port Glasgow and Darlington we find that Port Glasgow has a rate burden of 215s. as against 295s. in Darlington.

§ Mr. Robertson
I agree. Port Glasgow's figures are the highest in Scotland. In those figures 43 per cent. is the contribution of the equalisation grant. But why stop there? Why not consider Merthyr Tydfil, a county borough, where 58 per cent. of the expenditure is met by rate deficiency grant? By all means examine Wales as against Scotland, although if we examine Scotland we find some odd figures. I am pointing out that local authorities in the industrial 346 areas of Scotland compared with those of the north of England, Durham, Yorkshire and Lancashire are not getting their fair share.
The method suggested in the new Clause will not provide the final solution. There is only one way finally to solve this problem, and that is to apply a rate deficiency grant to the whole of the country—Scotland, England and Wales together. But this new Clause would at least assist and would give some relief to Scottish local authorities, which is long overdue.
I hope that the Under-Secretary of State will not reject this proposal out of hand. One of these days—