HL Deb 03 May 1909 vol 1 cc669-91
LORD BALFOUR OF BURLEIGH

rose to call attention to the Report of the Royal Commission on Local Taxation, and to the Special Reports on the Burden of Existing Rates and the General Financial Position of the Outer Hebrides presented to the Local Government Board for Scotland in 1906; and to ask whether the information contained in the latter Report could be brought up to date; and whether His Majesty's Government had considered the special circumstances of these districts, with a view of seeing whether some method of alleviating their special burdens could be devised.

The noble Lord said:

My Lords, I rise, in pursuance of the Notice which appears on the Paper, to call attention to the Special Reports on the Burden of Existing Rates and the General Financial Position of the Outer Hebrides presented to the Local Government Board for Scotland in 1906, and to ask whether His Majesty's Government have considered the state of matters now existing in those Islands, and whether they cannot see their way to do something to alleviate the financial pressure upon those who are chiefly concerned. I think I shall have no difficulty in establishing two things—namely, that the state of matters is quite within the mark to be described as disastrous, and also that it is not in any way the fault of those who are the chief sufferers in consequence of the present position. It is very serious, and your Lordships will see that it is also very unjust.

I cannot, of course, conceal from your Lordships that I touch the fringe, at any rate, of what is a very much larger subject—namely, how far, and upon what principles, it is right and reasonable for the central authority to do something more than is at present done to alleviate local burdens. That was the main part of the reference to the large and important Commission on the whole subject of local taxation appointed by the late Government some years ago, over which I had the honour to preside. But I do not intend to raise to-night any of the larger issues which were before the Commission. I think, however, I may say this, that the question of local taxation really lies at the root of the possibility of bringing in approved schemes of social reform, especially in regard to the Poor-law, upon which the Commission presided over by Lord George Hamilton has recently presented a Report. I do not know which of these two subjects is the more important, but of this I am pretty certain, that you cannot, with due regard to existing interests and existing grievances, bring in any scheme of administrative reform with regard to the Poor-law unless and until you have done something to reform the method of local taxation.

I deeply regret that nothing has been done in this direction during the years which have passed since the Local Taxation Committee reported. I am not going to say that it is the fault either of those who sit on the other side of the House or of those who sit near me. I am certain that if it had not been for the disturbance of financial conditions consequent upon the South African War the late Government would have done something to bring in measures of reform. I know that other subjects have attracted the attention of the present Government, but I repeat, and I repeat with some confidence, that if they are going further in the direction of social reform, if they are going further in the direction of Poor-law reform, they will have to do something to alleviate the burden, at any rate, of the poorer districts in the country before they can make much advance in that direction. I want to impress upon the House the point of difference between what I venture to describe as services which are national in character and onerous on the ratepayer and those which are local in character and confer a direct benefit upon those who pay for them. I admit that it is not altogether in the last resort possible to draw an absolutely logical and precise distinction between them; but none of us will have any doubt that such matters as water and drainage are essentially local in character, while those services to which I refer as mainly national are those of which the universality is characteristic, which are ordered by the State, and in regard to which the State insists upon the same sort of general and universal standard in every locality. I mean such matters as education, Poor-law, police, most sanitary matters, and things of that kind.

Before the Commission over which I presided there were two distinct classes of grievances alleged, and, as I venture to say the Report establishes, proved. There is, first, the grievance that this class of national service is undoubtedly paid for by those who are interested in special classes of property, I am not going into that branch of the subject to-day; but there is also the grievance, and it is hardly a less one, that even as between the owners of these same classes of property—real property in England and heritable property in Scotland—the burden which each has to bear varies according to the differences of the localities in which the property happens to be placed, and very seldom, comparatively speaking, is that the fault of those who are the owners or occupiers of that class of property. I do not deny that in some cases there may be extravagance; but the first point I wish specially to impress upon the House is this, that the test of whether the service is fairly borne or not is according to the ability of the locality to bear it, and, if your Lordships will allow me, I will say that the ability of the locality to bear the service may be best measured and attained by the amount of valuation per head of the population. Valuation gives the riches of the locality. The population is a rough, but not unfair, measure of the probability of the burden which will have to be borne.

I venture to say, without fear of contradiction, that administrative reforms, however desirable they may be, which greatly increase the burden upon the individual ratepayer, cannot with any sense of justice or fairness be imposed on the poorest districts equally with the rich. Two things have to be kept in view, I admit. The first is economy in the discharge of the local administration, and, secondly, how far it is possible to improve that administration. None of your Lordships who have not studied the question with some closeness really realise how much the ability of different districts to bear certain charges varies. I am not able to say what the extreme limits of variation in England are, but they are very great. They are not, perhaps, quite so great as they are in Scotland, because the unit of administration is, speaking generally, larger in England than in Scotland, being the union for Poor-law purposes in England while it is the parish in Scotland. The richest parish in Scotland has a valuation of £44 per inhabitant, while the one which is poorest by this standard has only a valuation of 9s. per head of the population. It is obvious that a parish with £10 per head of valuation can raise twice as much with the same sacrifice as a parish with only £5 per head of the population. Therefore, when I tell your Lordships that in one parish, at any rate, the valuation is £44 per head and that in another it is only 9s. per head, it is clear that the comparative ability of these parishes is nearly 100 to one; in other words, that a penny in the £ per inhabitant in the richest parish will raise nearly 100 times as much as a similar rate in the poorest parish.

As I have said, I am only concerned tonight with such matters as poor relief, roads, police, education, and sanitation. The administration, speaking generally, has to conform to a certain national standard while the administration is local, and those who have to administer in each locality ought to have regard, and I think as a rule do have regard, to three considerations—to what are the requirements of public policy imposed upon them, to reasonable economy in the discharge of the duty, and to ability to bear the burden imposed. There has been special inquiry into the ability and administration of these parishes in the Hebrides to which I am specially referring. An inquiry was ordered by the Secretary for Scotland who preceded the noble Lord now in office, and it was conducted by one of the most qualified sheriffs in Scotland, and by two perfectly competent gentlemen in the employment of the Local Government Board for Scotland. The verdict of this tribunal in regard to the parishes in the Outer Hebrides was this, that the expenditure is not greater than to be expected in the circumstances in which they are placed, and that the poverty of the districts makes the burden which they must bear, even in circumstances of the most stringent economy, extremely excessive. The words are that an exceptionally heavy burden has to be borne by an exceptionally poor community. The complaints made by all classes are quoted.

This is not a mere landlord's question; it is equally felt by all who own and occupy private property in those districts. It is the same by the shopkeeper as the landlord, by the small-holder as the larger farmer; and as one man said to Sheriff Fleming— the amount of rates we have to pay really amounts to a duplication of the rent. In passing, I may say that it is not surprising, in these circumstances, that in these outer islands the small-holders have an extremely hard struggle to live; the weight of the rates imposed upon them is really one of the main causes, if not the main cause, why small-holders in those districts have so poor and precarious an existence. I believe that in the parishes in the Outer Hebrides the lowest rate in the for the services I have mentioned amounts to 10s., 12s., or 15s. in the £ and in one or two cases it rises to the extraordinary amount of 25s., 26s., and 27s. in the £. A word of explanation is necessary in that connection, because if the rate was 25s. or 26s. upon the gross rental it, of course, could not be paid; it would mean bankruptcy. But your Lordships know that under the system in which rates are levied in Scotland there are certain powers of deduction given to parish councils in the case of owners and certain powers of classification in the case of occupiers, so that, although the rate in the £ may seem more than the basis upon which it is laid, it is not, and cannot be, of course, paid if it exceeds the gross sum which is the produce of the property.

For purposes of comparison I am going to discard to-night all question of the rate per £ that is raised, simply because it would not make a fair comparison between one parish and another. I have, with the assistance of some friends in the Scottish Office, and with the full consent of the noble Lord opposite, and also by means of explanations which have been given to me by the owners of some of the property in these districts, been, I think, able to compile a statement which will show your Lordships, without fear of misunderstanding, how really serious and heavy the burden is which is borne by these communities. It is not, as I have said, only a landlords' question. The same burden relatively is borne by everybody, whether he be owner or occupier, one-half of the rates being borne by the owner and the other half by the occupier.

I take the case of the parish of Loch. Major Mathieson, who is the owner of a large portion of that parish, supplied me with these figures, which have been corrected and criticised in the way I have just mentioned. His gross rental from the parish in 1907–8 was £2,900. I take that year as being the last available year, because in the following year there was a certain amount of litigation which confused the issue and which has not, I believe, altogether been determined. Therefore, it is bettor to disregard for our present purposes this year and to take the previous year. The gross rental from the property in 1907–8 was, as I have said, £2,900. Allowing ten per cent. of that as not recoverable—a moderate allowance—the net sum received was £2,600. The parish rates—that is, for poor relief and education—amounted to £1,121, the county rates to £435, and other charges, such as minister's stipend and land tax, to £150, so that the gross rates for purely onerous services for which no return is rendered at all to the individual owner came to £1,706 out of a total received of £2,600, leaving a balance of £894. But out of that balance there had to be paid income tax, management, repairs, insurances, and any mortgages or jointures which might have had to be paid by the unfortunate proprietor. And management in a case of this kind does not mean merely supervision. Management in a case where there is a large amount of sporting rental includes such things as keepers' wages, and, if the shooting is not let, the unfortunate proprietor has still to pay these wages and to pay the rate on the rental he has not received. That is a plain and unvarnished tale, and I venture to say that so stated—and it cannot be contradicted —it reveals an absolutely unparalleled case of hardship when it is demonstrated that there is no extravagance and that due regard to economy in administration has been had. Indeed, it amounts to absolute bankruptcy.

I will take one other case. I do not desire to unduly take up the time of your Lordships, but I will take the case of the parish of Barvas, the parish to which I referred a moment ago as the poorest parish in Scotland. In the case of Barvas the figures are almost equally instructive. The circumstances are these. The rental of the estate to which I refer is £2,459. I ought, perhaps, to say that, without making any deduction at all, the total amount of rates borne by the owner as owner of the whole and as occupier of those parts left in his occupation amounts to £1,017, or, for parish services alone, 41 per cent. on the total income drawn from the subjects in question. But when you add county rates and the other things I have mentioned, over which the owner has no control, such as minister's stipend, land tax and so on, and deduct them from the total received, there is only about £590 left, and this is still subject to income tax, repairs, insurance, management, and the other things I mentioned a moment ago.

The position in these two parishes is aggravated by another set of circumstances. Only two or three days ago a meeting was held in Stornaway which was addressed by Provost Anderson, well known to the noble Lord opposite as one of the ablest and most energetic of the local administrators in that district, and he supplies to some extent the explanation why the charges are so heavy in those parishes. He says that, in addition to the crofter and the farmer, there are a class of persons known as cottars and squatters. The difference between a cottar and a squatter is this. The cottar is the parasite upon the crofter. He has taken part of the crofter's holding. He cannot be got rid of by the crofter, and I believe he can hardly be got rid of by the landlord once he has settled there without such an amount of expense as to make it prohibitive. The squatter is the analogous person who has squatted on the common grazing belonging to the whole community. There is no difference between them in degree—the one is the parasite upon the crofter, the other the parasite upon the community as a whole; and Provost Anderson says there are no fewer than 1,103 cottars upon the crofts the occupiers of which are not rated. They are not tenants of anybody, and they pay neither rates nor taxes. In addition to those 1,103 cottars there are 289 squatters in the four parishes in the Lews, and, out of a population of 27,000 in the rural parts of the Lews, no fewer than 7,247 belong to the cottar and squatter class. Not one of these individuals pays a penny either in rates or taxes or rent. They contribute nothing whatever to the amelioration of the burden, but they share in all the benefits, such as they are, of poor relief, education, and other things of that kind.

I think I have established my case at any rate to this extent, that there is a clamant grievance crying for a remedy, and I think it is only a type, perhaps an exaggerated type, of what will have to be done if any scheme of general Poor-law reform costing more money is brought into operation. I have shown that the local finances of these districts are absolutely on the verge of bankruptcy. I have undoubtedly taken the two worst cases I know of, but they do not materially differ from what is going on in any of the parishes in the Outer Hebrides. This is no mere personal grievance of one or two people. It is making the useful and beneficial occupation of a property, whether as owner or occupier, in these districts absolutely impossible. The facts have been established by the inquiry and they will not be disputed; and the question I wish to put to His Majesty's Government is whether, in the circumstances I have explained to the House, they cannot hold out some hope of coming to some extent to the assistance of those who are suffering from a state of matters for which they are in no way rsponsible.

* THE EARL OF DUNMORE

My Lords, the main facts relating to the financial condition of the Outer Hebrides have already been exhaustively dealt with by the noble Lord who has just sat down, and I do not propose to detain your Lordships by entering into a detail of figures and statistics. It is now nearly three years since the Local Government Board for Scotland received the two Reports dealing with the pressure of local rates in the districts referred to, and although they contained the statement that these rates formed an exceptionally heavy burden on an exceptionally poor community, no relief has yet been afforded. A sound basis for such relief was suggested by Lord Balfour of Burleigh as far back as 1902 in the Final Report of the Royal Commission on Local Taxation, but since those suggestions were made there has been an enormous increase in the burdens of these parishes, accompanied in most cases by a diminished rental.

For many years the injustice of the incidence of the rates throughout the whole of the country has been recognised by successive Governments, with the result that the Imperial Exchequer has contributed towards local expenditure, those contributions taking the form of grants in aid, but such of these grants as were allocated in accordance with expenditure have in these parishes in proportion to the total expenditure greatly diminished. I think, in view of the existing high rates in these districts, that these grants cannot be considered as having proved adequate to removing the injustice caused by the inequalities in the local burdens. The chief sufferers under this heavy burden are not only the owners, but also the hotel-keepers, shopkeepers, and all those who occupy their own premises and pay the combined rate. It is, in fact, a prohibitive tax on industry and capital. The effect is to be seen in these impoverished districts.

The noble Lord called attention to the difference in valuation per head of the population in different parishes in Scotland. Under such conditions it is, perhaps, hardly surprising to find that the combined county and parish rates amount in two parishes respectively to 27s. and 25s. in the £. These figures are certainly open to some criticism on the ground, as the noble Lord pointed out, that the parish rates are assessed on the net rental and not on the gross; but a more accurate means of ascertaining the true increase and extent of the ratepayers' burden might be obtained by taking the actual expenditure of the parish council for a year, and, having deducted all Government grants, comparing the figures with those obtained in a similar manner for some former year. On this basis the expenditure on poor relief alone in one parish has increased by over 50 per cent. since 1896. That is after having deducted all Government aid.

I think the real reason of these high rates is to be found in the low assessable rental of the population combined with the ever increasing demands made on the poorer parishes by progressive legislation. Economy in local administration could never remedy this, for even with the same amount of pauperism and the same expenditure per head the rate in these islands would still be six times as heavy as in Scotland generally. In giving your Lordships those figures I have assumed that the burden of pauperism is equal in the areas compared, but this assumption is not borne out by the facts, for the burden of pauperism is much heavier in these districts. A considerable portion of the population consists of cottars and squatters who pay neither rent nor rates, but receive the full benefit of the local government. But there is another factor directly contributing to the heavy poor rate in the numbers of these poor people who, having spent the whole of their lives working in industrial centres, return as paupers to the land of their birth. As an instance of this, I may mention that of fourteen applicants for relief before the South Uist Parish Council three weeks ago twelve had been made paupers in other districts on the mainland, only two being local inhabitants.

In considering these financial difficulties it should also be borne in mind that practically the whole of the ratepayers, as agricultural occupiers, are only assessed on three-eighths of their rental under the Agricultural Rates Act of 1906. That Act, while very justly relieving the land of part of its excessive burden, did not reduce the total expense falling on the rates, and the agricultural rates grant, which was intended to recoup the parish for this reduction, has in these islands proved insufficient. The result is that owners and non agricultural occupiers have to bear the greater part of the extra burden caused by this reduction. There is no doubt that the taxable capacity of these islands is quite inadequate to meet the demands of local government. It is the natural result of the over-population of poor land, and the natural difficulties have been increased by dividing up the land into small holdings without any regard to economic conditions. I recollect last year the Secretary for Scotland remarking in the House of Commons that the Vatersay question and similar troubles in these districts would be solved if the Crofters' Act had contained powers for the enlargement of holdings and for dividing up the land among the crofters. But I would point out that taking the land for this purpose unfortunately either curtails or abolishes the principal ratepaying subjects, and I think the noble Lord, in solving the one problem, would under our present system of rating rind himself confronted with another and probably more serious problem. I would make it quite clear to your Lordships that I am in favour of establishing small-holdings wherever possible. I think that is a principle on which we are all agreed; but it is relative to the subject we are discussing this evening to point out that the question is entirely an economic one and has a direct bearing on the rates. Even if these smallholdings could be made self-sustaining, their taxable capacity would still be inadequate to supply their local requirements, and nine-tenths of the local expenditure would still fall on the owners and non-agricultural occupiers. This is neither just nor is it expedient, for the State should recognise that the greater portion of this expenditure is raised for national purposes. In other words, many of these rates give no direct return to the ratepayers for the taxation levied. In these districts, from which the majority of the young men migrate to the large commercial centres, education certainly gives no return to those who paid for it. Yet efficiency in education is absolutely necessary to our national well-being. I think I may say it is almost as important as national defence, and in a similar manner its cost increases in accordance with the competition of other countries. Therefore, if His Majesty's Government have made up their minds, which I trust they have, to demand of these poor parishes an efficient administration of these services, services which the noble Lord has justly termed national services, I think they must of necessity pay for it.

It is in districts such as these that we see the injustice of our present system of taxation, and it seems to me that the best remedy as regards these districts would be in the taking over of certain services by the State, services which are national in character and of national importance. So far as these islands are concerned I would venture to point out to your Lordships that the chief objection to nationalising these rates does not apply. It is obvious that the parish councils are elected by those who have to pay the smallest proportion of the rates, consequently there cannot be the same incentive to economy of administration as in the wealthier parishes. I have taken the figures of four parishes, and find that the total amount paid in rates in respect of the occupancy of each croft averages 4s. 8d., the bulk of the rates, amounting to over £5,000, being borne by the owner. These are abnormal conditions, and it is in view of these conditions that I am doubtful whether any scheme based on a system of Government grants would result in attaining the same degree of efficiency and economy in the administration of these islands as could be obtained by the nationalisation of the rates. But, considered in relation to the local taxation of the three countries, the scheme advocated by Lord Balfour is undoubtedly a far safer and more practical method of equalising these burdens. I do not wish to submit any proposal as to how His Majesty's Government should deal with this problem, but I would point out that the question is now in an acute stage, and that, pending some legislation in regard to our system of taxation, some temporary and exceptional measure of relief for these islands is urgently needed.

THE SECRETARY FOR SCOTLAND (LORD PENTLAND OF LYTH)

My Lords, with the main lines of the case which has been presented to the House this afternoon I have no desire to quarrel, and perhaps I may be allowed, as Secretary for Scotland, to welcome, in the first place, the speech which the noble Earl who has just sat down has made and which I know to be delivered with much knowledge, to which I cannot pretend, of the facts and circumstances of the western islands. Lord Balfour of Burleigh, too, speaks on this subject with unique authority. On the one hand, he has held the office of Secretary for Scotland for many years; and I should like to take this opportunity of acknowledging how readily he has placed at the disposal, at any rate, of one of his successors, his great experience and knowledge on Scottish questions. But he speaks also with unique authority on this subject as having presided over the deliberations of the Royal Commission on Local Taxation, which reported, I think, some seven years ago.

It is not probable that your Lordships will expect from me to-day any statement dealing with the recommendations of the Royal Commission, or any indication as to the policy of His Majesty's Government in regard to them. But perhaps I may be permitted to say this, that it must be a subject of general regret in all such cases that elaborate inquiries, involving great labour and much time, should take place and should then remain for many years before they are acted upon. The grievances remain, the inequalities as between localities or as between parishes remain, the clamour for assistance continues, the distinction between national and local services remains uneffected, and very often in the maze of grants, fee grants, stereotyped grants, assigned revenues, whisky money, and the rest of it—in the maze of difficulty that surrounds the subject few people have the leisure or will give the energy to master the subject, with the result that the advocates of some special interest or some particular reform too easily capture the public attention and warp public opinion before it is really roused to consider the whole subject.

Before I pass to the local case, perhaps I may say this on behalf of the Government on the general case which has been presented. While the Government have not been able to lay before Parliament or the public any proposals dealing generally with local taxation, some advance has been made on lines which are particularly associated with the name of Lord Balfour. I refer to the scheme which he propounded to the Royal Commission and embodied in the additional Report, by which highly-rated and poor localities might receive benefit at the expense of more fortunate districts, through a scheme of distribution of grants so calculated that they should give most help where most help was needed, and should have particular regard to ability to pay. In the Education Act which was passed last session for Scotland we adopted this principle.

The moneys devoted by Parliament to Scottish education fall into two categories. By far the larger amount, something like two-thirds or more of the whole, is provided by annual votes in Parliament. The remainder consists of moneys which from time to time and by various Acts of Parliament have been allocated to special educational purposes. There are grants which have been made in relief of fees, there are grants for secondary and technical education, and grants for many other purposes, totalling something like half a million of money. These grants were all devoted to some special purpose, permitting no co-ordination so far as their application went of the various kinds of education, and presenting a very intricate and difficult question to those who had to deal with it. The simple step was taken of paying all these sums into one fund and enacting that that fund should be distributed according to the very principle which Lord Balfour had advocated in his additional Report. It is obvious, however, that for a change of this kind to be carried out, unless great opposition is to be provoked, no authority must suffer by the change; that is to say, every local authority receiving grants must at least receive as much as it had received heretofore. In order, therefore, to carry out the scheme of giving greater aid to poor localities an additional sum was required, and £105,000 was provided by the Treasury to carry out that plan of distribution. If any such plan is applied on a general scale to the relief of local authorities a corresponding sum will, I venture to think, be required for the purpose. I mention this instance in order that it may be placed to the credit of the Government that they have at any rate done something to profit by the labours of the Royal Commission, and as showing some earnest of a desire to proceed to the reform of local taxation.

I pass now to the special case brought before the House this afternoon of the rating of these parishes. The Hebridean parishes mentioned are eight in number, and there have on former occasions been difficulties and complaints in regard to the rating. The proprietor of part of the Island of Barra some three or four years ago declined to pay the rates due. The parish council resigned, and a clause of the Act of 1845 was put into force. A parish council was constituted of officials and the chairman of the last elected board, and the Poor-law and other Acts are administered now by that authority. There had been some unwisdom and carelessness in administration. That has been put right. The rate has been reduced by a considerable sum in the last three years under the more efficient management, and though the administration has not resumed its normal course, yet I trust that if no other difficulties supervene we may Le on a fair road to that end.

In the Lews, which consists of four parishes, we are now confronted with a difficulty which has been raised by the refusal of the proprietor there to pay his rates. It becomes necessary, therefore, to consider what actually are the burdens borne by him in this respect. I do not intend to enter into, or to dispute, the figures given by the noble Lord who asks this Question, except in one particular. I do think it is necessary to bear in mind that Major Mathieson, whilst being the proprietor of the whole island, is also the occupier of various shooting properties on the island. The custom is for the owner to be rated in respect of those shootings not only as owner but also as occupier, but if the shootings are let he then recovers the rates from the shooting tenant. Therefore, that qualification must be borne in mind when the rates paid by the proprietor are mentioned.

I will not quote the figures to your Lordships, but will content myself with stating what I understand to be the general situation in the Lews. The island consists of four parishes, but there is no question just now about the fourth parish, which contains the burgh of Stornaway. We are concerned with the three rural parishes. In the first place—and here I rather demur to the statement made by the noble Earl who spoke second—there is no adverse criticism so far as I am informed of the administration of the parish councils. They are economical, they have been careful, and have carried out their somewhat difficult and onerous duties to the satisfaction of all concerned. There has been no accusation of lax administration, or extravagance, or anything of that kind, and I trust they may continue to discharge the duties which they have performed satisfactorily in the past. The burden of the poor—that is to say, the number of the poor—is not excessive. The proportion of pauperism to the population is not excessive. It is under the average for Scotland. Take the parish of Barvas. The proportion in that parish is under the average for Scotland, and that fact is very creditable to the people, for many of them are very poor. The burden of expenditure on the poor is not abnormal. That being so, there being no fault to find with the administration, the number of poor not being excessive, the burden of expenditure on the poor not being excessive, how is it that these high rates of which complaint is made come about? The explanation is, of course, that given by the noble Earl, Lord Dunmore.

The real cause of the high rate is the low assessment. On whom does it fall? On what classes of ratepayers does this burden fall? The rate, broadly speaking, is borne half by the owner and half by the occupier. Major Mathieson is the proprietor of, practically, the whole island, and therefore the owner's rate falls almost exclusively upon him. Of the occupiers, upon whom does the burden fall? Take the parish of Barvas. The burden does not fall upon the crofters. Their rental is one-third of the whole rental of the island. What do they pay in rates? They pay from ½d. to ½2d. a week in rates. That surely cannot be considered an excessive burden. The burden, therefore, does not fall upon them. The reason they pay so low a rate is that they receive not only the benefit of the Crofters Act, but also receive relief from the Agricultural Rates Act. That is the explanation. Nor is the burden heavy on the farmers, who also receive relief from the Agricultural Rates Act. It really falls, so far as the occupiers are concerned, upon the merchants and the sporting tenants. There are not very many of them, and, as I have indicated, the proprietor is really responsible ultimately if the shootings are unlet for the rates of the sporting tenants. It is quite true that the nominal rate is high, that the burden on the rental, which is a low rental, is high, but the burden per head of population is not high. It is a remarkable thing that the burden per head of population is extremely low. The average annual amount of parochial assessment in respect of all the rates raised in these three parishes produces a burden of 5s. 9d. per head of the population.

LORD BALFOUR OF BURLEIGH

Has the noble Lord taken off the 7,000 people who pay nothing at all?

LORD PENTLAND OF LYTH

I shall not forget to mention them. The burden per head of the population is 5s. 9d., whereas in the county of which this forms a part it is 10s. 11d.—approaching double—and in Scotland as a whole it is 10s. 6d. There must be some explanation for this, and the explanation is largely to be found in the fact to which Lord Balfour has drawn attention, namely, that there is a large population in this island who pay neither rent nor rates, and who contribute certainly their share to the burden laid upon the education rate and upon the poor-rate. The real truth then is this, that the burden, taken as a whole, is not excessive; and bearing in mind that fact I confess I see great difficulty, pending a general reform of local taxation, in finding any method of affording relief to this island.

The real truth is, it is the distribution of the burden among the population which is at fault. I will not go into the figures. They have been very much quoted, and the rate which Major Mathieson has had to pay has been stated. The fact has been published that in these three parishes the rates as a whole were 16s. 3d., 15s. 11d., and 17s. 9d. That is the nominal rate. When it is desired to find the burden we must look at the burden of expenditure borne by this assessment. There are two observations to be made about that burden. In the first place, comparing this year with last year there is no increase in the burden. Comparing this year with three years ago there is no substantial increase in the burden. Comparing the burden this year with that of ten years ago, and bearing in mind that the general rise in parochial assessment throughout Scotland has been something like thirty-three per cent. in that period, there is no abnormal increase in the burden borne in the Lews. There is, of course, the difficulty of the existence of the cottar population, which entirely alters the distribution of burdens and throws an extremely heavy burden upon the proprietor.

Your Lordships are aware that all this occurs in spite of the operation of certain grants voted by Parliament in the hope of giving relief to Highland districts. There is the Highland Relief Grant and there are the funds of the Congested Districts Board, of which some £30,000 have been spent in the last ten years in this island. It is not to be forgotten, too, that the people who live here do not entirely subsist by the produce of their croft and their work in the islands. The able-bodied among them are employed in occupations outside the islands for a large part of the year, with the result that a sum of something like £127,000 in a named year went into the island, with the further result, calculated in these Reports, that the outside earnings of every crofter family came to something over £26. The operations of the Old Age Pensions Act passed last year have also had a remarkable effect in the Lews. A sum of no less than £18,600 will now go annually into that island as old age pensions. This, I hope, may have a good effect, in the first place, in reducing the number of those who are put upon the pauper roll, and, in the second place, in making it more easy for the older of these small tenants to pay their rents. When rents are mentioned, it ought, I think, to be recollected that there is no complaint, so far as I understand, on the part of the proprietors that rents are not fairly paid.

I am extremely sorry not to be able to take a more hopeful view of the possibilities of the Government being able to help in this matter. It cannot, however, I think, be denied that, important as this question is to those concerned—and I should be the last to minimise its importance—it is neither large enough in scope nor typical enough in character to entitle the Government to commit themselves in respect of it to any general line of policy with regard to the main recommendations of the Royal Commission on Local Taxation. I have mentioned to your Lordships that we have tentatively and experimentally applied to part of the education money for Scotland the principle advocated by Lord Balfour. I trust that may give some relief to these parishes. It is intended to give them some relief. The final decision as to the application of that fund still rests with Parliament. A Minute will be laid before the House of Commons during this session, submitting for their approval a plan for the distribution of these moneys. I trust this may give some relief to the Lews parishes, though I know it may well be considered infinitesimal when placed by the side of the burden which the proprietor has to bear. And when I mention the proprietor I ought to say that it would be far more agreeable to me to be able to go further to meet his desires this afternoon, on public grounds if on no other; he is a considerate and kindly landlord who lives among his people and is deservedly popular; but, except indirectly, through the influences I have mentioned, I am not able to give any assurance on the part of the Government to-day.

There is no reason, I believe, to anticipate any increase in the burdens which we have been discussing: it is more likely they will diminish. It must be borne in mind that, compared with the rest of Scotland, there has been no substantial increase in them during recent years. There remains the question of the cottars. I would ask your Lordships' attention for one moment to this question. The cottars form one quarter of the population of the island. Their stock is on the crofters' grazings, and their houses are either on the crofters' grazings or on the crofters' holdings. The movement for some regularising of their position deserves every sympathy and encouragement. Some of them are people who have no hope of a career, and whose only desire is to end their days where they are now; but the others include many who resent the position of inferiority in which they are placed, and some of whom, I hope, would be willing to become rentpayers and ratepayers like their neighbours. It must be demoralising to have in the community men escaping public burdens who are better able to bear them, in many cases, than those upon whom they fall; and I hope something will be done to bring these people within the area of rent-paying and rate-paying inhabitants, so that they may bear their share of this burden, which is all the heavier now because it is not properly and equitably distributed.

THE EARL OF CAMPERDOWN

My Lords, the situation in the Lews, which has been laid before your Lordships to-night by Lord Balfour, is very serious indeed, and has become actually acute. The noble Lord the Secretary for Scotland said that the proprietor had refused to pay his rates. The reason is that the proprietor cannot pay his rates. They amount to very nearly the whole of his income. The ratepayers, too, cannot pay their rates. Why? Because they have not the money. In the Island of Lewis the average rent of crofts is under £2. It is absolutely impossible for the crofters to make a living out of them. The noble Lord says that the rates are inconsiderable in amount. So they are. But you must take them in relation to the rent which these people pay and their means.

In the Lews you see the crofter system in perfection. The average rental is, as I have said, under £2, and one-fourth of the people are cottars and squatters. The noble Lord says that the cottars and squatters are people who very likely feel the indignity of their position. They feel very much injured because they are said not to contribute in any way to the advantage of the community. What I complain of is this, that it is exactly that class which the Secretary for Scotland is doing everything he can to encourage. If the cottars and squatters were a certain number of men beyond whom there would not be any increase, then I think it might be possible to deal with the difficulty; but the reason why it is perfectly impossible to deal with it is that as soon as you find a small-holding to accommodate one of these persons he sets to work to breed other cottars and squatters. And the more you divide up this island the more will the population increase and the greater will be the difficulties. The noble Lord at the present time continues encouraging landowners to break up their farms and divide them among these people. He is simply doing his best to create another Ireland, and before very long that result will follow.

What consolation has Major Mathieson or the population of the Lews got from this debate this evening? None whatever. This is a difficulty which will not wait. The noble Lord says there has been no increase of rates during the last five years. I notice that when he forwarded the complaint of Major Mathieson to the Treasury, some Treasury clerk sent an answer to that effect. When rates have approached or surpassed 20s.in the — what does it matter what increase there is? Even supposing there has been no increase within the last three years the income of the islands during that period has been unequal to meeting those rates. That is the difficulty with which we have to deal.

This question of the outer islands is a most serious question and is becoming more serious every day. The noble Lord was asked last year if he was aware that there were between 7,000 and 8,000 squatters in the Lews, and he replied in the affirmative, adding that the matter was under his consideration. The trouble is that everything is under his consideration, and that everything remains there. I know no person who is better able than the Secretary for Scotland to give a sympathetic answer that has nothing in it. I defy anyone to extract anything—certainly not comfort—from any answer he gives. In this case what will happen? Major Mathieson is unable to pay his rates, and unless the noble Lord adopts some practical line of action the state of Lews will become, if possible, worse than it is now.

THE MARQUESS OF LANSDOWNE

My Lords, I ventured to observe the other evening, when we were discussing the affairs of Lady Cathcart's estate, that it seemed to me that the policy of His Majesty's Government was to promote the creation of what I described as uneconomic holdings in that part of Scotland. The debate which has taken place this evening I think absolutely confirms that impression. We have really had a most illuminating picture of the condition of the population of these islands. A great portion of them were described by my noble friend Lord Balfour, who speaks with special authority on these subjects, as being people who were parasites of the legitimate inhabitants of the islands. They pay no rent; they pay no rates. Occasionally they get the advantage of a liberal grant-in-aid out of public funds, and now, of course, old age pensions will be poured in liberally into these regions. It really looks as if these islands will be the only thoroughly happy and comfortable place to live at before long. There is one other most disquieting phenomenon which was touched on by by noble friend Lord Dunmore, to whom we listened with much pleasure on the occasion of his first speech in this House. He pointed out that, while all these things were taking place, the effect of this policy of creating new crofts, of giving these squatters slices out of other people's holdings, was to put an end to the existence of the only solvent rate-paying members of the community. The picture does seem to me to be a really alarming one, and I trust that on some future occasion we shall learn that His Majesty's Government are taking it a little more seriously than they appear to be doing at present.

THE LORD CHANCELLOR (LORD LOREBURN)

My Lords, I shall trouble your Lordships with but very few observations. In regard to the condition of this island, my noble friend the Secretary for Scotland has said all that need be said, although, of course, I quite agree that the condition of things is not satisfactory. What I have risen to say a word upon is the line the debate has taken by reason of the observation of the noble Earl, Lord Camperdown, that it is the desire of the Government to increase the number of squatters and cottars, who will breed other squatters and cottars, and so reduce these unfortunate islands to the condition of Ireland. I really think the noble Earl is not warranted in making that statement. I presume he referred to the Bill which this House refused to assent to more than a year ago.

THE EARL OF CAMPERDOWN

I can assure the noble and learned Lord that I had not the Bill in my mind at all.

THE LORD CHANCELLOR

Then I will say no more. I was going to point out that the mere creation of smallholdings had no sort of relation with any method for perpetuating what I acknowledge to be a deplorable condition of affairs in some parts of the islands. As regards the general opinion which the noble Earl and the noble Marquess have expressed, I am quite certain that the Government wish nothing less than to continue the state of dependency and misery which exists in that part of the country. But what I was about to say falls to the ground when the noble Earl states—and I accept unreservedly what he says—that he was not referring to the Bill of a year ago.

THE EARL OF CAMPERDOWN

If I used the word "holding" I can perfectly understand the interpretation which the noble and learned Lord put upon it. I was meaning crofts. What I was referring to was the policy that is being pursued at the present time by the Secretary for Scotland in urging the breaking up of farms and turning them into holdings on which these cottars and squatters may become tenants, which is invariably followed by the creation of more squatters and more cottars.

LORD BALFOUR OF BURLEIGH

My Lords, I will not occupy more than a moment, but I desire to point the moral of what is admitted by the Secretary for Scotland. We have here a large class of people, the cottars and squatters, who pay no rent and no rates; and the noble Lord must remember that the crofters do not pay rates on anything more than the value of the croft. They do not pay rates on any improvements. Therefore, they might build an hotel on the croft or a house as big as an hotel, and they would not be rated upon it. So that we are really getting in the Lews an object-lesson of what would be rating on land values and nothing else, and I think the lesson is a very valuable one.