HL Deb 12 January 1916 vol 20 cc883-90

LORD ST. DAVIDS rose to ask His Majesty's Government whether they will take additional steps to press upon local authorities the importance of their making investments in War Loans. The noble Lord said: My Lords, in putting this Question I should like to begin by acknowledging that the Government have already done a great deal in the way of placing this matter before local authorities. Early in the war the Government urged economy upon these bodies, and at a later period impressed upon them that they could perform excellent service by investing money in the different War Loans. Particularly was this done by Mr. Walter Long at the time of the issue of the last War Loan, when he said that as far as such investment by local authorities could be facilitated by the action of the Government lie could be relied upon to do his best in the matter. Under that promise considerable bank balances and amounts held for the purpose of sinking fund have been, as a matter of fact, invested by local authorities in War Loans, especially, I think, in the last Loan.

Local authorities were urged to economise, and there is no doubt that to a great extent they have been endeavouring to economise effectively. But the particular point which I would like the Government to press upon local authorities is that they should not reduce rates. I observe that most local authorities with such economies as they are making are promising and giving reductions in the rates. Such reductions are praiseworthy in themselves, but at present the country is unusually prosperous, and I very much doubt whether the devotion of the money which the local authorities are saving to a reduction of rates will do any material good to any one. If, however, the local authorities all over the country would invest the amount of their economies in the War Loans they would undoubtedly be helping the country.

I should like the Government to press this course upon local authorities for these reasons. First of all, because it will help in the war; secondly, because many things with which local authorities are concerned are deteriorating from lack of money being spent. upon them, especially the roads of the country; thirdly, because it is likely that after the war we shall have a great deal of unemployment and consequent distress, and if the local authorities keep this money in hand to spend then, it would be of great advantage to all. If the economies that are being effected all over the country were devoted to War Loans, they would amount, taken together, to a quite perceptible sum; and I venture to think that the fact that local authorities were themselves economising in order to invest in this way would be an example to others. There are a number of individuals in this country who read very little, but who do read the local newspapers; and the fact that their local bodies and the men whom they know and trust in their local government were saving money in order to invest it in this way would prove a good example.

These savings are to a great extent, I should say to a predominating extent, caused by lack of repairs to roads. A great many of the economies are not voluntary at all they are compulsory, because it is impossible at the present time for local authorities to get either the material or the labour for the roads. This is a matter of which I happen to have special knowledge. I have been a member of the Road Board from the beginning, and there can be no doubt that in the majority of counties the roads are deteriorating at a perfectly alarming rate. That is, as I say, unavoidable through lack of labour. The Road Board have been engaged, under the War Office, in undertaking repairs to military roads. We have been doing the construction and the repairs of the roads to the camps on Salisbury Plain and other places. To do this we have taken away from the local authorities of the country some thousands of their best labourers, and in one or more cases we have taken the whole working staff of the county, It is obvious that in those circumstances the deterioration of the roads, already very marked, is going to proceed at an accelerated Tate, and it would be an excellent thing if the local bodies had funds in hand at the end of the war to put these things right. Anybody who has had anything to do with road making will agree that the non-maintenance of roads is not economy. If on a section of road for a period of, say, three years you saved £1,000 a year on what you generally spent, you might at the end of the three years consider that you had saved £3,000; but you would undoubtedly discover that when you came to put things right you would not only have to find the £3,000 but double, and perhaps treble, that amount to restore the road to the condition it was in before. People may say "Oh, but at the end of the war we shall get grants for such purposes as these from the Road Board." That cannot be, because the Government, very naturally wanting all the money they can get, have stopped the funds of the Road Board since the beginning of the war; and the Road Board at the end of the war will have very little money, if any at all, for such purposes as these.

I observe that one or two local authorities have already adopted the principle that I am pressing upon the consideration of the Government. I would mention particularly the town of Tunbridge Wells. Tunbridge Wells, I understand, has saved about. £10,000 by various economies, and instead of reducing the rates by that amount the local authority decided to put the money into Exchequer Bonds. Think what a fine position that local authority will be in at the end of the war. They can sell the Exchequer Bonds and will then have the money for local purposes, for the repair of anything that needs repair and for meeting any lack of employment that might be causing distress. To sum up, what I would like the Government to do in addition to what they have already done is this. I would like them to repeat their admonitions of economy, and to couple with them a very strong expression of opinion that local authorities at this juncture are not doing very much to help the country by giving small relief in rates which will probably be frittered away by the individuals who benefit by it, but that they would he doing much more good by investing the money in Exchequer Bonds.

I would further urge that the Government should promise the local authorities, and should dwell markedly on this, that if they act in this way they shall have an absolutely free hand, without dictation from London, in the expenditure of the money which they will obtain by the sale of their holdings of Exchequer Bonds after the war. I would like them to know that if they save this money it is an affair of their own, and that when the war is over and they get it back they will be able to use it just as they choose. The point I am taking to-day may be a small one, but I think it is more important than some to which a good deal of time and attention is being given. The Exchequer is very busy in devising schemes by which workmen may be encouraged to invest their savings in Exchequer Bonds. That is admirable work; but I venture to say that if the national needs are strongly urged upon the local authorities and if they can be persuaded to adopt the policy I am now advocating, you will obtain a great deal more money for the purposes of the war out of the savings of the different municipalities than you are likely to get, without compulsion, from the savings of the working man.


My Lords, my noble friend asks whether His Majesty's Government will take additional steps to press upon local authorities the importance of their making investments in War Loans. This is a subject that has by no means escaped the attention of His Majesty's Government. As far back as July 1 last a Question was addressed to the President of the Local Government Board in the House of Commons on the subject. Mr. Long was asked whether he had taken, or proposed to take, any steps to facilitate the investment by local authorities of funds in their hands or otherwise available to them, whether already invested or not, in subscribing to the War Loan. My right hon. friend replied as follows— I should desire to facilitate in every way possible the investment by subscription to the War Loan of any funds which a local authority may be able to make available for that purpose. So far as the consent of the Local Government Board may be necessary to such investment, whether under the Municipal Corporations Act, 1882, the Local Government Acts of 1888 and 1894, or otherwise, local authorities may take it that such consent will be given, and I should not expect them in the circumstances to await the completion of the formal procedure which some of these Acts require before that consent can be given. Where any difficulty arises owing to the shortness of time available for decision, I will, within the limits of my powers, do my best to help local authorities to put matters straight. That announcement conveyed the decision of His Majesty's Government in this matter at that time, and to that decision they adhere.

The noble Lord who put this Question to-day is, of course, aware that the powers of local authorities to invest in any loan are only such as are given them by Statute, and it may be generally stated that these powers are given either by Public Statutes or by Local Acts, including Provisional Orders. These powers relate chiefly to the investment of sinking funds, redemption funds, adjustment moneys, police pension funds, superannuation funds, and so forth, and the law only allows that these funds shall be invested in trustee securities. Those securities are defined in the Trustee Act of 1893, and they include, of course, the War Loans. As to which trustee securities local authorities choose to invest their funds in, that is a matter in the hands of the local authorities themselves. The Government are naturally desirous that local authorities shall, where circumstances permit, use their savings to invest in War Loans, but the matter, as I have said, rests with the local authorities themselves, and there are various reasons which I think will occur to my noble friend why existing securities should not be sold out for reinvestment in War Loans. At the present time a good many local authorities have short-term loans—money repayable at six months' notice; and they are finding that the rise in the rate of interest and the desire to invest in War Loans are resulting in a number of these short-term loans being called in. I could give an instance of a large corporation in the North of England which has just had a considerable sum called in under these circumstances. They are obliged, as things are at present, to apply to the Treasury to provide them with money to meet these liabilities, and it is not convenient that more applications of this kind than can be helped should be made to the Treasury at the present time.

The noble Lord submitted that it would be advantageous, where local authorities are enabled to reduce their rates, that instead of taking that course they should levy the old rate and invest the balance in War Loan. The Local Government Board cannot share the view of the noble Lord in that respect. Rates are a compulsory levy, and if a higher rate were levied than was necessary in the circumstances of the case the balance between what was necessary and what might have been raised would be in effect a forced loan, and it is held by the Government that if there is to be a forced loan—I have no means of judging whether we shall come to that, but it is, of course, possible—the compulsion should be applied universally and not at the discretion of local authorities in certain areas. The Local Government Board consider that the persons required to invest in such a forced loan should have the benefit of their own investment, and that the dividends should not be pooled as they would be supposing the view of Lord St. Davids was carried into effect. In the opinion of the Local Government Board the valuation lists under which rates are levied by no means supply a proper measure by which the contributions of individuals to a War Loan should be gauged. As your Lordships are aware, local rates are in the main levied on real property, the occupiers and owners of real property being those who pay the rates. If there is to be any forced loan it would be hardly fair that people who own other species of property, such as foreign stocks, or large shipping companies, and so on, should be exempt.

I am afraid that in those circumstances it would be impossible for the Government to accept the suggestion of my noble friend that a circular should be sent out by the Local Government. Board authorising municipalities and local authorities to raise a higher rate than is required for their current purposes. It is extremely doubtful whether the issue of any such circular by-the Local Government Board to local authorities would not be ultra vices. Fresh legislation, it appears, would be required to carry out any such scheme as the noble Lord suggests. The noble Lord was quite correct in his statement that the roads in many parts of England are falling into a bad state of repair. Of all the economies that county councils and local authorities can effect I think the House will agree that the last economy they should try to accomplish is on the roads. Once roads get let down it is extremely difficult to get them into a proper state of repair again. But I think it is only just to the local authorities to say that it is not that they want to effect economies by cutting down the repairs of the roads. As Lord St. Davids pointed out, the reason is that labour is almost unobtainable in many districts, and the same is the case with regard to materials. The noble Lord instanced the local authority of Tunbridge Wells as having invested a considerable amount out of their balances in Exchequer Bonds.


I read a report of a meeting at which it was stated that they were going to do so; they had passed a resolution to do so.


I am not acquainted with the facts of the case in regard to Tunbridge Wells, but I am afraid that if the local authority there have been raising a higher rate than is necessary for the purposes of the district they will have been acting illegally, and I am not at all sure that the Local Government Board auditor will not have something to say to them on the matter. The noble Lord, in his last remarks, pleaded that the Local Government Board might do well to inform local authorities that they would be exempt in present circumstances from dictation on the part of the Board with regard to the way in which they raised rates or spent their balances. All I can say as regards this is that the Local Government Board might almost as well cease to exist if they are to exercise no control whatever over the expenditure of local authorities. One of the greatest safeguards over extravagance by local authorities has been, I have always understood, that they are under the control and supervision of the Local Government Board; and it is extremely doubtful whether the Board would be inclined, despite the circumstances of the times, to inform local authorities that they are quite free to raise what rates they like and to use their balances as they please. I hope I have fully answered the Question put by the noble Lord.

House adjourned at Five o'clock, till To-morrow, a quarter past Four o'clock.