Lords Sitting of 19 March 1929

Preamble
The House met at a quarter past four of the clock. The LORD CHANCELLOR on the Woolsack.

BUSINESS OF THE HOUSE.
LORD PARMOOR: Before public business begins may I ask the noble Marquess the Leader of the House whether he can give us any information as to his future plans?
THE LORD PRIVY SEAL (THE MARQUESS OF SALISBURY): My Lords, as you are aware the Local Government (Scotland) Bill stands for Second Reading this afternoon. I am in hopes that we shall get that Second Reading, if your Lordships are good enough to give it us, in good time. If not, I suppose the debate will have to be adjourned and continued to-morrow. That will not interfere, I hope, with the Third Reading of the English Bill which stands as first Order to-morrow. From certain inquiries I have made I gather that that Bill is not likely to take very long. I am given to understand that on Third Reading there are a certain number of Amendments which have to be discussed, but most of them are drafting Amendments. There are few Amendments of substance—so I am informed—so that we shall be able probably to conclude the proceedings on that Bill to-morrow, whether the Scottish Bill is finished this afternoon or not. If your Lordships wish to sit after dinner to-morrow, of course that could be arranged.
The Government propose to take the Committee stage of the Scottish Bill on Tuesday and Wednesday of next week. That time, I am informed, ought to be sufficient to fulfil the obligations upon that stage of the Bill. Should that prove to be the case, the House might adjourn for the Recess on Wednesday evening, and I hope that a certain holiday will be permitted to us. I thought, perhaps, your Lordships might be willing to return on Thursday, April 11, in order to take the Report stage of the Scottish Bill. As to the Third Reading of that Bill, we must see when we get to the Report stage how much more work there is to be done upon it.

INDUSTRIAL ASSURANCE AND FRIENDLY SOCIETIES BILL.
Brought from the Commons, read 1a, and to be printed.
MARRIAGES PROVISIONAL ORDERS BILL.
Brought from the Commons, read 1a, to be printed, and referred to the Examiners.
MINISTRY OF HEALTH PROVISIONAL ORDER (MIDDLESBROUGH EXTENSION) BILL.
Brought from the Commons, read 1a, to be printed, and referred to the Examiners.
FACTORY AND WORKSHOP (COTTON CLOTH FACTORIES) BILL. [H.L.]
Returned from the Commons, agreed to.
NORTHERN IRELAND LAND BILL.
Returned from the Commons, with the Amendments, agreed to.

LOCAL GOVERNMENT (SCOTLAND) BILL.
Order of the Day for the Second Reading read.
THE EARL OF AIRLIE: My Lords, it is not without a certain sense of personal trepidation that I, as a junior member of your Lordships' House, rise to ask your Lordships to read this Bill a second time. The trepidation is not so much for the effects or the objects of this Bill, but arises from the fear that I might fail to do adequate justice to the merits of the Bill. It is hoped by His Majesty's Government that towards the closing stages of the proceedings on this measure your Lordships may be persuaded that the greater part of the Bill is good, and that even those parts which may not appeal to you may appear better than you at present deem them to be. With all these feelings in my mind, I do not think that it is necessary for me to urge upon your Lordships the importance of this measure, but may I point out that,
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if anything, it is even more important for Scotland than is the English Bill for England. The parish in Scotland is still the area for the administration of poor relief, while in England that has long been a matter of the past. This Bill provides for wide changes in local government in Scotland. It constitutes the final step in the system of His Majesty's Government for the reform of rating and for the revision of the system of grants to local authorities.
Except for education, it is more than thirty years since the last big reform of local government took place. Since then there have been great changes and developments in industry, transport, communications, and the social services generally, and these developments call urgently for a review of the machinery of local government. This need for reform has long been felt, and, in fact, it has been recognised by one authoritative and responsible Committee after another: the Royal Commission on the Poor Law, the Maclean Committee on Local Government, the Haldane Committee on the Machinery of Government, the Desborough Committee on Police, the Consultative Council on Local Health Administration, and the MacKenzie Committee on Scottish Hospital Services. In Scotland at present, for a population of less than five millions there are 1,928 local authorities. Of these 869 are parish councils, and 201 are town councils. The size of these authorities varies enormously. Some are very small.
In the parish councils, whose main functions are the relief of the poor, there is, if I may put it that way, an inequality in the distribution of pauperism in those parishes. Over 75 per cent. of the pauperism in Scotland is contained in the 37 parishes constituted in the burghs, with a population of 20,000 and upwards. In the parishes with a small amount of pauperism the average of councillors to paupers is very high. There runs in my mind a quotation—I am not certain from where it comes—which says: "To every man a damsel or two." I would change that and put it: "To every councillor a pauper or two and a half." I am perfectly certain your Lordships will agree when I say that the average is too high in both

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cases One result is that the rates vary accordingly in some county parishes. Take, for instance, West Lothian, where the rates vary from 7d. to 7s in the £. Administrative expenses are very high in the small parishes, where 18 to 20 per cent. of the total expenditure on the relief of the poor is the expense connected with administration, compared with 3 per cent. in the larger parishes.
Turning to the town councils, we find 129 burghs out of 201 with a population of under 5,000. Out of the 201 there are 113 in which, under derating, a penny rate would produce less than £100. The town councils are the local authorities for all public health services, and the smaller the burgh the stronger the argument that the unit is too small to run efficiently the major services. From the financial point of view also after derating they will be less able to support the larger social services. So, it is obviously too much to expect that the major local government operations, especially those requiring institutions such as hospitals and Poor Law institutions, should be adequately and efficiently maintained by authorities of these smaller dimensions. Ono of the services which is now vitally affected by these progressive changes is the construction and maintenance of roads. Road traffic in the last few years has increased enormously, and it is mostly through traffic, but I would point out that the unit of administration has unfortunately stood still. District committees and town councils are still the local authorities responsible for all highways. Under this system rates for the maintenance of roads also vary a great deal. If I might give some instances, the road rate during 1926–27 in the county districts varied from 12 s. in the Lewis district of Ross and Cromarty to 1s. 7d. in the St. Andrews district of Fife, and in burghs from 4s. in Kinross and 3s. in Culross to 2d. in Cockenzie. Under modern conditions there can be no justification for the continuance as independent highway authorities of such small administrative units. In fact, there is a real need for more equitable distribution of the greatly increased cost of the maintenance and upkeep of main roads.
Now, if I may, I will turn far a minute or two to general observations. It is not only that local government areas are unsatisfactory and inadequate, from an ad-
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ministrative point of view, but the distribution of local government functions is wasteful and inefficient. There ensues from this duplication of staff, duplication of organisation and institutions, overlapping of duties generally, and especially in regard to the health services. Further, there is no unified financial control, and therefore no safeguard to the ratepayers against competing claims of local authorities. The reform of Scottish local government is long overdue, and the proposals in this Bill relating to grants and roads are called for even more urgently and imperatively. Now, with de-rating it may be that small areas will find their resources considerably diminished and, under the system of block grants, fluctuations in local expenditure will be reflected in the rates. It seems to His Majesty's Government to be a matter of supreme importance that local government units should be of sufficient size to ensure some inherent stability, and that the principal area should be of sufficient magnitude to present average conditions. The principles in the Bill are centred mainly on the provision of such adequate areas for the carrying out of major local government services with a single controlling authority.
As regards the reform of the rating system and the new system of grants, they are substantially the same as those in the English Bill, and I do not feel that at this stage it is necessary for me to repeat them to you, as they have already been fully discussed and explained in the debates on the English Bill; but I would like to remind your Lordships that the proposals relating to rates are intended to relieve agriculture and industry of the major portion of their rates, which are imposed upon the instruments of production. Rates are not like taxation, paid on profit. They are paid whether there is a profit or a loss. They constitute a severe handicap under modern conditions, which will operate even more in the future if we are to maintain our powers of competition in world markets. There is, however, one important difference from the English Bill to which I must refer, and that is in reference to the valuation of farms. In England, as those of your Lordships who come from that country will know, farmhouses and cottages are

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valued for rating purposes separately from the farm and steading and the existing agricultural rating relief is given on the value of the latter. In Scotland it is not so. The farm is valued as a unit, including the farmhouse and what we call the cottar houses and the farm buildings and the steading. It is also perhaps right for me to state that in Scotland the owner pays 75 per cent. of the rates, and the tenant 25 per cent. Therefore, so as to ensure as far as humanly possible that the benefit to the agricultural industry as a whole should be proportionately the same in both countries, provision is made to rate agricultural land and heritages on a fraction of the gross annual value, and this fraction is fixed at one-eighth. A new system of grants has been devised to assure that assistance from public funds will go to areas where the need is greatest. After the transitional period, grants will be made on a formula which is designed to affect this. That percentage system has been removed by which authorities willing and able to spend got more grant, and a system of block grants has been put in its place.
I turn now to the provisions of the Bill. The provisions of the Bill unifying the administration of the more important services are to be found in the first five clauses and the First Schedule. These include Poor Law, major public health services, town planning, maintenance of classified roads, education, police, and valuation. The unit for the administration of these is intended to be counties and burghs with a population of 20,000 and over. On this being accomplished, the following authorities will disappear: 869 parish councils, 27 district boards of control, 98 district committees, 37 education authorities and 33 standing joint committees. The number of new local authorities will be reduced to 234, of which there are 33 county councils and 201 town councils. The functions remaining to the parish councils and to the district committees after the transfer of Poor Law functions and of the major public health services and classified road maintenance are not such as would warrant their continuance as separate administrative bodies. Perhaps I might be allowed to say here that considerable difficulty was found in the 1925 elections
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in manning the smaller parish councils, inasmuch as in 76 cases there were insufficient nominations.
The transfer of education from an ad hoc to an ad omnia authority has given cause for a good deal of argument. This is an integral part of the scheme for the administrative and financial unification of local services, and the Government are of opinion that it would be neither to the advantage nor to the interest of education to remain under a separate authority. I should add, perhaps, that the proposal is that the education authority shall now be the county council, except in the case of the large city burghs—that is, Edinburgh, Glasgow, Dundee and Aberdeen—where the town council will be the education authority. The principal powers that are being transferred from town councils of burghs with a population of less than 20,000 (which we call the small burghs) to the county councils are the maintenance of classified roads, police, major health services, valuation, and town planning, and these town councils still retain considerable functions, which include housing, water supply, drainage, scavenging, lighting, libraries and housing, police functions (apart from the management of the police force) regulation of traffic by-laws, public parks, and burial grounds. Provision is also made for compulsory combination on these subjects if it is considered beneficial. Clauses 6 and 7 make provision for the transfer of property and liabilities which are consequent upon the transfer of functions, for the transfer of officers' superannuation funds, and for compensation to officers.
Owing to the extension of the powers of county councils it is proposed to reconstitute these bodies. The number of county councillors and their apportionment between county and burgh is to be decided by the Secretary of State for Scotland. The landward area is to be divided into electoral divisions, and town councils will elect burgh representatives amongst themselves for the county council, as is done at present by the Royal and Parliamentary Burghs. The burgh representatives will vote only on matters of financial interest to the burgh. In the case of large burghs this will, of course, affect only education and police. The large city burghs of Edinburgh, Dundee, Glasgow and Aberdeen will not be represented on the county council.

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The reconstituted county councils come into being in December, 1929, in order to frame administrative schemes for taking over the enlarged functions on May 16, 1930, which is the end of the financial year for local bodies. The White Paper (Cd. 3263) giving the provisional scheme for the representation of areas on the new county councils has been presented to your Lordships' House and to the town councils and county councils.
Clause 10 provides for the union of certain small burghs for all purposes. These burghs are contiguous. The clause also provides for the union of two small counties, and these counties are to be combined for the purposes for which small burghs are included in the counties—that is, major services. Clause 11 allows for the combination of local authorities voluntarily and, in certain cases, compulsorily. Clauses 12 to 14 are concerned with the arrangements for conducting the greatly increased business of the county councils and town councils. Clause 12 provides for the appointment by county councils and by those town councils which are education authorities of an education committee which is constituted under an approved scheme. The Committee must include persons of experience in education, persons interested in religious instruction and one or more persons representing those concerned in the schools transferred under Section 18 of the Education (Scotland) Act, that is, the Roman Catholic Schools, and it is laid down that a minority of the committee need not be members of the council. In counties also there must be a committee for police and for poor relief. No council is to delegate to the committee any function relating to the raising of money by rate or loan.
In Clause 13 it has been endeavoured to make the operation of these proposals as elastic as possible. A county council may delegate certain functions to the town council of a small burgh on terms to be agreed upon. These may be the maintenance of classified roads, or they may be the administration of poor relief. This is provided from the point of view of ensuring the greatest service being given without indulging in what might be called unnecessary red tape. For the purposes of carrying out certain minor functions, which will probably be most satisfactorily carried out
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by a local body, provision is made for the setting up of district councils to act in districts which will be fixed by the county council, subject to the approval of the Secretary of State for Scotland. The councils will consist of the county councillors for the electoral divisions included in the district, and other elected members. The county council may delegate additional functions to the district councils, and these may requisition on the county council for funds up to a rate of 1s. in the £. The remaining provisions of this Part need be referred to only briefly. They consist mainly of provisions with respect to rating, borrowing and audit. In this Part of the Bill, however, authority is given for the payment to members of county councils of expenses incurred and in respect of loss of remunerative time.
Part II of the Bill deals with de-rating, which, as I have mentioned, is a matter common to both countries. The total amount of rate loss under the proposals in Scotland is estimated at £3,200,000. Part III, which deals with Exchequer grants, presents the same scheme as that of the English Bill, with certain modifications to adapt it to the Scottish system of local authorities and to Scottish conditions. What actually happens is that the landward areas in Scotland are given slightly larger grants because their functions are a little more important and more varied than those in England. Part IV is general, and confers certain powers to make orders. In as short a time as I have been able to do it I have now endeavoured to cover the ground that this Bill embraces, and I ask your Lordships to read the Bill a second time.
Moved, That the Bill be now read 2a.—(The Earl of Airlie.)
EARL BEAUCHAMP,EARL BEAUCHAMP, who had given Notice to move as an Amendment, That the Bill be read a second time this day six months, said: My Lords, I am sure your Lordships will agree that the trepidation of the noble Earl, who has just moved the Second Reading of this Bill, was quite unnecessary. We all admired the skill and lucidity with which he has explained the provisions of this very complicated measure, and I agree with him in thinking that there are many parts of the Bill to which naturally we should take less objection than we should take to others. Like the curate's egg, the

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whole is not bad, but it is sufficiently bad for me to put down a Motion that the Bill be read a second time this day six months. One reason why I have done that is that I do not feel quite sure that the Amendment which has been put down by the noble Viscount, Lord Novar, would, when fully explained to the House, have met with the approval of my noble friends. We did not feel quite certain that the grounds upon which he is moving that Amendment were grounds which would particularly appeal to us, although, having read a number of his contributions to the discussions which took place on the Rating Bill of 1896 in another place, I find a great deal with which I am able to agree; but the principles, or two of the main principles, underlying this Bill, are so very similar to those of the English Bill to which we asked your Lordships to disagree a fortnight ago, that we find ourselves quite unable to let the Bill go by without making a protest, whatever the result of that protest may be.
The methods of applying the money—the formula—remain the same as before. We do not object to derating, but to the distribution of the money, and the way in which it is going to be distributed. There is this to be said as to the difference between Scotland and England. There is a far larger proportion of agricultural land in Scotland, and as time goes on, and there is more expenditure on health services and social reforms, the burden upon the shopkeepers and householders will be all the more, because the agricultural interest will be so very largely relieved. I think under this measure the amount of money absolutely given to the landlords amounts to £770,000, while the tenant only gets £110,000. Of course the landlord, under the provisions of this Bill, is bound to hand over half the amount he gets to the tenant. It is so different in Scotland from what it is in England that it is impossible to make an exact comparison between the two, but there is this in common, that we insist that the tenant shall be secured in getting the amount of relief which His Majesty's Government intend he shall have, at any rate during the beginning of this Bill.
I hope that in moving an Amendment to this effect I shall get the support of
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the noble Viscount, Lord Novar, because I see that on the Report stage of the Agricultural Rates Relief (Scotland) Bill, 1896, he said:
"In Scotland rents were far more competition rents than in England, and under a system of competition rents, at any lapse or breakage of lease, or re-arrangement of reductions for the bad times, the benefit must undoubtedly go to the owner and not to the occupier."
In those circumstances I hope that' when we move an Amendment trying to secure that the occupier shall get the full benefit of the remission of rates, we shall have the support of the noble Viscount. So much for derating.
The other important principle underlying the Bill is that dealing with local government. Here again we find that there are very great differences between England and Scotland. There is again the same principle of sweeping away the smaller authorities and handing over the power to larger authorities, and yet we find that small burghs of under 20,000 are swept away, but the larger burghs of over 20,000 are left in possession of certain powers which are not left to them under the English Bill. In this respect we venture to think that Scotland is more fortunate than was England. This work which is being done by smaller authorities throughout Scotland has been in the main very good work indeed. People living in the locality have taken a real interest in the work of the localities, and have done the work remarkably well on the whole. There has been specially good work on the health services, and it is most valuable training for citizens that they should be able to take part in the work of their local authorities as much as possible, and to encourage them to do that can only be a good thing. In Scotland the distances are great and therefore it is far more difficult for members of local bodies to get to the more centralised authorities than it is for them to attend meetings in their own localities and help to administer their local affairs. For my own part I regret the disappearance of the ad hoc education authorities in so many cases. In this respect Scotland has been particularly fortunate in the interest which the citizens take in education. There is much more interest, I am afraid, taken in education in Scotland than there is in England. No doubt that is

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one reason why the Scots attain such very eminent posts throughout the Empire.
Really the good work which has been done in Scotland on local authorities is particularly conspicuous in the work of the local education authorities, and if your Lordships will allow me a personal reminiscence, I still regret the disappearance of the ad hoc London School Board, on which I served, and which was able to do very good work for education in London. I doubt very much whether the more centralised system of education under the London County Council has meant any real improvement in the education of the children of the Metropolis. I am informed that in London alone it means 80 inspectors who were not necessary while the London School Board was in existence. The members of the London School Board took a personal interest in the schools more particularly under their care, and used to visit them, and were able to speak with knowledge whenever a question concerning them arose on the Board. That personal knowledge of individual schools was of the greatest value to education in London, and is inadequately replaced by the 80 inspectors, who cost a great deal more than the voluntary visitors. In four cities in Scotland, I understand, there are now no inspectors. I am afraid that when this Bill passes inspectors will become necessary, with all the further expenditure involved. In this matter opinion in Scotland is almost unanimously against the change, and the wishes of the people are really in favour of maintaining the present education authority. The Civil Service is an inadequate substitute for the local interest which citizens take in their own schools. It was a fine tradition in Scotland, and I am sorry to think it is likely to be broken by the passage of this Bill.
It is remarkable to see what opinion in Scotland with regard to the whole Bill really is. The Government had the Third Reading on a Monday night, and I understand that members living in Scotland are apt to take the week-end in Scotland, and not always to be in the Division Lobby on Monday night. Therefore it was on a Monday night that the Third Reading was taken, and then the Government had the best majority of Scottish votes—34 Scottish votes for
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the Bill, and 22 against it. That was much the most favourable Division that the Government had. On the Second Reading the Government were in a minority of two votes among the Scottish members. In the Committee stage there were sixty-two Divisions. The Government were in a majority in twenty-one Divisions, of which thirteen were on Fridays or Mondays. They were in a minority in thirty-five Divisions while in six Divisions the Scottish votes were equal. On the Report stage there were twelve Divisions. The Government were in the majority in two Divisions and in a minority in ten Divisions. In those circumstances, it cannot be wondered at that the passage of this Bill has gone far to strengthen the movement in favour of Home Rule for Scotland, and that people in Scotland, where the spirit of local patriotism is particularly strongly developed, feel it very much that their wishes should be overruled by those, as they think, inferior representatives who come from other parts of Great Britain. Some of this feeling might have been avoided if the Bill had been considered in the Scottish Standing Committee, but it was carried through on the floor of the House, and now your Lordships are asked to give it a Second Reading.
I would point to one or two differences between this Bill and the English Bill where the Scots seem to me to have an advantage, more particularly on Clause 27, dealing with treatment of sick persons, and Clause 17, dealing with expenses, on which the noble and learned Lord beside be put down an Amendment on the English Bill. In the course of the proceedings on the Committee stage of the English Bill the noble and learned Lord on the Woolsack was wise enough to say that one Bill at a time was enough, and that he could not turn his attention to what might or might not be in the Scottish Bill. I wonder what the procedure on the Committee stage will be. It will be a temptation to us, when we are moving an Amendment assimilating the Scottish Bill to the English Bill, to extract from the speeches on the English Bill of the Lord Chancellor and the noble Earl, Lord Onslow, their most telling points, and perhaps we shall be flattered by being replied to by quotations from the speeches we ourselves made on the English Bill. I wish there were some

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chance of the English Bill being amended in the direction of the Scottish Bill because—in the directions I have mentioned at any rate—the Scottish Bill is much better than the English Bill.
On the other hand, in Clause 72 the case is different. In Clause 126 of the English Bill your Lordships will see that every Order laid under that clause ceases to have effect unless some time before the expiration of three months it has been approved by both Houses of Parliament. In the Scottish Bill, on the other hand, under Clause 72 every Order becomes valid within the next twenty-eight days unless an Address is presented by either House of Parliament, and meanwhile is without prejudice to the validity of anything done under it. It would be easily possible for the Secretary of State for Scotland to issue an Order doing what he wanted and then, long before an Address had been presented by either House of Parliament., the Order would have become valid and, in spite of a protest by your Lordships, it would have the force of law. In this case, the onus lies on the Member of Parliament and on the private individual. In the English Bill, the onus lies on the Government of the day and on the Government Department to secure the approval of Parliament. If the Leader of the House would give his attention to that point he would perhaps he willing to consent to some Amendment such as the Government made in the English Bill. That, however, is a point we shall have to fight in Committee.
As to the rest of the Bill, I would only say that the principle of the two Bills is so much the same that in this Bill, as in the other, derating is going to benefit the wrong people, and too few people, and that the local government proposals will mean a large increase in the bureaucracy and the Civil Service. Much of the splendid voluntary work now done in Scotland will disappear. For these reasons I beg to move the Motion standing in my name.
Amendment moved—
Leave out ("now") and at the end of the Motion insert ("this day six months").(Earl Beauchamp.)
THE EARL OF ELGIN AND KINCARDINE: My Lords, in supporting the Amendment which has just been moved, I feel that my noble friend has already sufficiently explained
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the conditions of the passage of this Bill through another place. It is therefore unnecessary for me to point out again that there is a very considerable feeling in Scotland adverse to this Bill. I agree that there are parts of this Bill which are not so objectionable, but in spite of that, it is clear that very few Bills have been presented to your Lordships within recent years on which a Motion for rejection might more appropriately have been moved than on this Bill. This Bill has been forced through another place with the whole weight of the Party machine and, on the Second Reading, against the pronounced feeling of Scotland. It has been forced through as one of the last acts of an expiring Government. I might refer to it as the last kick of an expiring Government, but if I did so I would qualify it by saying that it is a very vigorous kick, because it affects not only every local authority, but every individual, in Scotland. One would have expected that the last act of a Government just before a General Election would have been an act which would have received general consent, in other words an act generally popular but it is surely evident from the very fact that an important Amendment has been put down by the noble Viscount opposite, that even supporters of the Government are not unanimous in support of this Bill.
The noble Earl who introduced the Bill gave us in some detail and with very lucid explanations the effect of the Bill in abolishing a very large number of local authorities. I would illustrate that from the County of Fife, in which I live. In that County no less than sixty-six administrative bodies will disappear. These include the board of control, the education authority for the county, parish councils, district committees, and other bodies. In addition, no less than twenty-six burghs will lose the major part of their authority. Fife is perhaps the best illustration that one can give. In the county there are no fewer than twenty-eight burghs, with their town councils and the authority which they represent. Twenty-six of those burghs will lose that authority, and only the two larger burghs, Dunfermline and Kirkaldy remain untouched. In addition, the old County of Kinross which has already been

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referred to by the noble Earl in introducing the Bill and which has been associated for a great many years in the services of the board of control and other services is to be divorced from the County of Fife and married to the County of Perth. This, I think, will illustrate the difficulties which will arise in the formation of a new county council to carry out the local administration which is to be their charge. At the present time we have a county council numbering between sixty and seventy members, the larger part of them representing, by direct election, the landward part of the county, the others representing the burghs. But under this scheme the total number of members of the new county council is to be ninety. Of these thirty-four are to be representative of the landward area and elected by direct vote; twenty-four are to be representative of the two large burghs, twelve from each, and thirty-two are to be representative of those twenty-six smaller burghs to which I referred. We shall have, therefore, in this council of ninety, three different classes of members with different authority and different powers of voting. Art exceedingly difficult procedure will undoubtedly result. In respect to the two larger burghs, which have twenty-four members out of the ninety, it will only be responsible for the services of education, and not for police, because in this case both burghs have their own police forces. The smaller burghs with thirty-two members will be there for other services, but will not be able to vote on every matter which concerns the county council.
The noble Earl referred to one of those burghs, the burgh of Culross, and I will refer to it again, as an anomaly. The burgh of Culross has a population of 508. One of the landward districts of the county, comprising several parishes, will have a population of 4,257. Yet those two constituencies will have the same, or practically the same, power of voting in the new county council. I mention that as one of the difficulties and anomalies of the situation. But I think the main objection to this Bill is to be found in Clause 72, to which I ask your Lordships to refer. Subsection (1) reads as follows—
"If any difficulty arises in bringing into operation any of the provisions of this Act, the Secretary of State may make such Order for removing the difficulty as he may
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judge necessary for that purpose, and any such Order may modify the provisions of this Act so far as may appear to the Secretary of State to be necessary…"
Is it necessary to have an Act of over 70 sections, with elaborate schedules printed on 91 pages of paper, and in that Act to have a section which gives the Secretary of State for Scotland power to make Orders to alter the Act? If I may refer to it in this way, we are celebrating this year the sexcentenary of the death of King Robert the Bruce, the greatest of Scotland's Kings, and I see in this, perhaps, an attempt of the Government to do something to celebrate that event. King Robert the Bruce, who died six hundred years ago, was a Liberal and a Free Trader, and if I could be certain that the Secretary of State for Scotland were going to follow adequately in the footsteps of King Robert I should make less objection to Clause 72.
Let us look back over those six hundred years. We find that even in those days the Parliament gathered at Arbroath, and, while making a very great declaration of faith in their King as the sponsor of their liberties and upholder of their faith, declared no less emphatically that if he deserted their cause, or made any attempt to make their country subservient to the country of England, they would turn him out as a, common enemy. This clause seems to me to be one that cannot possibly be allowed to remain in an Act of Parliament. It hands over every principle of democracy to the worst form of bureaucracy, and it is for that reason that I support the Amendment which has just been moved by the noble Earl.
LORD PARMOOR: My Lords, I have only a few words to say on this Bill, and I certainly shall not embark upon the particularly Scottish questions which are involved. I am one of those who think that in Scottish matters there should be a large liberality towards the opinions of Scottish members. That has been shown in another place, where the Scottish Members have naturally taken a leading part in regard to the Scottish provisions of the Bill. I was disappointed with the speech of the noble Earl, Lord Airlie, in one respect. I do not for a moment question either the clearness or the lucidity of the statement he made, but I think he escaped some of the special

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difficulties in the Scottish Bill by sheltering himself behind the discussions on the derating proposals which have already taken place on the English Bill, both here and in another place. He indicated clearly, of course, that there are differences between the rating system in Scotland and the rating system in England; more particularly in reference to a matter with which he dealt, though only slightly, namely, that in Scotland the rates are divided as regards the liability for payment between the owner and the occupier. I see in one of the Papers issued from the Scottish Office the proportion is put at about half and half. I believe that is correct, but in particular cases, and under particular Local Acts, the distribution of liability between the owners and occupiers is nothing near the half-and-half proportion.
It is a very serious question. I have always held that, whatever may be said for derating, it cannot be said to be a measure which will bring back prosperity to agriculture, either in this country or in Scotland, and it appears to me that the argument is very much strengthened when we find that about half of these derating benefits in the first instance in Scotland goes to the owners, and not to the occupiers. In fact, taking the figures stated by the noble Earl, it is a far larger proportion than that. It cannot be said, whatever we may think of rating questions, that the industry of agriculture can in any way be benefited by a remission of half of the charges which are now placed upon the owner in Scotland. I quite agree that there are certain provisions at a later stage in order that some of the benefit which is given to the owner shall be restored to the occupier, but I do not think that goes far enough, and, as the matter stands, it only emphasises the injustice which I have always felt in regard to these derating proposals, that they are not really effective for the purpose for which they were brought forward, at any rate in the English Bill—that is to say, for the advantage of the agricultural industry. They, in fact, give advantages to those who are not directly interested in that industry.
There is one other point I should like to make. If derating is to be applied in Scotland as in England, and if there is to be a just application of the bene-
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fits derived, it ought to be made an essential consideration in the provisions of the Bill that of all persons probably no one has derived the same interest from local taxation, so far as local benefits are concerned, as the landowners. So far as I have heard, no case has been made out—certainly not so far as the English Bill is concerned—to support the principle that the landowners should get these advantages from derating. I hoped that we should hear some justification from the noble Earl, Lord Airlie, of this part of the Bill, but he did not deal with it, relying entirely on what had already been said in the English discussions.
While on this point I should like to call attention to Command Paper 3155. issued from the Scottish Office in June, 1928. I think the shortest way in which I can summarise my objection is by referring to the points raised in that Paper. There has been a series of Papers issued since June, 1928, and I have studied them all carefully. Although in one or two respects there may be differences in detail, there is no difference in principle, which alone I desire to refer to this afternoon. On page 4 of the Paper an extremely important statement is made in regard to the future provisions of the Bill. Paragraph 5 says:—
"It must first be remarked that no scheme for providing an alternative source of revenue for local authorities can take the form of a grant varying from year to year with the expenditure of individual authorities"
For the purposes of the argument that I want to address to your Lordships I will assume that is so. I am not myself entirely satisfied that the block grant should take the place of the percentage grant, but, for the purposes with which I am dealing, I will take the statement made in regard to Scottish rating from the Scottish Office that no scheme for providing an alternative source of revenue for local authorities can take the form of a grant varying from year to year with the expenditure of individual authorities.
I emphasise that, because the next statement in the same Paper says that that is a very important factor when we are considering the question of derating. This is what is said in paragraph 6:—

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"The most important effect of the de-rating proposals on the position of the individual local authority is the narrowing of the basis of taxation available to that authority, which necessarily involves a greater or less impairment of the capacity to meet the considerable fluctuations in expenditure inevitable from time to time."
Your Lordships will notice that already it has been stated in this Paper that those fluctuations cannot be met from a central source, and, therefore, you leave local authorities with an impaired source of revenue, and the fluctuations which they have to deal with must inevitably be met out of the resources left to them. The Paper goes on to emphasise the same point when it says:—
"An examination of returns rendered by local authorities indicates that the loss of rates in rural parishes due to the de-rating proposals will vary from about 3 per cent, to 60 per cent."
Forty per cent. of the present rateable value would be taken away, and, therefore, to that extent, the expense of the fluctuations would be left to be borne by the diminished source from which the local authority could obtain the necessary revenue.
I do not want to exaggerate this, because the noble Earl, Lord Airlie, explained this point. He said that was one of the reasons why you have to have the enlarged areas. I agree that no one could leave the small local authorities without any extended area while at the same time taking away from them 60 per cent. of their sources of revenue. But I want to make this statement, that the difficulty there comes from derating. I think derating itself is wrong. It is pointed out that the de-rating, having the effect of reducing by 60 per cent. in an extreme case the present sources of revenue in the local area, means that you must have enlarged areas in order to draw your resources from large districts. I am not here contesting the enlargement of areas. I think the point was made perfectly clear by the noble Earl when he told us of the number of parish councils and other considerations, which showed quite conclusively that we must have larger areas in Scotland as in England. I am only dealing with this Paper because it is the shortest way of pointing out to your Lordships how the Scottish Office itself has dealt with this matter, as I think, in a wrong way, and
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put forward principles which cannot be sustained.
Why do they say that you must have the enlarged area? They say that it is a "necessary accompaniment of the derating scheme"—to a certain extent that is true—" and the arrangements to meet the case of the necessitous areas. "Now I joint issue upon that point. By taking away a part of the present rateable field from the necessitous areas prima facie you increase the liability upon those poor areas. The real remedy for these necessitous areas is to take from the shoulders of the ratepayers national burdens and national charges. National burdens and national charges are in a very special manner a hardship on the ratepayers in necessitous districts, and it always must be so, because you have a poor source of revenue which you are now making even poorer than before, and you seek to raise on that the money for purposes which ought to be regarded as national and not local. If you were to do that—this was pointed out years ago—you would at once deal with the difficulties of the necessitous areas. You would take away from them national charges which, according to every financial authority, ought to be assessed on ability to pay, and levy only local charges from which, at any rate in theory, corresponding benefits are derived in the locality itself. I cannot see how derating per se—of course, in large areas it may be of assistance from other causes—can be other than a system which places a heavier burden upon the necessitous areas because the ability to bear the burden as regards all rating, and particularly as regards rating for national burdens, would be heavier upon the remaining ratepayers than it was before.
There is another point bearing on this subject which is dealt with on page 5—I need not read it again, because it is really the same matter—where it is said that a fundamental part of the scheme is the block grant system which, according to the statement of the Scottish Office, makes it possible to deal with the fluctuations under the old percentage grant principle. I do not want on the present occasion to go again through the arguments which I have had to address to your Lordships on the English Bill, but I

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do wish the noble Earl would give some explanation which would do something to relieve my mind of the conviction, which I still hold, that the derating proposals are wholly wrong in principle, and that the assistance given from the national resources is distributed in about the most wasteful way possible. I am not now dealing with the question of giving doles to prosperous and rich companies, which is very bad, but I say that the whole system from beginning to end is not really of direct advantage, for instance, to agriculture. At the best, it only gives some indirect benefit which may be very small indeed. Indeed, I agree with what the noble Earl, Lord Airlie, said that you do not rate industrial profits and you do not rate the industry of agriculture at all. If you are merely dealing with rates, which in effect come under the category of rentals and not profits, so far as industry is concerned you leave it in its present position. That is a matter I will not go into at the present time, but it is a very large question.
There are two or three other matters on which I should like to say a few words. The first is Clause 17, which provides for payment by county councils of travelling expenses. That is a question I intend to raise again on the English Bill, but I want to say now that I think the provision in the Scottish Bill is admirably adjusted, and expenses are dealt with in the way in which they ought to be dealt with. I agree wholly, if I may say so, with the provisions of Clause 17, and I hope that they may be of some assistance when we come to deal with the English Bill again. I followed the debate on the subject in another place, and almost every Scottish Member, or at any rate Scottish Members from every side, approved the provisions which ultimately found place in Clause 17, as against the theory of merely leaving it to the county councils to make these payments or not. I say without hesitation that if you leave the provision in the English Bill as it is at present you will deprive every man of the poorer classes of any opportunity of finding a place upon these county councils. Remember that these county councils in Poor Law matters not only define policy, but are responsible for finding the money, and, in addition, they appoint all the officials by whom the duties imposed by the Poor Law are carried out. It is an
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important matter, and, as regards the Scottish Bill, I only desire to congratulate the noble Earl on having such an easy task in supporting Clause 17.
In the same way, I think he will support the Scottish principle in Clause 28, which deals with the recovery of expenses for the treatment of the sick. This recovery of expenses is a new power. Perhaps I ought not to say it is a new power altogether, because the liability was constituted a few years ago, but when it was constituted it was left to the discretion of the local authority as to whether they sought to recover these expenses or not. If there is one matter upon which I think security ought to be given in the administration of the Poor Law it is that this discretion should be in the hands of persons cognisant of the conditions, who know the people, who know what they want. Those people should have the advantage of hospital treatment, and there ought not to be a deterrent of this kind in the way of resorting to these institutions. On the contrary, they ought to be encouraged to resort to them by leaving the law as it is at present as regards the recovery of expenses.
One other point upon which I should like to say a word is that dealt with in Clause 44—adjustments as to rating relief between landlords and tenants. I understand that the principle there is to secure as far as possible the benefit to the tenant. That, of course, would entirely meet my views. How far that is really secured by this clause I am not quite sure at the present moment, but I would like to contrast it with the various attempts made to secure in the English Bill that tenants should at any rate have the opportunity of obtaining the benefit said to have been given them under that Bill. There are various proposals with the object of ensuring that the advantages should he passed on to the tenant, but I do not think there is a single provision of that kind in the English Bill. I think this is of great importance in the Scottish Bill and it is of greater importance for the reason that landlords in Scotland have actually paid the rates to a greater extent than they have in England, namely, in the proportion of half and half.
THE EARL OF AIRLIE: Of 75 per cent. to 25 per cent.
LORD PARMOOR: That is quite true. That is another way of putting it. This is a very honourable payment. So far as the remainder of the incidence of rating is concerned, we find it provided in Clause 44, so far as legislation can so provide, that the benefits are to be handed over to the tenant. I do not mean that this is done unfairly to the landlord. I am one of those who do not want any unfairness in matters of this kind if we can possibly avoid it. On the question of congested districts, we find in Clause 45 that the relief to occupiers of agricultural land and heritages affected by this Bill shall not be taken into account by the Land Court in fixing a fair or equitable rent. I highly approve of that principle, and it is stated perfectly clearly. It is notorious that these rate remissions are taken into account when new rentals are fixed. In other words, rentals and rates are regarded from the same point of view and both affect agricultural profits, though indirectly. I have said that I would net travel into the particularly Scottish questions involved. I think that this Bill is, in the respects that I have mentioned, a great improvement upon the English Bill. I am not one of those who do not want agriculture to benefit. I should like it to 'benefit, but in order that it may really benefit as an industry you must come to close quarters with the difficulties, and you must apply to those difficulties a remedy which will never be found in a derating scheme of this character.
VISCOUNT NOVAR VISCOUNT NOVAR had placed on the Paper an Amendment to insert the following addition to the Second Reading Motion: "but that this House, while approving of the consolidation of local authorities and the partial derating of industry effected by the Bill, regrets that rates on heritable subjects are not to be levied in Scotland as in England, and further regrets that under the Bill the local government franchise will be exercised by non-ratepayers and by rate receivers."
The noble Viscount said: My Lords, in view of the course that this discussion has taken and of the fact that I have no intention of asking your Lordships to divide on my Amendment, it may be more convenient if I say what I have to say on this subject at this stage of the debate.
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From time immemorial it has been the Scottish tradition to unite against a common enemy. Never united amongst ourselves, we have usually managed to come together in opposition to the predominant partner, represented on this occasion by so English an Englishman as the noble Earl the Leader of the Liberal Party in this House. It may be assumed, therefore, that few Scottish Peers will follow him into the Lobby, with the notable exception, no doubt, of the noble Earl, Lord Elgin, who speaks for 66 small authorities in the County of Fife. Some of us, indeed, believe most strongly that the Bill needs considerable amendment, as is indicated in the words of my Motion. That, however, is a matter for Committee, and not a reason for the rejection of the Bill, as I hope to be able to show. It has been a great pleasure to listen to the noble Earl, whose manner of exposition must make even a Scottish Bill attractive to your Lordships' House. I would also congratulate the Government on their courage in introducing so contentious and far-reaching a measure of local government reform, and one so disturbing to vested interests, on the eve of a General Election. By-elections suggest that the measure may not be generally popular, but, once the dust of demolition has cleared away, the Chamberlain building will stand as the most striking and original creation of the present Government.
We are dealing to-day with the Scottish Bill, taken from the English Bill and, like most copies, inferior to the original. The noble Lord, Lord Banbury of Southam, will be glad to hear that the more it differs from the English Bill the more unsatisfactory does it become. We know by experience that when England hears the voice of Jacob we in Scotland feel the hand of Esau. Lands with buildings, lands without buildings and woodland are not derated in Scotland as they are in England. The farmhouse alone is rated in England, and it is rated on its value to the farmer. In Scotland everything remains rated at one-eighth of the full value except the holdings of smallholders, whose buildings are not rated. My Motion approves the consolidation of local authorities. That, indeed, is even more necessary in Scotland than in England. In Scotland education authorities have been spending the ratepayers' money without the responsibility

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for collecting it, other authorities being their collectors. This has encouraged the extravagance already stimulated by Parliament. Again, quite recently nearly 1,000 parish councils were placed on the same footing on the spur of the moment after the General Strike, when the Government unexpectedly extended the scope of the Poor Law as administered by those bodies. Surely such a system is of itself ample reason for the removal of these different sets of administrative authorities. Nor is it less obvious that the control of the roads and of other essential services by the smaller town councils, and indeed by many of the larger ones, was quite out of date, although, some such functions apart, in view of centuries of active, thrifty and stable existence and public service, their disappearance in these very unstable times affords ample cause for sentimental regret. It is in such small, independent communities, indeed, that democracy is seen at its best.
In one or two respects consolidation could with advantage be carried further. Some of the smaller burgh police forces might well have been merged in the larger ones. Admitting that control of the police by provost and magistrates works well enough, and sometimes, in troubled times, better than that of the county force, yet the personnel and discipline of the smaller forces is the less efficient, while the county areas bordering on a restricted burgh area are inadequately protected from crime originating within the burgh. Normally control of county police by the joint committee—a system retained in England through the justices of the peace—is excellent, and the substitution of a committee of the county council, without Commissioners of Supply, is to be regretted. In any case the need is apparent for some other unit of control to act with the chief constable in emergencies. At present it is the sheriff who is responsible at such crises. He is a lawyer, who is invaluable on legal points, but he is non-resident, sometimes knowing his county and sometimes not, and usually without the necessary executive experience. Reliable control could be obtained by associating with the sheriff His Majesty's Lieutenant, the convener, and the chairman of the police committee, thus approximating to the burgh system. This suggestion came from a
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member of your Lordships' House, himself the convener of a large county, and I recommend it to the consideration of the Government. An alternative would be to substitute the convener for the sheriff, or any other outstanding representative person residing in the county.
It may be said that there is the government organisation that acted in the General Strike, but it may also be said that this, under two organisers, worked well on one side of Scotland and badly on another. Given effective local control of police we should be less dependent on outside intervention. As to the limit for county administration, it is open to question whether the county or the district of a divided county is the better, but I regret that the Government, under pressure, resurrected the district and gave it power to rate, thus departing from the principal object of the Bill, which was consolidation. What is certain is that either is better than both. I would have preferred the district. It has proved a good unit in practice, and districts can be so readily grouped for police, roads and so forth. Incidentally, that unit would have set such areas as the Long Island on their own feet, to cut their coat by their cloth, instead of sponging on the mainland and complicating county administration; but that is a matter to be dealt with in Committee.
In the more populous counties what excites apprehension is the prospect which the Bill will give of greatly increased power and authority to the ever expanding body of public officials, for an omnipotent bureaucracy is deadly to private initiative, responsibility and liberty. There is one weakness in the foundations of both Bills, but it is so marked in the Scottish Bill as to imperil the whole structure. The one security against over-spending has been the drain which it entails upon the resources of the ratepayers, especially the smaller ratepayers, and this in the burghs is a very real security, owing to the number of voters directly assessed who bear the burden. In Scotland, under the Bill, an existing evil, due to non-rating of houses and buildings and to compounding of rates, will be greatly aggravated and extended. I profoundly regret that the opportunity was not taken, in passing this great measure of reform, to abolish the baneful system of compounding, and to institute direct rating on every house-

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holder. In the County of Fife, there are not only 26 burghs that are going to disappear, but there are 9,000 voters nut rated directly who remain, 500 ratepayers who are relieved of rates, 4,500 compounded under the House Letting Act, and 4,000 under Section 16 of the Rating (Scotland) Act, 1926.
In England all rates fall on the occupier, a far more numerous class than the owner. In Scotland the owner pays from one-half to three-fourths of the rates, and therefore the great majority call the tune and the small minority pay the piper. No one suggests that the whole burden should be transferred to the occupier, but what we aim at is that the burden be distributed so as to maintain the interest of the whole mass of voters in economical local administration. In many cases, as I will show, this Bill destroys that one safeguard of the public purse. It has to be remembered, moreover, that all the many representations made with a view to amending, the Bill in this respect have been received with scant consideration. Also, that there was no opportunity, under the "guillotine" in another place, to expose the truly remarkable rating provisions of this Bill. This subject is raised in the second part of my Amendment, and I am confident that when it is made clear to your Lord ships, the offending clauses will be amended in Committee. The curse of Scottish local administration of late has been that large sections of the community have been wholly or partially exempt from rates, or, through the compounding of rates, have had no knowledge of or interest in the cost of local administration.
That will be intensified under the Bill, for, extraordinary as it may seem, a large section of the rate-paying class will now become a rate-receiving class, so that in some counties a majority of the ratepayers will stand to benefit by a rise in rates, and to suffer if they fall. The noble Lord laughs, but I shall be able to show him what I mean.
LORD OLIVIER: I am not surprised.
VISCOUNT NOVAR: I am glad to hear that. Take the instance of a typical crofting estate, with 150 crofters. These small landholders will pay 2s. 9d. each towards public services, and each will receive 7s. from his landlord in repay-
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ment of his half share of the grant. He is thus a rate receiver of 4s. 3d. per year, while every time the rates go up 1s. he will receive another 2s. 6d. from his landlord. This state of affairs will prevail throughout the Highlands and Islands. It will prevail more markedly there than anywhere else. This is so astounding a development that no attempt has been made to justify or defend it. It is all the more curious because two Departmental Committees condemned exemption of small landholders from rates on buildings—the Dunedin Commission on Local Taxation in 1922, and the Nairne Commission on Land Settlement in 1928. The Dunedin Commission in their Report came to the conclusion that it is a distinct hardship to place small landholders in a favourable position in comparison with holders of other subjects of no greater value. And this is of greater moment now that the small holdings system is extended all over Scotland. The finding of the Commission was "that small landowners should be subject to rates on their buildings." Sir Gordon Nairne's Commission confirmed that recommendation last year, and yet the Government has gone in the teeth of both findings, and without any attempt at justification.
What is going to happen under this Bill? In the Island of Lewis there will be some 1,766 families who will pay rates and there will be 3,427 who will receive from the rates. Of the 1,766 who pay rates, only 75 are agricultural, the remainder being feuars, who pay all rates as in England, house owners, fishermen, small traders, shops and business premises. All those will be rated up to the chimney tops, as an old Stornaway friend of mine described it, while persons outside the burgh, often pursuing exactly similar avocations to those within it, will be unrated on their houses and premises. The representatives of these rate receivers are to have several additional seats in the county council, where they associate with others elected by the same class on the western seaboard of the mainland: Under Clause 40 nearly half the county voting power will be in the hands of the rate receivers. I am informed, moreover, that already the larger farmers in a northern county are making plans for large local expenditure during the currency of their leases so as to be able to "ca' canny" at the end of them.

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Nor is Lewis an uncommon case. Lochiel has shown a much worse situation in Inverness-shire, as it will be also in Sutherland and Shetland. This is not a question between owner and occupier, but between ratepayer and rate-receiver, and between the taxpayer and ratepayer. Large classes of small ratepayers will be even more harshly treated than the landlords. A still more curious anomaly is that all the small landholders, whose fixtures are provided by the State, are not, and will not be, rated on them. The statutory small tenant, on the other hand, all of whose fixtures are provided by the landlord, remains rated to the extent of one-eighth on land and buildings. In other counties also the rate receiver will almost predominate, and your Lordships can well realise what the effect will be of this class of voter being so dominant on the county council and having such power to initiate expenditure, and the disastrous influence of this novel principle upon local government. Yet here we have a Bill to give rate-receivers a determining power in the local administration of a large part of Scotland, in which the public services are necessarily onerous and costly, owing to physical conditions and sparse population.
A touch of comedy is given to the situation by the fact that the squatters, who in two counties number between 3,000 and 4,000, who pay no rates and who receive all the benefits of public expenditure and largesse, are not at all satisfied with their prospects. They seriously complain of unfair treatment in that, whereas their brother crofters are to be paid for their occupancy, they are to get nothing out of the ratepayers. Another burden is to be laid upon the Scottish ratepayer from which his English brother is exempt. The county council in Scotland is to pay for time necessarily lost from ordinary employment by members of the council or of its committees. Surely, the expenses allowed on the English scale will prove sufficiently onerous for a poor country. The four Barvas members of the Ross-shire county council will cost about £400 a year on a moderate scale of attendance. The whole of the rates received from the 1,881 voters in Barvas in the island of Lewis will be £630. If the grant in relief of industry is not to be frittered away, as laid down by the Government, how can such anomalies be
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justified? Apart from such extreme cases, the same anomalies in the incidence of rating will exist in all agricultural districts, and all farmers will benefit proportionately by a rise in rates, but in the populous areas they are in a minority and have no preponderating voting power, and therefore these dangers will be less apparent. Yet the fact remains, that without direct rating of the miner, farm worker and others, it will be in towns and villages, where rates fall directly on the householder, that the only real security will be found against excessive expenditure in the county.
It is not suggested that farmers or crofters should be deprived of any relief to which they are entitled, but it is contended that such relief could be given by methods less unfair towards other ratepayers, and less subversive of good local government. One such method would be to stereotype the repayment by owner to occupier at the figure for the first complete year after derating comes into force, and thus dissociate it from the rise and fall of rates. Another would be to give the occupier a reduction of rent equivalent to the relief to be passed on, as suggested by Mr. Scott Plummer and estimated by Lochiel at 7 per cent. The perfect system would be the rating of every householder, and I would like now to answer a statement which was made on the introduction of the Bill in another place and referred to again this afternoon, that it would be too expensive to have a valuation of farm dwelling houses in Scotland as in England, where the costs of such valuations have been greater than with us. Every Scottish owner has already to furnish the assessor annually with a correct return of the value of every holding he possesses. If he does not do so, then, as in a recent case, he is prosecuted and fined. He could easily enter in a second column as valuation of the house with, of course, a corresponding reduction in the value of the holding.
Yet, instead of this simple system, we are to suffer all the bewildering complexities and flagrant injustices of the rating scheme of this Bill. It will of course be said, as usual, that this system, with all its anomalies, is to last only for seven years. But a system in force for seven years becomes a fixity, it crystallises. Is it conceivable that those who have been its beneficiaries will ever con-

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sent to forgo their privileges and to be placed on the same footing as ordinary ratepayers? The danger rather is—and it may be welcomed on the other side of the House—that pressure from the less fortunate ratepayers desiring equality of treatment will become so strong that this new rating scheme will fall to pieces, and that either a new one will have to be devised or, what is far mare likely, the whole burden of local services will be transferred to the shoulders of the taxpayers. I trust your Lordships will, therefore, give close consideration to Amendments that will be moved in Committee which will aim at removing defects which vitiate an otherwise bold and promising project of reform.
VISCOUNT ELIBANK: My Lords, the speech which has just been delivered by the noble Viscount seems to me to prove how wise the Government have been in preserving the present rating scheme in Scotland. The noble Viscount explained to us, with his usual knowledge and with all the experience he possesses of these subjects, the various anomalies which, in his opinion, exist in connection with the rating system in Scotland to-day. He also proved to us how complicated that system is, and how unwise the Government would have been had they attempted to cope with it within the confines of the present Bill. The system of rating that exists in Scotland to-day has stood the test of time for many years. The people of Scotland understand it. It is understood by the landlords, the fanners and the small owners, and it seems to me that it is a system under which landlords, farmers and small owners can do the best for the housing of the farming people of the country.
When the Bill was first introduced into another place the Government had decided that the rating should be based on a system of taking off one-sixth, and leaving the rest to the landlords and the farmers. That point was pressed and subsequently they changed it to one-eighth. That is a concession which, I consider, has proved very acceptable to the landlords and the farmers. In the course of his remarks the noble Earl who moved the rejection of the Bill made use of some figures which were not quite accurate. He told your Lordships that this Bill would give a relief altogether of £770,000 to the farming community,
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of which £110,000 would go to the tenants and the rest to the landlords. I understand that the correct figure is £1,500,000, and that of that only £562,000 will go to the landlords, while £937,000 will go to the tenants. A further sum is deducted really from the landlords' portion, £562,000, because a, certain amount of it will go to what are called the owner-farmers. These figures ought, as far as possible, to be quoted accurately.
On the question of rate-receivers the noble Earl will agree, I think, that there are other ratepayers in the country who have their rates absorbed into their rent. I pay rent for a flat in London, and the rate is absorbed into my rent. I have no idea. I must confess, what the actual rate in my district is, but I am a ratepayer, and what is sauce for the goose is sauce for the gander. Therefore, this so-called anomaly of which the noble Earl spoke is not one which exists only in the Highlands; it exists in every part of the country.
VISCOUNT NOVAR: If I may interrupt the noble Viscount, I mentioned that compounding afflicted specially the Southern part of Scotland, and not the Highlands.
VISCOUNT ELIBANK: Whether it is the South of Scotland, or England, or wherever it is, it does not affect my argument. The noble Viscount also stated that if this arrangement went on for seven years it would become a permanent arrangement. Under the Bill there is a provision whereby the Land Court can consider this question, and there is no doubt, as time goes on, that these rates will gradually be absorbed into, and will become part of, the rents.
The noble Earl who moved the rejection of the Bill gave some very interesting figures of the Divisions which took place in the House of Commons, but I do not think he laid enough stress upon the fact that the Bill was actually carried on Third Reading in another place by a vote of 29 Scottish Members to 19. He also did not tell your Lordships' House that of those 19 who opposed the Bill only three were Liberals, and that, there being 9 Liberal Members in Scotland, only one-third of the Scottish Liberal Members voted against the Bill. It is all very well to say that Scottish Members have long week-ends;

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but in regard to a Bill of this importance I consider that Liberal Members have just the same opportunity of coming, and certainly should come, to London to register their votes in the same proportion as the Unionist Members. After all, he laughs longest who laughs last. It is the Third Reading that counts, and it was at the Third Reading that the Government passed this measure by this majority, and it was at the Third Reading that those Liberal Members of Scotland ought to have been present to vote against it.
The noble Earl, Lord Elgin, in the course of his speech, referred to one or two points of great interest to your Lordships' House. I am sorry to see that he is not in his place. He quoted certain things which were not quite accurate. For instance, he stated that 26 burgh councils were to be abolished in Fife. The Bill does not provide for the abolition of burgh councils; those burgh councils of which the noble Earl spoke will still continue to exist, they will still have all the paraphernalia of their burghs—their provosts and their town councilors—and they will still have control over certain services within those burghs. Beyond that a number of their members will be selected or elected to represent the burgh on the new enlarged county council. Whilst they will to a certain extent be deprived of certain services within their burgh area, they will have the opportunity of controlling, supervising and voting upon the other services within their county area. Again, the noble Earl suggested by inference that when these various bodies are abolished none will be set up in their place. He suggested, I think, that 56 were going to he abolished, but he made no reference to the fact that district councils were to be set up and that in addition committees and sub-committees would be established.
The question of education arose in the course of the remarks, I think, of the noble Earl who leads the Liberal Party. He stated that there was no one in Scotland who desired that the education authorities should be abolished and their functions transferred to the new enlarged councils. That is not correct. The Town Council of Glasgow and other town councils have all agreed that those functions should be exchanged. Obviously there is a difference of opinion
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upon this big Bill, and obviously there are a great many people in Scotland who say they do not agree with it—supporters of the Liberal Party, supporters of the Labour Party and there may be disgruntled members of parish councils which are to be abolished—but on the whole I believe this Bill has the support of the general body of opinion in Scotland, and I am quite certain that when it has been in operation for some time that support will grow very largely.
The noble Lord, Lord Parmoor, gave us a very interesting speech on the question of rating. I should like to quote an extract from the speech of the hon. Member for Dundee, who led the opposition in the House of Commons on the Third Reading, and also, I think, on the Second Reading, in which he plainly states that we want larger administrative areas in Scotland and why he believes a Bill of this nature is necessary. He said:
"I do not for a moment say that there should be no wider areas. I do not think anybody can argue seriously in support of the existing administrative areas in Scotland. If there were no other reason, the coming of the motor car has made the existing administrative areas impossible."
There is an admission from one of the senior Labour members in Scotland that these wide administrative areas are necessary, and, if you link with those wider administrative areas the present rating system in Scotland, obviously, whatever may happen in the future that is for the moment the best system that can be adopted.
There is one other point I want to mention, and that is the question of the reconstitution of administrative bodies in Scotland. As I understand it, the Secretary of State, through the proper Department, has arranged for certain representations upon these enlarged councils on such a basis as seemed to him at first blush to be satisfactory, but I know that there is a good deal of feeling in Scotland that the particular proportion of members in certain areas has not been worked out very satisfactorily. I am glad, however, to know it is provided in the Bill that before a certain date—I think it is before the end of next year—the Secretary of State shall have inquiries held, where inquiries are demanded from the areas in which any complaint of that nature has come. I hope that the Secretary of State for

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Scotland will take this question very seriously into consideration, because it is one of great importance. Obviously, if these reconstituted county councils have not proper machinery—in other words, if the machinery is loaded with a certain amount of sand—the councils cannot work smoothly and efficiently. In my own County of Peebles I think the burgh feels that it is not sufficiently represented. That may be so or not, I am not prepared to say; but there is a case where obviously an inquiry is necessary. In the neighbouring County of Selkirk, in which I am also interested, the same condition exists. I think the County there feels it is not sufficiently represented. We know that there are other eases in Scotland of this nature, and I venture to suggest to the noble Earl in charge of the Bill that he should make representations to the Secretary of State for Scotland to look after this matter as carefully as possible.
I do not propose to detain the House any longer except to say that I believe this is one of the best measures of reform that has been introduced for many a long year. Like the noble Lord who spoke last, I am rather sorry it was not introduced in the earlier stages of this Government, because a large measure like this must be unpopular. The noble Earl, Lord Beauchamp, told us that this measure was not very popular, and the noble Viscount, Lord Novar, made your Lordships infer that it was quite unpopular. I feel that the Government, in view of these two expressions of opinion from the two sides of the House, has perhaps found the happy mean, and that when we go to the country we shall find that this Bill has very much greater support in Scotland than some noble Lords pretend to believe.
THE DUKE OF BUCCLEUCH: My Lords, I think that probably it is quite true that, anyhow in the case of a very large number of people, this Bill is unpopular, but the real reason is that the people of Scotland are so extremely conservative—especially those who belong to the Liberal Party—that any change in their functions is bound to be unpopular. On the other hand, I hope that when it has been working some time their views may change. The Bill does undoubtedly introduce great changes, and very likely there are many
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faults in the Bill, but they can be remedied. I have now had, I am sorry to say, a very long experience in local administration, having been on the county councils ever since they were first constituted, and I have no hesitation in saying that areas at present are too small for economical or efficient administration. In my opinion, one of the faults of the Act setting up county councils was that it made the districts the authorities both for public health and roads. It would have been very much better if the county council had been made the authority, with power, if they wished to do so, to delegate their authority.
I am afraid I am unable to agree with my noble friend on my left when he says that he would prefer the districts as the unit rather than the county councils. There has been a large number of duties placed on county councils in recent years, and there has also been a very large increase in the cost of roads. Generally speaking, I think that in agricultural districts the road rate is probably eight times as much as it was before motor cars were introduced; and, as the rural districts now require, I think you may say, double the former rate, they are really paying four times as much as they did for the benefit of people who often come from long distances. It is only reasonable that some others should share the cost of these roads and that the increase should not all be put upon agricultural land, which derives no benefit from them. Then there are other expenses: for instance, that of education. Your Lordships will know that formerly education was managed entirely by parish school boards, but shortly after the War, at the time of the Coalition Government, a new Education Act was passed. Formerly each parish simply paid for the education of the children in that parish, but under the new Act they were combined with the towns. Ever since then agricultural land has been paying a very large proportion of the cost of educating the children in the towns, while the towns are not paying a single penny for the upkeep of the roads which the townspeople use and destroy. Therefore, it is necessary, if we are to have proper administration, that there, should be a change.

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Burghs in Scotland have existed for a very long time, and no doubt we must sympathise with these ancient burghs, small though they are, which are losing some of their rights, and with people who will no longer have the dignity of being town councillors; but I am perfectly satisfied that the local government system cannot be carried on efficiently without some change. There are districts where a penny rate produces only £50 or £100 or £150. How can they maintain the roads? There are other grievances which are felt by some people. Oddly enough, the burghs complain of the Bill more than the counties do. They seem to have an idea that in future the burghs will be dominated by the counties. As far as I can understand the Bill, in the majority of cases exactly the opposite will occur. The noble Viscount who spoke just now quoted two counties. I do not know the figures relating to them, but I think that in both the burgh representatives will largely outnumber the county representatives. Is not that so?
VISCOUNT ELIBANK: No. In the case of Selkirkshire, yes.
THE DUKE OF BUCCLEUCH: At any rate, in Elgin I think the burgh members will dominate the county. Therefore, I think the rural districts have far more reason to complain of the Bill than the burghs because, although the burghs will lose some of their privileges, they will have greater power to interfere in the affairs of the counties than the counties will have to interfere in the affairs of the burghs. There has been in Scotland far too hard and fast a line drawn between the burghs and the counties, and one thing which I hope will be brought about by this Bill is that districts will combine together and realise that, after all, their interests are much more identical than they have ever supposed before.
I sympathise to a large extent with the noble Earl who is in charge of the Bill in having had to introduce such a complicated Bill under considerable difficulties. Your Lordships will recollect that last summer an Act was passed to reorganise subordinate offices under the Scottish Office, and so a very difficult Bill has had to be drawn up whilst the
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former Board of Health was in the last throes of dissolution, eagerly looking forward to the 1st of January, when it would be reincarnated as the Department of Health. I think everyone must agree that it is extremely difficult for a Department under such conditions to deal with so complicated a Bill, and the officials of the Department deserve great credit for the way in which they have done it, whether we agree or not with all the particular provisions in the Bill. I can remember that in the days when the Commissioners of Supply were done away with and the county councils were set up there were many forebodings. Now the county councils want still further development. This Bill may not he right, but I think it is on the whole on the right lines. There is a good deal to be said for the views of the noble Earl opposite as regards education. I quite agree that the education boards are unpopular in certain quarters, and that there has been friction. The county councils had to levy all the rates. I know that, because for many years I have been chairman of the finance committee of my county council. While the education authorities called the tune the county council had to pay the piper. It did not work well. I believe this new system will lead to greater efficiency and greater economy, and I do not believe from what I have heard that this change is by any means unpopular with the teachers or the pupils, or the parents of the children. That, however, is a matter which of course it is difficult to ascertain.
Criticism has also been directed to the proposal to do away with parish councils and substitute district councils. Parish councils were done away with in the Bill as introduced. It was only a later move of the Secretary of State to bring in district councils. Whether that is the best thing or not I should be sorry to say. I really think, however, that if some provision of this kind were not made the new county councils would be very much overloaded with work. I should also like to reiterate what was said by the noble Viscount on my right with regard to membership of the county councils. I am not for the moment considering whether the proportion of representation is fair or not, but I believe that in many cases there would not be enough members on the county council to carry out the

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new duties allotted to them. I hope that the noble Earl and his chief in another place will pay rather more attention to what is said by those representing the county councils than they have done up to the present, because I can assure the Government that there is a strong feeling among county councils that their requests have been treated very lightly.
With regard to derating, it may be said that rates were originally imposed for the benefit of those who paid them, but that for many years they have been increasing, largely because somebody with a fad would get some Act passed by Parliament and the Treasury never minded very much so long as the cost went upon the rates, and not upon the taxes. The result has been that all over the country we see a kind of second Income Tax levied upon a certain class of taxpayer. This has reached such a pitch that the derating proposals of this Bill have been rendered necessary. I do not think anybody can contend that there is justice in rating agriculturists for services of which they do not get the benefit. Agriculture is quite prepared to take its fair share, but I cannot see why agriculture should be required to pay for education in towns or for roads that are used mainly by people from a distance. It seems to me, therefore, that the derating proposals are, in principle, quite correct. There is one point that I should like to touch upon in this connection. The noble Lord opposite, Lord Parmoor, said that he did not like to be unfair to anybody, but he rather gave the impression that he would be satisfied so long as no landowner ever got anything. Why should not the land-owner be relieved as well as anybody else? I am sorry to find that my right hon. friend in charge of the Scottish Office seems, judging by this Bill, largely to share the view of the noble Lord opposite.
Let me just put the position regarding agriculture. I may be entirely wrong, but I have had a somewhat long experience. In England the farmer has been in a very bad way, and more hardly hit than the farmer in Scotland. Why? Largely because the farmer in Scotland has paid a very small amount in rates, and the farmer in England has paid a great deal more. The farmer pays a
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small amount in Scotland in comparison with the landowner. The landowner in England paid no rates, while the landowner in Scotland paid the bulk of the rates on agricultural land. I have properties in both countries, though I have less land in England than in Scotland, and I know that of late years the net return on land in Scotland has decreased very much more than the return from land in England. What has been the result? I do not say that the farmers in Scotland are too prosperous at the present time, but they are not so hard hit as the farmers in England. We must look for the causes, not so much in the reduction of rents as in the provision made for drainage and the improvement in the labourers' cottages. Then there is the excessive rating borne by the landowners in Scotland. It is only fair that they should have this relief. In fact, I think that they should have the whole relief, and should not have it parcelled out. They cannot spend this money if they do not get it.
There is another point to which I should like to call your Lordships' attention. There is another way in which the landowner is rated of taxed, whichever you like to call it, in Scotland, which is not found in England. I think I am right in saying that in England the rates on tithe are paid by the receiver of the tithe. In Scotland the landowner, although he does not get a penny into his pocket, has to pay the rates on the stipend to the minister, and the teind in Scotland, whatever the amount of the stipend, is one-fifth of the gross agricultural rental. I do not say that the stipend is always of the same amount as the teind, but it is so in very many cases and, when you think that a man has to pay rates on one-fifth of his agricultural rental, it does not seem altogether fair, I think that even the noble Lord opposite would admit that there is a certain unfairness in it.
My noble friend Lord Novar alluded to the compounding of rates which will leave large sections of the community with no direct interest in the cost of local administration. I am not going to repeat the noble Viscount's arguments, because I do not think I can put the case Ls well as he, but this is one of the greatest blots on the Bill. The present Government came in pledged to economy. I quite agree with noble Lords opposite that, except in regard to the defences of

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the country, that pledge has been somewhat ignored, but I never thought that things would come to such a pitch that both Houses of Parliament would be asked by the Government to vote a subsidy to extravagance. That is what this provision really means, and you cannot get away from it. It is a considerable subsidy to be voted in favour of the utmost extravagance. It may not be so bad in other parts of the country as it is in the Highlands, but it does seem to me an outrageous thing that persons should benefit by the rates who have a considerable power of raising them. It must be remembered that in country districts the agricultural occupiers, and especially the farmers, have been the keenest to prevent extravagance and to secure efficiency. They will now have no further interest in the matter.
I sincerely trust that the Government will accept Amendments which will be moved in Committee to deal with this point. It is unfortunately quite true, as Lord Novar said, that the ratepayers in Scotland are very few in comparison with the voters. It has always been the custom that farm servants, foresters, gardeners, and so forth, should have their houses rent free and therefore be free of rates. I have always thought this somewhat unfortunate, for, however small the rate may be, the man who pays thinks about it and tries to keep it down. The noble Viscount gave us an excellent example of a case in which people thought it did not matter how far the rate went up. If we are to get efficiency—for efficiency makes for economy—you want as many electors as possible to be affected. There is another clause to which I take exception, and which I think is very unfair. That is Clause 45. The noble Earl, I think, stated that a somewhat similar clause was moved in another place on the English Bill, and the Government resisted it. Why the Government should resist such a clause for England, and accept it for Scotland, I do not understand, and I do not think it is fair to the landowners of Scotland. If they are right in adopting such a clause for one country, they must be wrong in refusing to accept it for the other. To resist it for England, and to welcome it for Scotland, is treating the Scottish landowners very shabbily.
There is another thing which is very important, and which seems to me to show
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bias against the unfortunate Scottish landowner. Take the case of woodland. The owner and occupier are practically the same man. In England the woodlands are derated entirely. In Scotland they are rated at one-eighth. First of all the reasons given for farms being rated in Scotland at one-eighth was the difference in the value of the houses. Anybody knows that there is nothing in that. The other reason was that it was fairer to take one-eighth, and that may be so of the total value of the land and houses, but when you come to woodlands, if that applied, the house ought to be thrown in. The house with the woodman in it is just the same as the house with a farm servant. Yet we are rated on woodlands at one-eighth, and on the house to the full amount. It is a small matter, but it shows the bias which there seems to be against the landowner in the Scottish Bill.
I cannot, however, support the noble Earl opposite, although I do agree with much that has been said. This is a Bill which I hope will do a great deal of good, and bring more people in touch with each other in the development of local government. At the same time fear that there will be a considerable increase of county officials, and a considerable increase in expenditure. On the other and, I understood that it was thought by the Government that the Bill would relieve a considerable amount of work in the Scottish Office or subordinate offices, and we shall be very glad to bear from the noble Marquess the Leader of the House, or the noble Earl, Lord Airlie, at a later stage, what reductions are going to be made in those offices. There is one point on which I thoroughly agree with Lord Elgin, and that is as to Clause 72. I do not know, however, that we have been quite fair to the Bill. It is a very complicated Bill, and of course one wishes to criticise it from one's own point of view. It is very easy, I admit, to criticise it, but on the whole, notwithstanding the objections which I have, I think it is a fair attempt to develop and improve local government on fair and broader lines. Therefore I cannot support the noble Earl's Motion for its rejection.
THE MARQUESS OF SALISBURY: My Lords, I really think that I might have left the duty of replying on this debate to my noble friend who introduced the

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Bill to your notice this evening. If he will allow me to say so, as I listened to his speech ant realised the much greater mastery of the Bill he possessed than I can pretend to have, and how clearly he put it to the House. I envied him. I am certain that when I began taking a prominent part in politics I could not have made a speech of that kind. He has another great advantage over me in respect of this Bill, and that is, he is a Scotsman, and I am, like the noble Earl the Leader of the Liberal Party, an unfortunate Englishman. I was glad to hear the noble Earl speak, because I felt encouraged to lift my voice. I felt that if he could criticise the Bill, even although an Englishman, I might defend it, even although an Englishman.
The noble Duke who has just sat down spoke of the strong conservatism of the Liberal Party in Scotland. I believe that to be quite true, and no doubt many Liberals in Scotland, from a strictly conservative point of view, object to the passage of this Bill. The noble Earl, the Leader of the Liberal Party, as part of his rôle as a speaker on Scottish subjects, seems to have been infected with the same feeling, and he is evidently very conservative in his approach to this Bill. He does not like these reckless changes. I thought his criticism, if I may say so, very weak. I cannot believe that he accepts it as part of his political creed that the consolidation of local authorities in larger units, with all the efficiency which that means, is really objectionable from a Liberal point of view. The truth is these reforms in local government are neither Liberal nor Conservative. They are the necessary results of modern conditions, of developments in public needs and in public services, which make it absolutely incumbent upon Parliament to modify the conditions which have hitherto prevailed.
But, my Lords, criticism was made that this Bill had been delayed until the end of the Parliament. I agree with noble Lords opposite, and with noble Lords sitting behind me, that in many respects it would have been far better if this Bill could have been produced at an earlier period in this Parliament, but I would call your Lordships' attention to this, that there were preliminary steps which, in the opinion of the Government, had to be taken before you could deal with this subject, and these preliminary steps in
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rating, valuation, and assessment have been taken in the years which preceded this Session. Without them it would have been very difficult, if not impossible, to have approached this very great, difficult and intricate subject. Then the noble Earl described with great particularity how Members of Parliament had voted in various Divisions, and actually used the phrase that this Bill had been forced through against Scottish opinion by a tyrannous Government. He did not say "tyrannous," but that was the implication the probably does not know what an immense amount of trouble has been taken to hear everything that has been said in Scotland by way of criticism before this Bill was formulated and passed through Parliament. I believe it is true that the Secretary of State for Scotland has not refused to see any deputation that offered to interview him on the details of the Bill, and he has done everything in his power, both before the Bill was introduced and white it was going through Parliament, to conciliate opinion and to meet legitimate criticism.
The whole conception of the Bill being forced through Parliament against a reluctant public opinion is quite contrary to the facts. I am much more inclined to believe what the noble Viscount, Lord Elibank, said just now that the Opposition to this Bill was very half-hearted. Many Liberals have admitted that reform is abundantly called for Of course, there is criticism as to particular details and the application of particular provisions, yet it is admitted that local government reform is necessary, and that it must involve taking off a great part of the burden that at present rests upon the ratepayer. That is a general conviction which is not seriously challenged. The noble Earl criticised, among other things, the education provisions in this Bill, and said that he believed in an ad hoc authority. I do not believe in it. I did not believe in the old school board system in England; I believe it was much better done away with, and replaced by the council system that now prevails. You do not want to segregate education as if it had nothing to do with the rest of the administration of the country. It should be looked at from the broad point of view of the representatives of the people, the representatives for all local purposes they are to be found in the county council. It is only by that means

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that you avoid all the overlapping, with which we are very familiar, and which has existed in a very high degree in Scotland in all sorts of things, such as the feeding of children and the provision of playing fields.
All those matters will be simplified and disentangled by the merging of the education system in the general administrative government of the country. That cannot be contested. The noble Lord actually said that he was against the larger local authorities. I believe it to be true to say that the parochial system in Scotland, the concentration of authority in the parishes in Scotland, is now not defended by practically anyone. The Parish Councils Association of Scotland have admitted that the parish has ceased to be a defensible unit for these purposes. Therefore, we do not delay in defending that Just as it was necessary in England to have larger units, so a fortiori it was in Scotland because existing units are smaller there than in England. In England we have moved the authority of the districts to the county. In Scotland it is necessary to move still further because we have to move the authority from the parish. Therefore, the situation cannot really he challenged.
In many respects, the critics of the Government to-night have expended a lot of time in explaining that the Scottish Bill is much better than the English Bill If that is so, so much the better. I wonder whether, when we get into Committee, the noble Lords opposite will have the courage to move Amendments against their convictions in order to bring the Scottish Bill down to the low level—from their point of view—of the English Bill. I am sure they will do nothing of the kind. If in that respect, at any rate, we command the support of the noble Lords opposite, we are very fortunate in making a great advance. There was one particular clause in regard to which the noble Lords opposite were very much alarmed, namely, Clause 72. The noble Earl, Lord Elgin, actually said that was the reason why he opposed the Bill. Here is a Bill of nearly eighty clauses, and the only clause which he cares anything about is Clause 72. I must really consider him as a supporter of the Bill. If there is any objection to Clause 72, and we can do anything to remove it in Committee, I am sure the noble Lord will not find the Government hard
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hearted towards accepting any reasonable Amendment that may be proposed. There is no reason why noble Lords should not propose Amendments to this Bill. It will be found that in most respects it holds water, but, if in certain particulars there can be shown to be leaks which ought to be stopped, by all means let noble Lords on both sides of the House produce the Amendments and we shall give them consideration. I hope no idea will prevail that we are not prepared to listen to Amendments if they can be shown to be good.
I now come to the criticisms of noble Lords on my own side of the House. There was the very admirable speech of the noble Viscount, Lord Novar, who showed a mastery of the details of Scottish administration which left me very much at sea, but I do recognise that in several respects he criticised the Bill rather severely. As to his charge that the operation of this Bill would have the effect of increasing what he calls the bureaucracy in Scotland, well, it may be so, for he knows much more about the subject than I do; but, if that is the case, then I agree with him in profoundly regretting it. That is certainly not the object with which the Government has introduced this Bill. For my part, there is nothing I should dislike more than to have been a party to increasing the bureaucracy anywhere, and certainly in Scotland. I hoped that by consolidating administration in Scotland and concentrating the authority ill the county councils, we should have produced the contrary effect, and that it would not be necessary to have so many officials as at the present time. If it can be shown that that tendency can be diminished in any way without interfering with the scheme and structure of the Bill, then by all means let my noble friend make such proposals.
Then we come to the most difficult of all topics, the question of derating. That was dealt with by almost every noble Lord who spoke. The noble Lord opposite, the Leader of the Opposition, will, I am sure, forgive me if I do not follow him into all his arguments about derating, because most of them were really exactly the same arguments as he used on the English Bill. On the English Bill he made just the same criticism that our form of derating was the wrong form; indeed, he made the same criticism

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on several occasions in other speeches during the earlier part of the Session.
LORD PARMOOR: Hear, hear.
THE MARQUESS OF SALISBURY: Those arguments we answered to the best of our ability, and I will not advert to them, though I will deal with one point. The noble Lord argued that our derating system was going to help the landlord, the owner. I agree. It will help the owner, but it will help the occupier too. It will help the owner, and I say with my noble friend, the noble Duke behind me, why should it not help the owner? Is it not right that in any proper relief of an overtaxed industry all the partners in the industry should receive relief? That is the truth. Agriculture is an industry in which the owners and the occupiers are partners, and, of course, any relief to the industry ought properly to help all the partners in that industry, and that in effect is what will happen. I am not now speaking upon the temporary provision during the next few years; but, looking at it broadly over a period of years, undoubtedly the de-rating of the industry ought to help all the parties—owners, occupiers, and everybody engaged in the industry. That is what I hope.
I am not going to be frightened because I am told that it will help the owners. I hope it will where the owners deserve to be helped. It is very necessary that they should be helped in certain respects. Take, for example, the, building of cottages to which, I think, one of my noble friends referred. One of the effects of this Bill will be to relieve the rating on agricultural cottages. That will affect not only existing agricultural cottages, but agricultural cottages which are to be built in the future. Is it not a good thing to make it cheaper and easier to build the agricultural cottages which are wanted so very much for the agricultural population in Scotland? Why should that be considered an objection to the Bill? It is one of its advantages. We desire to do that very thing, and the idea that because you help the owner you do not help the occupier, that they are, as it were, adverse interests, the kind of thing that is the most commonplace stuff on Labour platforms in the country—all that is absolutely unworthy of the noble Lord opposite. They are not opposing in-
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terests. They are joint interests, and what helps one helps the other, and ought to do so. It is only from that point of view that anybody who aspires to the name of statesman ought to regard it.
I turn now from what I call the permanent position which is brought about by derating, to the temporary position which is going to obtain in the course of the next few years. This temporary position was the object of the rather severe criticism of my noble friends the noble Duke, the Duke of Buccleuch, and the noble Viscount, Lord Novar. I should like to emphasise the point that it is temporary. Whatever objection there may be to the system which they criticise will pass away in a few years. I do not mean to say that the Government need not defend it. They must defend it. But do not let us exaggerate its importance. It cannot last longer than seven years, and in many cases it will last a much shorter time than that, as my noble friends are well aware.
THE DUKE OF BUCCLEUCH: In the case of a lease it lasts to the end of the lease—which may be many years.
THE MARQUESS OF SALISBURY: It may do that. The contrary is also true, that it may last for a few years to the end of the lease.
THE DUKE OF BUCCLEUCH: Quite so.
THE MARQUESS OF SALISBURY: It might be a very much shorter time, as I hope my noble friend realises, before this temporary system comes to an end. What is said about the temporary system? it is said that we are putting a premium upon raising the rates by giving the benefit to the occupiers if they do vote for raising the rate. I have not misstated the proposition. When you look at the ordinary period which will elapse, are we really to be told that occupiers are so short-sighted that they will vote and use their influence for the raising of rates which they must know they will have to pay themselves in a few years? Merely in order to get a temporary benefit they are to be supposed to be so blind to their own permanent interests that they will vote for all this extravagance rather than be prudent, as we believe the Scottish people always are. That is one answer.

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Another answer is that these small agricultural tenants are not the only voters in the area. There are all the burgh voters. What are they going to do when the agricultural voters say: "In order to get a little temporary benefit we are going to vote for the raising of your rates"? Of course, an immediate opposition will be created amongst all the burgh voters. As I understand the system of the new county authorities, there will be a very large number of burgh voters in every county area. The voting strength of all the small burghs which are absorbed into the counties would be thrown on the other side if there was anything like a general movement. A sort of party spirit would be created at once, and the burghs would organise in order to resist the extravagant ideas of these small agricultural tenants. Therefore, I would submit to your Lordships that there is a great deal to be said on the other side.
The reason why it is necessary to make some such provision is that whatever benefit to the owner we may look for in the long run, there would be an obvious objection that in an Act of Parliament you should vote a very much larger sum of relief to the owner than to the occupier, and some temporary adjustment ought to be made to bridge over a few years and to make the effect gradual. I do not want to be too emphatic about it. By all means let my noble friends propose Amendments if they can see a better system. I should be very sorry indeed if they thought that they would not be heard if they have some better ideas for dealing with this point. Provided that they cover the particular difficulty which I have tried to indicate I hope that they will propose what they think best. One thing I hope they will not propose—the suggestion that seems to be contained in my noble friend Lord Novar's Amendment to the Motion for Second Reading. We could not consent to establish the English system in place of the Scottish system, because the result of allowing the rates to be then put upon the house as is done in England instead of leaving it as it is in Scotland would, in the case of the small farmer, absorb the whole benefit which would otherwise come to the occupier. As everybody acquainted with agricultural land knows, the buildings on the small farm are in value far
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higher in proportion than buildings are on a large farm. I understand my noble friend desires to establish the English system instead of the Scottish system. If we did that, in the case of a small farm in Scotland it would deprive the occupier of any benefit under the Bill, and that would evidently be disastrous from the point of view of the Government's policy. Therefore we could not accept a proposal of that kind, but by all means, if he can find some other method, I for one would be only too glad to give it every consideration which his knowledge of the subject certainly entitles it to receive.
One other proposal, I think, I ought to deal with. I think it was my noble friend Lord Novar or the Duke of Buccleuch Who suggested it. It was said that we ought to abolish the compounding system. We, in England, are very familiar with that system. I am well aware of the evils of the compounding system, because it does act so as to disguise from the ratepayer the effect of his vote. But it has often been considered in England, and we have never been able to get rid of it, for the very obvious reason that there is a great economy involved in it. If you allow the compounding system you are able to give a great relief of rates, because the owners undertake all the costs of collection. For those reasons it has never been possible to get rid of the system. At any rate, it is not possible to do it in this Bill. The Bill is long enough and complicated enough as it is, and if we added to it clauses to abolish compounding of rates I think that would pass any possible limits of defence. I do not think His Majesty's Government has any reason to complain of the way the Bill has been received. Certain criticisms have been made in detail, but broadly speaking, I think I am entitled to say that the Bill has been accepted as a great measure of constructive reform in Scottish local government and in the Scottish system of rating, and it is in that spirit that we recommend it to the favourable consideration of your Lordships' House.
On Question, Whether the word "now" shall stand part of the Motion?
Their Lordships divided:—Contents, 66; Not-Contents, 22.

CONTENTS.

Hailsham, L. (L. Chancellor.)

Morton, E.

Daryngton, L.

Mount Edgcumbe, E.

Desborough, L.

Onslow, E.

Dynevor, L.

Salisbury, M. (L. Privy Seal.)

Plymouth, E.

Dunmore, L. (E. Dunmore.)

Vane, E. (M. Londonderry.)

Ernle, L.

Fairfax of Cameron, L.

Wellington, D.

Bertie of Thame, V.

Fairlie, L. (E. Glasgow.)

Chaplin, V.

Gage, L. (V. Gage.) [Teller]

Bristol, M.

Churchill, V.

Elibank, V.

Hanworth, L.

Airlie, E.

Falkland, V.

Hayter, L.

Breadalbane and Holland, E.

Falmouth, V.

Howard of Glossop, L.

FitzAlan of Derwent, V.

Jessel, L.

Cawdor, E.

Novar, V.

Ormonde, L. (M. Ormonde.)

Clarendon, E.

Peel, V.

Ponsonby, L. (E. Bessborough.)

Denbigh, E.

Younger of Leckie, V.

Doncaster, E. (D. Buccleuch and Queensberry.)

Queenborough, L.

Abinger, L.

Russell of Liverpool, L.

Iddesleigh, E.

Addington, L.

Saltoun, L.

Innes, E. (D. Roxburghe.)

Askwith, L.

Sinclair, L.

Iveagh, E.

Avebury, L.

Stewart of Garlies, L. (E. Galloway.)

Leven and Melville, E.

Balfour of Burleigh, L.

Lichfield, E.

Banbury of Southam, L.

Templemore, L.

Lovelace, E.

Clanwilliam, L. (E. Clanwilliam.)

Wharton, L.

Lucan, E. [Teller.]

Wraxall, L.

Mar and Kellie, E.

Clinton, L.

Wynford, L.

Midleton, E.

Cushendun, L.

NOT-CONTENTS.

Reading, M.

Clwyd, L.

Parmoor, L.

Doverdale, L.

Pentland, L.

Beauchamp, E.

Elgin, L. (E. Elgin and Kincardine.)

Rathcreedan, L.

Buxton, E.

Sandhurst, L.

Gainford, L.

Shandon, L.

Allendale, V. [Teller.]

Hemphill, L

Stanmore, L. [Teller.]

Illingworth, L.

Tenterden, L.

Arnold, L.

Northington, L. (L. Henley.)

Thomson, L.

Bethell, L.

Olivier, L.

Resolved in the affirmative, and Amendment disagreed to accordingly.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

PENSIONS (GOVERNORS OF DOMINIONS, ETC.) BILL.
Order of the Day for the Second Reading read.
THE PARLIAMENTARY UNDER-SECRETARY OF STATE FOR DOMINION AFFAIRS (THE EARL OF PLYMOUTH): My Lords, the main object of this Bill is to give effect to the recommendations of the Committee presided over by the noble Earl, Lord Buxton. Clause 1 provides for new rates of pensions, rising to a maximum of £2,000 per annum. The clause is made retrospective to March 22, 1928, the date of the publication of the Report of the noble Earl's Committee, and that was done in deference to a request of that character which he made when the subject
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was last raised in your Lordships' House. It was as long ago as 1911 that the maximum pension for ex-Governors was raised to £1,300 per annum. This proposed further increase to £2,000 is the result first of all of the Report of the Committee presided over by the noble Earl, secondly to a feeling that it was only right and just that, as a result of the large rise in the cost of living, some step of this kind should be taken, and thirdly, in order to conform to an increase in pensions that has taken place in the various branches of the Civil Service.
There is an impression current that this means that a large percentage of ex-Governors will reach this maximum of £2,000 for their pensions. I think it right to point out that that is not so by any means. It will be only in very rare cases indeed that a Governor will be able to earn the full pension of £2,000 a year. The second clause enables any ex-Civil Service Governor who has completed ten years' service as Governor to have his pension calculated under the Superannua-

675
tion Acts on his last Civil Service salary, if this would be more to his advantage. This is to avoid the anomaly of a senior civil servant in one of the larger Colonies suffering loss of pension prospects on appointment to a Governorship in one of the smaller Colonies. The main purpose of Clause 3 is to clear up a technical defect in the existing Act, and I do not think it is necessary for me to go into the details of that. The other clauses deal with matters both technical and of another nature. I hope your Lordships will feel that this Bill does do what it was hoped it would do, namely, clear away a certain number of the anomalies and injustices which exist with reference to this matter. I hope your Lordships will give the Bill a Second Reading.
Mover, That the Bill be now read 2a.—(The Earl of Plymouth.)
VISCOUNT ELIBANK: My Lords, as one who moved a Resolution on this subject a few months ago I wish to congratulate the Government on having implemented the undertakings, if I may so call them, which they made on that occasion by bringing in this Bill in another place and bringing it forward for Second Reading in your Lordships' House this afternoon. I should like, if I may, to ask the noble Earl whether this actually carries out what the noble Earl, Lord Buxton, referred to during his remarks in the debate that took place the other evening. I understand from the noble Earl that that is so, and in that case I have nothing more to say except to thank the Government for having acted so speedily in this matter. I am sure the Governors in the various Colonies who are serving now and were serving on March 22, 1928, will be very grateful to the Government for putting them in a better position when their pension becomes payable.
EARL BUXTON: My Lords, I only wish to say that if my noble friend will look at Clause 1 (3) he will see that that carries out the undertaking—the undertaking being that the provision should date back to the time of the publication of the Report. The Government has been good enough to include that in the Bill, and therefore that answers my noble friend's point.
On Question, Bill read 2a and committed to a Committee of the Whole House.

BRIDGES BILL. [H.L.]
Read 3a (according to Order): Privilege Amendment made: Bill passed, and sent to the Commons.

UNEMPLOYMENT INSURANCE (NORTHERN IRELAND AGREEMENT) BILL.
Order of the Day for the Second Reading read.
THE CHANCELLOR OF THE DUCHY OF LANCASTER (LORD CUSHENDUN): My Lords, this is a Bill for making permanent an arrangement which was come to in 1926 between His Majesty's Government and the Government of Northern Ireland for equalising the burden borne by the two Exchequers in respect of their unemployment insurance. I do not think I need go at any length into the reason for that because it is probably well known to your Lordships. The accumulation of debt, or rather the deficit of the Northern Ireland Insurance Fund, which it was hoped in 1926 would be temporary, is now apparently so nearly permanent, or probably permanent, that it is thought best to make a permanent arrangement by this Bill which, with slight modifications, continues the arrangement that was made in 1926. This is done by providing that the Unemployment Funds of the two countries shall be kept in a state of parity on the basis of the insured population by means of an additional Exchequer Grant to the poorer Fund.
The deficit on the Northern Ireland Fund, had on September 30, 1925, reached a figure of £3,615,538 as compared with a deficit in this country of £8,262,001. That represents an infinitely higher debt in Northern land than in this country. In fact, I believe that it was stated in another place that the equivalent debt in this country would be a debt of £200,000,000, and therefore the equitable case for dealing with this matter is, I think, very apparent. On the basis of the insured population the Irish deficit would have been only a sum just over £191,000, and therefore the excess debt to the Irish Fund was £3,424,434. It is this that has to be dealt with, and the Government of Northern Ireland have undertaken to take steps immediately, under the agreement which is scheduled to the Bill, to

677
extinguish the excess debt, and they propose to do so by writing off immediately, before the end of the present month, a sum of,£424,434, and further writing off £100,000 each year until the debt is extinguished. I think that those are all the particulars which it is necessary for me to give to your Lordships, especially at this rather late hour, but, of course, when we get into Committee, it will be open to any of your Lordships to raise any points, and I shall be ready then, I hope, to answer any questions that may be put to me.
Moved, That the Bill be now read 2a—(Lord Cushendun.)
LORD ARNOLD: My Lords, I think it is an unfortunate circumstance that this Bill should come on at such a late hour. I made representations in the hope that it would be put down for another day, because it is a Bill that should receive very careful consideration. It is not certified as a Money Bill, and it is really a measure which represents one of the most indefensible things that has been done by the present Government. It has been introduced to us by the noble Lord in a very brief speech, as if there were really very little at stake, but, as a matter of fact, it is a very strange and, in my view, an unprecedented measure, as I think I shall he able to make clear. The Bill gives out and out to the Government of Northern Ireland a certain sum of money this year—about £460,000, I think—and, so far as can be seen, a suns will have to be paid annually under this Bill by the British taxpayers to the Government of Northern Ireland for many years to come. So far as the Labour Party is concerned, we do not say that help should not be given to the Unemployment Fund of Northern Ireland, having regard to the difficult circumstances that obtain there. That is not our position. What we do say is that money so provided by the British Exchequer should be in the form of a loan, and not of a gift. We say that the Fund should be on all fours with our Fund here. When the Unemployment Insurance Fund here runs into debit, money is advanced on loan—it is not given out and out—and then the hope is that in due course, with better conditions of trade, the deficit will gradually be wiped out with the normal
678
operation of the Fund. But in any case the money is not given. It is a loan.
What is the justification for making this differentiation between the Fund in Northern Ireland and the Fund in Great Britain? If I may say so with respect to the noble Lord, he really attempted no justification whatever, except that this was a continuation of the Act of 1926. It certainly is a continuation of that Act, and that is what we complain of. We opposed that Act, and we oppose this Bill. That Act did for the time being, until 1930, make this Government payment a gift instead of a loan, and we protested strongly against it at the time. I have no hesitation in saying that, if it had been proposed by a Labour Government to make a provision of this kind for some gift to some other part of the Empire than Northern Ireland, it would have caused the strongest feeling in this House, and very strong speeches would have been made about it. Since 1926 we have found for the Northern Ireland Unemployment Fund £2,500,000. This year we are to find another £465,000—I think that is the sum—and altogether there is a debit on that Fund of about £2,500,000.
It is quite true, as the noble Lord has said, that the Northern Ireland Government has undertaken to find £400,000, and that the remainder will be paid back, as we are told, at the rate of £100,000 a year, and that this will take thirty years. That is a very long time, even if the payments are to be made regularly. But I think it is right to say—the noble Lord did not tell your Lordships this—that we are bearing three-quarters of the interest on the debit of £3,000,000, which comes to £113,000 a year. The British taxpayer is bearing this and, at any rate until certain payments have been made, we shall actually be out of pocket on the transaction, so far as I can see. At any rate, there is not very much in it, even if they pay off £100,000 a year. We are finding, in the first instance, £113,000, and that will continue until the sum due to us has been reduced year by year.
There is one point about this extraordinary transaction that I should like to put to the noble Lord. It is stated in the White Paper (Cd. 3271) which explains this Bill that—
"The Agreement is reciprocal, and if at any time unemployment in Northern Ireland became less heavy than in Great Britain, the Exchequer of Northern Ireland

679
would be liable to contribute to any payments made by the British Exchequer to the British Unemployment Fund to bring it into parity on the basis of insured populations."
I say that this is a very misleading paragraph. In fact, it is more than misleading, for it gives an impression that is entirely false. I put it to your Lordships, or to the handful of your Lordships who are present, that this would be read by any man to mean that these Funds are really on a reciprocal basis, that we Day money to Northern Ireland now, but that, if unemployment in Northern Ireland should fall below the rate here, they would be liable to pay a certain amount to us. That is not the case at all. The true position is not revealed. If I am wrong the noble Lord will correct me, but I should like to ask him if it is not the fact that the Government of Northern Ireland would not be liable to pay a brass farthing to this country unless we altered the whole basis on which we conduct our Unemployment Fund. If our Fund runs into debit the advance is regarded as a loan. Is it not true that these words mean, if you go into them carefully—it is all so wrapped up that one almost requires a microscope to find out the actual truth—that the Northern Ireland Government would not be liable to pay a brass farthing unless we began doing here what we are now going to do for them, and made the excess payments a gift instead of a loan? That is the point that I want to put. I say, therefore, that the White Paper is most misleading. It is bound to create in the mind of any one who reads it an impression contrary to the facts. I do not think that it is a right thing that a White Paper like this should be put before Parliament. It really conceals the true state of affairs.
Let me put another question to the noble Lord. Is it not a fact that under this extraordinary agreement even if the Northern Ireland Unemployment Fund began to pay its way and if, despite that fact, unemployment there became worse than here, we should still have to pay money? Supposing for the sake of argument that the figure here was 3 per cent., and in Northern Ireland 6 per cent., both countries would be below the figure which has been adjudged the balancing figure; but even so, as I understand it, we should have to make a contribution. We should
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have to pay a dole—that is what it comes to—to the Northern Ireland Government., although at the moment there was no deficiency on their Fund but it was actually in credit. I put that question to the noble Lord. Is not this what the agreement comes to? I put these two specific questions to him. As I read it, that is what it means, and I think I am right.
We are told in this White Paper that, if at any time the amount that we may be liable to pay should exceed £1,000,000 a year, then we can reopen the question on its merits. There is very little consolation in that. Is it really suggested that that is a provision which in any way justifies what is being done? It is not a provision which really has any satisfactory features for us in practice, because the whole transaction, I think, is so objectionable. Not only so, but it is, without using too strong language, very nearly unconstitutional, because the Chancellor of the Exchequer himself, in another place, admitted in effect that the reason why the Government are doing this now is that they fear, and their fears are well grounded, that in a very few weeks they will be out of office, and they do not think that the next Government would do this, and so they are doing it now when they have their chance. In effect that is what the Chancellor of the Exchequer said. He was asked why he was hurrying over this, seeing that the present Bill does not come to an end until 1930, and he said they were doing it now because then they could be sure it would be done, or something to that effect. It is not the first time that this Government have been trying to bolt the door and lock the windows, and make all secure, so that their successors, with the authority of the people behind them, should not be able to do things. I wish to make it clear, in conclusion, that we are not objecting to helping the Unemployment Insurance Fund in the present distressful days in Northern Ireland, but that we are objecting to making this payment out of the British Exchequer in the form of a gift instead of in the form of a loan. I should be very much obliged if the noble Lord will reply to my question.
On Question, Whether the word "now" shall stand part of the Motion?
Their Lordships divided:—Contents, 8; Not-Contents, 4.

CONTENTS.

Hailsham, L. (L. Chancellor.)

Lucan, E. [Teller.]

Cushendun, L.

Vane, E. (M. Londonderry.)

Gage, L. (V. Gage.) [Teller.]

Sailsbury, M. (L. Privy Seal.)

Younger of Leckie, V.

Templemore, L.

NOT-CONTENTS.

Beauchamp, E.

Arnold, L. [Teller.]

Olivier, L.

Thomson, L. [Teller.]

THE LORD CHANCELLOR (LORD HAILSHAM): My Lords, I have received the figures of the Division. It appears that there are fewer than thirty Peers present. Therefore, under Standing Order XXXIII, I declare the Question
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not decided, and the debate thereon adjourned to the next sitting of the House.
Debate adjourned accordingly.
House adjourned at eight o'clock.