RURAL WATER SUPPLIES AND SEWERAGE BILL (Hansard, 22 March 1955)

§ THE MINISTER WITHOUT PORT-FOLIO (THE EARL OF MUNSTER)
My Lords, the purpose of this small Bill, with which I need not delay the House for more than a few moments, is to change the method by which Exchequer grants may be paid towards the cost of expenditure incurred by local authorities in providing water supplies and sewerage in rural areas. These grants are paid under the provisions of the Rural Water Supplies and Sewerage Act, 1944, which laid down that the grant must normally be paid by a lump sum. This present Bill gives discretionary powers to the Minister to pay either by a lump sum or by instalments; but for any future schemes payment will usually be made by a series of equal half-yearly instalments spread over a period of thirty years. In those cases where a grant has already been promised but has not yet been paid, or paid in full, the amount outstanding will normally be paid by instalments.
The purpose and object of this change is to bring water supply and sewerage into line with other grant-aided services, the cost of which is usually met by half-yearly or yearly payments. The new method has the definite advantage of reducing the amount to be provided in the Budget year by year for the next few years. For instance, without this Bill a 7 sum of nearly £8 million would have to be provided in the next financial year, but when the Bill becomes law the sum to be provided in the next financial year will be in the neighbourhood of 1½million.
I should perhaps mention here that local authorities will not suffer in any way by reason of this change. Let me give the House a simple example. Let me assume that a grant paid in a lump sum would amount to a figure of £20,000; under present arrangements the local authority would borrow the total cost of the work, less the grant of £20,000. In future, after the passing of this Bill, the local authority will borrow the total cost of the work, but the instalments will represent the loan charges on the figure of £20,000 calculated on the rate of interest in force at the time of the promise for loans obtained from the Public Works Loan Board. I think I need say no more on the purpose of this small Bill. I commend the proposals to the House. I beg to move that it now be read a second time.

§ THE EARL OF LUCAN
My Lords, we are grateful to the noble Earl for his explanation of this very simple Bill. Because some noble Lords who are much more knowledgeable on the subject than I am are prevented by illness from being here this afternoon, our examination of this Bill is probably not as searching as it might otherwise be, but I should like the noble Earl to explain something that was said in another place in the course of the debates on this Bill. It was said that although the passing of the Bill will mean a relief to the Exchequer in the coming financial year, over the period of thirty years or so the result will be adverse to the Exchequer—in other words, the taxpayer will have to pay a sum of about £19 million because of interest charges. I should be glad if the noble Earl could explain whether this is the case and whether, as compensation, we can look for a real improvement and acceleration in the provision of rural water supplies and sewerage. If he can convince us of that, we shall have nothing but praise for the Bill.

§ THE EARL OF MUNSTER
My Lords, I think I can quickly reply to the re- 8 marks which have been made by the noble Earl. As I pointed out in the course of my remarks in moving the Second Reading of the Bill, a tremendous advantage will be achieved by the Exchequer in the Budget for this year—namely, by cutting the expenditure from £8 million to £1½ million. It is perfectly true that in the long run, owing to the interest which is payable on the capital sums which are given by the Exchequer to local authorities, the ultimate effect will be to increase the cost by some £19 to £20 million in England and Wales and by £9 in Scotland, spread over a period of thirty years. But I think that the noble Earl will observe that it is infinitely preferable that the Exchequer should have a clear indication of what they are involved in year by year. As I have said, the change will bring these grants into line with Exchequer grants which are made in other services, and although in the long run it may well cost more, nevertheless I think it will be for the general benefit.

§ LORD WISE
Before the noble Earl sits down, can he reply to the last question of my noble friend, whether this Bill will in any way expedite or improve rural water supplies and sewerage?

§ THE EARL OF MUNSTER
The purpose of the Bill is not to expedite or to improve the sewerage or water supplies of rural areas, but merely to put the accountancy on a different basis from what it has been hitherto. The principal Act of 1944 enabled the Treasury to make grants in England and Wales to the extent of £45 million, and in Scotland to the extent of £20 million, giving a total of £65 million. The amount which has been committed under the principal Act at the present moment is something approaching £50 million, and in the course of a very short time it will be necessary again to come to Parliament in order to enable additional sums of money to be given in grants to local authorities for the provision of these services in rural areas. I will not say that the Bill in itself will improve the existing system of provision of water and sewerage to local authorities, but I think it is perfectly clear that the 1944 Act has been of great advantage to local authorities.