Lords Sitting of 23 June 1958

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers

RIVER SEVERN EROSION
2.35 p.m.
LORD HAMPTON: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government what progress has been made in arriving at a remedial scheme for dealing with the problem of River Severn erosion.]
THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL ST. ALDWYN): My Lords, I am glad to say that agreement has now been reached between the Severn River Board and the British Transport Commission on the financial basis of a five-year programme of work on the most seriously eroded portions of the banks, about 6½ miles in length. The total cost is estimated at £130,000, a substantial part of which will be met by a Government grant under the Land Drainage Act, 1930.
LORD HAMPTON: My Lords, I should like to express my thanks to the noble Earl for his reply, which will give considerable comfort to many landowners and farmers in that part of the world.

LOCAL GOVERNMENT BILL
2.36 p.m.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD MERTHYR in the Chair.]
Clause 1:
General grants
1.—(1) For the year 1959–60 and subsequent years the Minister shall make grants to the councils of counties and county boroughs in England and Wales and the Council of the Isles of Scilly; and those grants shall be in lieu of the grants paid or payable in respect of expenditure (hereinafter referred to as "relevant expenditure") specified in Part I of the First Schedule to this Act and not excluded by any provision of Part II of that Schedule.
The grants payable under this section are hereinafter referred to as "general grants", and the said councils as "recipient authorities".
(7) General grant orders shall be made in advance for successive periods (hereinafter referred to as "grant periods") of not less than two years, but as respects any matter to be prescribed by a general grant order the order may make different provisions for different years in the grant period.
THE LORD CHANCELLOR (VISCOUNT KILMUIR)THE LORD CHANCELLOR (VISCOUNT KILMUIR) moved, in subsection (1), after the second "shall to insert:
" save as provided in Part I of the First Schedule to this Act ".
The noble and learned Viscount said: This is one of three linked Amendments (the others are Nos. 3 and 46) which are necessary to give effect to the intention of preserving the police grant in.

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respect of expenditure on providing and maintaining vehicles and equipment used by police forces in enforcing the law relating to road traffic. This forms part of police expenditure and accordingly should, as with some other types of police expenditure, continue to attract the specific Exchequer grant towards police services.
This particular expenditure also attracts at present a grant from the Ministry of Transport under Section 57 (4) of the Road Traffic Act, 1930 (as amended by Section 4 of the Miscellaneous Financial Provisions Act, 1955) and this latter grant is to be superseded by the general grant; expenditure of this type is accordingly made "relevant expenditure" by paragraph 7 of Part I of the First Schedule. The Amendments are necessary because the general grant is expressed by Clause 1 in its present form to be "in lieu of grants paid or payable" in respect of relative expenditure, and this would have the unintended effect of replacing the police grant on this part of police expenditure as well as the separate Ministry of Transport grant. This group of Amendments have the effect of securing that the general grant shall be in lieu of grants in respect of relevant expenditure, save as provided in Part I of the First Schedule, which amends paragraph 7 in Part I of that Schedule to provide that the inclusion of motor patrol expenditure as "relevant expenditure" is not to affect the payment of police grant. I beg to move.
Amendment moved—
Page 1, line 11, after (" shall ") insert (", save as provided in Part 1 of the First Schedule to this Act,").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: This Amendment is little more than drafting; and it makes clear that grants for the year 1958–59 are not affected. I beg to move.
Amendment moved—
Page 1, line 12, after (" payable ") insert (" for those years under any enactment passed before this Act ").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: This Amendment is consequential on Amendment No. 1. I beg to move.
Amendment moved—
Page 1, line 13, leave out from ("in") to (" and ") in line 14 and insert (" the said Part I ").—(The Lord Chancellor.)
On Question, Amendment agreed to.
2.43 p.m.
LORD DARWEN LORD DARWEN moved to add to subsection (1):
" Provided that nothing in this Act shall affect the grants payable at the passing of this Act to local education authorities in respect of expenditure as such ".
The noble Lord said: I beg to move Amendment No. 4 standing in my name and the names of my noble friends. This Amendment seeks to remove education from that group of services which it is proposed to include in the general grant. It affects only Part I of the Bill, and its acceptance by the Government would disarm a great deal of criticism to which the Bill has been subjected. Perhaps, however, the most practical way of regarding the Amendment at this time and in this place is to see it as an expression from these Benches of a desire to put before your Lordships' House the main objections to financing education by apportioning the Central Government's contribution on the basis of population.
The main arguments for making a change from percentage grants to general grants or block grants have already been put in the Second Reading debate; and in that debate, the noble Viscount, Lord Hailsham, by way of rebuttal of certain arguments which I had put, compared the operation of the block grant under the 1929 Act with the increase in expenditure on education under the percentage grant system adopted in the 1930's. The figures he gave were a 40 per cent, increase under the block grant system for the health services at that time, and a 16 per cent. increase for education under the percentage grant system. But these figures, in my submission, prove nothing: if they are to have any force of argument they must be supplemented by other figures stating the percentage of the percentage grant—in other words, the proportion of Treasury money to the proportion raised on the rates. In fact, of course, we know from the Government's White Paper that the percentage grants to education were smaller then than now, and that, I think, does to some extent deal with his argument.
On the other hand—I hope that I shall not be misunderstood—I am not saying that one system is better than another system in all circumstances. What I am saying is that, given a strong lead, such as we are given in the 1944 Act, and given ministerial direction, then in those circumstances percentage grants are better for those authorities most alive to their duties. While block grants may encourage spending by the, shall we say, more parsimonious authorities, there is nothing in the system of paying of block grants per se to ensure that the money is wisely spent. Or let me put it this way: there is no reason to suppose that money paid under a block grant will be any more wisely spent by "tightfisted" authorities than percentage-grant money will be spent by (to use the Minister's own word for them) the "openhanded" authorities. The Minister said in another place, in Standing Committee, on February 6, 1958 (col. 152):
"I agree it would be less easy under a general grant for local education authorities which have been seeking hitherto to provide a service much better than their neighbour's, largely at their neighbour's expense."
He agrees that it would be much less easy under a general grant. I think that this is a very important admission. It means that, in order to try to get a greater measure of uniformity, the more progressive authorities are to be penalised, and it will be at their expense that the general grant system will operate.
This state of affairs would be well enough and unobjectionable if the provisions of the open-handed authorities were in excess of what is required in order to implement national policy; in other words, in order to implement policy laid down in the 1944 Act. But surely there is no authority of which it can truly be said: "They are providing too good an educational service". If, under the present system of percentage grants, an authority can economise, it is surely for the Ministry, with their greater knowledge of what can be achieved in this way, in obtaining the same result at a lesser cost, to show the way. Not unnaturally, we in the Labour Party take a pride in stating, as an example of this, the achievements of George Tomlinson. who set on foot the inquiry which led to one of the biggest real economies in education achieved without any deterioration in standards—namely, the inquiry
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into school buildings. The cost of school places was substantially reduced as the result of that inquiry. It may make no difference to the power of the Minister (here I refer to the Minister of Education and not to the Minister of Housing and Local Government) whether the grants are percentage grants or block grants. He may still be able to bring a backward authority up to standard, at any rate in theory, but I am afraid that the general grant system weakens his effective authority. I will come back to that point in a moment.
I may be naĩve, but personally I do not take the view that, in putting this Bill before us, the Government are providing themselves deliberately with a means of impairing the educational provision. I cannot see how it is possible to argue that the Government lack a sense of the importance of education to the country's future. I think that the records are all against such a charge. What seems to have happened is that they have been persuaded that education authorities are extravagant, and in view of the need to cut down wasteful spending the general grant is seen as giving the Government more power to dictate the rate of spending in the country as a whole, or in a given area, in a given period of time.
Apart from the objection I have already mentioned, there are, as I see it, three objections to the inclusion of education in the group known as the general grant group. The first of these, I would say, is impaired flexibility to meet local needs. I think that this is so obvious that it is not necessary for me to labour the reasons why this is so. The second is the threat to the partnership between the Ministry and the local authorities—and I regard this as an extremely serious objection. In the past few years that partnership has been a valuable and fruitful one, and it is a very necessary one if the present educational policy, whereby national policy comes from the Ministry and its administration is done locally, is to be continued; and we on these Benches are certainly not seeking to alter that system. It seems to me that if the amount of grant is to be on a predetermined scale, of an amount which presumably will be fixed by the Treasury and not by the Ministry of Education, the Ministry's functions in seeing that the

7
1944 Act is implemented will be seriously impaired.
How can the Minister insist that the provision by an authority is sub-standard if the authority can turn round and say that all the grant money they have had has been spent and that their electors will not stand for anything more being put on the rates, especially when they are going to have to pay 100 per cent. of the cost of anything more which is spent on education? The Ministry, therefore, are no longer in a position to offer inducements to the improvement of standards. Instead, they can only criticise—and that, as it were, only from the sidelines. They can disapprove of the way an authority have spent the money allocated to them by the Ministry of Housing and Local Government in conjunction with the Treasury. And it seems to me fairly obvious that the Government's interest in how a local authority spend a general grant, while in theory it is not diminished, is far less immediate than if the percentage grant were in operation. Moreover, as I have tried to point out, in these circumstances the Ministry of Education appear to have a less essential role in allocating Government expenditure on education. My third objection is that, whereas under the percentage grant system an authority have to find 40 per cent. of the cost of the service from the rates, under the proposed system they will not need to raise any money from the rates, so that "skimping" will actually be favoured by the operation of the general grant.
To sum up, I do not think that there is anything of the monster about the general grant. I view it simply as an inferior method of paying for what is a very important service. It may be more economical in the narrow sense, but this will depend on the amount which the Government are to hand out; and that is something that we do not yet know. The effects of the general grant on education seem to me to be negative. First of all, it clamps down on progressive education —that is to say, on the authority which is "education-minded" and which desires fully to implement the Act. Under the new system, on the Minister's own admission, that will be definitely impaired and, to some extent, prevented. It is a system which is less sensitive to local needs. It encourages a niggardly and mean
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approach to those services which it covers; it does not look forward, but backward; it does not encourage new thought and new developments on education, which we shall certainly need as time goes on, but instead encourages a kind of "make-do" attitude, that is all very well on a short-term basis but will not do on a long-term basis. This negative trend may be seen as something which operates even though the Government may be generous in the amount of money which they actually give to authorities. I submit that my criticisms of the block grant system are not answered by the Government when they say that the critics have no reason to suppose that they will not be anything but generous in the application of the general grant. I beg to move.
Amendment moved—
Page 1, line 18, at end insert the said proviso.—(Lord Darwen.)
LORD LATHAM: I rise to support the Amendment moved by my noble friend Lord Darwen in what I thought was a most thoughtful and informed speech. I had rather expected that the noble Viscount, the Lord President of the Council, would be present to-day, because I propose in the course of my remarks to seek to confute a number of observations made by him in winding up for the Government in the Second Reading debate on June 10. In that speech the noble Viscount scattered comparative figures of expenditure on education in what I thought was a spirit of carefree abandon, without much close concern for the precision, or indeed in some cases the accuracy, of his figures.
Before I deal with that matter, however, I want to make it perfectly clear again that we on these Benches are opposed to bringing educational expenditure under a block grant system, because we are convinced that, whatever may be its purpose, its effect will be to reduce expenditure and therefore to hamper the development and the expansion of education. For education cannot escape from the general purpose of the block grant—namely, to reduce the Government's contribution to local government expenditure. The expenditure on education represents something in the region of 80 per cent. of the grants to be merged, and I think it can be fairly said that informed opinion takes the view that education will suffer as a consequence.

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In the course of his speech, the noble Viscount, the Lord President of the Council, said [OFFICIAL REPORT, Vol. 209 (No. 73), col. 700]:
" I am bound to say that I find the charge that the object or purpose or intention behind the Government's action is to cut expenditure a trifle offensive, because it is clean contrary to the repeated assurances of every Minister who has handled this subject, inside Parliament or outside, and clean contrary to the terms of the Bill itself, which provides, in Clause 2 (1) (c), that the formula for general grant is to provide for the development of services."
In point of fact, Ministers have made quite different statements. In the White Paper published under the authority of the Minister of Housing and Local Government paragraph 26 plainly states as follows:
" The proportion of grants to rates is now as six is to five, and it is still increasing."
Incidentally, something can be said about that in regard to de-rating when we reach that part of the Bill. It goes on:
" It is important to reduce this dependence of local government on Exchequer grants if it possibly can be done."
That is fairly definitive. But the White Paper issued by the Secretary of State for Scotland went a little further and left out the words, "if it possibly can be done". That Minister said:
"The Government's view is that this opportunity should be taken to make some reduction in the level of Exchequer grants."
That, I submit, is a pretty definitive declaration that it is one of the purposes of this legislation. The noble Viscount, the Lord President of the Council, referred in his observations to Clause 2 (1) (c) of the Bill and said that
" the formula for general grant is to provide "—
and I stress that word—
" for the development of services."
There is nothing in Clause 2 (1) (c) to require that the Minister should so regulate the distribution of the block grant as to provide for the development of educational or, indeed, any other services. The words of the subsection are:
" that the Minister shall take into consideration—
… the need for developing those services and the extent to which, having regard to general economic conditions, it is reasonable to develop those services."
There is nothing there about provision, and the Minister can just as well take the
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view that there is no need to develop the services as that there is need to develop the services. He is to determine what developments are reasonable; and he is to determine also whether "regard to general economic conditions" should lead to a restriction of the money spent upon those services.
It is conclusive that the purpose of this legislation is to reduce expenditure. The association of local education authorities, which I understand include all the education authorities of England, Wales and Northern Ireland except the London County Council, are bitterly opposed to this proposal. They have in fact issued a pamphlet, and I should like to read one or two excerpts from it.
LORD HYLTON: Before the noble Lord does that, could he tell us whether he is referring to the Association of Education Committees? He referred to the local authorities. Perhaps he is really referring to the Association of Education Committees, a rather different body.
LORD LATHAM: I candidly admit that the description was perhaps a little inexact. It is true that the association to which I am referring is representative of education committees.
LORD HYLTON: Thank you.
LORD LATHAM: But I think the noble Lord will find it difficult to distinguish between the authority, the knowledge and the experience of education committees and of education authorities. After all, it is the Association of Education Committees which does most, if indeed not all, of the negotiation with Government Departments on educational matters, acting with full authority for the local authorities concerned. I do not think that one can in any way depreciate the importance of this Association. This is what it says in its pamphlet:
" We have sought in this pamphlet to show that the block grant is restrictive of development, inequitable between authorities and inefficient in achieving either value for money or similar standards throughout the country. We have shown that it is unsuited to a period of rising costs and that by it risks which the Treasury is better able to underwrite are to be transferred to the local authorities. Having set in motion a process which must inevitably stunt growth, the Government can afford to preach educational advance until they are blue in the face."

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That is pretty energetic language. It goes on later to say:
"They "—
the Government—
" will be able to claim all the credit for the nobility of their educational aims whilst the local authorities will receive all the odium if their conduct conforms to the restrictive pattern laid down by the Treasury."
That is a pretty grave indictment of the Government's policy, but it is the case that the present Minister of Housing and Local Government spoke in similar language with similar misgivings in 1943. He was then under the beneficent, progressive influence of membership of the London County Council. As I pointed out in my speech on June 10 [OFFICIAL REPORT, Vol. 209, No. 73, col. 689] the present Minister of Housing and Local Government, speaking on the occasion of the publication of the Education White Paper which preceded the Bill which ultimately became the Act of 1944, said:
"My fear is that not only these big reforms which the White Paper envisages but all the kinds of things we have long known, for instance, over-large classes, will fail to be dealt with unless my right honourable friend the President is able to reach a more favourable agreement with the Treasury. It will be a bad thing if the Treasury gained for itself the unenviable reputation of having stood in the way of what might have been the greatest advance ever in the quality of the British people."
That is a pretty strong, forthright statement. But the Minister made another equally strong statement at the same time. I quote from the proceedings of the Standing Committee of another place, February 4, col. 110:
" I am not "—
said the present Minister—
" in the least afraid of the prospective cost of £10 million per year for nursery schools. That sum will be more than offset by the consequential savings in the improvement of the quality of our population that this development will bring about."
That is precisely our case: that money invested on education shows a handsome return, a permanent return in the benefit of the nation and of its people. Of course, £10 million in 1943 would be nearer £20 million to-day, having regard to the fall in the value of money. I have been unable to ascertain what actual expenditure there is at the present time per annum on nursery schools, but I should be very surprised to learn that it was a figure in any
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way approaching £20 million which would be the representative figure of the £10 million used by the present Minister.
The Times said—and The Times was right:
"The only justification for this Bill is that it would reduce taxes and put up rates "
Mr. Fisher, who was President of the Board of Education some forty years ago, said, with abundant wisdom, I think:
"If we want education to progress we must finance it by the percentage grant ".
In 1914, the Kempe Committee, which was the short title for the Departmental Committee on Local Taxation, said the same thing. The Times has also stated that local authorities generally will be influenced towards greater economy by the imposition of the block Exchequer grant.
I think that I should here say, even though the noble Viscount, Lord Hail-sham, is not present, that even The Times has committed the heinous sin of referring to this grant as a "block grant." The noble Viscount took great exception to that and imputed all sorts of sinister political motives to my friends and to my Party for using the word "block". But whatever the noble Viscount may say, it is a block grant, and it will have the effect of being a block grant. The Times then went on to talk about the block grant "cutting away the fringes and the frills." Is there any great virtue in that? After all, in education as well as in most other human activities of a collective character, what is a frill to-day becomes an accepted necessity and provision tomorrow; and very often the "frills" and fringes "constitute what goes to make up what we sometimes term the arts and graces of life.
My noble friend Lord Darwen has referred to the great work which the late George Tomlinson did as Minister of Education in reducing the cost of school places—it was, indeed, a first-class piece of work. I well recall that, not long after the passing into law of the 1944 Act, the London County Council were consulted as to the proposed regulations and plans for nursery schools; and the extravagant basis (I use the word "extravagant" advisedly) upon which those plans had been worked out, not by a local education authority but by the Ministry of Education, was almost terrifying. I remember an important member of the

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London County Council who was at that time closely associated with education in London saying that "if nursery schools are going to cost this sum per place; there will not be many nursery schools built." I cite that case because it is often assumed that the Party represented by noble Lords opposite is the only Party in public affairs in this country concerned with efficiency and with economy.
Now let me deal with the figures which were used by the noble Viscount in his speech on Second Reading. He sought to show, by using certain figures, that under the present dispensation there had been a much larger expansion of education than under the previous Labour Government. He said that in the last completed year of the Labour Administration, in 1949–50, there was spent on education £277 million, and that in the present year, after six and a half years of Tory Administration, the figure was estimated to be £613 million—double, he said, that of the Labour Government. But, of course, there are certain adjustments to be made to those figures. The first adjustment is that since 1949–50 the pound has fallen in value from 100 to 72, so that, in real values, the estimate for 1958–59 is worth not £613 million but £441 million. Moreover, the numbers of pupils to be educated have risen. The Ministry's estimate for 1949–50 assumed an average of 5½ million pupils on the registers of our maintained and assisted primary and secondary schools. For 1958–59 the comparable figure is 6,797,000—or an increase of 22 per cent. If that difference is taken into account, as it must be, then the comparable figure for 1949–50 is £338 million, and not £277 million.
Moreover, apart altogether from the general difference of content in the estimates of the two years, it should be remembered that responsibility for the supply of milk in maintained schools was transferred from the Ministry of Food to local education authorities from October 1, 1954, and for the non-maintained schools from September 1, 1956. Moreover, the estimates for 1958–59 include £12,400,000 for the provision of milk which they necessarily did not include in 1949–50, when this matter was dealt with in the estimates of the Ministry of Food. Accordingly, if those adjustments are made, the difference between
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the figures for the two years is not £336 million, but £95 million. Expenditure is not being doubled; it is increased by something less than one-third.
I would say, in that connection, that it is the case, as all history shows, that a good deal of the expenditure now being incurred arises from policies adopted, and expansion and development projects initiated, by the Labour Government when it was in office. We must remember that it took several years to reconstruct the structure of education in this country following the war, and following evacuation and the occupation of many school premises by civil defence forces and for other warlike purposes, and also to repair the damage done to hundreds of schools in this country by bombing. I well remember the preparation of the educational development plan for London under the 1944 Act which, may I stress, was not a Tory Act but a Coalition Act—and no one would wish to withhold sincere praise from both Mr. Butler and Mr. Ede for the work they did in connection with that Act and its passage to the Statute Book. The London County Council plan was not formulated until early 1947; then it had to be examined and lodged and approved by the Ministry, and, as I have said, the larger expenditures under the Tory Government—which, I admit without reservation, except the one I have just made, the Tory Government are entitled to regard with some amount of satisfaction—was in great measure the result of the fructification of plans for expansion and development set on foot by the Labour Government. There was a new spirit abroad in this country.
The noble Viscount, the Lord President of the Council, used some other figures which have been referred to by my noble friend Lord Darwen. He compared the rate of increase in expenditure on education between 1930 and the outbreak of war, where there was a percentage grant, and that on public health, in respect of which there was no percentage grant. The comparison, of course, is not entirely valid because the cost of the two services was governed by various factors, of which the percentage grant was only one. But taking the figures for 1930–31 and 1938–39 given in the return published by the then Minister of Health, entitled Local Government Financial Statistics, we find that the

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total increase in expenditure was 21·7 per cent. The increase on education, elementary and higher, was 14·9 per cent., not 16 per cent. as stated by the noble Viscount, although I concede that it was an understatement by him, rather than an overstatement.
On public health, excluding hospitals, there was an increase of 36·4 per cent., not 40 per cent., as stated by the noble Viscount; but he left entirely out of account the fact that during that period, accounting for a considerable measure of the percentage fall of expenditure on education, the school population fell by 10 per cent. while the total population—the population using the public health services, rose by 4 per cent. Moreover, the average salary per teacher was almost constant during that period, and teachers' salaries of course, constitute the largest element in educational expenditure. The increase in public health expenditure was due to a very large extent—not wholly, but to a large extent—to the absorption of the Poor Law services by local authorities. So it will be seen, I submit, that the figures used by the noble Viscount and the deductions made by him from them are in a considerable measure and to a disabling degree fallacious.
We oppose this Bill and seek to take education out of the block grant and to retain it on a percentage grant basis. because we, and a large volume of informed and experienced opinion, take the view that the result of placing education within the block grant will be to restrict its development and hamper its expansion, with serious long-term consequences for the children and the adolescents of this country. It is a step which we in our view feel that the nation cannot afford to take. Accordingly I support the Amendment.
3.34 p.m.
LORD CHORLEY: I also should like to support the Amendment which my noble friend Lord Darwen moved so ably. In doing so I desire to make some remarks of a rather general character which may perhaps have been more appropriate on the Second Reading of this Bill, but unfortunately I was not able to attend the Second Reading owing to absence abroad on business of a more or less semi-national character. Apart
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from that, I would certainly have made these observations on that occasion.
It seems to me that the whole of this proposal to substitute what my noble friend Lord Latham has very properly said is essentially a block grant (in spite of what the noble Viscount, Lord Hailsham, said on the Second Reading) for the percentage grant is an altogether retrograde step on the part of the Government. The percentage grant system has been tried out over a long time, and I think it has been the general opinion of all those who have studied local authority matters that it has stimulated and assisted the progressive local authorities to get on with the job of carrying out what is very largely, in most of these cases, national policy. The block grant, on the other hand, has always been used —and it seems to me that it is really quite dishonest to pretend that it has not—when the object of the Central Government has been to economise and cut down on expenditure. Surely that is, in fact, the whole object of these present proposals. If it had not been for the financial difficulties—which nobody would pretend were not serious—we should not have been confronted with these proposals at all; and it seems to me that the suggestion which has been made, that this change has nothing to do with the economic difficulties but is a good thing in itself, is really just dishonest.
However, whether or not there is a case to be made for the use of block grants as opposed to percentage grants in regard to local authority government in general, I feel that education is undoubtedly a field of activity in which this policy is not only mistaken but likely to be thoroughly disastrous. This proposed change is perhaps the most disastrous mistake that the present Government have made since they came into power. I think that anybody, looking around the world to-day and studying the situation of this country in relation to Russia, the United States and other countries, is bound to come to the conclusion that our only chance of our holding our heads above water is by having the best educated people in the world. There is nothing the Government are doing at the present time to ensure that. This substitution of block grants for percentage grants in regard

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to education is a thoroughly retrograde and disastrous decision for the Government to take.
Those of your Lordships who have been reading a most interesting, instructive and informative book by Mr. Gunther about his recent visit to the U.S.S.R. (it certainly is not a book which is full of praise for what is going on there) cannot have failed to be struck by his observations on the subject of the intense enthusiasm of the Russian people—not only of the Russian Government, but of the Russian people—for education, and on the way that that enthusiasm has been stimulated by the enormous economic resources which the U.S.S.R. Government has been putting into education over these last years. On the technological side this point has been driven home in this country time after time, and not least in your Lordships' House. In fact it has been driven home with such effect, on a number of occasions, that the noble Marquess, Lord Salisbury, and other members of Her Majesty's Government accepted the danger of the situation, with the result that considerable financial steps have been taken to step up technological education in this country, with the approbation of everybody concerned.
One only wishes that that effort could have gone a little further, but a really substantial attempt has been made, certainly from the point of view of providing laboratories and workshops and for the material side of technological education, as a result of the changed policy of Her Majesty's Government—a change which resulted from information from the U.S.S.R. on the progress being made there. In that country they are turning out twice the number of engineers that are being turned out in the United States of Arnerica—a most astonishing fact, but one about which there seems to be no doubt at all. This astonishing progress in technological education in the U.S.S.R. is based on a sound foundation of general education in the schools and universities generally, because the Russians appreciate perfectly well that the technologist has to be more than a mere specialist: he has to be well educated from the start. It is here that this Bill seems to me to be letting down education in this country. It is interesting to note that practically all who are engaged in education are unanimous in taking this view. All educational organisations, whether of
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teachers in elementary schools, in secondary schools or in universities, are protesting against the policy of Her Majesty's Government in this particular matter.
It may be said that it is to the advantage of people who are teaching to have at their disposal as much money as possible; and one appreciates that there is something in that argument and that there may well have to be some other authority which, in given circumstances, has to determine that no more money can be spared. But Her Majesty's Government have not made out that case at all, and it seems most unfortunate that those upon whom the education of our children depends should be given this feeling of frustration as a result of this policy which, at best, is not really going to save a great deal of money. It would be wise if, even at this eleventh hour, Her Majesty's Government were to do what they could perfectly well do—accept this Amendment and cut out education from the destructive effect of this policy.
I should like to finish my observations with a few remarks of a rather more detailed character on the likely effect of this policy on the student population at our universities, which is the side of the matter that particularly interests me, as a university teacher for thirty years. The major part of the financing of students at universities is done by local education authorities. That is an integral part of the whole system and a very large number of boys and girls who are going to our universities, and on whom the future of our country depends, are going to universities on the basis of the grants they receive from local education authorities. It is the experience of everybody in the university world who is concerned with this side of the matter that there is a great deal of difference between local authorities in the way they carry out their duty of providing the finance for boys and girls going to universities. It is no good pretending that in this respect there are not progressive and backward authorities. Time and again the associations of teachers have brought this matter to the notice of the Ministry of Education. I have myself been on delegations-from the Association of University Teachers to the Ministry when officials have made no question at all but that there is this difference between progressive and backward authorities, and have indicated the kind of steps which they

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would try to take in order to encourage the more backward authorities to carry out what is undoubtedly their duty, that of providing the requisite sums of money for these boys and girls going to universities.
Even under the percentage grant system this has proved an exceedingly difficult task, and it is clear that the Ministry of Education themselves are not satisfied with what has been done. Is it not perfectly clear that under the new system the brake is being applied and that backward authorities will be even more backward in carrying through their duties of providing the necessary maintenance grants for students at universities? The result will be that students will have less and will find it much more difficult to carry on their studies effectively. Probably they will be fewer and the whole tone of the work will be degraded as a result of this policy. So I join with my noble friends in asking Her Majesty's Government to think again before they throw this spanner into the wheels of education by insisting on applying the system of the block grant to educational work.
3.48 p.m.
THE LORD CHANCELLOR: I do not think any Minister answering at the Box could complain of the care that has been put into the speeches in favour of this Amendment or of the tone in which they have been made. The noble Lord, Lord Darwen, has a special connection with education, and he obviously feels very strongly about it. If he will allow me to say so, I thought he was most generous in regard to imputations which he did not make with regard to the feelings of Her Majesty's Government in this matter. I would ask noble Lords to approach this matter objectively on the basis that we have good reason for our view and a firm belief in the importance of education. The noble Lord, Lord Latham, mentioned his regret that my noble and learned friend the Lord President of the Council was not here to-day. My noble and learned friend is fulfilling a very longstanding engagement to visit a research station, which was made before he had in mind that the House might be meeting on a Monday, and he regrets that he is not here to-day. I hope that he will be here to-morrow when
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certain educational aspects, at any rate, will be dealt with.
LORD LATHAM: Certainly I understand. My point was that I did not wish it to be thought that I was acting discourteously in controverting the speech of the noble and learned Viscount in his absence.
THE LORD CHANCELLOR: I fully appreciate that, but I wanted the noble Lord to know the reason why my noble and learned friend is not here.
I should like first to deal with some of the specific points that have been raised, then to deal with the more general argument for the line that the Government have taken. The noble Lord, Lord Darwen, gave a quotation from what my right honourable friend had said, and I think that his general point was expressed in the three objections which he made: first of all, that the general grant would cause impaired flexibility; secondly, it was a threat to the partnership of local and national Government; and, thirdly, that under the percentage grant an authority had to find 40 per cent., whereas under the general grant it had to find the whole.
With regard to the first point, on flexibility, I think that the answer to the noble Lord lies in the principles (they are set out in Clause 2 (1)) on which the Minister is to take into account: they are the foundation of the general grant. The noble Lord will remember that these are, first, the latest information as to the level of prices, costs and remuneration; secondly, probable fluctuation in the demand; and, thirdly, the need for developing the services. I point out to the noble Lord that the Minister must take all these points into consideration, and if he does so I find it difficult to see the argument that one is adopting an inflexible method. On the second point—and this is a very important point, which I should like the noble Lord to consider—I could not agree with him more strongly that, in order to have a well functioning State, one must have a real partnership between local and national Government. A great test is whether both, not only national Government but also local government, are healthy.
I put this point to him, and I hope he will consider it, because it is the result

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of many years of thought on this point: I believe that more important than the financial methods is that the partnership should be between bodies with a reasonable degree of independence, and that the organs of local government ought to be able to stand up and form their views according to their own thoughts. If one puts it, with regard to a specific service, that this is a service where there is a national policy but a local putting into effect of the policy, I still think it is of vital importance that the organisations of local government should be independent and should not be mere agencies of Whitehall.
LORD CHORLEY: Would the noble and learned Viscount go so far as to say that they should be able to ignore national policy? Because if they are independent they are in a position to ignore national policy.
THE LORD CHANCELLOR: I do not think the noble Lord can have heard what I said. I said that the whole basis of the educational service is a national policy put into effect locally, and that is what they have to do. The noble Lord has made his point, and I will answer it. You must still, in my view, have sufficient independence in order to give your local authorities a true right of choice. They cannot ignore the national policy; it is impossible for them to do so; and in a moment, if the noble Lord will look at the sections of the various Acts to which I shall refer him, he will see that they are prevented from doing that. He is putting an absolutely unreal and impossible situation in endeavouring to hoist me upon the horns of that dilemma. The third point which the noble Lord made was that the percentage is a composite figure of 40 and 60, instead of the authority being able to decide its own figure, on the basis (which is really my answer to the noble Lord. Lord Chorley) that the central Government (a) can say what will be the policy and what will be the standards, and (b) provide sufficient money for these standards, on the principles to which I have referred. I do not think that there is the difficulty which he says there is.
The noble Lord, Lord Latham, dealt with the various figures with great care and skill—and I hope when I use any such adjective it will be understood that there is no irony and that I am trying
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to deal with the point. I listened very carefully and took down what I could (which is much more difficult when listening) of what the noble Lord, Lord Latham, said with regard to the figures, comparing 1949, 1950 and the present year. Let me put it as objectively and as conservatively (with a small "c" and not a large one) as I can. As I understood the figures, making all allowances for automatic increases—that is, increases to compensate for the change in the value of money and for the alteration of certain matters among departments and among authorities—there still was a rise of £95 million, or roughly 33⅓ per cent. That in itself shows that the Government are not neglectful of education—I am trying to put it as mildly as I can. Even if the noble Lord is right (and I am not going to argue old and forgotten strife) that these are due to proposals of his own Party, it still leaves the very considerable answer that the other Party have put them into effect none the less because they are his Party's proposals.
I would also put this point. I am sure that as a master of finance he would agree that we had periods of difficulty, such as last September, which was a period when we had to take stringent measures. if after those stringent measures, and after providing for automatic increases, one still finds an increase of 33⅓ per cent., then I think it shows that one is attaching a high importance to education. The other figures of my noble friend to which he took exception were between-the-war figures. I think that the noble Lord, Lord Latham, would agree with me that whether it is 14·9 or 16 or whether it is 40 or 36·9 per cent. is not a material conclusion which we should draw from the matter.
LORD LATHAM: I wonder whether the noble and learned Viscount thought so when the figures were used on June 10.
THE LORD CHANCELLOR: I thought the noble Lord was chiding my noble friend for saying 16 when the real figure was 14·9, and 40 when the real figure was 36·9. I do not think that it affects the point my noble friend was making—namely, that when the percentage grant was operating, education was having difficulty in making the advance which it might have made in competition with other services. I would

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put to the noble Lord that that is a fair point. It is difficult to assess the exact value of the point without going into all the circumstances over these years, but my noble friend's point that the percentage grant does not ultimately mean that education is to have a better chance than other services is shown, I think, by the quotation of the figures of that period when there were other services with strong claims which made a much greater increase than education. That was my noble friend's point, as I understood it. Again I venture to say that it was not an unreasonable one.
There was one other point made by the noble Lord, Lord Latham. He quoted from a speech my right honourable friend the Minister made some fifteen years ago from the Back Benches, if my memory is right, in which he said that every Minister of Education ought to stand up to the Treasury. I think that that is really the effect of his speech. I respectfully submit to the noble Lord and to the House that in the framing of this Bill my right honourable friend has ensured that the course which he was advocating fifteen years ago will be pursued if these matters are properly taken into account.
Finally, the noble Lord dealt with his own fears about Clause 2 (1) (c). I would only remind him of the wording of the clause.
" In fixing the annual aggregate amount to be prescribed under the foregoing section the Minister shall take into consideration—
(c) the need for developing those services and the extent to which, having regard to general economic conditions, it is reasonable to develop those services."
The point which I put to the noble Lord is that it is mandatory that the Minister must consider the need. Of course, he must also consider the extent to which, having regard to the general economic conditions, it is reasonable to develop these services. So long as it is made mandatory that he must consider the need, I should have thought that in deciding beyond what is necessary and what is desirable every Minister—indeed everyone who had a position like the noble Lord on a great local authority—would have to consider the general economic conditions. Therefore, I suggest—I hope I have done it with the greatest desire to try to meet the noble
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Lord's points—there is not the same reason for him to worry as he thought.
LORD LATHAM: Surely the noble and learned Viscount would accept the proposition that it may be mandatory to consider but it is not mandatory to accept that there is a need. The Minister can reject the claim that there is a need.
THE LORD CHANCELLOR: Of course, that is so. It is mandatory that he must consider. The Minister can be either right or wrong as a result of his considering. If he is right, cadit quœstio. If he is wrong, then another place is there to exercise Parliamentary control. But what is important is that he must consider the need; and I think that, in this year of grace, to impute that any Minister of any Party, if he considers that there is need, will not take the steps open to him, is out of date and belongs to a period of Party difference which happily has departed.
LORD LATHAM: I am not imputing improper motives to any person. I did not pray in aid that paragraph; the noble and learned Viscount the Lord President of the Council did so, and I ventured to criticise its terms. It is not mandatory.
THE LORD CHANCELLOR: I do not think that there is any difference between the noble Lord and myself about the interpretation. I say that it is mandatory as it forces the Minister to consider, and I say, for reasons which I will develop in a moment, that it is inconceivable, if he considers that there is a need, that he should not carry it out.
On the general point that the Government have proposed a general grant because they consider it to be, first, a much better basis than the percentage grant system which gave financial assistance from the Exchequer towards local authority services, and secondly, because it is far more in accord with our general aim of increasing the responsibility of local authorities in managing their own affairs, I would say that here I do not think that there will be a great difference between the noble Lords, Lord Darwen and Lord Latham, and myself, because I think that both are seized with the importance of local government. The noble Lord, Lord Chorley, would, I believe, take a different view. From his interjection I think that he would still go

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back to what the noble Earl, Lord Attlee, said in 1935: that local authorities ought to be the instruments of the central Government and of the Party who constitute that Government. That is a view with which I disagree, and the whole basis of the Government's position—
LORD CHORLEY: I disagreed with the word "independent" which I thought went too far. I do not say that they are the mere servants of the central authority.
THE LORD CHANCELLOR: I am glad to hear that. Then the difference between us is a matter of degree and not of kind. But we strongly believe that the aim should be to increase the responsibility of local authorities in managing their own affairs. I am not going into that matter in detail again, because it is a point that I developed in placing the Bill before your Lordships at the Second Reading; but we say, consistently with that view, that all the existing grants which satisfy the conditions requisite for inclusion in a general grant system are to be included. May I remind the Committee of the three conditions which. I suggested should be fulfilled? The first was that the service should be one which extends to the whole country on a reasonably uniform basis. The second was that the need for expenditure on the service should be capable of being reasonably reflected in objective features, such as population and the number of persons benefiting, and in physical features such as density and sparsity. The third was that the service should be one in which there is real room for local discretion and initiative in administration within the framework of any national plan or policy. I believe that the education service satisfies these requirements.
The noble Lord, Lord Chorley, stressed the importance of education; and there is no difference between any of us on that point. He also stressed the importance of technological and scientific education; and again there is no difference between us. The noble Lord was good enough to say that the Government had taken great steps—of course, it is always possible to suggest that they could have done more—in that direction. The third point he made was with regard to the importance of seeing that we are not outstripped by
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scientific and technological education in the Soviet Union. Again, I entirely agree. There is no reason why the noble Lord should know, but I have often before made his fourth point: that you cannot leave scientists out on a limb; that they have to be, as he said, well educated and understanding of general problems as well. I assure the noble Lord that on all these points there is no difference between us. If I remind him of what the Government have done—for example, the introduction of the three-year training period for teachers, with which I am sure he will agree; the expansion of technological education and many other improvements that have been carried out—I do not think he can find a basis for saying that we desire to drag our feet. My colleagues have stated repeatedly that the Government are determined that the development of the education service necessary for our national wellbeing shall go ahead; they have undertaken that the Exchequer will make a contribution to the cost of this development; and if any further assurance is necessary, I give it now.
If there are fears for the future of the education service, once it is granted that the Government will keep their side of the bargain by making an adequate allowance in the general grant for the cost of the service, they must rest on apprehension that the local education authorities will not act with a sense of responsibility in devoting a proper share of the funds available to them to education. I do not think that that is a fair and reasonable apprehension; and I should not have thought that most noble Lords who have direct experience in the working of local government would subscribe to that view. I said that I would remind the noble Lord of the possible correctives—and I think I mentioned them on Second Reading. If any local education authority should be tempted to act in this way, the Minister of Education has powers under the Education Acts to deal with default under these Acts; and he will have new powers under Clause 3 of the Bill to act if the authority fails to maintain the necessary standards.
In any case, it is surely essential to our proposal for a comprehensive reform of local government and a strengthening of its fabric that authorities should have more responsibility for allocation of their financial resources between services; and

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surely it is good democracy that problems of this kind should be the subject of lively and informed debate in local authorities. as well as in this building.
I come now to a deeper point, which I would ask noble Lords to have in mind. I respectfully suggest that those who are apprehensive about the future of the education service under the general grant are misunderstanding what are the real springs of progress in education, as in every other service. We have had great advances in education in recent years under the percentage grant. As I pointed out to the noble Lord, Lord Latham—and I want to make the point with the greatest fairness—we had a percentage grant between the wars. I would put it in this way: that progress was not as rapid. because, as I ventured to put to the noble Lord, of the competition of other services that in those conditions—and I do not blame or praise anyone—had a greater competitive power. But we are living in 1958, and it is the climate of public opinion which determines the rate of progress through the influences which it exerts, both nationally and locally, and the support it is prepared to give to further advances. I think one of the most cheering things about our time is that we have a more vigorous public interest in education than ever before—I am sure that that will be agreed, times of controversy apart, by any Member of Parliament or member of a local authority, and I should hope beyond that. I have not the knowledge of the noble Lord, Lord Chorley, of students, but, as he knows, I have various connections with various universities, and, broadly. I find no discontent from the students, of whom I see a great number, on the working and the support of grants from local authorities.
Therefore I feel that we have come to a time when public opinion, quite irrespective of Party, is strongly in support of educational advancement; and I am sure that in that state of things the cause of education will not go by default, and can be sustained along with the cause of greater freedom and responsibility for local authorities, both of which, I suggest, are important measures that we have in the body politic to-day. I have tried to put my reply in the form which accepts the value of the basis of the arguments, and I hope noble Lords will find
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that, in those circumstances, it is unnecessary to alter this Bill on one of its cardinal points.
LORD DARWEN: Before the noble and learned Viscount sits down, may I remind him of one thing? I do not feel that he quite answered my third point, and I wonder whether he really took it. It is that the block grant system encourages skimping, because in effect the authority which perhaps is not very devoted to the cause of education—we all agree that there are these differences as between one authority and another—is in a position where it can say: "We will not use any of the rates, but will simply use the money allocated to us by the Government."
THE LORD CHANCELLOR: I am sorry if I did not make my answer clear. The answer is really twofold: one is the maintenance of standards and the sanctions that are behind that; and the noble Lord may remember that I developed that point rather more fully in my Second Reading speech. The second part of the answer (here he may think I am too optimistic, but I have great faith in my countrymen) is the climate of opinion. I believe that to-day we can got that enthusiasm for education and learning in a way we have not been able to do for many hundreds of years. I hope the noble Lord. whatever he thinks of my powers of argument, may, on reflection, share my enthusiasm.
LORD CHORLEY: May I say I think the noble and learned Viscount is judging some districts of England from the point of view of his own country. Scotland, where there has always been a greater enthusiasm for education. I daresay that the local authorities in Scotland can be trusted, but there are some parts of England where, I am sorry to say, they cannot.
LORD LATHAM: Is not the noble and learned Viscount making too much of this point of the climate? I and others in this House remember the climate which followed the Fisher Act of 1918, how it was desirable to have expansion and development of the educational services; yet within two or three years economy measures were being exercised and all the climate of opinion associated with Fisher and his Act disappeared.
THE LORD CHANCELLOR: It is not very profitable to put too much emphasis on the past. May I give this answer, which occurs to me at once? The Fisher Act was passed in 1918. Troubles occurred in 1921 and 1922. I am not going to embark on a defence of the Coalition Government at that time. I would only point out that the Act of 1944 (curiously enough I am one of the very few Members of this House here at the moment who was a member of the Government which passed that Act) has gone on for fourteen years, and I do stress the point which I made to the noble Lord earlier: that, with all the difficulties we had last September, education still continues to make the advance which his own figures admit. I have been studiously moderate in all the points I have made, and I know that no noble Lord will hold my moderation against me. I think that is a partial answer. But I think the much deeper answer to the noble Lord is the fact that we are just going over the threshold into this new scientific world, with a new industrial revolution occurring round us; and in those circumstances I believe that the popular imagination may be trusted to hold and to continue its pressure in the direction which I certainly think is right.
4.25 p.m.
LORD SILKIN: We have listened carefully, as we always do, to the moderate way in which the noble and learned Viscount has put his case, but I think we can assume that the case he put is the strongest possible case that can be made for the block grant, and so we have the authoritative voice of the block grant put to us this afternoon. The noble and learned Viscount asked us to accept two propositions: first, that the Government had good reasons for their views, and secondly, that they had a firm belief in the importance of education. I readily concede both. But I should like to ask the noble and learned Viscount in exchange to agree that we have equally good reasons—perhaps "equally" is not the right word, but we have good reasons—which are in our view as strong for taking the view that the block grant is a fundamental mistake and that it is against the interests of education, and that we have at least as firm a belief as the Government in the importance of education. If we can start the discussion
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with the mutual acceptance of those two propositions, then I think we can carry the matter at little further.
I would perhaps put forward a third proposition, which I hope the noble and learned Viscount would accept; that is, that the percentage grant system has worked and the onus of proving that any change is desirable is on those who want to make the change. I would make my remarks on the basis that the Government have not discharged that onus. I will take the reasons which the noble and learned Viscount put forward for making the change. I think he has to show that the change is desirable for certain reasons, and I would ask him: Has education suffered as the result of the percentage grant? Has expenditure been extravagant? Could better use have been made of the money?
Nobody—neither the noble and learned Viscount, nor anybody else—has suggested that education has suffered because of the percentage grant. I think that possibly the noble and learned Viscount, Lord Hailsham, supported by the Lord Chancellor, went so far as to say that it is not essential to have a percentage grant in order to get a developing service because other services have progressed much more than education during the relevant period. There may be many reasons why, for instance, the Health Services, or other services with which the comparison is made, have progressed more. The Health Service started from scratch and naturally development was more rapid. One can make that sort of case, but I think—here I would agree with the noble and learned Viscount—that this sort of comparison leads us along paths which can be very distracting, because it is necessary to get an exact analogy, and exact analogies are always very difficult, to draw.
I would base my case on the broad fact that during the period when the percentage grant was in existence we made good progress in education. The education services developed in a satisfactory way and without extravagance. If there had been any case of extravagance on the part of local education authorities which had not been detected by the Government at the time when they were making the grant, I am sure we should have heard of it since. But no single case of inefficiency or extravagance has at any

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time been put forward by the Government as a justification for withdrawing the percentage grant system. Indeed, in one Report (I am not going to quote it, but I have it here) the Government actually say in terms that they have not been able to discover any case of extravagance. Therefore it is not on account of the defectiveness of the service, it is not on account of extravagance, that the change is being made.
Why is it being made? The noble and learned Viscount put two reasons. The first was that the block grant is a much better method of giving assistance to local authorities. Why? There is much to be said for the block grant in the case of other services; but in education, which comprises 80 per cent. of the total, why is it a much better method of giving assistance? After all, it is a natural thing, it seems to me, if we regard education as a national service administered by the local authorities, but not as agents, that the two parties should get together and consult, and that there should be this partnership in which there is an agreed percentage provided by each of the partners towards the cost. That seems to me a far better and far more reasonable method of giving local authorities assistance on education than the block grant, which is not a grant towards education at all.
Admittedly, it takes into account educational expenditure, but it is not a grant for education; and certainly it is not a better method. I do not think I am doing the noble and learned Viscount an injustice if I say that he really made no attempt to prove that it was a better method; it was an assertion. To deprive local authorities of the advantage of consultation with the Ministry of Education on educational expenditure and development, with all the experience that the Ministry have of similar services and developments being carried out by other authorities, and to leave them virtually to their own resources, except that the Minister will require a minimum service, is not, it seems to me, giving the local authorities a better method of assistance at all. In so far as the case for the second advantage is made out, that it gives them increasing responsibility, I agree that it is giving them greater freedom—but greater freedom to do less than they would do if there were a percentage grant. I would
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respectfully suggest that the noble and learned Viscount did not make out the case for asserting that it was a much better method of giving assistance to local authorities than the percentage grant.
Furthermore, I think that he must take into account the views of those who are immediately concerned with education. Are they all prejudiced? Are they all speaking without knowledge, without understanding, without any appreciation at all of the point of view of the Government? Have they all misread the Bill? Have they not read subsection (2) of Clause 1? Do they not understand everything that the Minister and the noble and learned Viscount have said about the requirement that the service should not be impaired, and so on? In spite of all that, they are consistently opposed to this method of providing assistance. I must say that that fact impresses me immensely. I am sure the noble and learned Viscount will agree that it is not a political objection. It is certainly not made on political grounds, because this opposition comes from all sections of those concerned with education. It is not based on pure suspicion or misunderstanding; it is based on a real and, in our view, justifiable fear that education will suffer because this is not the best method of giving assistance to the local authorities.
The second reason given by the noble and learned Viscount was that it was far more in accord with the increasing responsibility for managing local affairs, that it would give local authorities local discretion and initiative, and would enable them to decide for themselves how the grant should be spent. We are speaking of education. Up to a point I do not want local authorities to have this complete freedom to decide on how this money is to be spent. I want, and the nation wants, an efficient education service; and I do not want this efficient education service to be depreciated, or that it should suffer in order that there should be a better road service, or what you will.
Competition may be a good thing; but where there is a limited amount of money available and conflicting claims for it, you do not necessarily get the best result in the public interest by allowing it to be settled by the chairmen of the various conflicting services. As I said on Second

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Reading, very often the result is determined by the personality of the individual concerned. I have had experience of this kind of thing. I have sat in a group where we have had to consider expenditure, and where the different chairmen have had to fight out among themselves how the available money should be spent, knowing that if a particular sum is given to one chairman for his committee then somebody else is going to suffer. I do not think that education, at any rate, is going to get the best results by this battle.
While the noble and learned Viscount may claim that this is a democratic way of settling things, I must say that I do not see the democracy in it. It is not the democracy that settles; it is the chairmen of committees, who have been appointed by the leader of the council, not necessarily in a democratic way, who argue it out among themselves—not necessarily on the best possible principles —and arrive at a result which I submit is not always the best one. It depends SO much on the personality of the particular chairman. It also depends on the weight which the local authorities attach to education. One authority may attach a great deal of importance and significance to education, and another less so; and in the case of those who attach less importance, then of course, education will suffer.
So I do not agree that the block grant system is in accord with the increasing responsibility for managing local affairs at all. In my view, this internal battle is not a good thing so far as education is concerned, and it seems to me that education can only suffer from this battle. I fully understand that we are now fighting a hopeless battle here—the Government have fully made up their minds as to what they are going to do, and I suppose it would be hardly credible that at this stage of the Bill they should accept our Amendment. I think all we can do is to put forward our case in the strongest possible way, and put on record the fact that we have the strongest of reasons for the view which we take. This is in no sense a political view. Like the education authorities, we have real apprehensions that the cause of education will suffer as the result of changing over from the percentage grant to the block grant.
I will just say this in conclusion. I have given the Government credit for
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having good reasons for their views, but I cannot help thinking that one of the good reasons—and it may be a perfectly good reason, from their point of view—is that this system will save money; that at the end of the day the amount which they will have to provide to the local authorities by this means will be less than they would have had to provide if the percentage grant had been in existence. I do not say that I would condemn even that out of hand; I have no objection to saving money in a proper way. But I feel that this reduction in expenditure will be at the expense of education. It is for that reason that my friends and I consider that we should press this Amendment, and press it, if necessary—as I imagine it will be—to a Division.
4.41 p.m.
LORD DOUGLAS OF BARLOCH: I have listened to this discussion which has ranged over a very wide field of educational aspirations and ideals, but it comes down in the end purely to a question of finance. This is a proposal for a new system of Government grants towards education and other services, and there are two fundamental questions which arise. The one is what will be the aggregate amount which the State provides for this purpose: will it be more or less than otherwise would have been provided if the percentage grant system had continued? That, I agree, is a question which it is very difficult to answer, because there is no standard of any kind laid down in this Bill by which one can ascertain for the future what the aggregate amount to be provided is. It is true that the Bill says that the Minister must give consideration to this question, and, in giving consideration to it, he has to take into account certain specified factors; but that is all. It becomes a matter of judgment upon the part of the Minister what the aggregate amount of the general grant is to be. That is the one consideration.
The other consideration is how the grant will be apportioned among the recipient local authorities, and how that apportionment will compare with the apportionment which would have taken place under the percentage grant system. Now, as far as that is concerned, I have thought about this problem for many years, and I am not certain that the apportionment which is made under the percentage grant system is an equitable

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one, because the percentage grant involves, broadly speaking, that those authorities that desire to spend most will get the largest contribution from the State. But the desire to spend is regulated, to some extent at any rate, by the resources which are available to the local authority. Those, of course, vary very considerably between one local authority and another, for some have relatively much higher rateable values per head of population than others. So it is true, I think, that the percentage grant system will tend to benefit those local authorities who have the largest rateable values per head at their disposal.
I can conceive that a general grant system can be worked out under which the grant to the local authority will be based upon an estimate of what is the reasonable cost of, let us say, educating each child, or each child in a certain age group, because the cost of education is not uniform for every child; it depends upon the age of the child and the kind of education, and many other factors. It is conceivable that some calculation of that kind is intended under this Bill, but the noble and learned Viscount has certainly not indicated that in any way whatever. If that were to be the policy I could conceive that a figure could be worked out which would be advantageous to the poorer local authorities and which would encourage the development of education in districts which at present may find themselves handicapped by their relatively low rateable values.
This, of course, is trespassing to a certain extent upon the First Schedule to the Bill, which contains more detail of the procedure by which the general grant is to be calculated; but I think it would be very desirable, and might allay a considerable amount of anxiety, if there were a specific statement in the Bill that a grant would be made for education based upon a figure which would be named expressly as being the estimated reasonable cost of educating each child, and that the grant would be based upon the number of children requiring such education in the district of each local education authority. At the present moment the Bill is expressed in extremely vague terms, and I am not surprised that many local education authorities have felt somewhat anxious about it.
VISCOUNT ALEXANDER OF HILLSBOROUGH: Before the noble and learned Viscount replies, might I say a word? My noble friend who has just spoken approaches this matter, as always, with a very calm mind, and with the approach of the expert accountant. He has made an excellent speech for drawing attention to an important point. My noble friend who has spoken from the Front Bench this afternoon and the noble Lord who has just sat down, have long experience of local authority and educational authority work and management, whereas I was merely a humble servant of a local authority for twenty-odd years, but I have always followed the processes and changes which have taken place since the days of the old Education Department, right through the Board and on to the Ministry.
I have just been checking my memory with my friends, and it seems to me that the statements made by the noble Lords, Lord Latham and Lord Silkin, are unanswerable as to what the effect is in this matter. The point, which appeared to be a very sound financial point, that my noble friend, Lord Douglas of Barloch, made is this: that there is not the handicap to the low rateable value authority that one would think, under the process of the percentage grant, because the formula which is put into operation by the Ministry, in recommending to the Treasury what the percentage grant shall be, is subject to an actual deduction—so much in the £ for every overall increase in the rateable value, the product of the rate. It seems to me, therefore, that we have to keep especially in mind—and here I speak frankly from a Party point of view—what is the view of my own Party on education and how it should be developed.
We are not anxious for this or that particular area; we are anxious that there should be equality of opportunity for children in whatever area they are born, domiciled or brought up, and that that should not be subject to the whims and fancies of a particular section or a given time of representation on a local authority. It should be the policy of any Government, of any Party, to see that their general, overall educational policy is such that there is equality of opportunity for all children. That is why we think that the use of the percentage grant,

37
to come behind well based and well planned expansion by the local authority, is the better way to deal with it. If they are prepared to pay from local resources an extra contribution for expansion, they ought to be entitled, under the surveillance of some Ministry, to whatever grant can be paid in relation to their efforts for that expansion of education which alone can secure the ultimate efficiency and prosperity of our country as well as the happiness of the individual.
4.52 p.m.
THE LORD CHANCELLOR: I am glad that the noble Viscount, Lord Alexander of Hillsborough, has made that interjection, because I feel it brings us down to the fundamental difference between us, which I am glad to think in this instance is not one on which we need assail each other's sincerity, but one on which we may well differ—as it is proper that Parties should differ—as to the methods by which we reach the objective we both want. I apologise to the Committee for not repeating to-day the reasons why I suggested that the general grant was better, because I had developed them at considerable length on Second Reading. Perhaps I may give noble Lords the references to them and deal with them very shortly. I dealt with this first point in the OFFICIAL. REPORT, Vol. 209 (No. 73), col. 624, and with the point which most interested the noble Lord, Lord Douglas of Barloch, in the succeeding column, No. 625.
I put two points on which is the better system. If the amount which the local authority get from Her Majesty's Government depends on how much they themselves spend, we do not get that objectivity in decision which is what is wanted. The other is the point developed by the noble Lord, Lord Douglas of Barloch, very interestingly—the question of doing equity between large and small authorities. There is a danger—and it is for us to estimate the importance of the danger—that in the case of a small authority, afraid of the consequential burden on their rates, that amount—even after allowance is made for what the authority receives in the percentage grant—may dissuade the authority from worth-while expenditure. Again I am putting it quite shortly, but I should like the noble Lord to know that it was not through want of consideration that I did not deal to-day
38
with that point, which I endeavoured to develop on Second Reading.
The next point which I thought was of importance was that made by the noble Lord, Lord Silkin, with regard to consultation. The noble Lord said that it would be very bad if local authorities were deprived of consultation with the Minister. This is rather trespassing on the next Amendment, but may I just explain the procedure for arriving at the amount of the general grant? The Ministry of Housing and Local Government have already issued a circular (Circular No. 34/58) which the noble Lord may have seen. This circular lays clown the procedure, under which the next stage of consultation is that the Departments concerned with the various services will issue a further request to authorities to deal with all the points, which I am afraid I have already elaborated in two speeches: information, prospective increases and so on.
The result of bringing the general grant into operation, therefore—and I believe this is important—will be to provide the Department concerned with the information. For example, the Ministry of Education sent out their circular, asking for full information, on June 16 last—though it is, of course, subject to the Bill's passage through this House—in order that there should be no delay before the first-year arrangements come into operation. So the result of the initiation of the general grant will be to give the Departments special and full information in regard to the matter, after which there can be the consultations which will always take place. That is a purely practical point which I believe will have its effect.
The only other point made by the noble Lord, perfectly fairly, was the question of those interested in education, especially education committees, to which the noble Lord, Lord Latham, referred. I believe it is significant, though again I do not want to put too much on it, that those who have devoted so much of their lives to local government in the local government associations have not shared that objection. I have been studiously moderate, I believe, in using every piece of information this afternoon—at least, I have tried to be. But I feel it is a significant point and one which rather harks back to the need for objectivity, which I mentioned earlier. The noble Lord has rightly said that this is a point

39
of division between us. I understand that he will require to take this Amendment to a Division, but despite that fact, I felt it my duty to give as full an answer as possible on the point, and that is why I
VISCOUNT GAGE VISCOUNT GAGE moved, in subsection (7), after "periods" to insert:
" which shall be, after the first year."
The noble Viscount said: Unlike the Amendment with which we have just been dealing, this Amendment does not raise any large question of principle and it has not been debated at great length in both Houses. It is, in fact, an Amendment dealing entirely with administrative procedure. Although it is limited, I think the associations, certainly the County Councils Association, regard the question I am raising as a matter of importance. Under the Bill the Government propose, as we know, to do away with percentage grants which have hitherto been paid to local authorities, and paid as the expenditure has been incurred. They propose instead to pay each local authority a general grant, calculated two years or possibly more in advance. This general grant is arrived at by fixing a total sum and then dividing it up for individual authorities on the basis of a formula.
have ventured to trespass on your Lordships' time.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided: Contents, 25; Not-Contents, 50.

CONTENTS

Attlee, E.

Douglas of Barloch, L.

Ogmore, L.

Lucan, E. [Teller.]

Ebury, L.

Pakenham, L.

Greenhill, L.

Pethick-Lawrence, L.

Addison, V.

Henderson, L.

Shepherd, L.

Alexander of Hillsborough, V.

Kershaw, L.

Silkin, L.

Stansgate, V.

Latham, L.

Strabolgi, L.

Lawson, L.

Williams, L.

Burden, L. [Teller.]

Milner of Leeds, L.

Winster, L.

Darwen, L.

Morrison, L.

Wise, L.

NOT-CONTENTS

Kilmuir, V. (L. Chancellor.)

Bridgeman, V.

Hampton, L.

Cilcennin, V.

Hawke, L.

Wellington, D.

Devonport, V.

Howard of Glossop, L.

Cholmondeley, M.

Gage, V.

Hylton, L.

Lansdowne, M. [Teller.]

Goschen, V.

Jeffreys, L.

Lothian, M.

Lambert, V.

Leconfield, L.

Soulbury, V.

Mancroft, L.

Bathurst, E.

Merrivale, L.

Buckinghamshire, E.

Addington, L.

Milverton, L.

De La Warr, E.

Baden-Powell, L.

Newall, L.

Gainsborough, E.

Balfour of Inchrye, L.

Rathcavan, L.

Gosford, E.

Chesham, L. [Teller.]

Rea, L.

Munster, E.

Conesford, L.

Saltoun, L.

Perth, E.

Digby, L.

Sandford, L.

St. Aldwyn, E.

Dovercourt, L.

Somers, L.

Selkirk, E.

Dynevor, L.

Stratheden and Campbell, L.

Swinton, E.

Fraser of North Cape, L.

Teynham, L.

Woolton, E.

Grantchester, L.

Resolved in the negative, and Amend ment disagreed to accordingly.

On this side of the House this principle has been accepted; it has been accepted generally by the associations, certainly by the County Councils Association, and, I think, by the Association of Municipal Corporations, but, I confess, with a certain reserve, because they realise, and we realise, as the noble Lord, Lord Douglas of Barloch, has said, that so much depends on the amount that is going to be put into the general pool and on the way the formula is going to work in dividing it up. If there is any serious miscalculation in either of these two points, the consequences to those of us interested in local government are likely to be equally serious. Moreover, it is obvious that in present circumstances any scheme for advanced budgeting is going to be difficult, because so much depends on factors which are out of our control. If any noble Lord were asked to submit a budget of his own estimated business expenditure or of his personal expenditure to cover the next two and a half years, he would probably argue that

41
a good deal depended on such things as the Budget, the credit squeeze, the bank rate, wage agreements and so forth. Of course, the same considerations apply to local government.
I suppose that most of us in local government have had the experience of having projects which we thought to be necessary cut about unmercifully by the Ministries in the interest of the anti-inflationary drive. We simply have no idea when we shall be allowed to proceed with them or when any new legislation will be introduced likely to affect our estimates. Let me take a small example. A Conservative Member of another place introduced a Private Member's Bill to do away with the present distinction in the price for land required by local authorities and the price for the land on the ordinary market. In resisting the Bill, the Government indicated that they might be introducing their own legislation on the subject. Obviously, if there is to be any change of that sort, it will affect estimates very much.
Local government estimates are also affected, if only indirectly, by what private enterprise is allowed to do. If the credit squeeze is diminished and the bank rate goes down, I suppose it is likely that we shall see a great deal more private enterprise houses, certainly in certain parts of the country, and if that were so, we should have to take into account the schools we should have to build and the other facilities we should have to supply. I should be the first to admit that in any scheme involving advance budgeting, that is an inherent difficulty. Those of us who accept the principle of the Bill must accept those risks. But we are an intelligent and adaptable people. I do not share the great distrust that certain noble Lords opposite seem to have of local authorities, and I believe that, given time, we shall master the drill of this Bill; and when good relations ultimately prevail between the Departments and local authorities, we shall produce figures which, if they are not completely foolproof, will make a great deal of sense.
Unfortunately, time is one of the facilities that is not accorded to us, at least in the first instance. Local authorities have received a circular in which we have been asked to submit our estimates for the first period—that is to say, for the next 2½ years—which we have to submit at the
42
latest by August 15 next, which is about six weeks from now. We have to fill in forms of considerable detail, and some of these forms have not yet been circulated—or had not been last week. When I remind your Lordships that the average time required to provide an estimate for one year ahead under the old system has been usually from four to five months, your Lordships will perhaps forgive me for saying that half the normal time to prepare an estimate for more than double the period for which we have been used to budgeting is really a ridiculously short time.
What is going to happen? I suppose the finance officer, the county treasurer or the borough treasurer will gather together his principal officers and after a good deal of negotiation a figure will be produced which, for form's sake, will be sent up under the signature of the chairman of the finance committee. But, clearly, there will not be time for the customary democratic procedure of investigation by committees checked by the finance committee, particularly as many of these committees have only recently been formed following the local general elections. In any case, the month of August is not a particularly good moment for securing large attendances of voluntary workers.
Ideally, I feel that we should be given a much longer period, possibly until December, but obviously that could not be done without upsetting the whole Government timing. What I am proposing in this Amendment, therefore, is something in the nature of a transitional arrangement. I suggest that we should do the best we can to meet the circular this year, but for this corning year only, and we should be given., as it were, a second chance next year, when there will be time to master the new procedure arid tackle it in a democratic way.
I should like to read one or two sentences from the circular to which I am referring:
"The information which the several Departments need about the development of the services in each of the two years to be covered by the proposed general grant order is the council's sober estimate of what they will achieve, arrived at by their traditional process of assembling the proposals of the spending committees and accepting or limiting them in accordance with an approved budget."

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That is what I should like to see being done, but in present circumstances it is quite impossible. This circular was issued on May 29 last, and of course it does not seem to take into account any of the revisionary duties that your Lordships see fit to exercise. Those are our orders, whatever this House may say.
I am aware that an Amendment dealing with a somewhat similar point was proposed by the Opposition in another place and was rejected by the Government, but it went a good deal further than my suggestion; and, of course, the discussion on it took place before this circular was issued and before its implications were fully known. I am moving this Amendment with the full support of the County Councils Association—indeed, at their urgent request. As I have said, it does not introduce any Party principles, and deals simply with a matter of efficient administration. I beg my noble and learned friend to meet us on this point in some way. Of course I am not tied to any particular form of words. I beg to move.
Amendment moved—
Page 2, line 37, after (" periods ") insert (" which shall be, after the first year,").—(Viscount Gage.)
LORD HYLTON: I rise to support my noble friend on this point. This circular which has been received gives rise to formidable practical difficulties. As my noble friend has said, and as is well known to all noble Lords who are members of local government bodies, this budgeting process is a difficult and protracted business. My noble friend has said that it takes about four months in his county. The present proposition, as he said, is that by August 15 estimates for two and a half years have to be produced. That has this disadvantage, however. County councils, and no doubt other local government bodies also, normally meet early in July, and in my opinion these figures could not possibly be ready by early July. Yet if they are not presented to the full meeting of the council early in July, they cannot be presented until the first quarterly meeting, which is usually held early in October. Of course, it would be possible to call a special meeting of county councils, borough councils or other councils, but such a meeting would not he likely to be particularly effective if it were called in the month of August when
44
many small local authorities "shut up shop": they go away, and all the officials go away, too. This is a matter of considerable difficulty from the practical point of view.
There is a further disadvantage which my noble friend did not mention. The Minister is able to take into account what are called unforeseen increases during the period these estimates run; but I have great doubt (the noble and learned Viscount will correct me if I am wrong) whether the Minister could say that a substantial miscalculation in the estimates was an unforeseen increase. An unforeseen increase is one of those things to which my noble friend referred—namely, an increase caused by higher wages, prices and so on—and surely a mistake in estimates could not come under that heading. The Minister, therefore, is unable to deal with any mistake that may be made in this sort of blanket "estimate over a period of two and a half years. I do ask the noble and learned Viscount the Lord Chancellor to give careful thought to this matter between now and the Report stage, because it is one that is worrying many local authorities.
LORD MILVERTON: Perhaps I may intervene for a moment just to correct the noble Viscount, Lord Gage, on one point. I understood him to say that the Association of Municipal Corporations support the terms of this Amendment.
VISCOUNT GAGE: No; I did not mean to convey that. What I said was that they accepted the broad principle of the Bill. I have not heard that the Association of Municipal Corporations are against this Amendment, but on the other hand, I have not heard that they are for it.
LORD MILVERTON: I did not mean to misrepresent the noble Viscount. As a matter of fact, the Association of Municipal Corporations do not support this Amendment. They set up a specially constituted committee to consider the original clause and decided not to challenge it. In those circumstances, naturally, the Amendment would not have their support.
5.24 p.m.
THE LORD CHANCELLOR: I am grateful to my noble friend Lord Milverton for putting the position with regard to

45
the Association of Municipal Corporations. I should like to deal with the problem that my noble friend Lord Gage has posed, and in which my noble friend Lord Hylton has supported his solution. I think one has first of all to consider the nature of the problem and also when the new system has to be put into operation. If my noble friend Lord Gage would look at the circular to which he referred. which, as I said, has been sent out on the basis that your Lordships pass the Bill (it is the one I mentioned on the last Amendment, No. 34/58), he will see that in the middle of the first paragraph it says:
" The Bill proposes that the new system shall take effect subject to the transitional arrangements as from 1st April, 1959, and it is contemplated that the first general grant Order should operate for the two years 1959–60 and 1960–61."
Then the broad line of the circular is that the Minister asks the local authorities to give to that one of his colleagues concerned with the service in question the information which we have already considered to-day —namely, the information contemplated by Clause 2 (1) (a) (b) and (c).
My noble friend Lord Gage has said it is important that the amount of the grant should be properly calculated. I think he will agree that, if that is to be done, it is important that the information should reach the Minister at the earliest possible moment. That is why my right honourable friend the Minister of Housing and Local Government has asked that the information should reach his various colleagues by August 15. I appreciate the difficulty which my noble friend Lord Gage has suggested: that there is not sufficient time for local authorities to deal with the matter. I would, however, remind him that the answers are wanted by the various Ministers dealing with the various services; and the sooner they come in, the greater likelihood there is that the proper answer to his main problem, namely, the amount of the grant, will be given. On the main one (and we have heard to-day that education is 80 per cent. of the amount) the Ministry of Education, I am told, issued their individual circular on June 16, so that local authorities have two months in which to deal with that matter. It seems to me that that part of my noble friend's argument was really directed to the question of whether the Bill Should
46
be brought into operation on April 1, 1959.
I should like to deal next with what is the stated point of my noble friend's Amendment—namely, whether the period for the general grant should be one year or more. I think my noble friend will agree with me that if his Amendment were accepted, and since the first period of the grant is one year, then it would follow that the second period of the grant must also be one year; because, as he will remember, there is a rating revaluation due in 1961, and it would clearly be undesirable for a grant period to straddle the revaluation, which may see considerable changes in the distribution of rate resources between various areas.
I should also like my noble friends to consider the question of principle raised by the Amendment, which I would pose as this: What is the shortest suitable period for fixing the basis of distribution of a grant of this kind? In answering that question, I submit that a balance must be held between two requirements. On the one hand there is the need to take a fairly long view of the needs of the various services, so that proposals for improving and developing services can be seen in the round and proper provision made for them, and so as to give certainty and stability to the financial element in the programmes of the local authorities. I hope that my noble friends will agree with that argument. On the other hand there is admittedly the need to base the grant on realistic estimates of likely achievement or of costs.
Those seem to me the factors which one must balance in arriving at the period for the grant. The difficulty I find with my noble friend's Amendment is that it puts all the emphasis on the second consideration and does not pay attention to the first one, which, if I may remind your Lordships, is to take a fairly long view of the needs of the services and the proposals for developing them. To me it is cardinal to the general grant principle that there should be certainly for a period ahead. Local authorities cannot be expected to plan the orderly development of their services in the way the Government are anxious to encourage if they know only a year at a time what grant they are going to get.

47
We think that our suggestion of two years is a reasonable compromise and strikes a reasonable balance, and that two years is the minimum period over which to review the needs for development as required by Clause 2. It would be unwise to go beyond two years because there will have to be, as I said, the stocktaking when the 1961 revaluation is made. I think my noble friends are aware that, although it is not covered in the Bill, the White Paper on Local Government Finance, in paragraph 18, makes it clear that the first period will be two years. My noble friend says, "All right, let us consider having two years in the future, but let us start with two periods of one year." The Amendment says one period of one year and the revaluation means that you must have another similar period. We feel that this is a matter on which we ought to start as we intend to go on, and, as I said, since the two-year period is the normal minimum, it is better that the new system should be started on a two-year basis, which will provide a much better demonstration of the value of the system than an untypical period of one year.
I come to the other point which my noble friend developed, and that is that the first period will be fraught with a particular risk of inaccuracy in estimating as no one will have experience of the business. I want to examine very carefully what my noble friend Lord Gage said, but I do not see the difficulty here. What authorities are being asked to do is no more than a budgeting exercise with which they are well acquainted. It is true that they are being asked to look beyond the next year to take account of likely developments in services, but I should not have thought they were unfamiliar with that. My noble friend says that some quite unforeseen things may arise which have not been catered for in the fixing of the general grant. I wonder whether it is conceivable that they would be of such an order as to invalidate the basis of the grant order. The grant is not designed to fluctuate with every minor deviation in local government expenditure. Sometimes expenditure on this or that service may turn out to be a little greater than had been expected. The expenditure on other services may be less. But this is not a grant for hold-
48
ing a very precise, but quite arbitrary, balance between ratepayer and taxpayer. The Exchequer and the county and county borough councils, I should have thought, had broad enough backs to take any deviations which are likely to occur, which as I say, are likely to be relatively small—it must be remembered that we are dealing only with a period of two years. I would remind my noble friends that there will be "swings" as well as "roundabouts", and I should have thought (and this is the point I should like them to consider) that, compared with the size of the general grant, those deviations are, in the nature of things, likely to be marginal. The broad pattern of demands and the factors affecting them—population, age distribution of school population, supply of teachers and so on—are readily predictable, and the unforeseen need for costly development of services does not arise overnight.
As I say, the Government are anxious that this new system shall be brought into operation next April. They are confident that, with the help of the local authorities and their expert advisers, they can arrive at a just figure for two years ahead, in the first place, a figure which would be proof against any foreseeable difficulty. Perhaps I may say a word on the question of any unforeseen increase in prices or wages because my noble friend Lord Hylton, I think, had that point specially in mind. If my noble friend will look at Clause 2 (4) he will see that it says:
" If it appears to the Minister that during any grant period any unforeseen increase has taken place in the level of prices, costs or remuneration, and that its effect on the cost of providing the services giving rise to relevant expenditure is of such magnitude that it ought not to fall entirely on local authorities, the Minister may by order … increase the annual aggregate amount of the general grants.…"
LORD HYLTON: If I may interrupt the noble and learned Viscount, that is just the point I did not make. What I said was that if a mistake is made in the estimates then it cannot be corrected by the Minister under Clause 2 (4). We do not understand how the Minister can take into account any under-estimating or over-estimating in this estimate that is required by August 15. If the noble and learned Viscount can tell me that the Minister will be able to take into account any mistake in estimating, either underestimating or over-estimating, of course we can accept it at once.
THE LORD CHANCELLOR: I want to be absolutely clear. I understood from my noble friend Lord Gage that he had in mind exactly these factors; that is, an increase in the level of prices, costs or remuneration. He mentioned various matters, such as the credit squeeze, and the new legislation, housing—matters that might increase the cost of the various services. I want to get it absolutely right. If my noble friend Lord Hylton is dealing with a mistake as to the number of the population in his county, or the number of children and so on, my answer to that was the earlier point, that I cannot believe that the mistake in that regard could be anything more than marginal. Both my noble friends are well known to everyone in this House as having probably greater knowledge of Sussex and Somerset respectively than has almost any living man. I cannot believe that either of them would make a mistake as to the population or any of the other factors which could, as I say, be anything more than marginal. I am quite prepared to consider it, but that is certainly the view I take, and I should be absolutely astounded if in that sort of way a mistake was made.
That is, so to speak, a factor of subjective knowledge. The others are objective factors which, as my noble friend Lord Gage knows, may depend on a policy outside his knowledge. I should have thought that the objective factors were covered by subsection (4) of Clause 2. Both my noble friends have asked me to consider this matter again. I have dealt with it, I am afraid at some length, because I know from what he said to-day and also from his speech on Second Reading, to which I listened, how much thought my noble friend Lord Gage has given to it. I have tried to give him the answer as I see it to-day. I would ask him not immediately to reject the answer I have given, but to consider it with the care he has given to the rest of the problem. If he is still not satisfied, or other noble Lords are not satisfied, it is the sort of point that it might be profitable for us to discuss, as to whether there should be further time for the replies to circulars or other matters. I should like to consider all these points. Then if my noble friends are not satisfied, they can return to the matter on Report. I will certainly consider it. But we have considered the problem fully.
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I am in this difficulty: that I think as short a period as one year is undesirable as a basis for the ascertainment of the general grant. I should like my noble friends to consider that point, because, in view of the revaluation, their Amendment means two one-year periods. Therefore, I suggest that we both consider what has been said. I will willingly meet them or any noble Lord, as I always try to do on any point of difficulty. As my noble friend said, this a procedural point; it is not a Party political point. Therefore I would ask my noble friend not to press his Amendment to-day, but to consider the matter between now and Report.
VISCOUNT STANSGATE: I have been asked by the Essex County Council to say a word on this Amendment. Of course, I am not in charge of the Amendment, but what the Lord Chancellor has said is of great help, because, after what lie has said, I will consult them again and, if there is anything more that they wish to know, I shall then put it forward.
LORD SILKIN: We on this side had intended to support the noble Viscount on this Amendment—it is not a Party matter, and we felt that there was a great deal to be said for flexibility, certainly in the beginning of the block grant operations. But the noble and learned Viscount has put the case for a certain amount of continuity, and I think it would be wise if both sides thought about the matter in the light of what the noble and learned Viscount has said. If we are not satisfied—I did not hear the whole of his speech, in any case—we can, of course, always return to the subject on the Report stage.
VISCOUNT GAGE: I am most grateful to my noble and learned friend for the attitude he has taken. At one point he spoke as if I were raising some matter of principle. Of course, there is no real principle involved in what I have said, except that we have been asked by the Government to do a job and to fill in quite a number of detailed forms, and I simply said that we shall not have time to do it in the proper democratic way. My Amendment was simply a suggestion—it may have been a bad one—for getting round that difficulty. Certainly, if the point can be met in other

51
and better ways, I shall be the first to agree that it will be more desirable.
LORD HYLTON: I should like to thank the noble and learned Viscount because there is a real difficulty about this business of estimating. The noble and learned Viscount was good enough to refer to my knowledge of Somerset, but that would not be of great help in formulating the financial estimates of the county council. That is a much more difficult matter. If mistakes should be made in these estimates, we should be in a position of great difficulty. I am most grateful to the noble and learned Viscount for saying that he will consider it and will let us consider it with him.
On Question, Amendment negatived.
Clause 1, as amended, agreed to.
Clauses 2 to 4 agreed to.
5.47 p.m.
LORD BURDEN LORD BURDEN moved, after Clause 4 to insert the following new clause:
Saving for security of tenure
" . Notwithstanding the repeal of part of subsection (2) of section seventeen of the Ministry of Transport Act, 1919, effected by this Act where there is at the passing of this Act an agreement between the Minister and a local authority under that subsection to defray half the salary and establishment charges of the engineer or surveyor to the local authority the dismissal of the engineer or surveyor shall continue to be subject to the approval of the Minister."
The noble Lord said: This Amendment may appear somewhat technical but its purpose is quite simple: it is to ensure the continuance of that measure of protection which certain officers employed by councils have had since the passing of the Ministry of Transport Act, 1919. The Bill which we are now considering proposes to repeal part of Section 17 of the Ministry of Transport Act, 1919, which repeal will seriously affect the security of tenure of engineers and surveyors in respect of whom an agreement has been made between the Minister and the local authority under that particular section. The part of the section in question provides that advances by the Minister of Transport for the purpose of defraying half the salary and establishment charges of engineers or surveyors shall be subject to the condition that the appointment, retention and dismissal of
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these officers shall be subject to the approval of the Minister.
Of course, I am aware that, strictly speaking, Section 17 (2) of the 1919 Act does not afford absolute security of tenure to the officers concerned, in the light of the decision in Moss v. Chesham Urban District Council, a decision given in the King's Bench Division in 1945. The effect of that decision is that officers are afforded no direct protection by virtue of the agreements made between the Minister and the local authority. A local authority may dismiss its engineer and surveyor, and while the Minister may, after an inquiry, recommend that the grant be discontinued—a most powerful weapon in his hand—he cannot in law restore the officer to his lost appointment. But whatever the strict legal position may be, in point of fact ministerial inquiries have afforded a substantial measure of security and protection to the officers concerned, since local authorities have almost invariably followed the recommendations of the inspectors appointed to hold the inquiries.
To a local authority, the engineer, in his capacity as highways surveyor, is often in a position where he may have to take action which is inconsistent with the wishes of individual members of the public. Readers of Winifred Holtby's South Riding may remember an incident in that book. As the officer responsible for planning, maintenance and improvement of roads, as well as the construction of new roads, his work is very much in the public eye, and his actions are at times liable to offend—and sometimes more than to offend—both the public and the members of his own council. He must, of course, be completely unbiased in the planning of roads. I noticed a case in the paper to-day where a suggested road is planned to go through a cricket ground. Proposals of that kind no doubt arouse a good deal of local controversy. In particular, there are circumstances where individual properties may be affected by improvement schemes and pressure exercised by certain individuals to vary the plans so as to affect other people's property at more expense, with the possibility that individuals will blame the engineer for conserving public funds to the disadvantage of the individual. The siting of pedestrian crossings, the installation of parking meters and the design and siting

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of road furniture, such as lamp-posts, are other instances of matters likely to give rise to local controversy.
It will be readily seen that there are many instances which may arise between a ratepayer and a borough engineer where differences are likely to occur, and it is, of course, not beyond the bounds of possibility that such, an aggrieved ratepayer may ultimately become a member of the council concerned. The officers and the officers' trade union consider that there should be the same security of tenure for engineers and protection against victimisation as it has been considered reasonable to accord to medical officers of health and public health inspectors by Section 110 of the Local Government Act, 1933. My submission is that the officers in question are in many ways brought into contact with members of the public in such a way as to give rise to controversy, and in order that the officers concerned may act as I believe they have always acted in the past—with the utmost consideration and without bias one way or the other, but in the interests of the general public—I hope that the noble and learned Viscount will consider that there is substance in this Amendment and will give it his serious consideration. I beg to move.
Amendment moved—
After Clause 4, insert the said new clause.— (Lord Burden.)
LORD SALTOUN: I hope that the Government will be able to give serious consideration to this Amendment moved by the noble Lord, Lord Burden. He knows that I have experience which has taught me how very highly these officers value the necessity of obtaining the approval of the Minister in cases of dismissal, and I quite agree with everything that Lord Burden has said about it.
5.55 p.m.
THE MINISTER WITHOUT PORTFOLIO (LORD MANCROFT): The effect of this new clause which the noble Lord, Lord Burden, would like inserted in the Bill would be to continue in force certain existing requirements for a local authority to obtain the approval of the Minister of Transport and Civil Aviation before dismissing their engineer or their survey or. It would apply in those cases where there was, at the time of the passing of the Bill, an agreement between my
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right honourable friend the Minister of Transport and Civil Aviation and the local authority—an agreement, that is, as the noble Lord has told us, under Section 17 (2) of the Ministry of Transport Act, 1919. That is an agreement for the Minister to defray half the salary and establishment charges of the engineer or surveyor. That is the point I think we must bear in mind: that it is an agreement to defray half the salary and the establishment charges.
The Bill discontinues the payment of these small and, I suggest, outmoded grants. I should have thought, with respect, having listened carefully to what the noble Lord, Lord Burden, and my noble friend Lord Saltoun have said, that under the new and quite changed conditions arising under the Bill the noble Lord's proposed Amendment might be considered an almost unwarrantable interference in the normal relationship between a local authority and its officers. Under this relationship, subject to agreements between the authority and the employees' representative associations, the authority are free to appoint or dismiss their servants. That seems a very straightforward and normal state of affairs. Let us go back into history for a moment and see how this situation arose, because, although the noble Lord, Lord Burden, did not actually mention this, it does materially greet and reflect upon the reason for this change.
At the time Section 17 of the Ministry of Transport Act, 1919, was enacted, the calibre of the engineer or surveyor to many of the authorities was often poor. I do not want to be offensive about this, but I think it is common knowledge that it was not anything like as high as it is nowadays. In those circumstances, it was essential for the standard to be raised, in order to secure the greatest possible benefit from the funds provided for highway purposes. The grant paid towards the salary of the surveyor enabled the smaller authorities (many of them were then rural district councils) to pay salaries to attract properly qualified candidates. Nowadays, with the disappearance since 1930 of rural district councils as highway authorities, the county councils and urban district councils have seen to it that suitable officers are appointed to these posts, and the introduction of national scales for

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chief officers has secured the availability of suitably qualified highway engineers. This has done away, I would suggest, with the need for the grant towards the salary and the need for the Minister to approve the appointment. The reason the Minister had to approve the appointment was because he had a say in the salary. He is no longer going to have a say in that salary, and I suggest that the removal of that say in the salary also removes the right or the necessity for the Minister to have any say in the tenure of office.
The noble Lord, Lord Burden, has referred to the different treatment accorded to medical officers of health and public health inspectors whose dismissal, I readily agree, normally requires the consent of my right honourable friend the Minister of Health. This protection is continued by paragraph 6 of the Eighth Schedule to this Bill, notwithstanding that, in the case of county district councils, it has previously rested on the payment of contributions towards their salaries by the county council and that such contributions are abolished by Clause 56 of this Bill. The distinction here is a very clear one. Medical officers and public health inspectors have statutory duties which might conceivably conflict with the interests of their employer authority. I was for several years chairman of the public health committee of my own local authority, and I never knew this actually to happen or heard of its happening; but I agree that it is a possibility.
The situation with medical officers of health is quite different from that which might arise with engineers. I feel that the noble Lord, Lord Burden, was a little pessimistic in his idea of possible conflict between the surveyor, the engineer, and the public interest. Conflict, of course, there must be, for that is inherent in the democratic nature of a local authority. But, of course, the ultimate responsibility for seeing that the wishes of the council are carried out is that of the elected council. It is their duty to stand by their engineer and his duty to carry out their wishes. On the whole, engineers are a pretty tough lot and will do their duty without fear or favour. I hope that the noble Lord will consider this point because there is an important difference between the engineer and the medical
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officer of health. I hope he will now realise why this right of approval of the tenure of office is being changed, now that the Minister no longer has any say in the actual salary. Perhaps the noble Lord will now consider the matter and consult his friends. I feel that the situation which he envisages is not likely to rise, and now that we have changed the whole system and are getting rid of grants it is better that we should put the matter on a fairer and better basis and that the relationship between the local authority and its employees should be restored to the normal and justifiable situation which this Bill envisages. I hope, therefore, that the noble Lord will think again about his Amendment and reconsider his view.
LORD BURDEN: I am unconvinced by the argument advanced by the noble Lord, and he himself has recognised its illogicality by mentioning, as he did, the position of the medical officer of health and public health inspectors. I submit to the noble Lord that the highway engineer and the borough engineer, in their day-to-day work, will be brought up against issues quite as controversial as those of the medical officer of health and public health inspectors. I agree that, by and large, we can trust councillors to do the right thing and it is only for the exceptional case that we want this provision retained, as it is being retained for medical officers of health and public health inspectors.
LORD MANCROFT: If I may interrupt the noble Lord for a moment, I do not think I can have made the point clear to him. There is a substantial legal difference between the engineer and the medical officer of health. The engineer and surveyor cannot have an interest differing from that of the employing authority as such; the medical officer of health can. That is the difference between the two.
LORD BURDEN: I agree there is that legal difference, that the engineer cannot have an interest; but I made the point that, notwithstanding the section in the 1919 Act, the council could still dismiss a borough engineer, and his only protection would be an appeal to the Minister, who could not order a council to reinstate him. I agree that the position is a little different, and no doubt the officers concerned may continue as they have in the past. I readily accept that standards have gone up since 1919, and that these men will continue to

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give their absolutely unbiased views to their council, even if it may hurt the interests of the council; and I still feel they should have the same measure of protection that they have had up to the present. The Minister gives me no hope at all in regard to looking at this point again, from the point of view of seeing that these men continue to have the rights or privileges (call them what you will), which they have enjoyed since 1919. Would it be possible to provide that new entrants into the service should not have that protection? Would the Minister be prepared to consider that suggestion as a possible way out of this difficulty?
LORD MANCROFT: I do not want to put up a stone wall against the noble Lord. He has not at all convinced me. I feel that there is a very noticeable difference between these two types of officer and that it is time we changed to a more logical basis. I cannot accept the noble Lord's Amendment, but I will look carefully at this matter and discuss it with my noble and learned friend; and if by any chance we have overlooked some point here we will think again. But I am afraid that at the moment I must ask the noble Lord to withdraw his Amendment.
LORD BURDEN: In the hope that this matter may be looked at again, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
Clause 6:
Limitation of Rate-deficiency Grant to normal expenditure
6.—(1) Where, as respects a year for which Rate-deficiency Grants are payable (hereinafter referred to as "the grant year"). the expenditure of a local authority exceeds its normal expenditure as hereinafter ascertained, the amount of the excess shall be disregarded in determining the amount of any Rate-deficiency Grant payable to the authority for that year:
Provided that for any of the first four years for which Rate-deficiency Grants are payable the whole amount of the excess shall not be disregarded as aforesaid, but for the first of those years one-fifth only shall be disregarded, for the second two-fifths only and so on.
6.7 p.m.
VISCOUNT BRIDGEMAN VISCOUNT BRIDGEMAN moved, in subsection (1), after "exceeds" to insert: "by more than a prescribed percentage". The noble Viscount said: With the permission of the Committee, I will draw
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attention to the similarity which exists between the Amendment standing in my name on the Paper and Amendment No. 8 which follows immediately in the name of the noble Lord opposite.
THE LORD CHANCELLOR: I was going to suggest that we might consider Amendments Nos. 7, 8 and 9 together. Perhaps I have taken the words out of the noble Viscount's mouth.
VISCOUNT BRIDGEMAN: I shall be only too pleased to fall in with what my noble and learned friend suggests. That may be the best course for the Committee. In fact, I should have used in my Amendment almost the same words as the noble Lord opposite used in his if I could have believed for a moment that the Ministers concerned would so far forget themselves as to prescribe a percentage without consulting those concerned. However that may be, I will now give the arguments which my noble friends and I consider are arguments in favour of this Amendment, and no doubt they will be developed later by noble Lords opposite.
The first and background argument for this Amendment is that one can look upon this clause as it now stands as going behind the principle of the block grant. After all, in certain circumstances the arrangements made by the block grant can be altered; and surely if the principle of the block grant is accepted there is a good deal to be said for not whittling it clown or shaving it away by anything which comes later in the Bill. Quite apart from that, all the arguments which my noble friend Lord Gage used in moving his Amendment, about the uncertainty which would be caused to local authorities and their treasurers, applies here also. No one really knows exactly what will be the effect of this clause when it comes to be worked out in figures, because nobody really knows what "normal expenditure" means. That may be explained later, but I doubt whether we know now. As your Lordships have just heard, local authorities are already to be faced with a race against time which some of us think is unreasonable and which may put a great strain on the local government offices and make it almost impossible for committees to discuss these things properly. If, on top of the problem with which Lord Gage has dealt, we come to uncertainty in this

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section, then I think it will be very difficult, certainly for the county councils, to play their full part, which they are anxious to play, in seeing that the Bill works in the way it is intended to work.
It is quite clear, to me at any rate, that the Minister must have sufficient powers in his hands to curb extravagance, if in fact extravagance occurs on the part of a local authority. But there seems in the drafting of this clause, and in the explanations which I believe have been given to the local authorities' associations, to be some tendency to regard large expenditure as the same thing as extravagance, which I certainly think it is not. There is in existence a set of figures which shows the percentage increase of local authorities compared with each other between 1949 and 1950, and 1952 and 1953. Some of the counties show an increase in the order of 20 to 25 per cent.; other local authorities show an increase in the order of 45 per cent.; and, of course, it is very easy to say on the face of it that those which had an increase of 45 per cent. must have been spendthrifts and those which had an increase in the order of 25 per cent. must have been doing what they should have done. But that does not follow, and there are two or three ways in which I do not think it follows.
The first is that every local authority as it is to-day has inherited a situation of some sort from its predecessors. Some county councils may have inherited a tradition of parsimony and have leeway to make up; some county councils may have inherited a tradition of extravagance and have to scale down; some county councils may have inherited a tradition of good administration and, therefore, can keep their estimating and forward projects on an even keel. It is not for us in this House to say what is the position of any local authority in that respect; it is a matter for them, and the point I am trying to make is that it does not necessarily follow that because one county may have large expenditure and another county may have a smaller expenditure proportionately, the county with the large expenditure is extravagant.
There is another point. In the really small counties any particularly big project, say, the building of a large school, bears a much bigger proportion to the total budget of that local authority than
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a building of the same size and cost would bear to the budget of a larger local authority which turns over more money. I am not at all sure how far the Ministry of Housing and Local Government have as yet made any serious attempt to work out what the effect of the operation of this clause is likely to be on the local authorities concerned. Certainly if they have, the results have not been apparent to local authorities, and therefore local authorities are in a good deal of doubt not merely on how the scheme will work out when they start to do their own estimating but on exactly what result the Ministry think this clause is going to produce.
This Amendment, or something very like it, was taken in another place, and there it was not accepted. I think that a good deal of reliance was placed by the Government spokesman in another place on subsection (7) of the clause. Subsection (7) gives the Minister an escape clause, if it appears to him that some expenditure ought for any reason of "special circumstances" to be excluded. I am hound to say that I do not like the expression "special circumstances". It seems to me to be far too narrow to be certain of including the circumstances which are likely to arise in the normal working of a county's affairs, on the assumption that their financial policy is a sound one and that there is no extravagance. I should have thought myself, in the absence of any other explanation, that the "special circumstances" could be held to refer much more to something which could not have been foreseen.
Take, for example, the floods of two or three years ago in North Devon and West Somerset. Those undoubtedly caused heavy expenditure on the part of the county councils concerned, and those circumstances would certainly have been regarded as "special circumstances" had this Bill been an Act at the time. But I feel that, whatever happens, there is not enough room in the working of this clause to make it possible for the Minister to give proper heed to the needs of those local authorities which were carrying on a sober policy and are in fact projecting their capital budgets by looking ahead in a way which may quite easily produce expenditure which is abnormal, if you like, but not extravagant. Therefore, I hope very much that we have not

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heard the last word from my noble and learned friend on this clause.
The percentage formula, which is contained in my Amendment and in the Amendment of noble Lords opposite, is, to our minds, one way of dealing with it. There may be others, and I am not wedded myself to the particular form of my Amendment. I want to say very strongly, however, that I do not feel that the clause as it now stands is likely to produce that settled frame of mind among the local authorities which everybody wants if the provisions of the Bill are to get off to a good start. I hope, therefore, that my noble and learned friend will be able to give us some hope that the matter will—if I may put it this way with great respect—be taken seriously and not left as it is. I beg to move.
Amendment moved—
Page 8, line 7, after (" exceeds ") insert (" by more than a prescribed percentage").—(Viscount Bridgeman.)
LORD SILKIN: I find myself in the happy but unusual position of agreeing with every word that the noble Viscount has just said, and, coming from both sides of the House, I am sure that the noble and learned Viscount the Lord Chancellor will agree that there must be some justification for this series of Amendments. My own Amendment is to delete the whole clause, not necessarily because I think that the whole clause can be safely deleted, though I think it can, but because I think it is drawn in such terms that it is fundamentally wrong in principle.
The principle which I think is wrong is this. The clause provides that where a local authority has spent more than the average expenditure of authorities in the same class, calculated on the basis of three years, it loses the grant on the excess amount. As the noble Viscount said, in the first place, that offends against the principle of the block grant, and, in the second place, a local authority is not being penalised because of its own expenditure but because of the expenditure of a large number of other authorities in the same class. Suppose that X County Council embarks on certain expenditure in good faith, honestly believing that it is essential for the welfare of its citizens. It carries out the work without extravagance and efficiently. Then, it may be two years later —because it will take a long time before
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these averages are calculated—it discovers that its expenditure exceeds the average of other county councils for the last three years and that therefore it is automatically cut off from grant in respect of the excess. At the time it could not possibly have known—obviously it had no means of knowing—what was going to be the average expenditure of other similar authorities.
I can understand penalising a local authority because it has been extravagant, but the test should be its own extravagance and not the expenditure of similar authorities in the last three years. I think that this clause is bad in principle. I do not deny that it may be necessary for the Government to deal with those rare cases—and they are very rare—where local authorities are extravagant; but what is the test? Surely it cannot be the test of what other authorities have expended on an average over a period of three years. It should be what the authority itself has spent. If the Government want to deprive a local authority of grant, surely they should do it on the basis of the expenditure of that authority and not on the basis of somebody else's average.
Apart from that, how is an unhappy local authority to know that it is going to spend more than the average of other authorities? If it spends less, well and good; the Government get the benefit of it. If it spends more, then the Government deprive them of it. The Government are trying to get it both ways. They get the benefit if authorities spend less than the average by giving them a smaller grant. I suppose that few authorities spend exactly what is the norm. On the law of probability, it may be that half the authorities will spend rather more than the norm and half rather less. Under the clause as it stands, half of the authorities in the country will be deprived of excess grant, unless they can prove that the expenditure has been justified. How can they, since inevitably some authorities must be spending more than the normal?
I think that this is a case for the reconsideration of the whole principle. The method adopted by the noble Viscount, Lord Bridgeman, in his Amendment is that there should be a certain percentage which authorities may spend above the normal and upon which grant would be

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obtained. My noble friend and I suggest that this percentage should be fixed
"after consultation with the respective groups of local authorities."
I do not suppose the noble Viscount would object to that. I go a little further than the noble Viscount because I do not like this principle of setting a normal expenditure and then for virtually half of the authorities who exceed it to be deprived of grant. Like the noble Viscount, I am not oblivious of Clause 7. To my mind that is not really satisfactory, because a local authority will not know upon what basis the Minister will regard their expenditure as being attributable to special circumstances. In any case the Minister will always have in mind the expenditure of other authorities and not theirs.
At present, in the Local Government Act there is a provision which I should have thought would safeguard the Government in respect of their grant. It provides that the Minister may reduce any Exchequer grant if he is satisfied that the expenditure of a council has been excessive and unreasonable, regard being had to the financial resources and relevant circumstances of the area. I should have thought that that was a fair criterion. It relates directly to the expenditure of the authority and not to the average. But that provision in the Local Government Act is being repealed by this Bill, and the Minister will no longer be in a position to inquire into the expenditure of the local authority concerned.
I hope that the noble and learned Viscount the Lord Chancellor will realise that this is a provision which gives local authorities of all classes considerable grounds for apprehension. The uncertainty of not knowing whether they are going to exceed the normal expenditure or not—and it is a 50–50 chance that they will—of not knowing whether or not the reason for it will be acceptable to the Minister, and generally this cumbersome way of safeguarding the position against the possible extravagance of local authorities, all make me suggest that this is a clause that might be looked at again to see whether some other method is possible. One alternative, although I think it is not a good alternative, is that there should be a percentage above which, and only above which, this clause
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will come into operation, and there should be discussions about what that percentage should be.
6.30 p.m.
THE LORD CHANCELLOR: I think it would be convenient if we first of all looked at the basis of Clause 6 and why it is there. The clause is a new provision based on the Report in 1953 of the Committee appointed to investigate the operation of the Exchequer equalisation grants in England and Wales, usually known as the Edwards Committee. The broad purpose is to secure that where a local authority in receipt of a rate-deficiency grant is increasing its annual expenditure per head of the population at a greater rate than the average for all authorities of the same type, the excess shall not attract rate-deficiency grant. An authority which has been spending less per head than that average will, however, be allowed to increase its expenditure up to the average without any limitation applying.
I ask your Lordships to consider the matter for a moment from another point of view, negatively. No limit operates in any year unless, first, an authority is spending per head of the population a greater amount that year than other authorities of the same type, and, secondly, has also increased its rate of expenditure compared with the average for the preceding three years to a greater degree than all other authorities of the same type. It seems to me that the Edwards Committee fixed a fairly reasonable and, I should have thought, elastic provision when they fixed the two requirements: that no limit operates unless the authority is spending per head a greater amount than other authorities and, at the same time, has increased its rate of expenditure. It has got to be both spending more than other authorities and to have increased its rate of expenditure. Where both these conditions obtain, the expenditure ranking for grant will, subject to the Minister's power to disregard expenditure under subsection (7)—I will come to that in a moment—be limited by reference to the average expenditure per head of all authorities in the same group.
It is quite correct (and this is what I should like both noble Lords to consider) that the effect of this limitation will be that an authority, at the time it incurs the

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expenditure, will not have any certainty that the expenditure will attract rate-deficiency grant—and we are dealing here, of course, with rate-deficiency grant, and not ordinary and general grant. But it is part of our attitude towards this matter, as I am afraid I have stressed more than once to your Lordships, that each proposal coming before a council should be considered solely on its merits, in the light of the total cost. The noble Lord, Lord Silkin, stressed that it is a bad feature, but I consider it a good feature that the local authority should not know whether it is going to get rate-deficiency grant. It ought to consider any proposal on its merits, as I say, in the light of the total cost. In that way, it fits in with one of our general objects of preventing distortion in the consideration of the actual problem.
LORD SILKIN: Is the noble and learned Viscount saying it is a good thing that a local authority should not know when pit occurs expenditure whether or not grant will be available?
THE LORD CHANCELLOR: That is what I am saying. The expenditure ought to be considered on its merits; and the question of whether the council is going to get rate-deficiency grant towards the expenditure should not enter into it.
LORD SILKIN: How does the council know whether it can afford to spend money unless it knows whether it is going to get some assistance?
THE LORD CHANCELLOR: The noble Lord will remember that it will fail to get the money only if it has done both things; that is, spent per head of the population a greater amount than other authorities of the same type, and also increased its rate of expenditure compared with the average of the preceding three years to a greater degree. That is the danger the council is facing. As the noble Lord said, it cannot know for certain that it will receive this grant, but if it is taking an objective view of expenditure in that field, I should have thought that the danger did not arise.
LORD LATHAM: The noble and learned Viscount may be right if the situation depended only on the local authority in question; but it does not. Whether the authority will rank for a deficiency grant depends upon what all the other authorities in the same class have done, in both respects. In those circumstances, does the
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noble and learned Viscount still contend that an authority should be kept in ignorance of what it is likely to get?
THE LORD CHANCELLOR: If you are going to apply any objective test—that is, a test from something outside the authority itself—I cannot think of two more relevant factors; and neither could the Edwards Committee.
LORD LATHAM: If I may say so, it is not a question of relevance. I do not dispute the relevance of the factors; but since the factors are not controllable by the authority, it should know what it is likely to get.
THE LORD CHANCELLOR: If the factors are to be entirely objective—that is the sense in which I was using "objective"; that they are fixed by the action of the general bodies of authorities in that class—I cannot see how, subject to special circumstances, that is not relevant to one authority.
LORD LATHAM: The noble and learned Viscount talks about "objective". I do not want to enter into a general discussion on semantics, but the objectivity of one authority is to be determined by the subjectivity of others.
THE LORD CHANCELLOR: I do not think anyone who is as distinguished a master of figures as the noble Lord ought to describe averages as being exercises in the subjective. However, while we are getting into what I personally find a particularly interesting discussion, as to the meaning of words, I am sure that the noble Lord and I are alone in the Committee in finding it interesting; and perhaps I had better go to another point. What I was going to say —and this is the point in which I find the difficulties of noble Lords rather puzzling—is that this provision is designed to have a psychological effect, and to secure a better and closer consideration by the council of the various problems.
LORD LATHAM: That is to say, economy by uncertainty.
THE LORD CHANCELLOR: Economy by the test of those in a similar position. If I may put it to the noble Lord colloquially, it is the opposite of "keeping up with the Joneses"; it is keeping to what the Joneses ought to have spent, which seems to me a much healthier position.

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I am very conscious that some of your Lordships have an engagement of some importance to-night, and that it may be convenient if I conclude my remarks tomorrow. If we rise a little earlier, I think it will suit some people. I promise your Lordships that I will not take that as an indulgence to begin again; I shall try to finish with the same speed. I beg to move that the debate on the Amendment be adjourned until to-morrow.
Moved, That the debate on the Amendment be adjourned until to-morrow.(The Lord Chancellor.)
On Question, Motion agreed to, and debate adjourned accordingly.
House resumed.

INTEREST ON DAMAGES (SCOTLAND) BILL
Brought from the Commons; read 1a and to be printed.
LOCAL GOVERNMENT (OMNIBUS SHELTERS AND QUEUE BARRIERS) (SCOTLAND) BILL
Brought from the Commons; read 1a and to be printed.
MEDICAL ACT, 1956 (AMENDMENT) BILL
Brought from the Commons; read 1a and to be printed.

TRADING REPRESENTATIONS (DISABLED PERSONS) BILL
Brought from the Commons; read 1a and to be printed.
BRADFORD CORPORATION (TROL-LEY VEHICLES) PROVISIONAL ORDER BILL
MAIDSTONE CORPORATION (TROLLEY VEHICLES) PROVISIONAL ORDER BILL
PIER AND HARBOUR PROVISIONAL ORDER (GREAT YARMOUTH) BILL
PIER AND HARBOUR PROVISIONAL ORDER (KING'S LYNN CONSERVANCY) BILL
PIER AND HARBOUR PROVIVISIONAL ORDER (SHEERNESS)BILL
Brought from the Commons; read 1a and referred to the Examiners.

FIRST OFFENDERS BILL
Returned from the Commons with the Amendments agreed to.
MATRIMONIAL PROCEEDINGS (CHILDREN) BILL
Returned from the Commons with the Amendments agreed to.
ESSEX COUNTY COUNCIL BILL
Returned from the Commons with the Amendments agreed to.