LOCAL GOVERNMENT BILL

HL Deb 24 June 1958 vol 210 cc76-166

2.47 p.m.

Order of the Day for the House to be again in 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 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.

Debate resumed on the Amendment moved yesterday by Viscount Bridgeman—namely, in subsection (1), after "exceeds" to insert "by more than a prescribed percentage".

THE LORD CHANCELLOR

When the debate was adjourned, I was dealing with the point raised on this Amendment by the noble Lord, Lord Silkin. It will be generally agreed, as indeed it was by the noble Lord, Lord Silkin, himself, that there is need for some check on expenditure where Exchequer grant is paid, as in the case of the rate-deficiency grant, as a percentage of the amount spent by a local authority. Certainly one way of dealing with the matter is to give the paying Minister, the right to withhold grant where he detects extravagance or excess. That was the approach, to which the noble Lord, Lord Silkin, referred, adopted in Section 6 (1) (b) of the Local Government Act, 1948, in respect of Exchequer equalisation grant.

But I should like to put the problem to the noble Lord: how is extravagance to be detected? Surely no one—and especially no one in your Lordships' House, after the tone of the debate on the Second Reading of this Bill—wants to see close and continuous scrutiny by the Ministry of the expenditure of every eligible local authority. I think that applies all the more because under this Bill the rate-deficiency grant is to he paid to county district councils as well as to county and county borough councils, and that would mean examining the expenditure of a thousand authorities instead of a hundred, as at present. This is just the sort of detailed checking of local expenditure which the Government want to get away from, as did most of your Lordships who spoke on the Second Reading.

The other danger of the approach, which I am sure the noble Lord will appreciate, is that because of these very difficulties the check on extravagance will go by default. That is why the Government have sought a different approach. As I said yesterday, they base themselves on the recommendation of the Edwards Committee, and I would remind the House that on that Committee local authorities were strongly represented. That recommendation—and I am sure this will interest both the noble Lord, Lord Silkin, and the noble Lord, Lord Latham—was, in turn, based on a feature of the London equalisation scheme, which was proposed by the London authorities themselves as a means of controlling expenditure ranking for contribution under the scheme. The effect of the present clause can therefore be put in this way. It puts the onus on the local authority to show that its comparatively high rate of expenditure is justified in any case where it has expended more per head in a year than other authorities of the same type and has also increased its expenditure per head as compared with the preceding three years to a greater extent than these other authorities.

I am sure the noble Lord, Lord Latham, has noticed that this is different from the London scheme, which was based only on two years. The advantage of this method is that scrutiny will be necessary only in cases where extreme conditions apply, and will be confined to such expenditure as the authority may wish to represent should be excluded by reason of special circumstances. The noble Lord, Lord Silkin, yesterday made a point which I have considered, for it struck me as deserving of consideration: that an authority will not knew when it expends money whether it will get a grant and therefore whether it can afford to spend that money. I believe the answer is that if an authority is eligible for rate-deficiency grant it will know that the great bulk of its expenditure—probably all—will get Exchequer grant; and the limits under Clause 6 will apply only on the margin of expenditure.

We ask, therefore, is it unreasonable to say that an authority ought not to want more assurance than that before it undertakes the expenditure? Having this general assurance about Exchequer grants, it is surely right that authorities should be encouraged to address themselves to particular items of expenditure from the point of view of whether it is justifiable expenditure of public funds, irrespective of whether these come from rates or taxes. That is one effect of the clause. But even if expenditure should turn out to exceed the limits set by Clause 6, there is power for the Minister under Clause 6 (7) to disregard expenditure; and one of the points authorities may have to consider is whether there is a case for new or increased expenditure strong enough for the Minister, as an impartial arbitrator, to be likely to exercise discretion in their favour if it should result in the normal limits being exceeded.

I would remind your Lordships that subsection (7) enables the Minister, in making the calculations provided for in the clause, to leave out of account any expenditure where there are special circumstances justifying this course. What the clause does in effect, therefore, is to require an authority to show special circumstances, if it is not to have its grant limited, in any case where in one year its rate of expenditure per head of the population (as I have said) has increased at a greater rate than that of the generality of authorities of the same type. I would also point out to noble Lords who have spoken that that is subject to the qualification that if the authority's rate of expenditure per head has in the three preceding years been below the average for its group, the authority may bring its expenditure up to the average without any question of limitation arising, even though the rate of increase will exceed that of the group.

So far I have been dealing with the general justification of the clause. I have examined very carefully the suggestion of my noble friend Lord Bridgeman that there should be a margin above normal expenditure to be prescribed by the Minister. To prescribe a general margin in that way would imply that it is reasonable that any authority, without being called on to show special circumstances, should get the grant without question on expenditure which resulted in both those matters which I have stressed: the greater rate and the greater acceleration. How is the Minister to arrive at the percentage which reflects the reasonable excess that does not require scrutiny? I suggest that it is surely preferable to leave the special circumstances to be considered by the Minister in particular cases rather than to introduce some arbitrary general margin whose extent it would be impossible to fix by a reference to any objective considerations.

I should not like your Lordships to think that Her Majesty's Government are approaching this matter in any way other than with an open mind, because I believe it is shown that they are not; and I would remind my noble friend Lord Bridgeman of the proviso to subsection (1) of the clause: Provided that for … 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 and so on. I believe that that helps to meet one of the matters which was worrying my noble friend Lord Bridgeman, namely, that there must be a certain element of trial and error in a new proposal of this kind. It is going to affect only one-fifth of the additional expenditure. But I do not think the matter stops there. My noble friend will note that the words are "any special circumstances", and that expression is wide enough to enable the Minister to take account of all circumstances in which expenditure was incurred and any circumstance which distinguishes the position of the authority concerned from that of other authorities of the same kind whose expenditure was an element in the calculation of the normal limits.

If the Committee will bear with me, I should like to repeat what my right honourable friend the Minister of Housing and Local Government and Minister for Welsh Affairs (Mr. Henry Brooke) said in regard to his approach to this jurisdiction. I am reading from OFFICIAL REPORT of the Commons Standing Com- mittee on the morning of March 4 last, Columns 592–3: I assure the Committee that I really have no desire at all to be inflexible in the sense of getting the clause on the Statute Book and then refusing to operate subsection (7) in a reasonable and understanding manner. The Government would never have put the subsection in the Bill if they did not intend to operate it. Clearly, one cannot give a general advance undertaking about the administration of subsection (7), but I should be prepared to give as much guidance as I possibly could to any local authority which had a genuine anxiety about the position in which it might find itself as respects rate deficiency grant arising from special circumstances, believing it might be given the benefit of subsection (7), but desiring some indication from me whether the expenditure would qualify. In so far as it is necessary, I repeat and endorse what my right honourable friend has said.

The other point which I have considered again is whether the term "any special circumstances"—especially in relation to the word "any"—is wide enough. I feel that it is wide enough to cover the circumstances which are special to the one authority and also wide enough (and this again may be helpful to my noble friend Lord Bridgeman) to cover a group of authorities who had, for example, special expenditure with regard to coast protection. It might be that half a dozen authorities were in that position. I think they would be covered by that; it is certainly our intention. If my noble friend Lord Bridgeman has any doubt about the width of the word, I shall be glad if between now and the Report stage he will try to think of other words, and I shall do the same, because that is what is desired. I apologise for taking up so much of the time of the House, but the arguments that were put against me were quite tightly packed and I was anxious that I should try adequately to reply to them. I hope, in view of what I have said and my readiness to consider any improvement in the words, that my noble friend Lord Bridgeman will consider these points and not press the matter at this stage of the Bill.

LORD LATHAM

As one of those associated with one of the three Amendments we are discussing to-day connected with this clause, I should like to make a few remarks. The noble and learned Viscount said that the purpose of this clause was that if the Minister detected extravagance he would be able to curb it. I submit that that is not the case.

THE LORD CHANCELLOR

I am most sorry. If I put it in that way I did not intend to do so. I said that that was the procedure under the Local Government Act, where it works in that way. This is, of course, a substitute for that procedure, which works on the basis of what other authorities do. I am sorry if I misled the noble Lord; I did not intend to do so.

LORD LATHAM

I am much obliged to the noble and learned Viscount for that amplification of what he said. But that brings me to his statement as to the purpose of the London pool. The London pool was not devised to curb extravagance on the part of any of the constituents of that pool. The London pool arose from the difficulties that ensued from the first block grant under the Act of 1929, because it was found that, contrary to expectations, the poorer boroughs of London were, under the formula, the paying boroughs, and some of the more wealthy boroughs were receiving. It was a voluntary arrangement. I agree that the pool devices in connection with the 1948 Act had many of the features of that voluntary pool, but it was never devised for the purpose of curbing extravagance on the part of any one of the constituents. I do not deny that it might have had that result, but that was not its purpose, and I do not think it can be prayed in aid as an analogy to support the present proposals.

The noble and learned Viscount was good enough to quote from a statement of the Minister (very apposite to a consideration of this matter, I readily admit), appearing at columns 592 and 593; but there is also another statement made by the Minister appearing at column 590 of the Report of Proceedings of Standing Committee D of March 4. The Minister said: It is true that an authority which is spending less than the average will he allowed to increase its expenditure up to the average without any limitation applying. It can do that whether it does so extravagantly or not. The merits of the expenditure cannot be examined by the Minister at all. Indeed, that statement is almost an invitation to authorities whose average expenditure is below the normal to increase expenditure, whether it is necessary or whether it is not.

Another point which it seems to me should be made in connection with this clause is this. Under Clause 1 the procedure, after the determination of what is in excess of the norm, is automatic, whatever the merits of the expenditure; and it is only when we reach the provisions of Clause 7 that the question of the merits of the expenditure can be examined, by reference to "special circumstances" and as to whether the expenditure is reasonable. The Amendment which stands in the name of my noble friend Lord Silkin and myself suggests or proposes that the percentage should be prescribed by the Minister. The noble and learned Viscount said that the Minister would have some difficulty in doing that. He may have to do it, however; indeed, he is required to do it under subsection (7). It seems to us that it is only fair upon the local authorities that they should know within what limits they can operate as regards this rate-deficiency grant, and the Amendment suggests that it would be a proper thing that in determining that percentage the Ministry should have the fullest, and, I do riot doubt, useful, conversations and consultations with local authorities.

LORD SILKIN

I do not want to continue the debate except to draw attention to the terms of subsection (7). It deals first with expenditure for police, which, it says, is to be left out of account. Then it goes on to say that the Minister may leave out of account any other expenditure of a local authority. It seems to me that those words could well be interpreted as meaning any block of expenditure similar to expenditure incurred for police purposes—for instance, expenditure for road purposes or something of that kind. I am sure that that is not the intention, but the noble and learned Viscount knows of the eiusdem generic rule and that it might well be interpreted in that way. If subsection (7) is going to be used at all it should be used where a local authority establishes not merely that a particular type of expenditure has been incurred specially but that, even in the case of ordinary expenditure, there are good grounds for expending more than other authorities. I had hoped the Government would be prepared to look again at the whole clause (I have given my reasons and I will not repeat them), but if they will not do that, I think that at least they should I look at subsection (7) more carefully and ensure that the Minister really has power to do that which he is praying in aid as the justification for this clause.

THE LORD CHANCELLOR

Before the noble Viscount, Lord Bridgeman, speaks, may I say that I shall be very glad to do that? It is not the intention of the Government that that clause should be limited by the eiusdem generis rule at all. I will go into it again, in view of the point raised. It is exactly the sort of thing. I was anxious should not happen, and I shall be very glad to do that.

VISCOUNT GAGE

Will the noble and learned Viscount give an undertaking that the Government will seek to explain what is meant by the word "special" in this particular clause? I think it would be an admirable thing if that were done.

THE LORD CHANCELLOR

I did try to show that, in my view, it might mean special in the sense of arising through a particular set of circumstances, in the case of one authority, or a particular problem with which one authority was faced; or, equally, if the authority was one of a group (I instanced coast protection, because there might be half a dozen authorities with the same problem), it would still be a "special circumstance" relating to each of the authorities. All that the word "special" excludes, if I may put it in this way, is the circumstances that are common to all the authorities of one group. We are trying to give the Minister the widest powers to deal with circumstances of the type I have described. I do not want to make a narrow idiosyncracy of it. I want to get a term which will give the Minister the widest powers. I shall apply my mind to it and I should be very willing to consider what either or any of my noble friends suggests in this way.

VISCOUNT BRIDGEMAN

I am sure that we are all grateful to my noble and learned friend for the trouble he has taken in explaining this matter in detail, and for making arrangements by which the debate on it was adjourned last night and resumed to-day. I think that the time has now come to begin to separate the Amendments we have been discussing together, and what I am going to say now refers only to my own Amendment and not necessarily to the Amendments of noble Lords opposite. One of the things that has come out of this discussion is the need, when these clauses begin to operate, whatever their final form, for an atmosphere of mutual trust and confidence between the local authorities and the Ministers; and I think that some of the explanations given by my noble and learned friend have gone a long way to achieve that result.

I still feel that, as this clause stands, we may find that local authorities are ground between the upper millstone of subsection (1) and the nether millstone of subsection (7). Much of what my noble and learned friend said is technical, and I think that we shall want to study it carefully when we read it in the OFFICIAL REPORT to-morrow; and that applies also to others concerned, outside your Lordships' House. My own feeling at this stage, for what it is worth, is that subsection (7) could be looked at again, and I am glad that my noble and learned friend gave some indication that he and his advisers would do that. Equally, some of us may want to look at it in our own way. We may not want to return to the question, or we may return to it in another way on Report stage, but until we have studied the matter more carefully I should like to leave it at that. Once again I thank my noble and learned friend for his explanation, and beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

LORD LATHAM had given notice of his intention to move as an Amendment, in subsection (1), after "exceeds" to insert: by more than a percentage to be prescribed by the Minister after consultation with the respective groups of local authorities ".

The noble Lord said: Having regard to what the noble and learned Viscount has said, I feel that my noble friend Lord Silkin and I will be prepared not to move this Amendment, on the understanding that there will be further consideration of the points that have been put forward material points of great concern to local authorities, and that, if it should be necessary, we will return to the matter at a later stage in the consideration of the Bill.

LORD SILKIN had given notice of his intention to move to leave out Clause 6. The noble Lord said: May I associate myself with what my noble friend said on his Amendment and not move Amendment No. 9?

Clause 6 agreed to.

Clauses 7 and 8 agreed to.

Clause 9:

Rating of industrial and freight-transport hereditaments

9.—(1) For the year 1959–60 and subsequent years the fraction of net annual value by reference to which the rateable value of an industrial hereditament or of a freight-transport hereditament is to be ascertained shall be doubled, and accordingly subsection (1) of section sixty-eight of the Local Government Act, 1929, shall have effect in relation to those years with the substitution for the words "one-quarter", wherever they occur, of the words "one-half".

3.15 p.m.

LORD LATHAM had given Notice of four Amendments to subsection (1), the first being to omit "fraction of." The noble Lord said: I rise to move the first of the group of Amendments appearing in my name on the Marshalled List, the purpose of which is to put an end to industrial de-rating. On these Benohes we have always taken the view that the de-rating of industry at the expense of the revenue of local authorities is wrong. It was wrong in 1939, it is wrong now, and it ought to be ended. This Amendment, therefore, seeks to re-rate industry to 100 per cent., as against the 50 per cent. proposed in the Bill. If industry has to be assisted—and I am not admitting at this stage that there is any need so to do—the assistance should not be given at the expense of local authorities and their revenue, but should be given by the Government, through the national Exchequer.

It is a curious circumstance that for several years before the introduction of this Bill, the Government have said that they were anxious about finding new sources of revenue for local government. I believe it to be the case that they appointed a Committee, or were associated with the appointment of a Committee—a high-powered Committee under ægis of the Royal Institute of Public Administration, the purpose of which, among other things, was to find new sources of revenue. Here is a source of revenue which ought to be returned to them. At the present time, the local authorities are deprived of 75 per cent. of the rateable income which would other- wise be receivable by them. After April 1 of next year, under the Bill, they will still be losing 50 per cent.

I think that it is of some utility to refer briefly to the history of de-rating. After some ten years of mostly Tory administration in this country, in 1929, the then Tory Government, finding industry very much in the doldrums, with the industrial equipment of this nation running down in an awesome fashion and to a disturbing degree, decided that something should be done to help industry. The condition of industry, of course, was largely, if not wholly, due to the calamitous policy of going back on to the gold standard which was followed in 1925, when we were asked to contemplate with pride the pound looking the dollar in the face. What happened, of course, was that millions of unemployed and their families were forced to look misery in the face. The economic consequences of that decision, we know, were tragic and calamitous. There are grounds for saying that it directly led to the General Strike of 1926, and it certainly aggravated most gravely the economic crisis of 1931.

However, the Government decided in 1929 to subsidise industry by the process of de-rating. One of the considerations, of course, was that there had been a revaluation for rating purposes in this country, the results of which had come into operation in April, 1925. The assessments were largely increased because the earlier assessments went back, by reason of the war period, to 1909 or 1910. In the original block grant there was no provision for compensating local authorities in respect of the de-rating of new industrial properties or in respect of an expansion of existing industrial properties. The loss in respect of those properties had to be borne until 1948 by the local authorities. It is the case that after 1948, if a local authority was entitled to share in the equalisation grant, they might get something in respect of the loss of rateable value on new properties coming into assessment. But inasmuch as the total grant was fixed at 22½ per cent., which I think amounted to something like £22¼ million, it can fairly be said, I believe, that the local authorities, by and large, had to bear themselves, without recompense, by grant or otherwise, the loss of rates on new industrial properties.

We all know that owing to the impulse of war and post-war years there has been an amazing expansion of industrial hereditaments. It is almost unbelievable that until 1956 our booming industry was paying no more in rates than £15 million a year, which is a derisory figure, having regard to the prosperous condition that industry was in during those years, and for the most part is still in. In support of this submission as regards new industrial properties I should like to read a statement made at a recent conference of the Institute of Municipal Treasurers by the City Treasurer of Hull, a Mr. Pollard. He said: Although it may properly be said that in the original block grant of the 1929 Act there was compensation for this de-rating loss of rates, it has long since lost its character, and in any event the compensation was £2¼ million, whereas the present value of de-rated properties is estimated at not less than £90 million a year. We have always contended that de-rating is unsound. It is indiscriminate in its operation; it takes no account, as taxation does, of whether a concern is profitable or otherwise, or of the measure and degree of its profit or of its losses. That was the opinion of the Committee to which I have already referred, of the Institute of Public Administration; and it is the opinion of an independent committee of economists, accountants and rating valuers which reported in October, 1956, on the effect of de-rating and re-rating on industrial costs. In their report that committee said: If the policy of extending relief to industries OT firms in special need "— and I stress the word "need" is to be pursued, then it is recommended that some means of giving it other than rating relief should be found. Rating relief is indiscriminate, and need is not efficiently measured by liability to pay rates.

In proof of what I have said, I should like to cite the shipping industry. At the time de-rating was originally instituted, the shipping industry was in a pretty bad way, with hundreds of vessels laid up; and to-day an increasing number is being laid up. If any industry needed help, shipping certainly did. But shipping was not within the Schedule to the 1929 Act as being eligible for de-rating relief, and until the Rating and Valuation Act of last year, which de-rated ships, hotels, offices and miscellaneous properties, shipping received no relief under de-rating provisions. It now receives 20 per cent. under the provisions of that Act, to which we also objected, principally for the reasons that we object to industrial de-rating. But whereas shipping and other industries in difficulties were excluded, the prosperous chemical Industries, the metal industries, the engineering industries and a large section of food and drink industries were eligible and have since 1929 received this substantial relief at the expense of local authorities.

The Government, of course, are most interested in de-rating, because they make a profit out of it. They will make a profit of at least £5 million under the provisions of this Bill, in this way. The increased rateable income of local authorities, under the proposal to re-rate up to 50 per cent., will be £30 million, and of that the Government will contribute by way of lost taxes, whether income tax, surtax, or both, £15 million, because there will be less profit assessable to tax. But they are not content with taking that £15 million, which really belongs to the local authorities, but are to take £20 million, leaving the local authorities only £10 million. But after April next year industry will be receiving a relief which is estimated to be £60 million a year, and of that sum, on the Government's own figures, the Government will take, by reason of additional taxation, no less than 50 per cent.

As regards commercial de-rating, it is estimated that that will result in a loss to the local authorities, of £40 million, and of that the Government will take £15 million a year in additional taxation. So one can understand the keen interest the Government has in maintaining de-rating; they are making a pretty good thing out of it—almost a sharp practice. In the result, as from April 1 next year, if industrial and commercial de-rating be taken into account, the local authorities will lose a total of £100 million plus the £20 million which they are to lose under the provisions of this Bill by reason of the deduction of that sum from the grant. Industry and commerce will get £55 million and the Exchequer will get a total of £65 million, at, I submit, the expense of the revenues of local authorities.

In the face of those facts, it is idle for the Government to complain of the increase in the proportion of rate expenditure contributed by the Government, because, by the policy initiated and pursued by the Government the local authorities have to go short each year of some £120 million in rateable income and resources. Commercial de-rating was introduced by the former Minister of Housing and Local Government without any prior notice or consultation with the local authorities. I understand the local authorities sought to see him by way of deputation and he declined to see them. Nevertheless, that policy has, as I have indicated, meant a loss of some £40 million a year in rateable income. Our view is that whatever may have been the case on the grounds of hardship for instituting de-rating in 1929, those conditions do not now apply. Industry could quite well pay its fair share of rates. It benefits very largely from rate expenditure, especially that large item of rate expenditure which is incurred on education. Thirty million pounds a year is not going to harm industry, with a total gross output of £10½ thousand million, according to the last census of production in 1948.

The Committee to which I have referred have estimated that the complete abolition of de-rating—industrial de-rating, leaving aside commercial de-rating—would add no more to the gross output of the eligible industries than .385 of 1d. in the pound. If the net output of the eligible industries be taken, the loss, or the additional cost if you care so to put it, would be no more than 1.21d. in the pound. In my submission, it cannot be said that this additional sum would seriously affect, if indeed it would affect at all, our export trade. Up to the present our export prices are not higher than those of our competitors. If we are at some disadvantage with exports it is principally because of delays in deliveries and also because of the restricted credit facilities available in this country in comparison with the much more liberal credit facilities which are available for encouraging export business among our competitors.

I therefore move the Amendment standing in my name on the grounds that I have stated: first, that this is not a matter where the local authorities should be asked to subsidise not only industry but the Exchequer; and, secondly, that as regards the economic position of industry there is no longer any need to continue this relief. I beg to move.

Amendment moved— Page 10, line 13, leave out (" fraction of ").—(Lord Latham.)

THE MINISTER WITHOUT PORTFOLIO (LORD MANCROFT)

This is a most important Amendment. It is a fundamental Amendment really, and the noble Lord, I think, has fully conveyed that impression to the House. He is suggesting that we should re-rate industry fully, instead of up to 50 per cent. as the proposal at present stands in the Bill. I hope the noble Lord will forgive me if I do not follow him into the attractive and provocative fields into which he has journeyed concerning the return to the gold standard—of which I somehow seem to think Mr. Philip Snowden approved—the causes of the general strike, and other matters. If I do not follow him into those fields I hope he will not think I am tacitly agreeing with the many arguments of a provocative, interesting nature he put forward. May I confine myself to the facts at present before us?

This is the third occasion (apart from the proceedings in another place on this actual Bill) within three years that this issue of industrial re-rating has been before Parliament. It was fully debated in Committee in another place on the Rating and Valuation (Miscellaneous Provisions) Bill in 1955; it was debated again in another place in 1956 on the Second Reading of the Industrial Rating Bill. Those debates were carefully studied when the Government were considering what should be done about industrial de-rating. Your Lordships have been reminded by the noble Lord, Lord Latham, of some of the past history. Perhaps it may be of interest to your Lordships if I were to recall for a moment some of the figures that were prayed in aid on former occasions. We were told that in the year before industry was de-rated from 100 per cent. to 25 per cent. (that is, 1928) industry contributed 10 per cent. of the rateable value of local authorities, and that immediately after de-rating that figure fell to 3.41 per cent. Local authorities, it was argued, would benefit as a result of the repeal of industrial de-rating—that is from 25 per cent, back to 100 per cent.—by approximately £20 million a year, and that industry would thereafter contribute 12 per cent. of the rate burden as against 3.5 per cent. in June, 1955. I come to this conclusion. The Opposition in 1955 thought that an increase of nearly 250 per cent. in industry's share of the rate burden was not unjust.

Since 1955 there has, as your Lordships know, been a general revaluation. Clause 9 of this Bill proposes to re-rate industry and freight-transport up to 50 per cent. Before revaluation, industry's share of the rate burden was just over 4 per cent. After the measure of re-rating which we propose has effect, its share will be nearly 12 per cent. That is an increase of over 180 per cent. in industry's share. There is not, therefore, very much difference, I suggest, between what the Opposition considered to be acceptable in 1955 and what the Bill now actually provides for. Noble Lords opposite are increasing their demands. But I think I am entitled to emphasise that whilst industry's share of the rate burden will have risen to about three times its 1955–56 level, the share borne by householders will have fallen by about 20 per cent. over the same period, while the share of shops and miscellaneous properties will have risen by about 7 per cent. The increase over the period in the total amount levied in rates applies, of course, to all classes of ratepayers equally. If the increase continued at the speed it has achieved in recent years, industry would be paying considerably more than three times as much as in 1955–6.

LORD LATHAM

May I just intervene? I think this should be said: that of course industry pays its rates out of gross income, whereas private persons pay their rates out of taxed income.

LORD MANCROFT

Yes; that fact is perfectly acceptable. The noble Lord in his argument talked about the export trade. May I refer to that for a moment? If we bear in mind the need to keep down prices and to maintain exports in the face of growing competition, the Government were, I think, right when they decided that this increase in the rate burden was just about as much as could safely be levied on industry. Full re-rating, such as the noble Lord, Lord Latham, and his friends advocate, would add perhaps £45 to £50 million to the rate burden of industry in 1959–60 in addition to the £30 million or so added by re-rating to 50 per cent. proposed in the Bill. That is a total of between £75 and £80 million added to the burden on industry. That is a lot of money.

LORD LATHAM

Would the noble Lord say whether the added burden is by reference to the rating before 1956 or after?

LORD MANCROFT

I am saying that the added burden which would be put on industry if the noble Lord's Amendment were accepted would amount to £75 million to £80 million.

LORD LATHAM

I am sorry, but that is not so. A goodly proportion of that is due to the revaluation, and industry was paying rates on assessments which went back to 1934.

LORD MANCROFT

Come what may, you are going to add a considerable burden to industry, and the noble Lord wants to add twice the burden that we suggest should be added to industry.

LORD LATHAM

Thirty million pounds.

LORD MANCROFT

The noble Lord says "thirty million pounds" rather scornfully. I suggest that it would be folly to increase overheads by £30 million, or by the £75 million to £80 million, which I suggest is the more probable figure, at a time when the prospects of halting, and perhaps reversing, the wearisome trend of rising prices from which this country has suffered for several years are so promising. Widespread price falls are, as your Lordships know, having a stabilising effect on the wholesale prices of manufactures—such falls, hitherto exceptional, seem to be becoming almost common form, at any rate in manufacturing industry. Take the figure of an increase of £45 million. That would be roughly the equivalent of either a 3 per cent. wage increase for all operatives in metal manufacture, shipbuilding, engineering and vehicles; or a 1½ per cent. wage increase for all operatives in manufacturing industry; or a 2 per cent. rise in the import bill of manufacturing industry. Are these insignificant figures? Are these figures that we can dismiss lightly as merely marginal?

LORD LATHAM

I am sorry to interrupt, but the noble Lord refers to £45 million. According to the figure in the White Paper, it is £60 million, of which, of course, £30 million is recovered in relief of taxes.

LORD MANCROFT

I think the noble Lord is arguing on a false premise. He is trying to double the burden that we suggest is the full burden that industry can bear. I am arguing to your Lordships that the burden which noble Lords opposite are seeking to put upon industry is a heavier burden than industry could or should fairly be asked to bear. Let us riot quibble about pounds this way or that. An increase of this order, as suggested by noble Lords opposite, would double the burden that we are seeking to impose.

An increase of that order in the burden of rates would, I suggest, certainly be a disincentive to private investment. My right honourable friend the Chancellor of the Exchequer pointed out in his Budget speech that one of the Government's principal objectives is to maintain a high rate of savings and investment. On this, as your Lordships may know, the national economy depends. My right honourable friend has also since further increased the concession on initial allowances which he proposed in his Budget to encourage industrial investment. I think noble Lords opposite to-day agree with my right honourable friend's views. This, at any rate, is clear to me from Mr. Harold Wilson's speech in the Budget debate in which he criticised the Budget on the grounds that it would fail to produce the necessary increase in investment. He went on to say that, second only to exports, investment must be given a clear priority over all other calls on our economic resources. But, surely, any addition to industrial overheads must, in the absence of compensating price increases, cut into funds potentially available for investment and have some disincentive effect on investment. Admittedly, re-rating at 100 per cent., as the noble Lord, Lord Latham, proposes, rather than 50 per cent., would mean only a marginal increase in costs, taking industry as a whole, but—and this is where the noble Lord and I differ—it is a margin that matters. For instance, the increase in capital expenditure by manu- facturing industry between 1956 and 1957 was only about £50 million.

I hope that your Lordships do not feel that this increase will be unimportant because, as the figures which were quoted on earlier occasions sought to show, it was small compared with gross profits. Surely it is misleading of the noble Lord to try to judge the effect of changes of this kind by averages. The consequences of even the Government's proposals may be, I readily admit, severe for individual firms. As we all know many manufacturers are finding it increasing difficult to compete successfully in the hardening export markets to which the noble Lord, Lord Latham, has drawn attention, and their position would undoubtedly suffer from the addition of even small amounts to their overheads. As we are abundantly aware, world trade is no longer expanding and trading conditions are likely to be more difficult in the months to come, so that any increase in export prices, however small, could have harsh repercussions. We just cannot afford to ignore facts of this kind.

I have carefully reconsidered the remarks which the noble Lord, Lord Latham, made in his speech on the Second Reading of the Bill in this context. If I understood him aright, he tried to show that the effect of 50 per cent. de-rating of industry was to compel local authorities to subsidise (that was the word he used) both industry and the Exchequer. If the noble Lord will forgive me, I would suggest, with great respect, that that is rather an odd word to use in either context. Rating authorities will be collecting more than £60 million in rates from industry, while the Exchequer are currently paying local authorities over £500 million a year in grants. In any event, I suggest that it is necessary in this case to take a much broader view. The real effect of de-rating is to reduce the share of the rate burden borne by the de-rated ratepayers and to increase the share borne by the others. All ratepayers—most of us—in fact have a stake in the ability of industry to compete successfully in overseas markets, and it would obviously he wrong to reach a conclusion about the proper measure of re-rating without regard to the consequences to industry. But even if this were a possible course, there is, I suggest, no case for full re-rating of industry at a time when perhaps 99 per cent. of the rest of the ratepayers enjoy de-rating in one form or another—be it in 1939 values for houses or 20 per cent. relief for shops and offices.

The noble Lord, Lord Latham, talks about fair shares. I agree with that entirely. I suggest that the burden we are putting upon industry at the moment is a fair burden. I suggest that it is about as severe a burden as industry can bear. I suggest that whether we argue this way or that about a few million pounds, which to some people seem unimportant but to me on this occasion are important, the effect of the noble Lord's Amendment will be to put an unfair, if not almost an intolerable, burden on industry. I think we have gone as far as we possibly can. We have asked industry to do all it possibly can. This, I am afraid, is a fundamental point, and I cannot possibly accept the noble Lord's Amendment.

3.50 p.m.

LORD SILKIN

I agree with the last words of the noble Lord, that this is a fundamental point. I think he has put the best possible case for the Government position, but there are one or two things in his argument which I could not possibly accept. He has based his case almost entirely on the need to preserve our export trade, but this concession—and it is a concession as compared with the other ratepayers; the concession of giving to industry half their rates—applies to all industry, whether it is for export or for the home market. The vast bulk of industry is for the home market, and even if it were assumed (which I do not assume) that the export trade really needs this subsidy—and I am continuing to call it a subsidy—the noble Lord has made no case for the people engaged in the home trade who are getting the full benefit of it as well.

He rather brushed aside the case that my noble friend made, and referred to it as something that was irrelevant. He said, "Let us get down to the relevant time" but it is relevant to try to under-stand the circumstances in which the original concession was made. In 1929 there was a crisis in industry—not merely in the export trade, but in all industry—and it was necessary, looking back to the position as it was then, to give some relief to industry in order to enable it to keep on its feet, and that concession was given. But is the position the same to-day? Does the noble Lord say that that concession is still necessary? Is it still necessary to-day, in present conditions, to give to industry a subsidy on its rates? How does the noble Lord measure it? Have we got half-way back to the position where it can stand on its own feet and no longer need a subsidy? I just do not understand by what argument the Government come to the conclusion that to-day it is right to relieve industry of half its rates; that in 1929 it was right to relieve it of three-quarters of its rates, and that apparently for all time we must remain in the present position. The argument that the noble Lord put before us to-day for relieving industry of half its rates, in so far as it applies to the export trade, will apply for all time. Is the noble Lord then saying that for all time we are to relieve industry of half its rates?

He rather brushed aside my noble friend's figures, but they are relevant and important on this issue. It is important to bear in mind that the Government are paying, by way of relief of taxation, a proportion of any increase in rates that industry has to bear. If industry is relieved of £80 million, would not the Government then get half of that in additional taxation? If industry were to pay at the full rate, the burden on public funds would in fact be only half, because industry would be relieved of paying taxation on half its rates. So that if my noble friend is asking industry to pay another £30 million or £40 million by way of rates, it in fact means only £15 million or £20 million out of the pockets of industry. Therefore, in my submission, it is not a burden that it is unable to bear. If you look at the output of industry in the last financial year—my noble friend gave the figure—you will find that it was £10,500 million as against £30 million or £40 million which would be the net amount that it would be required to pay if it were rated to the full extent. That is roughly about £1 in £300 on its output and is not going to make all the difference in the world between its being able to compete with other countries in export and not being able to do so. It certainly is not going to make any material difference so far as the home market is concerned.

While I realise that this is a matter upon which the Government have come to a decision and that they are not likely to change it in this House, nevertheless I submit that the Government have not really made their case for continuing to subsidise industry to the extent of 50 per cent., and none of the arguments which have been put forward today have been in any way convincing. I quite agree with the noble Lord that this matter has been debated on a number of occasions

4.8 p.m.

LORD OGMORE moved, after subsection (1) to insert: () Where before the passing of this Act such industrial hereditament was demised or let on terms which provided for the payment of the rate (within the meaning of the Rating and Valuation Act, 1925) on that hereditament or on part thereof by the owner and there is no provision in the lease or contract in respect of such demise or letting or otherwise for the owner to demand an increase of rent in respect of such rate the owner shall be entitled to receive from and shall be paid by the person liable to him for the payment of such rent an increased rent equal to the additional rate from time to time payable in respect of such hereditament or such part thereof by virtue

in another place, but not here. I do not think we have discussed this subject for many years. I feel that it is necessary for us to register our views quite definitely, and we propose, therefore, to vote in favour of our Amendment.

On Question, Whether the said Amendment shall be agreed to?

Their Lordships divided: Contents, 29; Not-Contents, 57. of this section and such increase shall for all purposes in connection with the recovery of rent be deemed to be part of the rent originally reserved or made payable on such demise or letting. For the purposes of this subsection "owner" shall mean any person for the time being entitled to receive the rack rent of the industrial hereditament whether on his own account or as agent or trustee for any other person.

CONTENTS
Attlee, E.	Haden-Guest, L. [Teller.]	Quibell, L.
	Henderson, L.	Rea, L.
Hall, V.	Kershaw, L.	Saye and Sele, L.
	Latham, L.	Shepherd, L.
Amulree, L.	Lawson, L.	Silkin, L.
Archibald, L.	Merthyr, L.	Sinha, L.
Burden, L. [Teller.]	Meston, L.	Strabolgi, L.
Carnock, L.	Milner of Leeds, L.	Williams, L.
Ebury, L.	Ogmore, L.	Winster, L.
Grantchester, L.	Pethick-Lawrence, L.	Wise, L.

NOT-CONTENTS
Kilmur, V. (L. Chancellor.)	Cilcennin, V.	Dynevor, L.
	Colville of Culross, V.	Elton, L.
Hailsham, V. (L. President.)	Gage, V.	Forbes, L.
Cholmondeley, M.	Goschen, V.	Geddes, L.
Lansdowne, M. [Teller.]	Soulbury, V.	Gifford, L.
Salisbury, M.	Tenby, V.	Hylton, L.
		Jeffreys, L.
Albemarle, E.	Aberdare, L.	Leconfield, L.
Dundee, E.	Addington, L.	Mancroft, I..
Gosford, E.	Allerton, L.	Merrivale, L.
Home, E.	Amherst of Hackney, L.	Mills, L.
Howe, E.	Baden-Powell, L.	Milverton, L.
Macclesfield, E.	Balfour of Inchrye, L.	Newall, L.
Powis, E.	Birdwood, L.	Rollo, L.
St. Aldwyn, E.	Chestham, L. [Teller.]	St. Oswald, L.
Selkirk, E.	Clitheroe, L.	Saltoun, L.
Swinton, E.	Conesford, L.	Sandford, L.
Waldegrave, E.	Derwent, L.	Stratheden and Campbell, L.
	Digby, L.	Teviot, L.
Bridgman, V.	Dovercourt, L.	Tweedsmuir, L.
Chelmsford, V.

Resolved in the negative, and Amendment disagreed to accordingly.

The noble Lord said: I beg to move this Amendment. It relates particularly, but not necessarily exclusively, to the Wales and Monmouthshire Industrial Estates, Limited, and the Treforest Industrial Estate—an estate which I believe both the noble and learned Viscount on the Woolsack and the noble Lord, Lord Mancroft, know very well, as I do. This company is not a profit-making concern. It was founded as a company limited by guarantee without a share capital on June 27, 1936, and I am told that the directors receive no remuneration. Its object, when it was founded, was to encourage individuals or firms to start manufacturing businesses in the then depressed area of South Wales. Similar estates, of course, were founded in other depressed areas. For this purpose the company built modern factories at Treforest, which, as the two noble Lords will know, is about half-way between Cardiff and Pontypridd. These factories were let at attractive rentals as a means of encouraging light industry to develop in this area where the old, established heavy industries were unable to offer sufficient employment to men or, of course, to women.

Apart from the British firms who applied for these attractive facilities, many of the businessmen who were so attracted there were those who had fled from the Nazi terror. In later years there have been those who have fled from behind the Iron Curtain, from the Communist terror. The name on the label changes but the effect on these unfortunate people is the same. The foreign business men who came to Treforest were unused to British ways, and in many cases were unable even to speak the English tongue. They could not be expected to understand what so few British people do; that is, their way through the rating jungle. Consequently, almost invariably they insisted upon inclusive rentals—that is to say, that the rentals should include the rates which were levied on the premises.

I am glad to inform your Lordships that the Treforest Industrial Estate has done very well. It made a splendid contribution during the war, and has done so since, to the industrial life of this country. I might say that on my own visit there in 1951, to address the management and workers of the B.O.A.C. factory, I heard the highest praise of the stability and quality of the workers. Firms and business men occupying these factories have become rich and they have offered a diversified range of employment for workers in Rhondda, Pontypridd and the surrounding district. The factories built by the Estate Company or adapted from war-time buildings now give employment to more than 62,000 people; but, unfortunately, the surplus for the year 1956–57 from the Industrial Estate was £116,830, which was £15,058 less than the loan interest for the year, at 4 per cent., which they paid to the Treasury.

The effect of Clause 9 in its present form will be to reduce the benefit of industrial de-rating from 75 per cent. of the net annual value to 50 per cent. after March 31, 1959, because, as I have said, the Estate Company granted certain leases before the war—and also since the war in consequence of certain commitments entered into before the war—at rents inclusive of rates, without provision for the Estate Company to recover increases in rates, however arising; and they are subject to a heavy loss and an increasing loss. The effect of the proposed changes in industrial de-rating in their present form would be an increase in expenditure from the Treforest Industrial Estate account from £27,500 to £55,000 on account of the rates of factories let at inclusive rentals over the twelve years from 1959 to 1971. Against this expenditure of £55,000, the Estate Company will collect only £42,000 in rents for the factories concerned, so that for the period there will be a loss of £13,000. That is assuming that there is no increase in the level of assessment on the premises and also that the rate levied in the £ does not increase. I might say that these are most unlikely grounds on which to base any assumption, because I think it is almost certain that there will be an increase in the assessments; and it is equally certain that there will be some increase in the rating.

I have put down this Amendment to deal with this situation. I may say that it is of highly respectable Parliamentary parentage, because at the Committee stage in another place it was moved by my friend Alderman Percy Morris, one of the Members for the Borough of Swansea, and on the Report stage it was moved by Mr. Graham Page who, as your Lordships know, is a highly respected member of the Conservative Party. So there are no Party politics in this matter—in fact the Amendment could not be more respectable in its origin. I base the Amendment on the following grounds. First, the parties to the leases in question had in mind, when the terms were negotiated, only the level of assessments then in force, just before the war, and the rate then being levied in the £. These two elements of risk were carried by the Estate Company, because in those days that was the only way of attracting business men and industrial companies to the special areas, which were known as distressed areas. No thought in those days was there of the possibility of industrial de-rating; indeed, there was no reason why there should be, because it is only to-day that a clause appears in the present Bill upon the subject; and we have just had a Division upon that very clause.

My second reason or ground for moving this Amendment is that the parties to the leases could not possibly have foreseen at that time the change in the law relating to industrial de-rating, and would have assumed, I think, if they had been able to foresee it, that the Government would make some provision to assist them in the way they have assisted others who have been affected. For example, there are the provisions of the Finance Act, 1941, now re-enacted by Section 486 of the Income Tax Act, 1952. Those provisions, I believe, protect people who contracted to pay to annuitants and others net sums after deducting income tax in the days when the standard rate of income tax was 5s. in the £, or a little less, and when normally prudent persons would not have contemplated a substantial increase over 5s. in the £. Then there are the provisions of the Rent Acts. When, in 1914 and 1939, the levels of rents were frozen, there was provision to enable landlords to recover the excess rates in the form of extra rent. We must remember that, conversely, the Local Government Act, 1929, by which industrial de-rating was introduced, required landlords of industrial property let at inclusive rents to pass on the benefit of de-rating to their tenants. We are now asking that the converse should apply and that when there is less de-rating than before the landlords should be able to pass that on to the tenants.

Then the tenants involved have had something like twenty years, in most cases, in which to settle in the development areas, and there is no reason why they should be subsidised in this way at the expense of the taxpayer—because it is the taxpayer who will ultimately pay, if there is a loss. There is no reason why these gentlemen and companies should now be put in this handsome position not only in face of other ratepayers but also at the expense of the taxpayers.

In the other place the Minister made a curious comment on this matter. If he had heard it, I am sure that Mr. Gladstone would have revolved violently in his grave. This point was put in another place by Mr. Bevins, who was replying for the Government. He said: It is difficult in this one known case to make any substantial plea of hardship on behalf of the landlords. If there were a distinct element of hardship the proposition would probably be different. This Company, for whom we have a great admiration for its work in South Wales is not constituted for profit, and the worst that is likely to happen if the Company makes a loss is that it would partially default on its interest payments to the Exchequer. That will not be any hardship. That is surely a most extraordinary statement for a Minister to make at any time, and particularly on this Bill, when our withers have just been wrung by the noble Lord, Lord Mancroft, who has been talking about what a hardship increases in rates would cause. Apparently it is a hardship if rates are increased to those who should pay them, the people enjoying the property; but it is no hardship to the unfortunate taxpayer if he has to pay the rates which they should pay! That, I think, is a ground on which we should have some reply, because I suggest that the reply and the ground given in another place by the Minister were ludicrous; and I should have thought that no Minister had ever given such a ground before.

I am coming to the end of my grounds, but there are just two more. In a community like the Treforest Industrial Estate, all the others will get to know that this is happening, and there will be a good deal of dissatisfaction on the part of those who will be paying considerably more in rates than these particular people are paying. They will also know, what in fact will be the case, that the rates on these properties paid by the Company will be more in some cases than the rents the latter will receive, so that the tenants will be entirely subsidised at the expense of the taxpayer. Surely no Bill is supposed to have that effect.

The complete abolition of industrial de-rating is a distinct possibility. Your Lordships have heard the arguments put forward so cogently by my noble friend Lord Latham and supported by my noble friend Lord Silkin. The Estate Company will be put in an even more difficult position than they are now if in the future there is industrial de-rating. They should not be expected to suffer in that way. Whether there are any more persons in this position I do not know, but whether there are others or not, I suggest that the facts that I have given show your Lordships a case which should be met by the Government. It is a case in which we are all in a sense interested, because we are taxpayers. But that is not the sole argument: the directors, managers, secretary and staff have done a fine job of work throughout the years and take a great interest in it. The directors are unpaid. They all want their estate to be a success and do not want to default so that the taxpayer has to make good the amount they cannot find. They want it to be not only an industrial success, which it is, but also a financial success, which it cannot possibly be for years to come unless this Amendment, or one like it, is carried. With these grounds in mind, I beg to move.

Amendment moved— Page 10, line 20, at end insert the said subsection.—(Lord Ogmore.)

LORD MANCROFT

The noble Lord's Amendment would come into effect when the tenant of an industrial hereditament was paying rent inclusive of rates and his tenancy agreement or lease contained no provisions for increases of rent to take account of increases in rates. The object of the Amendment, as the noble Lord told us, is to secure that in that case, if the letting took place before this Bill reached the Statute Book, the tenant should pay the owner an increase in rent equal to the increase in rates attributable to the re-rating of industry by Clause 9, which we are now discussing. I hope that the noble Lord will not mind my pointing out that there are serious deficiencies in the drafting of the Amendment, but I do it purely as a formality and not out of discourtesy. I also agree that there is no political intent in this Amendment, as there has been in others. But because it has respectable antecedence in the support of Mr. Percy Morris and Mr. Graham Page in another place—respectable, indeed—that does not mean that the Amendment is a good one.

As the noble Lord told us, it is primarily concerned with the Treforest Trading Estate, and he was good enough to suggest that my noble and learned friend the Lord Chancellor and I know this estate well—my noble and learned friend when Secretary of State for Home Affairs and Welsh Affairs and I when I was Under-Secretary in the same Department. I visited the estate on many occasions and I remember this problem, and I should have paid a great deal more attention to the details of it if I had known that I should ever have to grapple with it from this Dispatch Box. The problem, if I remember rightly, was largely pre-war and war-time in origin. As the noble Lord has told us, the tenants on the estate were largely refugees. I remember being introduced to one who spoke hardly anything except Yiddish and who married a lady from the noble Lord's part of the world who spoke hardly anything except Welsh. I can assure your Lordships that there is nothing more likely to bring a roomful of people to complete silence and standstill than a marital row between husband and wife in Yiddish and Welsh.

These refugees were apprehensive about taking leases at exclusive rentals in case they were overwhelmed by rate increases. Those who have argued the point elsewhere have recognised that the company accepted the risk of increased rates but maintained that they could not have foreseen the possibility of industrial re-rating in part or in whole. It was suggested in another place that the problem was not peculiar to this company but that there must be many small industrial properties let at inclusive rentals. If the company's tenants at inclusive rentals escaped any increase in rates on re-rating, we were told that" an unfortunate position would be created "between them and the company's tenants at exclusive rents. The other place was told that lettings at inclusive rentals were not unusual and it was argued that it would be grossly unfair not to provide for the converse of the provision in the Local Government Act, 1929, which required the landlords of property let at inclusive rentals to pass on to their tenants the benefit of de-rating. Re-rating, we were told, was being introduced because the Government considered that industry, not the landlord, could bear the additional burden. The fact of re-rating was itself tantamount to an interference with the terms of the tenancy and, it was suggested, could be clearly distinguished from normal increases in rates due to increases in poundages.

At Report stage in another place, the Opposition pointed out that this Amendment of the noble Lord provided only a partial solution and did not deal with any possible further measure of re-rating or with increases upon revaluation. The solution, it was argued, was a fresh lease. At Committee stage in another place the Government undertook to look at the extent and character of the problem but my honourable friend indicated that the Government inclined to the view that it would be wrong in any event to apply the Amendment to any lease or tenancy entered into after 1945. At Report stage the Government said that, despite the publicity given to this problem, no other instance had come to their notice; and so far as I know, that is still the case—I am subject to correction on this point.

I must honestly confess that the Government do not think it right to alter the law solely to meet one known case, even if the merits there were beyond dispute, and I suggest, with respect to the noble Lord, that, in fact, the merits are not quite beyond dispute. The pre-decessors of the board of management had accepted the risk of rate increases, but because they had not envisaged the possibility of a measure of re-rating we are asked now to indemnify them at the expense of the tenants, whose concern had been to safeguard themselves against increases from any quarter. It is difficult in this one known case even to make any substantial plea of hardship on behalf of the landlord. I think that the noble Lord has had Gladstone revolving in his grave. This company was not constituted for profit and, as my honourable friend the Parliamentary Secretary pointed out in another place, the worst that would be likely to happen, if the company made a loss, would be a partial default in its payment of interest to the Exchequer. I am sorry that the noble Lord, Lord Latham, is not in his place. He complained that the Exchequer was getting too much out of this Bill, and this might put him slightly at ease. My honourable friend agreed that some re-negotiation of terms between company and tenants might be appropriate. However, there are no break clauses in the leases.

It was suggested that one reason justifying a general application of this Amendment would be the clear distinction between increases in rates due to re-rating and ordinary increases due to rising rate poundages. But re-rating is not a new idea. The original scheme of de-rating was opposed by the Party opposite and various attempts have been made since to modify or abolish it. The last of these was the Industrial Rating Bill presented by the honourable Member for Acton in another place in November, 1955, which we were discussing on previous Amendments. Five months earlier, the Government had announced their intention of including de-rating in the comprehensive review of local government finance which led to the presentation of the present Bill. In December, 1954, the honourable Member for Southall had presented his Industrial and Agricultural Rates Bill. Clearly, for example, it would be wrong to give relief where the letting took place after the Government had announced the review of de-rating. Since I think it is probably fair to say that re-rating has in fact been a live issue ever since de-rating was introduced, it seems equally wrong to give relief for earlier lettings. While, therefore, nobody can criticise a factory owner who has taken a chance and let at an inclusive rental, I must say I find it difficult to see why Parliament should intervene to rescue him because the chance has not come off.

Nor is the argument that this is merely the converse of the 1929 provision passing the benefits of de-rating to tenants conclusive. The de-rating of industry was, in a Parliamentary sense, a new idea. It was not, as re-rating has been, an event which had been lingering in the background for many years; and I think a distinction can fairly be drawn between the treatment of this issue on de-rating and on re-rating. In all these circumstances, I am afraid I can see no reason for withdrawing the Government's opposition to this Amendment. If there should be a change in circumstances and many other cases should come to light, then I quite agree that we might have to look at it again. At the moment, however, I am afraid the Government's decision must stand.

LORD OGMORE

Although the noble Lord has been answering the arguments in another place rather than those I ventured to put forward to-day, I take it that the Government will look sympathetically at the Industrial Estates Company when, as must happen, they are unable to pay the full per cent. interest which they have to pay to the Exchequer. I do not think I need pursue this matter further. The Government are the watchdog of the taxpayer, and as the taxpayer has to bear the burden, if the Government are satisfied, why should I argue? I merely say that I think it is an extraordinary position to be in: that the Industrial Estates Company, a public company, will have to pay more in rates than it will get in rent. The noble Lord's friend who has a Welsh-speaking wife is going to be in a very happy position. I do not think it matters whether he speaks English or not; it could not have been any better for him if he had spoken English. In the circumstances, having ventilated the matter, I do not think there is anything more I need say, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD MANCROFT

This is a drafting Amendment. I beg to move.

Amendment moved— Page 10, line 30, after (" ' levied ' ") insert (", in the second place where it occurs ").—(Lord Mancroft.)

On Question, Amendment agreed to.

Clause 9, as amended, agreed to.

Clauses 10 to 17, agreed to.

Clause 18:

General scope of Commission's proposals

18. The changes which may be put forward in proposals of the Commission on the review of any area are changes to be produced by any of the following means or any combination of those means (including the application of any of the following paragraphs to an area constituted or altered under any of those paragraphs):—

(d) the abolition of an administrative county or county borough and the distribution of its area among other areas being counties or county boroughs;

4.33 p.m.

VISCOUNT SOULBURY moved to add to paragraph (d): provided that not less than one administrative county shall be retained in each geographical county;

The noble Viscount said: Your Lordships will be aware that, excluding county boroughs within a county, the boundaries of the administrative county as a rule coincide with the boundaries of the geographical county. There are a few exceptions, such as Yorkshire and Sussex, which contain more than one administrative county, but I know of no exception the other way. In short, the geographical counties have always had at least one administrative county. This Bill permits the relevant Commission to recommend the abolition of a county as an administrative unit and to leave it, presumably, merely as a geographical unit without, so far as I can see, any administrative functions, or, indeed, further reason for its existence, except perhaps as an historical abstraction—a museum piece whose identity may be worth preserving as a vestigial relic of mediæval development. I can see no further place for time-honoured offices, the Lord Lieutenant, the High Sheriff or other offices or organisations which have been associated with the area for centuries. Incidentally, I think it is Clause 25 (3) and the Seventh Schedule which make provision for the preservation of mayors and deputy mayors, but of nobody else.

The Bill provides for the distribution of the area of a county among the areas of other counties, and I think it may well be expected to lead to the abolition not only of the administrative county but of the geographical county itself and thereby extinguish the valuable traditions of loyalty and co-operation that tie the people of a county together. Throughout the ages, in war and in peace, a man's pride in and affection for his county have been a considerable asset to the country. That is true of small counties as well as of large ones, and perhaps truer. I think one may sum it up by saying that local patriotism is a most important ingredient of national patriotism.

By Clause 17 the proposed change will be authorised if the Local Government Commission think it desirable in the interests of effective and convenient local government. But convenient to whom? Surely not to the local inhabitants or the local ratepayers—and, it seems to me, for obvious reasons. One would be that the new administrative centre is almost certain to be more remote from the majority of them than the existing centre. As we all know, the number of those persons to-day who can spare the time for local government work and to attend the formal committees of the council or for informal talks with the county officials is regrettably small, in spite of the comparatively easy access which most of them enjoy. It will certainly be far less convenient in the future, and we may anticipate that the number of those who are still sufficiently public-spirited to attend will gravely decrease. As regards those who are still able to attend, it is almost certain that they will find themselves part of a small and probably ineffective minority, in the presence of a majority many of whom will have precious little interest in the affairs of the small county.

It may be said, and with truth, that an amalgamation is more convenient for the central administrator and for the Ministry because, broadly speaking, the fewer and the larger the units with which the central authority has to deal, the easier the administration—the less correspondence and so forth. But I have yet to be persuaded that the convenience of the civil servant at Whitehall should take priority over the ratepayer in the county. It will also have to be shown that the proposed amalgamation is more effective in producing a more efficient and economical local government. Size, as most of us know front some experience or another, is by no means always coincident with economy, or with swift action or decision. Organisations can soon become too large and elaborate, clogged up with red tape, cumbersome, machine-like and inhuman. For the ratepayer in the small county there is no reason to suppose that the new administration proposed will be more efficient than the administration he at present enjoys, and it will certainly be more productive to him of vexatious delays and inconvenience.

As your Lordships know, a county councillor in a district knows most of the residents, the ratepayers in the villages and so forth, and has definite personal contact with them. That contact is more likely to produce closer scrutiny of expenditure and policy than is possible in a much larger area. The same applies to local contacts with officials. Moreover, as regards economy it is not at all unlikely that the augmented administration after amalgamation will before long fall victim to what is known as Parkinson's Law. In any event—this is the practical point of view I want to put to Her Majesty's Government—in England, at all events, the number of small units, except perhaps small boroughs, likely to fall within the mischief of Clauses 17 and 18 is almost negligible. I find it hard to think of many more than those mentioned by the noble Lord, Lord Silkin, in his speech on the Second Reading. The two instances he gave were the County of Rutland and the Soke of Peterborough. The latter is, of course, not a county, and is not touched by my Amendment. The noble Lord warned Her Majesty's Government of the howl that would arise if it is sought to join little Rutland with the adjoining county or to get rid of the Soke of Peterborough. I think the noble Lord is right. There is more than likely to be a howl with which a great many people will sympathise.

I ask Her Majesty's Government, is it really wise, either administratively or politically, to provoke that howl? Is it really, as a matter of practical politics, worth while, for the sake of dubious and uncertain gains in effectiveness and convenience to local government, to rouse and encounter the certain opposition, resentment and indignation of the ratepayers of the absorbed county? Amalgamation, no doubt, may produce in certain cases a tidier and neater administration, but to my mind it is a grievous pity to sacrifice what will be only a handful of historic communities just for the sake of tidiness and neatness. The noble Lord, Lord Silkin, went on as follows [OFFICIAL REPORT, Vol. 209, col. 644]: I venture to prophesy that in five years ' time, after the review has taken place, the County of Rutland will remain the County of Rutland and the Soke of Peterborough will remain the Soke of Peterborough. I hope the noble Lord is right, and it is not inconceivable that some day or other he may find himself in a position to ensure that his prophecy comes true.

In the meantime, however, it may be said that these small units such as Rutland and maybe one or two others are squealing before they are hurt, and that no Government would dream of authorising their amalgamation without. full consultation and inquiry. Well, my noble friend Lord Conesford has an Amendment on the Paper which will bring that into effect, either in those or in other words. But if the Government would accept my Amendment there would, of course, be no need for his, and no need for the expense and delay of the inquiry. In other words, my Amendment would be more in the interests of effectiveness and convenience. I hope, for that reason, that the Government will give a favourable hearing to it. I beg to move.

Amendment moved— Page 16, line 44, at end insert the said proviso.—(Viscount Soulbury.)

LORD MILVERTON

I rise to offer, very briefly, some objection to the Amendment which has just been proposed. I do not wish to depreciate in any way the strength of the arguments used by the noble Viscount, but there is another aspect to this question. The Amendment, if adopted, would prevent the Commission from carrying out a proper review of the administrative counties. It is true that it would prevent them from embodying Rutland in any other county for administrative purposes, yet there would be nothing to prevent the Commission from combining, say, East and West Sussex, or the three Ridings of Yorkshire, into a single administrative unit.

It has been suggested to me that the Amendment strikes at the root of the agreement between the local authority representatives which form the basis of the proposals in the White Paper (Command 9831) entitled Local Government: Areas and Status of Local Authorities in England and Wales. I have ascertained that the Association of Municipal Corporations—and they are surely entitled to some consideration of their views, especially in view of what I have just said—view this Amendment with considerable misgivings, and they feel that it would possibly cause a reopening of the whole question of the power of county councils to make proposals for the reduction in status of non-county borough councils and also lead them to ask for safeguards against a reduction in the status of county borough councils. I therefore suggest that the Amendment would not be a wise one to adopt.

THE LORD CHANCELLOR

My noble friend, Lord Milverton, has deployed the main argument but, with your Lordships' consent, I should like to elaborate it a little. The restriction which my noble friend Lord Soulbury proposes would be one on the effectiveness of the reviews, and it would be absolutely contrary to the basic objective of this Part of the Bill, which is to enable the whole of the local administrative structure in England and Wales to be reviewed and, where necessary, overhauled. My noble friend who moved the Amendment mentioned some remarks of the noble Lord, Lord Silkin. The whole basis of Lord Silkin's speech, as I understood it, was that this matter should have been considered by a Royal Commission, before a Bill was introduced, and that the recommendations of the Royal Commission should have been embraced in a Bill. I did not understand the noble Lord to be saying that it was wrong that the whole structure should be considered.

But the point that my noble friend Lord Milverton has made is surely very important. The objective of this Bill, that the structure should be reviewed and overhauled in the interests of effective and convenient local government, has not only been wholeheartedly accepted, but has been demanded. It has been demanded, first, by all the local authority organisations; secondly, by all political Parties; and thirdly, by responsible public opinion interested in this matter for many years. It was that demand which underlay the agreed proposals put to the Government by the local authority associations in 1955, the White Paper of 1956 and the many debates on local government that we have had. Indeed, as again my noble friend Lord Milverton has reminded the Committee, the Association of Municipal Corporations, representing the boroughs, have assented to the proposition, even though it means that certain ancient municipalities will lose their local government functions—although, of course, they will keep certain offices which are not connected with those functions. The County Councils Association, for their part, have equally accepted that administrative counties also must be subject to the change if necessary; and in their case no question of any non-local government functions arise.

When one has had that general acceptance, to introduce the limitation that my noble friend suggests would, I think, be wrong, and would certainly strike at the basis of agreement which has been come to by all local authorities and, as I say, all political Parties. But having said that, I want to make it clear to my noble friend that I sympathise with his objects. I sympathise with the importance of local patriotism; I sympathise with the importance of the convenience of the place of local government to the ratepayers and persons governed. Therefore I want to indicate again, as I did on Second Reading, how many and clear are the protections which the Bill gives against any derogation of these rights or conveniences. It is well understood that people do associate the administrative counties, although they are of modern origin, with the historic shire, and no one would want to see any administrative county or any other kind of local unit disappear without very good reason. That is why the Bill contains such full provisions ensuring adequate safeguards at all stages. No change can be proposed except in the interests of effective and convenient local government.

If one considers the inquiries of the Commissioners, that is not a matter of projecting the views of Whitehall; it is a matter of collecting the views of the persons affected on the spot. The regulations requiring Parliamentary approval will give guidance as to the matters to be taken into account in this connection, so that will come back to this House; and the guidance will include reference to the importance of considering the wishes and convenience of the inhabitants—the very point on which my noble friend expressed his fear. The character of an area is another of the points; and a third, of course, is the record of administration of an existing local authority, whatever its size or population.

That is one branch of the protection. But there is also the provision for each Local Government Commission to hold preliminary consultations locally, to circulate its draft proposals, to consider and confer on the comments of the draft proposals, and to submit to the Minister final proposals and a report in a form for everyone to see. Then, when everyone has seen them, and has been able to comment, the Minister must advertise and circulate them, and must consider objections. He would certainly hold a public inquiry into objections where the proposals of the Commissioners involved the disappearance of an existing county.

I will not say any more about an Amendment which we shall discuss further later on, but I say without any fear of contradiction at all that he would certainly hold an inquiry in this case. If, in the end, he decided to give effect to such a proposal, he would have to do so in an Order as far as possible dealing with that issue only, and he would then have to obtain the approval by Resolution of each House of Parliament. I cannot imagine a stronger series of protection, and I hope that when my noble friend has considered all these safeguards, he will come to the conclusion that no administrative county or any other well-respected local government institution, can possibly be eliminated lightly. It is too early to say whether any counties will in fact be eliminated at all. I am not going into that discussion; I think it would be wrong to do it at the moment.

LORD LATHAM

It would be very dangerous.

THE LORD CHANCELLOR

But it must be reviewed with one aim only in mind—namely, effective and convenient local government in the part of the county concerned. If the continued separate existence of any county, however small, can satisfy that test, it will have nothing to fear. But, equally, I say—and I am sure that the Committee will agree with me—that if it cannot satisfy that test, namely, that it gives effective and convenient local government, we should be all the more wrong to have singled it out for exception and not have it considered. That is the position, and I would ask my noble friend, especially in view of the first part of my argument, which was really a repetition of my noble friend Lord Milverton's account of the agreement, not to press this Amendment but to hold his fire for a later Amendment which I am sure he has in mind.

VISCOUNT SOULBURY

I am not entirely convinced by the argument of the noble and learned Viscount; I am slightly disappointed. On the other hand, my disappointment is alleviated by his expression of sympathy, and will be still further alleviated if the Government give a favourable reception to the Amendment which follows shortly in the name of my noble friend Lord Conesford, an Amendment which will make it quite clear, either in the terms in which it stands at the moment or in similar words, that the certainty of a consultation, a full public inquiry, in such cases is assured. For that reason, I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 18 agreed to.

Clause 19 agreed to.

Clause 20 [Special review areas: distribution of functions]:

4.59 p.m.

LORD HYLTON moved to add to the clause: (3) Nothing in this section shall prevent the Commission, in any case in which they think fit so to do, from putting forward a proposal that the special review area or the part thereof to which any proposals put forward under this section may relate shall form part of an existing administrative county.

The noble Lord said: Clause 20 deals with the distribution of functions in a special review area. This, of course, is a function of the new Local Government Commission when it is set up. The object of this Amendment is to ensure that, in dividing any special review area into units of local government, the Minister should not be precluded from proposing that the council of the county, part of the area of which is within the special review area, should be the authority to administer some of the functions of the first-tier authority within the special review area. I apologise for these somewhat technical phrases, but I think that the intention of this Amendment must be clear to noble Lords.

There are certain functions of first-tier authorities or county councils—call them what you like—which require a large geographical area over which to operate in order to get the most efficient results. To that I think all the noble Lords will agree, especially to-day, when the use of greatly increased quantities of machinery makes very small areas unsuitable for that particular function. One can think at once of several functions that come within that definition. I would suggest to the Government that the fire service, for instance, comes within that definition of a function that requires a very con- siderable geographical area to develop its full efficiency. If that were not so, the fire service would not have been put on a county basis not so many years ago. Because the small local fire brigades were found to be operating within small geographical areas, out of touch with their neighbouring fire brigades, the whole thing was put under the charge of the county council; and to-day these fire services operate on a county basis, rather expensively, but on the other hand, I believe, very efficiently.

Another service I can think of where, the same is true is the police service. Small units of police forces are not, I believe, considered to-day to be the most efficient units. That comes about for many reasons. One of the principal reasons, of course, is that there is not sufficient scope for the personnel to obtain experience within a small unit they have not the chance of being transferred from one town to another. Therefore, the bigger area is, in the opinion of many, desirable for the police forces.

The same point occurs in the legislation dealing with town and country planning. There again, in 1947 the Government put the main function of town and country planning on a larger geographical basis: they put it on counties. And only the other day in this House the noble Lord, Lord Silkin, said that he wanted even larger planning areas because, in his opinion, even counties were not large enough to fulfil all planning functions. If that is so, then I think a case can be made out that where the Local Government Commission, in a special review area, proposes to cut off parts of one county or parts of several counties in order to make some new local government authority, then it should not be precluded from recommending that certain functions should still remain with the larger geographical units, which in effect would be, in many cases, the existing county councils.

I do not know if this Amendment has the support of my noble friend Lord Milverton—if it has not, no doubt he will tell us later on—but I think there is a case to be made for giving the Commission power to look into this point, because, as the clause is at present drafted, the Commission is prevented from putting forward proposals on these lines. It should at least be entitled to do so, always provided that it thinks that the proposals would be appropriate to the special review area on which the Commission is reporting. I do not think I need add anything more, as I do not wish to detain your Lordships. I think the case is perfectly clear. I beg leave to move.

Amendment moved— Page 17, line 37, at end insert the said subsection—(Lord Hylton.)

LORD MILVERTON

I should not like to disappoint the noble Lord, and there are one or two points that I suggest ought to be considered. Although at first sight the object of this Amendment would seem to be to give greater flexibility to the powers of the Commission, it seems to me that in fact it strikes at the basis on which the reviews of the special review areas are to be undertaken. Each special review area is designated as such on the basis that all the authorities in the area need to be looked at together because they have common problems which are not shared by adjoining areas, whether they be rural or urban; and if the common problems extend into other adjoining areas there is provision in the Bill for these areas to be brought into the special review area. Having thus taken the special review area out of its existing local government surroundings so that it can be looked at as a whole—and, so far as it requires joint provision, enabling such provision to be made for it as a whole—it would be quite illogical, I suggest, once again to dismember the area by returning parts of it to adjoining administrative counties. That is the hesitation that I would suggest to the noble Lord's Amendment.

THE LORD CHANCELLOR

May I say, first of all, that I am in entire agreement with Lord Hylton's premise that the fire service, the police service and town and country planning require large areas. I had the honour to be responsible for the first two of these services for three years, and I am sure that anyone who has had either national or local experience would agree with him. Indeed, I think my recollection is right that after the fire service was denationalised by the Labour Government following the war there was no political argument about the need for large areas. On that point I do not think that my noble friend need have any apprehension. But, having admitted one of his premises, I have much more difficulty in connecting with that his conclusion that one ought to deal differently with conurbations, and that is a point which I should like to develop because I think it is a very important one.

The intention of Clause 20 is to enable a Commission to propose, as one of the possibilities for all or part of a special review area, a two-tier conurbation structure with a distribution of county and district functions designed specially for that conurbation, and different from the distribution of county and district functions in normal counties. It is only in giving this power for redistribution of functions that the clause adds anything that is not already contained elsewhere in the Bill. We have included that clause because we feel that the possibility of a special arrangement of that kind—the conurbation county—cannot be ruled out. But it would be a big step to take and, in our view, would be justifiable only where the local government circumstances of the conurbation concerned had two characteristics: that it was markedly homogeneous and, secondly, markedly self-contained and (this is the point I would ask my noble friend to note) different from the circumstances of the surrounding areas.

If your Lordships will forgive the personal intrusion, I may tell you that I lived in and was for nearly twenty years Member of Parliament for one of the Liverpool Divisions, and I am therefore very familiar with the Merseyside special review area which noble Lords will find dealt with in the Third Schedule, paragraph 5, which says: The Merseyside Area shall consist of the county boroughs of Birkenhead, Bootle, Liverpool and Wallasey, the following country districts in the county of Chester, that is to say the boroughs of Bebington and Ellesmere Port and three of the Wirral areas. I would suggest to my noble friend that the Merseyside fulfils my qualifications of being homogeneous, self-contained and different; and it is the difference that I would again stress, for it is quite different from the rest of Lancashire. I do not know whether my noble friend is familiar with Lancashire, but if he considers the district North of Preston, around Ulverston and Barrow-in-Furness, I believe he will agree that that is completely different from the Lancashire towns constituting the special area with which we are dealing.

It is in these circumstances, where one gets homogeneity and where the area is self-contained and different, that a two-tier local government structure for the area should clearly not contain any pockets of one-tier government. Hence the requirement in Clause 20 that the powers of the clause should be exercisable only in the case of a "continuous county"—that is, that any county boroughs in the area should be demoted.

Even more important, if the area really has such homogeneous and distinctive features as to justify demoting its county boroughs and creating a local government organisation containing a specially designed distribution of functions, it follows logically that there should be a self-contained organisation for that area alone. And that is why we find that Clause 20 has been drafted in such a way as to allow it to be used only in the case of a new county whose boundaries are confined to the special review area. In other words, Clause 20 provides for a special new kind of distribution of functions, with the elimination of county boroughs as a condition thereof, only where there is to be a new and self-contained county of a special kind—a conurbation county covering the conurbation only. In all other cases the distribution of county and district functions will have to follow the pattern applicable to the country as a whole, and any demotion of county boroughs will have to be justified otherwise than by purely conurbation considerations. I would stress that point.

It is difficult not to be technical on these matters but I hope I have made them clear. In one case there is the homogeneous, distinct and different area which constitutes a conurbation, and there we shall have the special distribution of functions and the demotion of county boroughs. To those of us accustomed to the grandeur of county borough status it must not be forgotten that the demotion of a county borough of the character of, say, Liverpool or Birkenhead is a very serious matter. That is what the conurbation will include. On the other side, where we have no conurbation, there will be the usual structure where no county borough could be demoted unless there were reasons of a totally different character.

Apparently the Amendment of my noble friend contemplates a situation in which, first, the county boroughs in a conurbation would be demoted, and secondly, there would be a special new distribution of their functions devised so as to give them more—or less—powers than those of the usual county district, merely in order to throw them, with the rest of the conurbation, into one of the existing counties. As I have indicated, however, with regard to Lancashire, which happens to be one I know very well, the existing counties contain in every case large areas of mixed urban and rural countryside which cannot be described as homogeneous with the conurbation areas or possessing the same distinctive features and problems. I believe that applies in every case. I know South East Lancashire area fairly well because I was Recorder of Oldham for six years; and I know the West Riding because a long time ago I had a constituency there so I am fairly familiar with these areas.

What the Amendment contemplates would therefore turn Clause 20 on its head. We should still start with the proposition that a conurbation area had to be found to have such distinct homogeneous features as to need its own special treatment, but the treatment we should then give it would be to force it into an ordinary existing county (subject to some adjustment of the powers of some of the districts) with most of which it has nothing in common. I would ask my noble friend to consider my example and assume that the Commission decide that there should be a conurbation for Merseyside. On my noble friend's suggestion we should have the arrangement of the functions for Liverpool, Birkenhead, Bootle, and Wallasey and then the Lancashire County Council who are concerned with the area north of Preston—Ulverston, Barrow and the like—it having been possible to give to that county council the police or fire services. When one considers the problem of the conurbation, I do not think that that is a practical solution.

With great respect, I consider the Amendment raises another difficulty. Clause 20 (and the Amendment does not alter the clause in this respect) applies only on the condition that the county boroughs in the conurbation being dealt with are all, as I said, demoted. It is one thing to demote all the big and well-established county boroughs of a conurbation in order to incorporate them in a new county created specially for the conurbation area; but it is quite another to demote them merely in order to include them as districts (whether with more or less powers than normal districts) in a dressed-up existing county stretching a long way outside the conurbation and consisting of quite different communities, many of them rural.

To take my example, suppose you find the need for a conurbation on Merseyside, that implies that you demote Liverpool. But if this Amendment is carried, it will make it possible, not that Liverpool should he part of the conurbation with a special area, but that it should be part of the area of Lancashire County Council, with the north of which it has no community of interest at all. To take away and demote a borough in order to do that would, I think, be asking for trouble from the point of view of future co-operation. May I take another exaniple?—I do not want you to think I am pursuing my own "King Charles's head" of Lancashire. Let me turn your Lordships' attention to the Midlands. It is conceivable—I will put it no higher that that—that a case may be made for turning Birmingham into a special district of a special urban county created for the West Midlands conurbation, as is dealt with in the Schedule. That could be done under Clause 20 as it stands. But it would surely be absurd to seek to demote and convert Birmingham into a district of Warwickshire on the plea that this was needed because of the special distinctive and homogeneous nature of the West Midlands conurbation. That is the sort of thing that this Amendment would imply.

With an apology for trespassing on your Lordships' time, may I sum up by saying that Clause 20 is addressed solely to the case where a conurbation is found to have such a homogeneous and self-contained character as to require throughout a special two-tier structure of its own—I repeat, of its own. If there are other good grounds for not giving a separate organisation of its own—for example, because that would mean carving off so much from an existing county as to leave a rump that was neither viable in itself nor suitable for amalgamation with another county—that point would have to be considered. Clause 20 is not the only solution, nor even necessarily the best solution, for a conurbation: it might in those circumstances be found best, on balance, to make more limited changes. But that is no justification for amending Clause 20 so as to mean something quite other than what it is designed or needed for. There is provision for demoting a county borough, and putting it into an existing county, in Clause 18. If that is really what is wanted in any particular special review area, that is the provision which should be used; and if it is right that the county borough should go as a district into the existing county, it is also right that it should get no more and no less functions than are available to the other districts elsewhere in the county's area.

That is the one problem. The other is the conurbation problem, and in regard to that I suggest to my noble friend that the solution which he puts up as a possibility is not compatible with the underlying idea which the Commission may follow if that is their wish. Therefore, I would ask him not to press the matter—or, rather, I would put it more moderately than that: I would ask my noble friend Lord Hylton to consider in cold print what I have said, I am afraid, in a somewhat lengthy and necessarily technical form. If, having done so, he still has any worry, I shall be glad to see him before Report stage; or, if he feels that I have not been convincing, he can put down an Amendment on the Report stage and I will deal with any point then.

VISCOUNT STANSGATE

I am in no way qualified to deal with the technical arguments so industriously and effectively put forward by the noble and learned Viscount the Lord Chancellor. But what I do not understand is this: Why is it, with all that has been said in their minds, that I have a letter from the Essex County Council again begging me to support this Amendment? I am not an expert, but why do they want it supported if all the arguments we have heard are good?

LORD HYLTON

I should like to thank the noble and learned Viscount for his most lucid and careful explanation of the Government's view. If I may venture to say so, I should like to suggest that he has rather blown up and inflated this Amendment far further than it was the intention, at any rate of the mover, to inflate it. In my opinion, and if I am correctly informed, all this Amendment seeks to do is to give the Commission power to make a recommendation for more convenient and economical administration; and I ventured to mention two or three functions. If the conditions are right—that is to say, if the conurbation county is such that these functions could be more economically and efficiently administered by one of the former county councils—it seems to be reasonable that the Commission should be given power so to report to the Minister. That is all that this Amendment, in my humble view, seeks to do. Of course, Essex (if I may be allowed to refer to Essex) is a county that might be affected by the creation of a conurbation county, and therefore has a particular interest in preserving, let us say, parts or the whole of its county police force. That is my suspicion in this matter. Of course, it may be that the existing police force would be the best and most efficient form of police protection to deal both with the administrative county and with the new conurbation county. However, the noble and learned Viscount has said that he will reconsider some points, and in view of that I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 20 agreed to.

Clause 21 [Procedure for Commission's reviews]:

5.29 p.m.

THE LORD CHANCELLOR moved, in subsection (3), after "then" to insert "either—(a)".

The noble and learned Viscount said: This is one of a group of linked Amendments all serving simply to clarify and put beyond doubt the position arising where a Local Government Commission or county council, when carrying out a review under the Bill, decide not to make any proposals for a change in the area reviewed. This is admittedly a fairly remote possibility so far as county reviews are concerned, but it is not so remote as regards reviews by the Commissions, since these latter bodies will be concerned (outside the special review areas) only with the numbers and boundaries of counties and county boroughs. The effect of the Amendments is to make it quite clear that local authorities and the public, in any review area where no proposals are made, are notified of this fact and are still enabled to see the reviewing body's report. I do not think I need to go into this Amendment any further. I am sure that it will commend itself to the Committee. I beg to move.

Amendment moved— Page 18, line 11, after (" then ") insert (", either—(a) ").—(The Lord Chancellor).

>On Question, Amendment agreed to.

THE LORD CHANCELLOR

This Amendment is consequential. I beg to move.

Amendment moved—

Page 18, line 13, leave out (" specifying ") and insert (" or (b) if the Commission have not formed the opinion that there are changes which are desirable in the interests of effective and convenient local government, shall notify the said authorities and bodies that they have no draft proposals to put forward, and in either case shall specify ").—(The Lord Chancellor).

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This Amendment is consequential. I beg to move.

Amendment moved— Page 18, line 14, after (" proposals ") insert (" or, as the case may be, as to the desirability of proposals being put forward by the Commission ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This Amendment is also consequential. I beg to move.

Amendment moved— Page 18 line 19, at end insert (" if any. ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This Amendment is consequential. I beg to move.

Amendment moved— Page 18, line 21, leave out (" preparation of draft proposals ") and insert (" action taken by the Commission under subsection (3) of this section ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This Amendment is another consequential Amendment. I beg to move.

Amendment moved—

Page 18, line 40, at end add— (c) if the Commission notify local authorities that they have no draft proposals to put forward, the Commission shall give public notice thereof ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 21, as amended, agreed to.

Clause 22 [Commission's reports to Minister]:

THE LORD CHANCELLOR

This Amendment is likewise consequential. I beg to move.

Amendment moved—

Page 18, line 41, leave out subsection (1) and insert— (" (1) When on any review the Commission have completed their proceedings under the foregoing section, they shall submit to the Minister a report on the review together with the proposals they have formulated or, as the case may be, a notification that they have no proposals to put forward. "). (The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This Amendment is consequential. I beg to move.

Amendment moved— (5) The Minister shall secure that the report of the Commission on any review, together with copies of the proposals of the Commission or, as the case may be, their notification that they have no proposals to put forward, is furnished to all local authorities in the area to which the review related and to any other public authorities appearing to him to be concerned, that public notice of the submission of the report and proposals or notification is given and facilities are provided for enabling members of the public to inspect the report and any proposals, and that a time is fixed within which representations may be made with respect to any proposals by any local or public authority or member of the public. "—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 22, as amended, agreed to.

Clause 23 [Power of Minister to give effect to proposals]:

THE LORD CHANCELLOR

This Amendment, too, is consequential. I beg to move.

Amendment moved— Page 19, line 17, leave out subsection (2).—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This Amendment is consequential. I beg to move.

Amendment moved— Page 19, line 27, leave out (" the foregoing subsection ") and insert (" subsection (5) of the foregoing section ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

5.32 p.m.

LORD CONESFORD moved to add to subsection (3): Provided that a local inquiry shall in all cases be held where the abolition or amalgamation of an administrative county or county borough is proposed.

The noble Lord said: The principal object of this Amendment is to make certain that a historic county shall not cease to be a separate unit of local government, if it objects, without a local inquiry. That proposition could be commended briefly in any event, but I think that my task is made all the easier by the useful debate which took place a short time ago on the Amendment of my noble friend Lord Soulbury, in which the case for the Amendment I am now proposing was made by my noble friend and by my noble and learned friend the Lord Chancellor in his very clear reply.

My noble friend's Amendment would have prevented, had it been accepted, a historic county from ceasing to be a separate unit of local government in any event. Her Majesty's Government thought that that would be going too far, but, in seeking to take away any fears that my noble friend might have, my noble and learned friend was good enough to state the various safeguards that existed in the Bill, which, in his submission, would prevent any serious risk of a county ceasing to be a separate unit of local government without the most careful consideration. The list of safeguards given by my noble and learned friend included this very safeguard of a local inquiry. Thus we have an admission in both Houses that the inquiry for which I seek ought invariably to be held.

In another place the case of Rutland was put in the debate on Second Reading by my honourable friend Sir Roger Conant, the Member for the area concerned, and in his reply the Parliamentary Secretary gave a specific assurance that a local inquiry would certainly be held in such a case. I need not trouble your Lordships with further particulars of that undertaking, because it was repeated in express and satisfactory terms by my noble and learned friend to-day in reply to the Amendment of my noble friend Lord Soulbury. We now have an express statement by Her Majesty's Government in both Houses that a local inquiry will invariably be held in such a case as that for which I seek to provide.

The only question that can arise is whether the local inquiry which, by universal admission, ought to be held, ought to be expressly provided for on the face of the Statute. I do not think that in any quarter of the Committee there will be any doubt about that. If it is universally admitted that in such a case a local inquiry should invariably be held, the Statute ought so to provide. It should not be assumed that all Ministers will invariably be wise, though I do not think that any Minister would be likely to be so foolish as not to grant a local inquiry in such a case. Nevertheless, I think that all noble Lords will agree that the matter should be plain on the face of the Statute.

The only matter that remains is the question: are the words I propose the most suitable for effecting this object? I have far too long an experience in both Houses in amending Bills to assume for one moment that the words of an amateur draftsman will be good enough. Therefore, if my noble and learned friend assures me that he will provide that there shall be a local inquiry in every such case, but that my words are not the most suitable for effecting that object, I shall have no hesitation in following his advice. I beg to move.

Amendment moved— Page 19, line 33, at end insert the said proviso.—(Lord Conesford.)

THE LORD CHANCELLOR

I am going to accept the Amendment in principle, but I do not want to stop the noble Lord, Lord Ogmore, from speaking on it.

LORD OGMORE

I was just going to support the noble Lord's Amendment. I have been asked by the Merionethshire County Council to say a word on this matter for the reasons which the noble Lord gave. There has been some misunderstanding on the part of some of my noble friends about the word "where". They read that as meaning place, but in fact I think it is time and should really be "when" —"whenever the abolition or amalgamation …" and so on. I think that the noble Lord made it clear in his speech, but it was not clear to some of my noble friends from the Amendment. With that rider, I support what the noble Lord has said and hope that the Government will accept his suggestion.

LORD MILVERTON

Before the noble and learned Viscount replies, may I ask one question? I agree with all the aims and objects of the Amendment, but I wonder whether writing it into the Bill does not weaken the case for an appeal by a local authority by in effect challenging Parliament. As in all cases of inquiry, if certain things are specified and others are not, when one of the unspecified things has to be inquired into the case seems to be weakened.

THE LORD CHANCELLOR

I am grateful to my noble friend Lord Milverton for raising that point, because it is one of the matters which I was going to crave in aid in order to ask my noble friend Lord Conesford not to press these terms but to allow me to find some words which would deal with all the requirements. I accept the Amendment in principle. One point is that which my noble friend Lord Milverton has raised. We in the legal profession put it rather barbarously: inclusio unius, exclusio alterius—and I have always been rather doubtful about these Latin quantities. I should like to consider that point. I should also like to consider this aspect, which may interest my noble friend: that if we are going to do it with counties and county boroughs, we ought to consider non-county boroughs as well. I will take into account the consideration my noble friend Lord Milverton has advanced, and try to find an Amendment which will not create the mischief which he has mentioned, while satisfying the point of my noble friend Lord Conesford. Therefore, I hope the Committee will not tie me to the actual form of words, but I shall find the best I can before the next stage of the Bill.

LORD CONESFORD

I thank my noble and learned friend the Lord Chancellor. I would assure the noble Lord, Lord Ogmore, that the word "where" in my Amendment had the meaning which he attributed to it; and it was because I had in mind the point raised by my noble friend Lord Milverton that I was conscious that the words of my Amendment might be imperfect. I am grateful to my noble and learned friend for his undertaking and in the circumstances I ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

THE LORD CHANCELLOR

This is a drafting Amendment which is consequential on the fact that Clause 23 (6) was altered in another place so as to include lines 7 and 8 the words: or the constitution of a new county borough by amalgamation of two or more non-county boroughs. I need not detain your Lordships further on this Amendment. I beg to move.

Amendment moved— Page 20, line 14, after (" district ") insert (" or, as the case may be, of any of the boroughs to be amalgamated ").—(The Lord Chancellor.)

On Question, Amendment agreed to

Clause 23, as amended, agreed to.

Clause 24 [Power of Minister to initiate changes in default of proposals of Commission]:

THE LORD CHANCELLOR

This is another of the group of linked Amendments that I mentioned a few moments ago. I beg to move it as a consequential Amendment.

Amendment moved— Page 20, line 19, leave out (" any ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This is a consequential Amendment. I beg to move.

Amendment moved—

Page 20, line 34, at end insert— (2) If, in a case where the Commission have notified the Minister that they have no proposals to put forward, the Minister is of opinion after consideration of the report of the Commission and of any representations made to him by any local or public authority or member of the public and after consultation with all local authorities in the area to which the review related, that provision is required for the purpose of securing the effective and convenient organisation of local government in the area reviewed, the Minister may make proposals for the said provision. "—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 24, as amended, agreed to.

Clause 25:

Variation of special review areas.

(2) If for the purposes of their review of a special review area it appears to the Commission expedient that the whole or any part of a county district adjoining the special review area, or of the remainder of a county district part of which is in that area, should be treated as if it were comprised in that area, they may after consultation with the councils of the county and of the county district notify the Minister and the councils of the county district and of the county within which it is comprised that they propose so to treat the county district or part, and unless within two months from the notification the Minister directs them not to do so they shall so treat the district or part and proposals may be made, and given effect to, as if it were comprised in the special review area.

5.45 p.m.

LORD CHORLEY moved, in subsection (2), after "area", where that word occurs a third time, to insert: "or contiguous to such district ". The noble Lord said: This clause deals with the special review areas and, as your Lordships appreciate, gives the Commission the power to make recommendations in regard to a number of areas which are, in effect, the conurbation areas. I am interested in this problem primarily from the point of view of one of the most important of these conurbation areas; that is, the Birmingham area, which has a valuable green belt that has been particularly in the minds of those of us who have been concerned and active in the amenities movement over these last years. I well remember the time when I had the great pleasure of being taken by the late Sir Patrick Abercrombie, one of the great Englishmen of our time, to see the working plan which he had put up to the local authorities concerned for the establishment of a green belt, particularly along the southern side of this Birmingham conurbation.

Birmingham is not peculiar in this matter, however. There are other important cities, and particularly perhaps the London area itself, in which the green belt is of real importance and has already proved of the greatest benefit to the people. It does not seem to me, and to other people who are concerned with this problem, that the Commissioners are given quite sufficient latitude in making their recommendations. It is true that they are, in effect, entrusted with the problem of tidying up, as it were, the boundaries. In the Birmingham area, for instance, there are involved six county boroughs, nine boroughs, ten urban districts and two parishes of one rural district, together with three county councils. Obviously this is an important area and there is a dominating problem of land usage. The centre of it is no doubt the problem of Birmingham's overspill population, which is already estimated at something like 100,000 to 120,000—more than Birmingham has housing sites to accommodate.

If this problem is to be dealt with in a comprehensive and sensible manner, without the sacrifice of the green belt on the south side of Birmingham, which I am sure would be a crying shame, it seems that the Commissioners ought to be given more elastic powers to consider the area as a whole and to go outside the county districts immediately adjacent to Birmingham and the other parts of this conurbation. I believe it is only in that way that the green belt can be saved from substantial depredations into it. Looking at it from a wider point of view, I think it is only in that way that the population problem of Birmingham, in particular, can be dealt with. The city is already, I think, the largest city in England, and I submit that it would be a mistake to allow it to extend its population immediately outwards. More sensible planning proposals would be to establish satellite towns of the kind that have been established outside London. This central conurbation in England has reached a stage when it ought to be, I submit, dealt with in much the same sort of way; and therefore the review Commissioners ought to be given much wider terms of reference in order that they can consider the whole matter.

In another place an attempt was made to give them this wider power by omitting this subsection (2) and leaving it, as it were, at their discretion. If your Lordships look at subsection (2) you will see that the Commission are given power only to consider districts adjoining a special review area, and any district adjoining a special review area must be a district within the green belt—that is, of course, in the individual case of Birmingham. It was suggested in another place that this condition attached to the Commissioners' review of the situation should be left out, but that proposal met with the reply that this was rather absurd, because they might then go any distance, even 100 miles. I do not think the Amendment put down was pressed, or at any rate it was not satisfactorily answered, so far as I know, and I have tried to get over this problem by limiting the review area, so that it could not be 100 miles or some very wide area of that kind, yet allowing the Commission to go a little further than the adjoining districts and as far as districts which are contiguous to the adjoining districts. I think that would, on the whole, enable them to go to the other side of the green belt. At any rate, it would certainly widen out their terms of reference and put them in a much better position for making a review of the whole situation, which is surely what one needs.

This is, no doubt, very amateur draftsmanship on my part, and I should welcome an indication of opinion from Her Majesty's Government that they are in sympathy with this proposal and that they would be prepared to take over the problem of the draftsmanship, which could be done, of course, at the next stage of the Bill. I am entirely in their hands from that point of view, but meanwhile I hope that I have said enough to convince the noble and learned Viscount and the Committee that this is a very reasonable proposition and one which ought to be accepted. I beg to move.

Amendment moved— Page 21, line 19, after first (" area ") insert (" or contiguous to such district, ")—(Lord Chorley.)

THE LORD CHANCELLOR

My difficulty here—because I should like to help the noble Lord after the most conciliatory way in which he has moved the Amendment—is that the problem is not what territory should be added; it is what territory should be added without reference to Parliament. Clause 25 (2) is to enable the Local Government Commission for England, when making proposals for changes in the local government pattern of a special review area, to extend slightly the scope of their proposals so as to cover fringe territory which, though not in the actual area designated for special review, would nevertheless best be covered by the same set of proposals. For example, it may be found that just on the fringe of the special review area there is new development which is really an extension of the conurbation and should be dealt with as part of it. The Commission are empowered to do this, subject to local consultation and to veto by the Minister, without the necessity for getting an order formally varying the special review area's boundaries. In other words, they are allowed a certain degree of flexibility in observing the limits within which Parliament, in the Bill or on an order under Clause 17 (2) or Clause 25 (1), has decided that the special review area provisions should apply.

I think it is important that the Commission's discretion to stray beyond the special review boundaries agreed by Parliament should in some way be limited to the sort of cases where it is really justified, and that is the problem in front of us. These cases could arise only where all or part of the odd district or rural parish just outside the special review area's boundaries is found in the course of the review to be so nearly an attached fringe of that area as to be much more suitable for treatment along with the conurbation than with places outside it. That is why Clause 25 (2) is so worded as to allow the Commission, as it were, to stray beyond the terms of reference, but only to the extent of one district from the special review area's boundary, or, where the special review area takes in part only of a district, to that district's outer boundary.

The Amendment seeks to widen that discretion, and, apart from certain difficulties in the wording to which the noble Lord, Lord Chorley, has very modestly referred, its apparent intention is to enable the Commission effectively to extend the special review area not merely by the width of one district but by the width of nearly two districts where one is partly within the area and one is not. I have already referred to the five special review areas scheduled in the Bill, and the only type of case of a district partly inside and partly outside is where the special review area includes a small bit of territory at one end of a rural district. The Amendment would, therefore, in practice enable the Commission, without any prior reference to Parliament, effectively to extend a special review area in any direction by nearly all of one rural district plus the whole width of the district beyond it. I think that is ping too far.

In our view, the extension of a special review area on that scale should not be left to the discretion of the Commission or even the Minister; it should be a matter referable to Parliament. In other words, if it seems to the Commission to be needed, they should recommend it to the Minister under Clause 25 (1), which is provided for that purpose, and then if, after the Minister has had a chance of local consultation, he agrees to the extension, he must make an order and submit it to Parliament for rejection or acceptance. Long and bitter experience of dealing with questions of this kind has, I think, made all of us decide that in the end it is better, when you are in any doubt, to refer it to Parliament and let Parliament have its say. While I am not objecting in any way to the ideas that the noble Lord, Lord Chorley, promulgated, I think this is going too far, because, as one knows, there are very big rural districts. I would ask him to consider what I have said and see whether, on reflection, he does not agree that this is the sort of thing, where we want to take in a second district, in which it would be better for Parliament to have its say.

LORD SILKIN

I do not want to keep the House very long on this Amendment. I see the force of what the noble and learned Viscount has said. Nevertheless, there may be cases where it is desirable, in the interests of efficient government, that an area beyond what is contemplated in this subsection should be included. It would be a great pity if we were to preclude ourselves entirely from power to take it in. It may be that the Amendment goes too wide, but if the noble and learned Viscount would look at the subsection he would see that there are ample safeguards against the Commission's going too wide. They have to consult with the local authorities concerned, with the county council and the county districts, and then the Minister virtually has to give his approval. Unless that is done they cannot take into consideration these other areas. I cannot myself think of any particular case where it is desirable, but with the developments that are taking place all over the country I should think there might well be an odd case where it would be a good thing that that should be considered in the special review. Therefore, I hope that the noble and learned Viscount has not closed his own mind to the possibility of slightly amending this provision so that it can be done in the exceptional case.

LORD CHORLEY

I entirely accept what the noble Lord has just said. The noble and learned Viscount did not deal with the green belt aspect of this matter which, in a sense, is a subsidiary aspect. While I appreciate the constitutional difficulties which he has indicated so clearly, I should like to press him to see whether something cannot be done. If, in fact, this biting into the adjacent areas on the South side of Birmingham takes place, it can be only at the expense of the green belt. It would be such a pity if the green belt, which has with such difficulty over the years been secured around this enormous centre of population, should be frittered away in this manner just because of these, in effect, constitutional difficulties which have been indicated. I am sure that the noble and learned Viscount, with the assistance of the able people in the Ministry, should be able to find some solution which would meet the planning difficulties in the area and at the same time give an opportunity to preserve the green belt. Having said that, I would beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 25 agreed to.

Clause 26 [Provisions as to joint boards]:

6.3 p.m.

THE LORD CHANCELLOR

This Amendment is consequential. I beg to move.

Amendment moved— Page 21, line 36, leave out from (" board ") to (" proposals ") in line 37 and insert (" the power of the Commission or Minister to make proposals shall include power to make ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This, too, is consequential. I beg to move.

Amendment moved—

Page 22, line 3, leave out from beginning to (" proposals ") in line 4 and insert— (" (2) The power of the Commission or Minister to make proposals on the review of a special review area shall include power to make ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 26, as amended, agreed to.

Clause 27 agreed to.

Clause 28 [Holding of reviews by county councils]:

On Question, Whether Clause 28 shall stand part of the Bill?

LORD ADDINGTON

My experience in local government, which has been a major activity of mine for some considerable time, has been in the countryside, and the village in which I have lived most of my life has now, all told, about eighty inhabitants. I therefore feel strongly that local government should be based upon the parish—that is, upon the smallest unit. I think that a village is an entity, and that those on the council, or even a parish meeting, should be given worthwhile and useful functions to perform and should be able to convey to higher authority the needs and wishes of the parish. I trust that, normally, a parish will not be amalgamated, abolished or grouped with another parish, as is possible under paragraphs (d), (e) and (f) of subsection (3) of this clause. I fully realise that, in a few cases, there may be exceptional circumstances. Under subsection (4) of Clause 29 even a parish meeting, if it maintains an objection, can require the Minister to hold a local inquiry. But it is probable that there will be a good many conferences and consultations between, on the one hand, the Minister and his advisers and, on the other, those who are to conduct these reviews of districts, and some general directions and guidance may be given on this. I trust that the Ministry will feel able to emphasise the point I have endeavoured to raise.

THE LORD CHANCELLOR

I am glad to be able to assure my noble friend Lord Addington that the Government share his anxiety to preserve and foster the usefulness of the parish council system in rural areas. I do not know whether the noble Lord is aware of this fact, but some years ago, when I was Home Secretary, I had the honour of being asked to speak to the Parish Councils Association. I was most impressed, not only by the variety of subjects discussed but by the vigour and strength of the feelings held upon them. The Government have welcomed, and assisted in, some modest but useful additions to parish council powers that have reached the Statute Book in recent years.

With regard to the point that my noble friend raised, under the Bill parishes must be subject to a review and alterations, where necessary, just like any other kind of local government unit—as, indeed, they are already under existing law. I assure my noble friend that there is no intention to go in for amalgamations and so forth for their own sake. The county councils who are to carry out these reviews are given their objective quite specifically by the Bill itself, in Clause 28 (1). Their proposals must he aimed solely at effective and convenient—I repeat "and convenient"—local government, and at that alone. The procedure of the county reviews ensures that there must be extensive consultations and conferences before any proposals are submitted to the Minister; publicity and an inquiry into any local objections before the Minister makes an order, and an opportunity for Parliament to reject the order if it thinks fit. When the time for the county reviews comes, my right honourable friend the Minister will, as in the case of previous county reviews, issue a circular of guidance to the local authorities, and undoubtedly this will draw attention to the value of the parish council system in rural communities and to the importance of ensuring that the size and boundaries of the parishes are realistic in relation to the communities in them. I hope that that will reassure my noble friend on the points which I am glad he raised.

LORD ADDINGTON

I am very grateful to the noble and learned Viscount.

Clause 28 agreed to.

Clause 29 [Procedure on county reviews]:

THE LORD CHANCELLOR

This Amendment is consequential. I beg to move.

Amendment moved— Page 24, line 9, after the second (" and ") insert (" any ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This Amendment is designed to effect a modest improvement in the procedure for county reviews. Clause 29 (2), as at present drafted, requires a county council, having completed a review of its districts, to submit to the Minister a report and any proposals for change and also to send copies to the county district councils appearing to the county council—I repeat and emphasise the words "appearing to the county council"—to be concerned. That wording is similar to that of a comparable provision in the 1933 Act. We have considered the matter, and on consideration we feel that all the county district councils in the area reviewed should be entitled to receive copies of the county council's report and any proposals: it should not be left for the county council to decide which of them should be regarded as being concerned. The improvement which will be effected by this Amendment is in keeping with a similar Amendment incorporated in Clause 23 (2) in another place to entitle all the local authorities in a review area to be sent copies of the report and any proposals of the Local Government Commission. I beg to move.

Amendment moved— Page 24, line 10, leave out from (" districts ") to (" and ") in line 11 and insert (" in the area to which the review related, ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This is a consequential Amendment. I beg to move.

Amendment moved— Page 24, line 12, leave out from (" notice ") to (" proposals ") in line 14 and insert (" that the report has been submitted to the Minister, stating whether any proposals have been made and that copies of the report and any ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This is also a consequential Amendment. I beg to move.

Amendment moved— Page 24, line 15, leave out the second (" the ") and insert (" any ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This also is a consequential Amendment. I beg to move.

Amendment moved— Page 24, line 22, leave out (" the proposals ") and insert (" any proposal submitted to him by the county council ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

This is a further consequential Amendment. I beg to move.

Amendment moved— Page 24, line 35, leave out (" and proposals ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 29 as amended agreed to.

Clauses 30 to 37 agreed to.

Clause 38 [Consequential and transitional arrangements relating to Part II:]

6.13 p.m.

On Question, Whether Clause 38 shall stand part of the Bill?

LORD CHORLEY

I should like to say a word or two about this clause, and to ask the spokesman of the Government whether they could consider the deletion, in the next stage of the Bill, of subsection (6). As your Lordships will see, the point very shortly is that due to this subsection the boundary extension will not carry with it an extension of the passenger transport area of the local authority which operates a passenger transport service in the particular district, without their going through the quite possibly difficult process of getting a consent or permit from the Traffic Commissioners.

This subsection was inserted in the Bill in another place only at a very late date, and without the usual consultations which take place with the organisations which represent the local authorities. There are, although not a large number, some district councils which run transport undertakings, and they are rather upset by the interposition of this subsection in the Bill at this late date. They very naturally take the view that when they have an effective transport system of this kind centred in the chief population area of the district in question, it is natural and sensible that on an extension of the area the transport undertakings should be extended as well. I am sure that commonsense argument is entirely on their side, and it seems that this subsection must have been inserted rather hurriedly and without the consideration which ought to be given in a case of this kind. I would suggest to the Government that it would be wise of them to take this subsection out at the next stage of the Bill, and I should like to have their reactions to this suggestion.

THE LORD PRESIDENT OF THE COUNCIL (VISCOUNT HAILSHAM)

I think the noble Lord who has just spoken is mistaken both as to the history and as to the purpose of this subsection. The subsection was put into the Bill simply to ensure that the position as regards public transport operating rights, and the need to get consents and licences for their extension, will be just the same and not different on the extension of a borough by order under a Bill as it has in practice been for several years past on borough extensions effected by Private Bills or by orders under existing legislation.

A deputation from the Municipal Passenger Transport Association recently saw the Parliamentary Secretary to the Minister of Transport about this matter, and the position was fully explained to them. The Government fully realise that the whole question of road traffic licences and consents for local authority transport undertakings is somewhat controversial, but this subsection does not enter into that controversy. Its purpose is simply to continue the present practice in borough extensions. That is really the answer to the noble Lord's criticism. So far as the considerations of common sense are concerned, I should have thought that it was obvious, under the system of licensing that, so far as I am aware, we have now obtained in passenger transport throughout the country, that the mere fact of the extension of the local government boundary did not automatically dispose of the position as regards transport for which arrangements had already been made.

LORD CHORLEY

I am grateful to the noble Viscount. No doubt what he has said will reach the organisations which are interested in this problem and will be given due weight by them.

Clause 38 agreed to.

Clauses 39 to 42 agreed to.

Clause 43:

Boundaries between English and Welsh areas not to be affected

43. Nothing in this Part of this Act shall be construed as enabling any alteration of areas to be made so as to alter the boundary between an area in England and one in Wales.

VISCOUNT BRIDGEMAN moved to leave out Clause 43. The noble Viscount said: On the Second Reading of this Bill I questioned the desirability of Clause 43. Now, on the Committee stage, I am not going to revert to that point, but I am going to deal with this clause from the point of view of what I believe to be sound administration on the Welsh Border. This clause was not in the original draft of the Bill as it first appeared before another place, but it was inserted in Standing Committee. When it was inserted in Standing Committee, my noble friend who spoke for the Government made it clear that, notwithstanding the introduction of this clause in the Bill, it was still possible to proceed with adjustments on the Border between England and Wales under the Local Government Act, 1933, but he did not go on to say that Her Majesty's Government would give facilities for the use of that Act under these conditions. As your Lordships know, what is lawful is not necessarily expedient, and therefore, while it might be lawful to use the procedure of the 1933 Act, it by no means follows that the Department would be ready to see it used. I believe that that makes all the difference.

There are a number of places on the Border between England and Wales where quite serious anomalies exist. In some places the Border runs right through the middle of a village, and in other places the highway goes in and out over the Border and consequently is awkward and expensive to maintain. Most of these places are quite well known to the Departments concerned. I am talking now of the small places, not the bigger ones. Most of these difficulties ought to be cleared up, and it is my belief that they can be cleared up by agreement between the two local authorities concerned, with the agreement of the people who own and occupy the land. If substantial agreement cannot be reached, then, of course, I do not think it would be right that these cases should be put up to the Ministry by the counties concerned. But I believe there will be a number of places where agreement is reached arid where, therefore, there will be a good case for putting the cases to the Ministry.

I consider that the counties concerned have a right to know that if agreed cases come up to the Ministry, the Ministry will give facilities for the use of the procedure under the 1933 Act. I hope that that is an assurance which my noble and learned friend will be able to give me in a few moments. I believe that it is important because, under certain conditions, it is possible that agreement might be reached between those who are materially affected, and yet a piece of land might be used as a stamping ground for all kinds of extremists, pressure groups and people of that kind. I hope that if the case were put the Ministry would be sufficiently strong-minded not to listen to pressure groups but would be guided by local authorities on both sides of the Border who had reached substantial agreement and by the owners and occupiers of the land concerned—that is, by those who were materially interested in any way. I have no idea of whether once these matters are gone into there will be a case for a piece of England to go to Wales or for a piece of Wales to go to England; and I do not think that matters. That is a matter for the counties concerned to choose to initiate the procedure under the 1933 Act. I feel, however, that we are entitled to some assurance that where local agreement is reached the proposals will be given a fair hearing by the Ministry. I beg to move.

Amendment moved— Leave out Clause 43.—(Viscount Bridgeman.)

LORD OGMORE

I hope the noble Viscount, Lord Bridgeman, will not consider me a pressure group, but after careful consideration of all he has had to say I do not feel that this is an advisable Amendment to make. I understand that originally the Bill did not contain this clause and that, in those circumstances, it would have been possible for either Commission to have made suggestions for an alteration of the boundary. At that stage the Welsh Counties Association, representative of all the county councils of Wales, came into the picture. They felt very strongly on the matter. They sought and obtained the agreement of the County Councils Association, and then approached Her Majesty's Government with a view to the insertion in the Bill of some such clause as this; and during the stages in the other place this clause was moved by Her Majesty's Government.

It is quite true, as the noble Viscount has said, that in certain places the boundary between England and Wales goes in a rather odd fashion, and there are one or two places where the boundary has obviously resulted either from a local battle or a local truce, for one wonders how on earth the boundary went in that particular way. I believe there is a bit of Flintshire in the county of the noble Viscount—Shropshire. There is certainly an odd bit of one county appearing in another. This boundary has been in existence for centuries past, and people on both sides of the Border feel very strongly upon it. I feel that it would necessitate not just a resolution by a Commission but a full scale Act of Parliament, whereby all interests would be represented and the whole thing could be threshed out, for there to be any alteration of the boundary between England and Wales.

I am certain that it is that kind of consideration which actuated the County Councils Association—which, after all, is representative of councils in both England and Wales—in pressing Her Majesty's Government to put the clause into the Bill. Having some knowledge of the feeling in Wales, at all events, I certainly feel that it would be wrong possibly to endanger the harmony in certain areas by permitting a Commission to make recommendations for boundary alterations. For those reasons I would support Her Majesty's Government and ask your Lordships to agree to the retention of the clause in the Bill, in spite of the persuasive and attractive way in which the noble Viscount moved his Amendment.

VISCOUNT BRIDGEMAN

Before my noble and learned friend replies, may I say that I hope the noble Lord opposite realises that the attitude I was taking up was that I should be perfectly happy to see the clause remain in the Bill if I got the assurance for which I asked—that the 1933 Act would be allowed to be used in appropriate cases.

LORD OGMORE

I take it that if the Act is on the Statute Book there is nothing to prevent its being used. The noble and learned Viscount is to reply, but presumably the 1933 Act will not be used in improper cases; it can be used only in proper cases.

THE LORD CHANCELLOR

That is the explanation, which I hope will satisfy both noble Lords. There is only one point which I want to add to the history given by the noble Lord, Lord Ogmore. The House will have noticed that under the Bill the Commission for England is empowered to deal only with England, and the Commission for Wales can deal only with Wales. So that even before there was this addition to the Bill it was clear that they were to be restricted to the respective countries and were not to act in problems which involved both.

As the noble Lord, Lord Ogmore, has indicated, this clause was inserted because of some doubts which arose as to whether the machinery for dealing with the joint problem was enough. But that does not mean that the possibility of the adjustment of the boundary by other means is excluded. The view of Her Majesty's Government, which I am told is also the view of the County Councils Association, is that the means that exist are more appropriate and realistic. These are Sections 140 and 143 of the Local Government Act, 1933, which are being left in force, subject to certain amendments which are set out in the Eighth Schedule. They empower the Minister—I stress, the Minister—to make orders adjusting county boundaries ad hoc, at any time—which means, in practice, during the intervals between general reviews. The county boundaries which may thus be adjusted include, of course, those which also constitute a boundary between England and Wales.

I will come to the spirit of Lord Ogmore's suggestion in a moment, but I should just like to indicate what are the procedures in the Eighth Schedule which are improved by the amendments. Either the two county councils (or a county and a county borough council) concerned on opposite sides of the boundary can agree to apply for an adjustment—and in that case the Minister—again, I stress the Minister—will be able, after any necessary public inquiry, to give it effect by order under Section 143 of the 1933 Act; or, failing agreement, the county council that seeks the adjustment can apply to the Minister for an order under Section 140 of the 1933 Act. The application will have to be advertised, and notified to every local authority and parish council or parish meeting in the area affected; there will be a period for objections to the Minister and any necessary public inquiry; and then the Minister will be able, if he thinks fit, to make an order effecting the boundary adjustment asked for, subject to approval by a Resolution of each House. So one is very nearly in the noble Lord's position, in that it does not require legislation, but it requires approval in the House.

On the general point I submit this. For a peculiar and sensitive matter like adjustment of this boundary, this method has great advantages. As I have stressed as I have gone along, it puts the responsibility for the decision directly on the Minister—which is how it should be, I think, in such a matter, which goes beyond ordinary considerations. Where there is local agreement on an adjustment, the decision can be taken and implemented quite simply. Where there is disagreement, any adjustment decided on by the Minister will have to be positively confirmed by Parliament, as I have said. That is the Minister's side of it, and I think that the other side is equally important. By keeping this sort of issue out of the scope of the Local Government Commissions we shall avoid a situation in which the Commission's task of review and their set of proposals for the generality of an area lying against the Welsh Border, get clouded over by arousing feelings, which we know might well happen.

But it has been said—and I want to face it quite straightly—that even where a need for adjusting boundaries is in fact found to exist, in practice nothing will ever be done about it. But if one really assumes that no use will in practice be made of the amended powers of the 1933 Act, it would seem to be pointless to write virtually a duplicate set of the same powers into Part II of the present Bill. It must always be, in any particular case, ultimately for the Minister of the day to decide (if necessary with the approval of Parliament) whether an adjustment should be made. He already has the powers—and the Bill improves them. Clause 43 simply makes it quite clear that it is those powers, the powers of the 1933 Act, that will have to be used for this particular purpose. It was, as I have said, generally welcomed in another place, and has also the support of the County Councils Association.

The inclusion of Clause 43 does not mean that changes to this boundary under the 1933 Act provisions will not be considered. As the noble Lord, Lord Ogmore, said, these provisions exist; they are the law and they can be used. When they are used they will, of course, be considered by the Minister, and if there are adjustments which should be made to the boundary there is no reason why they should not be considered on their merits and the changes made if they are shown to be in the public interest. But these will, as I said, be dealt with by the Minister if they are agreed, and by Parliament if there is any disagreement. I hope that for once the middle road has not succeeded in just offending both people the more. I think I have shown to Lord Bridgeman that by maintaining these provisions still in effect, the procedure can be taken, and if a suitable case arises it will be considered. In answer to Lord Ogmore, I think it is right not to get the Commissions which are operating, one in England and one in Wales, involved in this matter. I hope that with that explanation my noble friend Lord Bridgeman will be satisfied.

VISCOUNT BRIDGEMAN

I am sure that both the noble Lord, Lord Ogmore, and myself are grateful to my noble and learned friend for the careful and full statement he has made on the matter. So far as I am concerned, I should like to say at once that I am absolutely satisfied with that statement. It makes it clear that, if one road is barred, the other road is at least open to those with a good cause. With those remarks I beg leave to withdraw the Amendment.

LORD OGMORE

May I say that I am grateful to the noble and learned Viscount. I think his explanation has cleared up any doubts there may be on this subject.

Amendment, by leave, withdrawn.

Clause 43 agreed to.

LORD CHESHAM

In view of the progress of the Bill at this stage, I think it might be for the convenience of the House if we do not take the adjournment for dinner as planned. It has been agreed through the usual channels that we shall carry straight on and finish the Amendments remaining on the Marshalled List. I hope that those noble Lords who have already put down their names for dinner will remain and eat it, so that any alarm and despondency in the Refreshment Room may be avoided.

THE LORD CHANCELLOR moved, after Clause 43 to insert the following new clause:

Provisions as to Cinque Ports

" 44.—(1) No change of area or status effected under this Part of this Act or under section one hundred and forty-one of the Act of 1933 shall affect the continuance of the Confederation of the Cinque Ports.

(2) An order under this Part of this Act or the said section one hundred and forty-one affecting any port or ancient town of the Confederation may make provision for securing the continued discharge of functions in relation to the Confederation (including, but without prejudice to the generality of the foregoing, provision for the preservation so far as necessary for the purposes of this section, and with or without modifications, of any existing corporation), for appropriating property or providing funds for the discharge of functions as aforesaid, and otherwise for securing that anything required or authorised to be done by, to, or in relation to the Confederation or any Court thereof may continue to be done.

(3) Subsection (5) of section thirty-eight of this Act shall apply in relation to the foregoing provisions of this section as it applies in relation to subsections (1) to (4) of that section. "—(The Lord Chancellor.)

The noble and learned Viscount said: This new clause is designed to ensure that any changes of area or status found necessary in the interests of effective and convenient local government in the Cinque Ports, or in the associated Ancient Town of Rye, can be put into effect without impairing the continued existence or the dignities and traditions of the Cinque Ports Confederation. I am sure that everyone will agree with this measure of protection, and I need not elaborate the point. I beg to move.

Amendment moved— After Clause 43, insert the said new clause.—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 44 agreed to.

Clause 45:

Schemes for exercise of health and welfare functions by councils of county districts

45.—(1) The following functions of a county council shall, so far as they relate to a county district for which a scheme under this section (in this Part of this Act referred to as a delegation scheme) is in force, be exercisable by the council of that district on behalf of the county council, that is to say, their functions under—

• (b) sections twenty-nine and thirty of the National Assistance Act, 1948 (which relate to welfare arrangements for disabled persons),
148
• (d) the Lunacy and Mental Treatment Acts, 1890 to 1930, and the Mental Deficiency Acts, 1913 to 1938.

and, subject to subsection (2) of this section, their functions under—

• (f) Part III of the National Assistance Act, 1948, so far as it relates to residential or temporary accommodation, and
• (g) section twenty-eight of the National Health Service Act, 1946, so far as it relates to the care in residential accommodation of persons suffering from mental illness or to the after-care in such accommodation of such persons.

VISCOUNT GAGE moved, in subsection (1), to transfer paragraphs (b) and (d) to follow paragraphs (f) and (g). The noble Viscount said: Your Lordships will understand that one of the innovations of this Bill is that there was introduced into certain services the principle of compulsory delegation; that is to say, a borough of over 60,000 inhabitants would have a right to demand that they should exercise control over various services, particularly education, health and certain welfare services, and to supervise that work with their own staff. In general, I do not think that anyone would quarrel with that idea—it has been the subject of negotiations that have been going on for a long term of years—although we sometimes feel that there will be duplication of staff and some additional administrative expense. There are certain highly specialised services, particularly those dealing with the blind and the mentally afflicted, where delegation might produce a duplication of officers and extravagance in expenditure which would not be justified. Also the number of specialists who can deal with this work is not unlimited and we do not want to have unnecessary fragmentation of their work. Taking the blind, for example, I understand that there are 96,000 registered blind persons in England and Wales. Dividing this on an average basis, that would mean 120 blind persons in a borough of 60,000; and of those I suppose that at least 50 per cent. would be over the age of seventy. Similar calculations regarding the mental health service show that the average for the 60,000 borough would be 105, which would probably be divided up into categories, each of which would demand separate specialist services.

I do not suggest that delegation should be ruled out. There may be, and often will be, cases where boroughs have ample reason to demand their own administration of these services, where delegation would be perfectly proper. What I am asking for is that delegation should not be made automatic in regard to these specialist services, if the county council feel that delegation would result in waste of money or manpower. I ask that the council should have power to make representations to the Minister and that the Minister should have power, if he thinks fit, to withhold delegation. All I am suggesting is that the services mentioned in these two paragraphs should be transferred to the category of services where the Minister's consent is required. That seems to me to be a reasonable submission. I beg to move.

Amendment moved— Page 32, line 15, transfer paragraphs (b) and (d) to follow paragraphs (f) and (g) at end of line 34.—(Viscount Gage.)

LORD AMULREE

I should like briefly to support this Amendment. It seems to me that far more is going to be gained if the tiny numbers of blind and mentally unwell people are not compulsorily transferred to the smaller authorities—partly, as the noble Viscount has said, because of lack of trained staff to deal with them properly, and partly because it is not good for people suffering from these complaints to be dealt with in such tiny numbers. I very much hope that the Government will see fit to going some way towards agreeing to the Amendment.

VISCOUNT HAILSHAM

The effect of this Amendment, which I must say is a piece of exquisitely elegant draftsmanship (sometimes Ministers say that Amendments are not well drafted, but this seems to be an admirable piece of draftsmanship), is that the functions relating to welfare arrangements for disabled persons, under Sections 29 and 30 of the National Assistance Act, 1948, and functions relating to the care of the menially ill and mentally defective, under the Lunacy and Mental Treatment Acts, 1890 to 1930, and the Mental Deficiency Acts, 1913 to 1938, would not be included in delegation schemes unless the Minister of Health had consented to their being so included. The whole object of Part III of this Bill is to provide for the delegation of health and welfare functions where the circumstances make this consistent with considerations of efficiency. The question is whether the effect of this Amendment would be consistent with these considerations, and our present view is that it would strike at the root of the principle which is vital to the whole conception of delegation—that is, that the administration in any area of the health services, including the mental health services, should be kept in the hands of a single authority.

We regard this as necessary because of the inter-relation of the services in question and the need to co-ordinate them closely. Often this need goes to the extent of even employing the same staff—I instance the work of the health visitors—on two or more of the services. In our view this renders it necessary, as a matter of principle, to keep the administration of the health and welfare services in the hands of a single authority and we must adhere to that principle. It is true that, as in all cases where principles have been enunciated, the Bill thereupon inevitably goes on to provide for exceptions. Some of these exceptions are in paragraphs (f) and (g) of the subsection we are discussing which are made subject, as this Amendment would make (b) and (d) subject, to the provisions of subsection (2). One of the exceptions provided for is the ambulance service, which for practical operational reasons we think is not suitable to be delegated at all, and a second is the provision of residential accommodation for the aged or handicapped under Part III of the National Assistance Act, 1948 (which your Lordships will see in paragraph (f)), and for the mentally ill, under Section 28 of the National Health Service Act, 1946, and paragraph (g) of this subsection.

With your Lordships' permission, I will give our reasons for regarding these two examples as exceptional. From what I have said, I hope it will appear clear that the whole object of delegation is to provide for it where circumstances make it consistent with considerations of efficiency, and I hope that I have shown why, at least in our view, it is unnecessary, and may well be wrong, to exclude services or parts of services unless there are special considerations, such as those applying to the provision of residential services. In our view these special considerations cannot be said to apply to the welfare service, under Sections 29 and 30 of the National Assistance Act, 1948, which is the service referred to under paragraph (b), or to the mental health services in the Lunacy and Mental Treatment and Mental Deficiency Acts, as being the services referred to under paragraph (d). On the contrary, in our view there are good reasons why these services should be grouped with those which come automatically within the scope of any delegation scheme.

As regards the welfare services, the Guillebaud Committee expressed the view that a division between these two branches would be "calamitous", and said that the aim in future should be to combine the health and welfare functions as closely as possible. The Committee of Inquiry on the Rehabilitation. Training and Resettlement of Disabled Persons, presided over, as your Lordships no doubt remember, by the noble Lord, Lord Piercy, which reported in 1956, thought that the welfare services should be closely linked with the arrangements for after-care under the National Health Service Acts, the latter being a service which will be delegated under paragraph (c) of this subsection. The mental health services of the local authorities include a home visiting service by mental welfare officers, health visitors or other social workers, and the provision of training centres for the mentally defective, all of them linked closely with the other health services and being required on a sufficient scale in an area of 60,000 population (which, as my noble friend Lord Gage reminded us, is the principal criterion) to justify delegation. There is accordingly every reason against making an exception of these services from the general principle that health and welfare services should go together.

I feel that I should explain the reasons for making special exceptions in the case of the services described in paragraphs (f) and (g) in regard to the residential or temporary accommodation under Part III of the National Assistance Act, 1948, which, of course, is the subject of paragraph (f). We consider that this needs to be planned over a wide area and, being in short supply, it may require for some time to be so planned, particularly in view of the restrictions on capital development which at present exist. We think, therefore, that in that case it is desirable that control should remain in the hands of the county council, who can make the best use of what accommodation is available by assigning to individual units a wide catchment area. In such a case automatic delegation of control of particular units to district councils might seriously prejudice the ability of the county council to make proper plans for its area as a whole or to ensure effective use of the remaining accommodation.

Some residential accommodation under paragraph (f) is of a specialised type—for instance, that for the blind, epileptic, deaf and dumb. The numbers of these involved are generally small and it will always be necessary, whatever the capital investment situation may be, to have large catchment areas for accommodation of this type. The sort of exceptional circumstances that might justify partial delegation of this service would be the existence in a large district of units of accommodation—for example, homes for old people—which closely matched the needs of that particular district. But we think that each case of this kind should be examined on its merits, and as your Lordships will see from subsection (2) of the clause, the provisions of the Bill secure this.

Secondly, the care in residential accommodation of mentally sick under Section 28 of the National Health Service Act, 1946, is also treated as exceptional under paragraph (g). No accommodation of this kind is yet provided under Section 28 although there is some provided by voluntary organisations, with financial help from local health authorities. The provision of such accommodation by local health authorities is a new development of the mental health service, strongly recommended for persons not requiring hospital care by the Royal Commission on the Law relating to Mental Illness and Mental Deficiency. The extent of the provision which will need to be made, and the precise pattern which it will follow, cannot be known until some progress has been made in the development of the service. It is clear, however, that similar considerations apply to it as to residential accommodation described in paragraph (f), which I ventured to develop when I was talking about the residential accommodation for the aged. It will, moreover, in any event generally be desirable that control of this particular residential service should be in the same hands as control of residential accommodation for the aged, since for obvious reasons the categories involved tend to overlap.

For this reason, our view is that paragraphs (b) and (d) are rightly placed under the general rule, because considerations of efficiency so demand; and that equally, because considerations of the catchment area and the other considerations I have mentioned really necessitate it, paragraph (f) and (g) are rightly separated from the others and are made subject to the consent of the Minister and the procedure under subsection (2). I, of course, bow to the great personal knowledge of my noble friend Lord Gage in matters of this kind, on which his judgment would be one which I suppose we should all accept as of the highest authority, but in this case the Government feel that the Committee cannot be advised to accept the Amendment, and I hope that in view of the explanation I have given, he will not press it.

6.58 p.m.

THE EARL OF SWINTON

I hesitate to intervene in this debate, not having anything like the authority of my noble friend Lord Gage. On the other hand, as I understand it, the County Councils Association feels strongly about this matter and, I believe, are unanimous on the point. It is clear from the speech we have just heard that the Government have given careful consideration to this point, and I am sure they want to do what is best. But I am bound to say, having read what the County Councils Association have said on the matter and, still more, having heard the views of my noble friend Lord Gage, and particularly those of the noble Lord, Lord Amulree, on the question of lunacy and like complaints, I should hope that the Government would reconsider, at any rate, paragraph (d), although I should hesitate to pronounce on paragraph (b). I should have thought that even the arguments which my noble friend the Lord President of the Council has adduced, as to why the matters under paragraph (g) about mental illness are treated separately and require the special approval of the Minister, were in themselves greatly in favour of the argument that paragraph (d) should be put in the same classification and treated in the same way as paragraph (g).

After all, what we want here in this Bill, as has been so rightly said on both sides of the Committee, is efficiency. We want the careful consideration of what is best for the individual people concerned, and we want economy; that is a matter which the Government have stressed very strongly. I should have thought, that from the point of view of economy, at any rate, it must be clearly right that the mental services, the treatment of lunatics, whether in their locality or in a central institution, cannot be divided. Persons are continually moving. We know how the local doctor gets on to the central mental institution; people are sent there for observation. This sort of thing is quite unsuited to an area of 60,000 people. I would suggest that in the interests of the patients themselves it is most desirable that at any rate all these matters with regard to lunacy should be treated in the same way and should be treated as paragraph (g). After all, if you leave a matter to be dealt with automatically by delegation, there it is; but if you transfer it and classify it under paragraph (g) you are not preventing this from happening in a suitable place. On the contrary, if a good case is put up for allowing a delegated authority to have control over all the lunacy matters, then the Minister can perfectly well approve it. For those reasons I hope that my noble friend will be willing to consider this matter again, at any rate so far as the lunacy services are concerned.

LORD CONESFORD

May I support very strongly the pleas that have been made? When I saw some of the very expert gentlemen with experience of these matters from the county councils, the example that impressed me, I think even more than the example just given by my noble friend Lord Swinton, was the example given by my noble friend, Lord Gage, in his original speech—namely, the blind. I think that in the case of the home visiting of blind persons there is evidence that a single person—and I imagine he must be a fairly expert person—visiting the blind in their homes can deal with more blind persons than will be found in the comparatively small authorities we are here considering.

I think, therefore, that my noble friend Lord Swinton is quite right in saying that, unless we have some Amendment of this clause, the Government will be insisting on waste, and on a wasteful use of perhaps a limited number of people—because I imagine that the number of people who are skilled in teaching the blind in their homes is not so very great. Therefore, for the purpose both of a practical arrangement and of an economic arrangement, I think there is a good case for some Amendment of this clause. I could not follow, as I heard it, all the very careful speech of my noble friend the Minister in his reply. Although it seemed to me that this Amendment was a good one, I dare say that there are some objections to it; but I think we must avoid this automatic delegation which actually leaves, so far as I can see, the blind in a worse position than now obtains.

LORD HYLTON

I hope that the noble and learned Viscount the Lord President will look at this matter again. I would ask him if he is aware that in 1954 all the four local government associations agreed that mental health should not be delegated under a county scheme. It is not often that these four associations agree on any policy, but if this rather surprising conclusion was right in 1954, I believe that the Government must have some tremendously strong reason why they should now wish to force delegation of these subjects on to the authorities concerned. The noble and learned Viscount the Lord President has not told us the fundamental reason. He has given us no real reason for this, except that they thought it might be a good thing. That really is not the point. The point really is that on this business you have to count heads: if there are not enough blind or enough mental defectives in a 60,000 population, then it would be wrong to delegate because they would be better looked after under the existing system. I hope that the noble and learned Viscount the Lord President will look at the point again.

LORD MILVERTON

In view of what has been said, perhaps I ought to mention that the Association of Municipal Corporations are entirely behind the Government in this matter and are opposed to this Amendment.

LORD HYLTON

I did not know they had changed their minds since 1954.

LORD MILVERTON

I think their reason is that, where efficiency is possible, the care of the sick and so forth should essentially be carried out by people of that locality; that there should not be a distant authority, and that it is better to have it in the area which they are trying to serve.

LORD LATHAM

This is a tricky matter. It cuts right across local government and it cuts across Parties. I had some experience of transferring health services from the metropolitan boroughs to the London County Council in 1946. I think it was a proper thing to do, but I did not find universal assent to that proposition. I believe that now that the services, as a consequence, have been established, proposals are afoot for the transfer of quite a number of them back to the metropolitan boroughs. On this matter, I should have thought that it was not likely to result in efficiency or economy or in the provision of the necessary quality of services to delegate the welfare of the blind to, relatively speaking, small units. For instance, I gather that within the provisions of the National Assistance Act, 1948, there are services for the blind, including home visiting, home teaching, home workers' schemes, employment in workshops for the blind and recreational facilities. I find it difficult to visualise a relatively small authority providing workshops for the blind. They are very difficult to provide. All sorts of problems arise in connection with them. London County Council at one time (I do not know what the figure is now) had some 8,000 blind persons within its charge, and quite a number of workshops; and even then we found the problems at times almost insurmountable.

Then there are perhaps more difficult problems, not so wide in extent but, in my view, more difficult, in dealing with the deaf and dumb. I should have thought that those were eminently services which should be dealt with and provided by the county council, unless, of course, an almost unanswerable case can be made to the Minister for delegation. I am also equally disturbed about the proposal to transfer mental services and functions to authorities having a population of 60,000 and over. Dealing with persons mentally affected and providing treatment under the various Lunacy and Mental Acts is a matter of great complexity which requires expert staff, of whom there are not too many available.

Therefore, in the interests of the nation it should be possible to employ those special specialists (if I may use that word) to the full, rather than have them as officers of, relatively speaking, small authorities and therefore, by reason of the facts of the case, not fully employed because, happily, the number of the persons to be served and dealt with is not sufficiently large. Contemplate running a workshop for fifty blind persons. It cannot be done except at, relatively speaking, staggering cost per head. We are often regaled with figures about this cost and that cost. I admit that the figures are very disturbing, but one must always bear in mind that if there are only ten persons to deal with those ten persons will, in many cases, have to carry the same overheads as a hundred persons. That is why the per head costs or per unit costs appear to be, and indeed are, so high.

I cannot accept the view of the noble and learned Viscount, speaking for the Government, that the purpose here, namely, to secure an efficient, economic and (as I assume the noble and learned Viscount would wish) equal service—will be achieved merely because delegation is automatic. The delegation under Clause 45 is automatic. As understand it, the noble Viscount, Lord Gage, is asking that the services comprehended within subsection (1) (b) and (d) should not automatically be delegated, but that they should be, as it were, delegated by permission and approval of the Minister, after he has considered all the circumstances not only of the demand but of the capacity to meet the demand that may exist in any particular area. In those circumstances, I think that the Government should look at the matter again in the light of what has been said in the debate.

7.13 p.m.

VISCOUNT GAGE

I think my noble and learned friend Lord Hailsham would agree that there has been strong feeling shown in this debate that, as Lord Latham has said, this matter ought to be looked at again. My noble friend was good enough to attribute all sorts of special knowledge to me which I do not claim. But I am concerned with administration, and the argument that has appealed to me in the County Councils Association's case is that it is not just transferring a group of people from one existing service to another existing service. To do their job properly the boroughs who claim to look after these afflicted people will have to go out and recruit specialists that they have not got at present. I speak in all sincerity when I say that, because of my responsibility as a county councillor, I should feel much happier if the experts on this matter—for it is an expert matter—had a really careful examination of what is entailed under the Bill as it stands. I should say that I am not greatly impressed with the fact that the Association of Municipal Corporations are against this Amendment. It is the sort of thing that I suspect they would be against, and it rather strengthens my case that this particular suggestion ought to be looked at again most carefully. Therefore, in view of the strong feeling that has been shown in this debate, I hope that my noble friend will consent to look at it again.

VISCOUNT HAILSHAM

I do not know whether it would be the wish of the Committee that I should reply to the various invitations that have been extended to me, or whether they would prefer me to remain silent. But I always like to reply to invitations, and perhaps it is better that I should do so. I know that my noble and learned friend in charge of the Bill would not wish me in any sense to give the impression that the Government's mind was closed upon what is obviously a controversial and complex subject, and certainly do not want to give the impression, therefore, that this matter will not receive further consideration. On the other hand, there are sometimes different tones of voice in which one offers further consideration. Sometimes it amounts to a virtual promise that one will yield to the pressure and to the feelings which have been expressed. I do not want to give that impression either in what I say—in other words, while the Government's mind is not closed. I do not wish to encourage belief that this is a change of view on the part of the Government. For that reason, I would rather indicate one or two arguments which I feel I ought to put, after hearing the debate and listening with great attention and interest to the various opinions which have been expressed.

Of course, it is not for me to express any preference as such for the divergent views of the municipal corporations and the county councils as stated in their professional bodies. Each association is rightly proud of its own jurisdiction and powers, and of the different and divergent advantages which each type of authority offers. I think this matter has got to be viewed on its merits. I am bound to say that, listening to the case presented for the county councils' view, I did not think they had really grappled with the point: that many of the services required by these afflicted persons are provided by generalised home visiting services and mental welfare officers. For instance, as regards mental health, the whole trend has been to integrate this service with the other health services. This was one of the principal attitudes adopted by the Royal Commission's Report.

The provision of workshops for the blind, referred to by the noble Lord opposite (of which he has great experience) is a specialised subject on its own, and the considerations applicable are sometimes different from the point of view of both municipal and ordinary counties. They are a very special case, and they are, as a matter of fact, already provided to cover the area of several local authorities by one local authority providing and the others using the workshops. Therefore, they do not really assist one, I think, in coming to a conclusion as to which of these two rival views is the better. At the same time, I would say to my noble friend Lord Swinton that I am not at all convinced by the argument that because residential accommodation for these afflicted persons needs to come from a wider catchment area than a 60,000-inhabitant municipal corporation, then services other than residential accommodation for the same afflicted persons need necessarily be treated in the same way.

For exactly the same reason I fail to follow my noble friend Lord Conesford. I myself do not take the view that economy is the primary consideration here, but he seemed to think that the Government's view was necessarily the more extravagant of the two views expressed. I must say that I do not feel convinced by that, if you once assume, as the Government believe—and which certainly has not been controverted by figures—that the 60,000 population is sufficiently large to be able to require health services justifying delegation as a matter of statistics, and, secondly, that the home visiting service which has to be provided for the blind and the deaf and the dumb consists of mental welfare officers, health visitors and other social workers whose activities will not be confined to those afflicted. I know that it would not be the desire of either the Committee or the local authorities concerned to duplicate services of this kind. Having said that, I would add that the last thing I wish to do is to create the impression that we are adopting an absolutely intransigent or dogmatic view about what is obviously a controversial matter. I certainly should like to think that both my right honourable friend and my noble and learned friend on the Woolsack in charge of the Bill in this House will give the matter further consideration in the light of the debate.

VISCOUNT GAGE

In view of what my noble friend has said, I will withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 45 agreed to.

Clause 46 agreed to.

Clause 47 [Variation and revocation of delegation schemes]:

THE LORD CHANCELLOR

This is, I am advised and believe, a drafting Amendment relating to the provision in Clause 47 (1) whereby a district council that has once got a delegation scheme for health and welfare under Part III of the Bill is exempted from any need to get consent before making and submitting a fresh scheme varying or revoking it. The purpose of the Amendment is to make it clearer that this exemption applies not only irrespective of what the district's population may be at the time but also irrespective of whether or not it is a rural district. I am advised that it really is a drafting Amendment. I beg to move.

Amendment moved— Page 35, line 26, leave out (" population ") and insert (" circumstances ").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 47, as amended, agreed to.

Clauses 48 to 54 agreed to.

Clause 55 [Contributions by county councils to expenses of county district councils]:

7.26 p.m.

LORD MILVERTON had given Notice of two Amendments, the first being in subsection (1), after "but" to insert "subsection to subsection (3) of this section" and the second to insert a new subsection (3). The noble Lord said: The purpose of the two Amendments standing in my name is to ensure that the much wider power now proposed to be conferred on county councils to make contributions towards the expenses of county district councils shall be exercised with due regard to the needs of the councils to be assisted, and also to the justice of requiring other county districts to contribute to its expenditure. Under the Bill, rate deficiency grants will be paid in the future to county district councils direct where those councils qualify for such grants because their average resources are below the national average for county district councils. This provision means that in future there will be no poor county district councils, as the rate deficiency grant will bring up the resources of the poorest to those of the average. One of the chief reasons for county council contributions to county district councils' expenditure is therefore being removed altogether by this Bill.

The four main causes of expenditure in regard to which heavy burdens may be placed on a county district council are the provision of water supply, sewerage and sewage disposal, coast protection and expenses in connection with schemes of town development. As regards all these matters county councils have powers under independent statutory provisions to make grants to county district councils. Indeed, certain of these Statutes impose obligations on county councils to make contributions where the Minister of Housing and Local Government has himself agreed to contribute. In rural districts, which generally are those having small resources but which will be very con- siderably assisted by the rate deficiency grants under the Bill, the county council is responsible for the repair and maintenance of unclassified roads, so that there can be no undue expense falling on the rural district in respect of highways.

Having regard to these considerations, it may be unjust to the more progressive authorities if county councils make grants towards the expenditure of backward local authorities. For example, if one authority has, entirely at its own expense, made complete provision within its area in respect of some service, it seems quite unfair for that authority to have, as it were, to pay twice by contributing through the county council precept towards the county council grant offered to induce some other authority to make some similar provision, perhaps, within its own area, unless it can be shown that the resources of the authority so assisted are such as to make a county council contribution essential to enable the work to be carried out. The clause is put forward by the Government as a contribution towards the relaxation of controls on local authorities. It must however be expected that some controls will continue to be necessary under any arrangements, and these arise when third party rights exist. For example, it would not be suggested that a local authority need no longer seek the confirmation of a Minister before making and putting into effect a compulsory purchase order. That is an obvious case where third party rights exist and must be protected.

Similarly here, although in theory the county council raises its own money and therefore should be entitled to do with it as it pleases, it is to be remembered that this money is obtained by precepting on the county districts within the country. This means that where a contribution is paid to one of the county districts the county council are giving away money which has been raised from the ratepayers of the other county districts within the administrative county. These districts in some cases may be equally in need of assistance. It is right, therefore, that the county district council should be able to challenge the intention of the county council to give away money raised in their area.

In support of this it is notable that the Royal Commission on Local Government which sat under the chairmanship of the Earl of Onslow from 1923 to 1929, when recommending that county councils should be empowered to contribute to the expenses of county districts, also recommended that the power should be limited to certain essential services and that any proposals to make a contribution should be subject to an appeal to the appropriate Minister—then the Minister of Health, now of course, the Minister of Housing and Local Government.

It may be said in the interests of county district councils that they should not look to the county council for financial assistance for their various local projects save in cases of absolute necessity, because contributions by a county council may lead to undesirable but inevitable interference by the county council in the affairs of the county district assisted, and that if the practice of looking to the county council for contributions is persisted in over a period it may produce an attitude of subservience on the part of the county district councils towards the county council which will militate against the creation and maintenance of a healthy and independent system of local government among the county district councils.

Having regard in particular, therefore, to the improved financial resources which will be available to the poorer county district councils as a direct result of this Bill and to the injustice of imposing on progressive county districts the financial burden of contributing towards the expenditure of other areas on services which they themselves have provided in their own districts, at their own expense, I move this Amendment, which seeks to ensure that there shall at least be an opportunity to appeal against the possible irresponsible generosity of any county council. I beg to move.

Amendment moved— Page 40, line 37, after (" but ") insert (", subject to subsection (3) of this section, ").—(Lord Milverton.)

VISCOUNT GAGE

I have not consulted the County Councils Association on this Amendment, but, speaking from my own point of view, I believe district and borough councils are admirable bodies; I have myself served on both. They have good and bad instincts, and this Amendment is calculated to appeal to their very worst instincts, for it is based on the fear that some county district council is going to do better than another. The county councils must have discretion in this matter and, after all, they are collective bodies which often include members who are also members of district councils. In any case, the principle of election should provide that the different points of view of different areas are properly represented. If this procedure had to be adopted whenever a grant had to be made I believe that it would not only cause a great deal of unnecessary trouble but might cause delay which, in some cases—for example, in matters dealing with erosion—might prove dangerous. I do not know what Her Majesty's Government will say in reply, but on the whole I should say that this Amendment should not be supported by the Committee.

VISCOUNT HAILSHAM

On the previous Amendment I found myself somewhat supporting the municipal corporations against the view which was admirably expressed on behalf of the county councils. On this occasion, with what I hope will be regarded as an impartiality devoted to the merits of each case, I am bound to say that I align myself with my noble friend Lord Gage, rather than with my noble friend who proposed this Amendment. The power which is conferred by Clause 55, under which this Amendment is proposed, empowering the county council to make such contribution as they may think fit without the need for ministerial consent, replaces more limited powers given respectively under Section 307 of the Public Health Act, 1936, referred to in subsection (1), and under Section 126 of the Local Government Act, 1948, in subsection (2).

Under the present law which this clause replaces and enlarges, no ministerial consent is required for the exercise of the first power, but ministerial consent is required for the exercise of the second power. We have to bear in mind the whole policy underlying the Bill. This is a Bill designed to give local authorities greater responsibility to manage their own affairs. I understand that the purpose of this Amendment is to create machinery whereby county councils must not exercise this power without the Minister's consent—at any rate if the decision is challenged. To that extent, it takes away from local authorities the right to manage their own affairs. The ground on which the argument is presented is that the individual interests of local communities inside the county council area may be prejudiced if this is done—I believe that even the fear of irresponsibility was voiced by my noble friend Lord Milverton. The view of Her Majesty's Government is that county councils are not likely to prove irresponsible bodies; and, after all, the people who may be precepted to their disadvantage within county council areas as my noble friend Lord Milverton fears, are persons themselves residing within the county, and the county council is responsible to them no less than to other people.

Wherever there are local authorities there are, and must be, divergent interests. It is sometimes surprising to see local authorities showing for their interests all the passion shown by rival business concerns, though we all know that they act out of the purest public spirit and very often, as in this case, on behalf of individuals who are in fact constituents of both areas. It is the view of Her Majesty's Government that county councils are to be trusted with this power and that it will be adequately safeguarded by the ordinary processes of discussion and democracy without the unnecessary belief that the "man in Whitehall" will know better than either.

LORD LATHAM

I should have thought the main objection to this Amendment was that it is calculated to impair the good relations between county councils and county districts. Whatever we may think of this Local Government Bill, local authorities, through their associations—which have been in pretty energetic disagreement over many things over the past twenty years—hope that, whatever deficiencies, in their view, this Bill may contain, the relationships will be improved. I can think of nothing more likely to impair good relations between county districts and county councils than the power which it is sought to give county districts under this Amendment. My own view is that it would impair the self-esteem of the county districts and the self-respect of the county councils. I very much hope that the Amendment will not be accepted.

LORD MILVERTON

Without in any way agreeing with a single word of the noble Lord who spoke last, I should like to thank the noble and learned Viscount who replied on behalf of Her Majesty's Government for his sympathetic and clear expression of his difference of opinion. In view of his words, I ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 55 agreed to.

Clauses 56 to 64 agreed to.

Clause 65 [Interpretation]:

VISCOUNT HAILSHAM

This is really a drafting Amendment which is consequential on an alteration made to Part II of the Bill in another place, as a result of which the definition of "local authority" was inadequate for the purpose, as it did not include the Council of the Isles of Scilly.

Amendment moved— Page 45, line 3, at end insert (" and in the said Part II includes the Council of the Isles of Scilly ").—(Viscount Hailsham.)

On Question, Amendment agreed to.

Clause 65, as amended, agreed to.

Clauses 66 and 67 agreed to.

First Schedule: